CAI Corp - Capital/Financing Update 2016

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 to be taken, you should consult your licensed securities dealer, 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 the Prospectus Documents to the purchaser or the transferee or to the bank, licensed securities dealer, registered institution in securities or other agent through whom the sales or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited, Hong Kong Securities Clearing Company Limited and The Stock Exchange of Hong Kong 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.

A copy of each of the Prospectus Documents, having attached thereto the documents specified in the paragraph headed ‘‘Documents delivered to the Registrar of Companies’’ in Appendix III to this prospectus, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Registrar of Companies in Hong Kong and the Securities and Futures Commission of Hong Kong take no responsibility for the contents of any of the Prospectus Documents.

Dealings in the Rights Shares in both nil-paid and fully-paid forms and the Bonus Shares may be settled through CCASS established and operated by HKSCC and you should consult your stockbroker or other registered 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. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

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 OF 333,784,800 RIGHTS SHARES ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY TWO (2) EXISTING SHARES HELD ON THE RECORD DATE WITH BONUS ISSUE ON THE BASIS OF TWO (2) BONUS SHARES FOR EVERY THREE (3) RIGHTS SHARES TAKEN UP UNDER THE RIGHTS ISSUE

UNDERWRITER TO THE RIGHTS ISSUE

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Capitalised terms used in this cover page shall have the same meanings as those defined in this prospectus.

Shareholders and potential investors should note that the Rights Issue and the Bonus Issue are conditional upon, among other matters, the Underwriting Agreement having become unconditional (see the section headed ‘‘Conditions of the Rights Issue and the Bonus Issue’’ herein) and that the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof (see the section headed ‘‘Termination of the Underwriting Agreement’’ herein). Accordingly, the Rights Issue and the Bonus Issue may or may not proceed.

Shareholders and potential investors should exercise extreme caution when dealing in the Shares, and if they are in any doubt about their position, they should consult their professional advisers.

Shareholders should note that the Shares will be dealt in on an ex-rights basis commencing from Friday, 16 December 2016 and that dealing in the Rights Shares in the nil-paid form will take place from Thursday, 29 December 2016 to Monday, 9 January 2017 (both days inclusive) while the conditions to which the Underwriting Agreement is subject remain unfulfilled. Any Shareholder or other person dealing in Shares up to the date on which all conditions to which the Rights Issue and the Bonus Issue are subject are fulfilled (which is expected to be on Monday, 16 January 2017), will accordingly bear the risk that the Rights Issue and the Bonus Issue cannot become unconditional and may not proceed. Any Shareholder or other person contemplating selling or purchasing Shares, who is in any doubt about his/her/its position, is recommended to consult his/her/its own professional adviser.

The latest date and time for acceptance of and payment for the Rights Shares is 4:00 p.m. on Thursday, 12 January 2017. The procedures for acceptance and payment and/or transfer of the Rights Shares are set out on pages 13 to 14 of this prospectus.

23 December 2016

		Page
Expected timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		ii
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Termination	of the Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Appendix I	— Financial information of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	— Unaudited pro forma financial information of the Company . . . . . .	II-1
Appendix III — General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		III-1

– i –

EXPECTED TIMETABLE

Set out below is the expected timetable of the Rights Issue and the Bonus Issue:

First day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Thursday, 29 December 2016 Latest time for splitting nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Wednesday, 4 January 2017

Last day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . Monday, 9 January 2017 Latest time for acceptance of, and payment for,

the Rights Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 12 January 2017

Latest time to terminate the Underwriting Agreement

and for the Rights Issue to become unconditional . . . . . . . . . . . . . . . . . . . 5:00 p.m. on Monday, 16 January 2017

Announcement of results of the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 20 January 2017

Refund cheques, if any, to be despatched if the Rights Issue is terminated or in respect of wholly or partially unsuccessful applications for excess
Rights Shares on or before. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 23 January 2017
Certificates for fully paid Rights Shares and

Bonus Shares to be despatched on or before . . . . . . . . . . . . . . . . . . . . . Monday, 23 January 2017

Designated broker starts to stand in the market to

provide matching services for odd lots of Shares . . . . . . . . . . . . . . . . . Tuesday, 24 January 2017

Commencement of dealings in fully-paid Rights Shares

and Bonus Issue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Tuesday, 24 January 2017

Last day for the designated broker to provide for odd lot matching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 14 February 2017

All times stated in this prospectus refer to Hong Kong times. Dates stated in the Prospectus Documents for events in the timetable are indicative only and may be extended or varied. Any changes to the anticipated timetable for the Rights Issue and the Bonus Issue will be announced as appropriate.

– ii –

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES AND FOR APPLICATION AND PAYMENT FOR EXCESS RIGHTS SHARES

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

a 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 the date of the Latest Time for Acceptance, 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; or
(ii) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the date of the Latest Time for Acceptance, the latest time for acceptance of and payment for the Rights Shares and for application and payment for excess 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 in Hong Kong at any time between 9:00 a.m. and 4:00 p.m..

If the latest time for acceptance of and payment for the Rights Shares is postponed in accordance with the foregoing, the dates mentioned in this section may be affected. An announcement will be made by the Company in such event as soon as possible.

– iii –

DEFINITIONS

In this prospectus, unless the context otherwise requires, the following terms shall have the following meanings:

‘‘Announcement’’
the announcement of the Company dated 4 November 2016 in relation to, among other things, the Authorised Share Capital Increase, the Rights Issue and the Bonus Issue and the amendments to the Articles of Association
‘‘Articles of Association’’
the Articles of Association of the Company as amended from time to time
‘‘associates’’
has the meaning ascribed to this term under the Listing Rules
‘‘Authorised Share Capital Increase’’
the increase in the authorised share capital of the Company from HK$200,000,000 divided into 400,000,000 Shares to HK$1,000,000,000 divided into 2,000,000,000 Shares by the creation of an additional 1,600,000,000 unissued Shares which was approved by the Shareholders in the EGM
‘‘Board’’ the board of Directors
‘‘Bonus Issue’’
the issue of the Bonus Shares pursuant to the terms and conditions of the Underwriting Agreement
‘‘Bonus Shares’’
the bonus Shares to be issued (for no additional payment) to the Qualifying Shareholders, who elect to take up Rights Shares, on the basis of two (2) Bonus Shares for every three (3) Rights Shares under the Rights Issue subject to the terms and upon conditions as set out in the Underwriting Agreement
‘‘Business Day’’
a day (other than a Saturday, Sunday or public holiday or days on which) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours
‘‘CCASS’’ the Central Clearing and Settlement System established and operated by HKSCC
‘‘Circular’’
the circular of the Company dated 21 November 2016 in relation to, among other things, the Authorised Share Capital Increase, the Rights Issue and the Bonus Issue and the amendments to the Articles of Association

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DEFINITIONS

‘‘Company’’
China New Economy Fund Limited, an exempted company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on the Stock Exchange
‘‘connected person(s)’’
has the meaning ascribed to this term under the Listing Rules
‘‘Director(s)’’ director(s) of the Company
‘‘EAF(s)’’ the excess application form(s) for the excess Rights Shares (with Bonus Shares)
‘‘EGM’’
the extraordinary general meeting of the Company held on 14 December 2016
‘‘HKSCC’’
Hong Kong Securities Clearing Company Limited
‘‘Hong Kong’’
Hong Kong Special Administrative Region of the People’s Republic of China
‘‘Independent Shareholders’’
Shareholders other than the Directors (excluding independent non-executive Directors) and chief executive and their respective associates
‘‘Independent Third Party’’
any person or company and their respective ultimate beneficial owner(s), to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties independent of the Company and its connected persons
‘‘Investment Manager’’
China Everbright Securities (HK) Limited, 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)
‘‘Last Trading Day’’
4 November 2016, being the last trading day for the Shares before the date of release of the Announcement
‘‘Latest Practicable Date’’
19 December 2016, being the latest practicable date prior to the printing of this prospectus for ascertaining certain information contained in this prospectus

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DEFINITIONS

‘‘Latest Time for Acceptance’’
‘‘Latest Time for Termination’’
‘‘Listing Committee’’
‘‘Listing Rules’’
‘‘Overseas Letter’’
‘‘Overseas Shareholders’’
‘‘PAL(s)’’
‘‘PRC’’
‘‘Prohibited Shareholder(s)’’
‘‘Prospectus’’
‘‘Prospectus Documents’’
‘‘Prospectus Posting Date’’
4:00 p.m. on 12 January 2017 or such later time or date as may be agreed between the Company and the Underwriter, being the latest time for acceptance of, and payment for, the Rights Shares
5:00 p.m. on the second business day after the Latest Time for Acceptance or such later time or date as may be agreed between the Company and the Underwriter, being the latest time to terminate the Underwriting Agreement
has the meaning ascribed to this term under the Listing Rules
the Rules Governing the Listing of Securities on the Stock Exchange
a letter from the Company to the Prohibited Shareholders explaining the circumstances in which the Prohibited Shareholders are not permitted to participate in the Rights Issue
the Shareholders with registered addresses on the register of members of the Company which are outside Hong Kong on the Record Date
the provisional allotment letter(s) for the Rights Shares (with Bonus Shares)
the People’s Republic of China (for the purpose of this prospectus, shall exclude Hong Kong, the Macau Special Administrative Region and Taiwan)
those Overseas Shareholder(s) to whom the Board, after making enquires, considers it necessary or expedient 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 not to offer the Rights Shares and Bonus Shares to them
this prospectus in relation to the Rights Issue and the Bonus Issue
the Prospectus, the PAL and the EAF
23 December 2016 or such later date as may be agreed between the Underwriter and the Company for the despatch of the Prospectus Documents

– 3 –

DEFINITIONS

‘‘Qualifying Shareholders’’
the Shareholders, other than the Prohibited Shareholders, whose names appear on the register of members of the Company as at the close of business on the Record Date
‘‘Record Date’’
22 December 2016, being the date by reference to which entitlements to the Rights Issue was determined
‘‘Registrar’’
Computershare Hong Kong Investor Services Limited, the branch share registrar of the Company in Hong Kong
‘‘Rights Issue’’ the proposed issue of the Rights Shares by way of Rights Issue to the Qualifying Shareholders with Bonus Issue on the terms to be set out in the Prospectus Documents and summarised herein
‘‘Rights Share(s)’’ 333,784,800 new Shares proposed to be offered to the Qualifying Shareholders for subscription on the basis of three (3) Rights Shares for every two (2) existing Shares held on the Record Date and payable in full on acceptance pursuant to the Rights Issue
‘‘SFO’’
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
‘‘Share(s)’’
existing share(s) of par value of HK$0.50 each in the share capital of the Company
‘‘Shareholder(s)’’ holder(s) of the Share(s)
‘‘Specified Event’’
an event occurring or matter arising on or after the date of the Underwriting Agreement and prior to the Latest Time for Termination which if it had occurred or arisen before the date of the Underwriting Agreement would have rendered any of the warranties contained in the Underwriting Agreement untrue or incorrect in any material respect
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited
‘‘Subscription Price’’ the subscription price of HK$0.50 per Rights Share
‘‘Takeovers Code’’
The Hong Kong Code on Takeovers and Mergers
‘‘Underwriter’’
China Jianxin Financial Services Limited, a licensed corporation under the SFO authorised to carry out regulated activities of Type 1 (dealing in securities) and Type 4 (advising in securities)

– 4 –

DEFINITIONS

‘‘Underwriting Agreement’’ the underwriting agreement dated 4 November 2016 and entered into between the Company and the Underwriter in relation to the Rights Issue ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong ‘‘%’’ per cent.

– 5 –

TERMINATION OF THE UNDERWRITING AGREEMENT

If, prior to the Latest Time for Termination (provided that for the purposes of the Underwriting Agreement if the date of the Latest Time for Termination shall be a Business Day on which a tropical cyclone warning signal no. 8 or above or a black rainstorm warning signal is or remains hoisted in Hong Kong between 9:00 a.m. and 4:00 p.m. on that day, the date of the Latest Time for Termination shall be the next Business Day on which no tropical cyclone warning signal no. 8 or above or no black rainstorm warning signal is or remains hoisted in Hong Kong between 9:00 a.m. and 4:00 p.m. on that day):

(1) 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 and 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 of the Underwriting Agreement) of a political, military, financial, economic 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 which may, in the absolute opinion of the Underwriter materially and 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
(c) the imposition of any moratorium, suspension or material restriction on trading of the Shares on the Stock Exchange due to exceptional financial circumstances or otherwise; or
(2) any material 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) 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

– 6 –

TERMINATION OF THE UNDERWRITING AGREEMENT

(3) 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
(4) 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
(5) any 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
(6) the Prospectus Documents when published contain information (either as to business prospects or the condition of the Company or as to its compliance with any laws or the Listing Rules or any applicable regulations) which has not prior to the date of the Underwriting Agreement been publicly announced or published by the Company and which may in the absolute opinion of the Underwriter is material to the Company and is likely to affect materially and adversely the success of the Rights Issue or might cause a prudent investor not to apply for its assured entitlements of Rights Shares under the Rights Issue (with Bonus Issue); or
(7) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than ten consecutive Business Days, excluding any suspension in connection with the clearance of the Announcement or the Prospectus Documents or other announcements or circulars in connection with the Rights Issue.

The Underwriter shall be entitled by notice in writing to the Company, served prior to the Latest Time for Termination, to terminate the Underwriting Agreement.

The Underwriter shall be entitled by notice in writing to rescind the Underwriting Agreement if prior to the Latest Time for Termination:

(1) any material breach of any of the representations, warranties or undertakings contained in the Underwriting Agreement comes to the knowledge of the Underwriter; or
(2) any Specified Event comes to the knowledge of the Underwriter.

Any such notice shall be served by the Underwriter prior to the Latest Time for Termination and thereupon the obligations of all parties under the Underwriting Agreement shall terminate and no party shall have any claim against any other party for costs, damages, compensation or otherwise save for any antecedent breaches.

– 7 –

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 (Chairman) Mr. CHAN Cheong Yee

Independent Non-executive Directors: Mr. LAM Chun Ho Mr. Faris Ibrahim Taha AYOUB Mr. PUN Tit Shan

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

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

23 December 2016

To the Qualifying Shareholders and, for information only, the Prohibited Shareholders Dear Sir or Madam,

PROPOSED RIGHTS ISSUE OF 333,784,800 RIGHTS SHARES ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY TWO (2) EXISTING SHARES HELD ON THE RECORD DATE WITH BONUS ISSUE ON THE BASIS OF TWO (2) BONUS SHARES FOR EVERY THREE (3) RIGHTS SHARES TAKEN UP UNDER THE RIGHTS ISSUE

INTRODUCTION

Reference is made to the Announcement and the Circular in relation to, among other things, the Rights Issue and the Bonus Issue. The Company proposes to raise approximately HK$166.9 million before expenses, by way of Rights Issue of 333,784,800 Rights Shares at the Subscription Price of HK$0.50 per Rights Share on the basis of three (3) Rights Shares for every two (2) existing Shares held on the Record Date and payable in full on acceptance with Bonus Issue on the basis of two (2) Bonus Shares for every three (3) Rights Shares taken up under the Rights Issue. The Company will provisionally allot to the Qualifying Shareholders three (3) Rights Shares in nil-paid form for every two (2) Shares in issue and held on the Record Date. The Rights Issue will not be available to the Prohibited Shareholders.

– 8 –

LETTER FROM THE BOARD

The proposed Rights Issue with the Bonus Issue was subject to the approval of the Authorised Share Capital Increase and amendments to the Articles of Association by the Shareholders at the EGM. In compliance with Rule 7.19(6) of the Listing Rules, the Rights Issue with the Bonus Issue must be made conditional on approval of the Independent Shareholders by way of poll at the EGM.

The Rights Issue is fully underwritten by the Underwriter. The Underwriting Agreement contains provisions granting the Underwriter the right, which may be exercised at any time prior to the Latest Time for Termination or such later time or date as may be agreed to terminate the Underwriting Agreement on the occurrence of certain events. If the Underwriter terminates the Underwriting Agreement, the Rights Issue will not proceed.

In order to give effect to the Bonus Issue, the Company put forward a special resolution to the Shareholders for approval at the EGM to amend the Articles of Association such that all resolutions to approve the declaration, making or payment of a distribution or dividend to the Shareholders can be declared, made or paid otherwise than pro rata to their respective shareholdings upon the capitalisation of any part of the Company’s reserves or undivided profits.

At the EGM, resolutions approving the Authorised Share Capital Increase, the proposed amendments to the Articles of Association and the Rights Issue with the Bonus Issue were duly passed by the Shareholders or the Independent Shareholders (as the case may be) by way of poll. The Authorised Share Capital Increase and the amendments to the Articles of Association have become effective on 14 December 2016, details of which were disclosed in the announcement of the Company dated 14 December 2016.

The purpose of this prospectus is to provide you with further details of the Rights Issue with the Bonus Issue, including the procedures for acceptance of the Rights Shares provisionally allotted to you and application for excess Rights Shares, together with the financial and other information of the Company.

RIGHTS ISSUE WITH BONUS ISSUE

Issue statistics

Basis of the Rights Issue Three (3) Rights Shares for every two (2) existing Shares held with Bonus Issue: on the Record Date and payable in full on acceptance, together with two (2) Bonus Shares for every three (3) Rights Shares taken up. The aggregate effect of the Rights Issue and the Bonus Issue would be for every two (2) existing Shares held on Record Date, five (5) new Shares would be issued to the Qualifying Shareholder should the Qualifying Shareholder elect to take up the Rights Shares.

Subscription Price:

HK$0.50 per Rights Share

– 9 –

LETTER FROM THE BOARD

Number of Shares in issue 222,523,200 Shares as at the Latest Practicable Date:

Number of Rights Shares: 333,784,800 Rights Shares

Number of Bonus Shares: up to 222,523,200 Bonus Shares to be issued to the Qualifying Shareholders, who elect to take up the Rights Issue, on the basis of two (2) Bonus Shares for every three (3) Rights Shares under the Rights Issue

Number of Rights Shares 333,784,800 Rights Shares, being the aggregate number of the underwritten by the Rights Shares under the Rights Issue Underwriter:
Number of Shares in issue up to 778,831,200 Shares upon completion of the Rights Issue with the Bonus Issue:

As at the Latest Practicable Date, the Company does not have any outstanding convertible note, warrant, option, derivative or other securities convertible into or exchangeable for any Share. The Company has no intention to issue or grant any warrants, options and/or convertible securities on or before the Record Date.

Bonus Issue

Subject to the satisfaction of the conditions of the Rights Issue, the Bonus Shares will be issued to the Qualifying Shareholders, who elect to take up the Rights Shares, on the basis of two (2) Bonus Shares for every three (3) Rights Shares under the Rights Issue. The aggregate effect of the Rights Issue and the Bonus Issue would be for every two (2) existing Shares held on Record Date, five (5) new Shares would be issued to the Qualifying Shareholder should the Qualifying Shareholder elect to take up the Rights Shares.

On the basis of 333,784,800 Rights Shares to be issued under the Rights Issue, a maximum of 222,523,200 Bonus Shares will be issued.

Subscription Price

The Subscription Price is HK$0.50 per Rights Share, payable in full on application and the effective subscription price (the ‘‘Effective Subscription Price’’) after taking into consideration the Bonus Issue is HK$0.30 per Right Share. The Subscription Price represents:

(i) a premium of approximately 14.9% over the closing price of HK$0.435 per Share as quoted on Stock Exchange on the Last Trading Day;

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LETTER FROM THE BOARD

(ii) a premium of approximately 47.5% over the theoretical ex-entitlement price of approximately HK$0.339 per Share after the Rights Issue with Bonus Issue based on the closing price of HK$0.435 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a premium of approximately 12.1% over the average closing prices of HK$0.446 per Share for the last five consecutive trading days including and up to the Last Trading Day;
(iv) a discount of approximately 79.3% to the latest unaudited net asset value attributable to the Shareholders per Share of approximately HK$2.42 as at 30 November 2016; and
(v) a premium of approximately 58.7% over the closing price of HK$0.315 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

The Effective Subscription Price of HK$0.30 per Rights Share represents:

(i) a discount of approximately 31.0% to the closing price of HK$0.435 per Share as quoted on Stock Exchange on the Last Trading Day;
(ii) a discount of 11.5% to the theoretical ex-entitlement price of approximately HK$0.339 per Share after the Rights Issue with Bonus Issue based on the closing price of HK$0.435 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a discount of approximately 32.7% to the average of the closing prices of HK$0.446 per Share for the last five consecutive trading days including and up to the Last Trading Day;
(iv) a discount of approximately 87.6% to the latest unaudited net asset value attributable to the Shareholders per Share of approximately HK$2.42 as at 30 November 2016; and
(v) a discount of approximately 4.8% to the closing price of HK$0.315 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

The theoretical ex-entitlement price per Share after completion of the Rights Issue and Bonus Issue is approximately HK$0.339 and this is calculated based on the following formula:

(Number of Rights Shares x Subscription Price) +

(Number of existing Shares x Closing Price as at the Last Trading Day)

Total number of Shares after completion of the Rights Issue and Bonus Issue

The Subscription Price was arrived at after arm’s length negotiation between the Company and the Underwriter with reference to, among other things, the prevailing market price of the Shares, the financial position of the Company and having considered the future development and other investment opportunities of the Company. Taking into consideration of the

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LETTER FROM THE BOARD

theoretical ex-entitlement price per Share, in order to increase the attractiveness of the Rights Issue to the Qualifying Shareholders, the Directors consider that the proposed discount of the Subscription Price to the market price is appropriate and the Subscription Price is fair and reasonable and in the interest of the Company and the Shareholders as a whole as each Qualifying Shareholder is entitled to subscribe for the Rights Shares at the same price in proportion to his/her/its existing shareholding in the Company.

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders and will not be extended to the Prohibited Shareholders. The Company will send (i) the Prospectus Documents to the Qualifying Shareholders and (ii) the Overseas Letter together with this prospectus, for information only, to the Prohibited Shareholders. To qualify for the Rights Issue, the Shareholders must on the Record Date:

(i) be registered on the register of members of the Company; and
(ii) not be the Prohibited Shareholders.

Prohibited Shareholders

The Company will send this prospectus only (without PAL and EAF) to the Prohibited Shareholders for their information. Arrangements will be made for the Rights Shares which would otherwise have been provisionally allotted to the Prohibited Shareholders to be sold in the market in their nil-paid form as soon as practicable after dealings in the nil-paid Rights Shares commence and before dealings in nil-paid Rights Shares end, if a premium (net of expenses) can be obtained. The proceeds from such sale, less expenses, of more than HK$100 will be paid pro rata to the Prohibited Shareholders. The Company will retain individual amounts of HK$100 or less for its own benefit. Any unsold entitlement of Prohibited Shareholders, together with any Rights Shares provisionally allotted but not accepted, will be taken up by the Underwriter.

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. Any Rights Shares created from the aggregation of fractions of the Rights Shares will be available for excess application by the Qualifying Shareholders. Should there be no excess application by the Qualifying Shareholders, those Rights Shares created from the aggregation of fractions of the Rights Shares will be taken up by the Underwriter.

Rights of the Overseas Shareholders

The Prospectus Documents will not be registered and/or filed under the applicable securities legislation of any jurisdictions other than Hong Kong.

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LETTER FROM THE BOARD

Based on the register of members of the Company as at the Latest Practicable Date, there was no Overseas Shareholder. Accordingly, there is no Prohibited Shareholder and all Shareholders are Qualifying Shareholders.

Procedures for acceptance and payment and/or transfer

Qualifying Shareholders should find enclosed with this prospectus a PAL which entitles the Qualifying Shareholder(s) to whom it is addressed to subscribe for the number of Rights Shares shown therein. If the Qualifying Shareholders wish to accept all the Rights Shares provisionally allotted to them as specified in the PALs, they must lodge the PALs in accordance with the instructions printed thereon, together with a remittance for the full amount payable on acceptance, with the Registrar at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, by no later than 4:00 p.m. on Thursday, 12 January 2017. All remittances must be made in Hong Kong dollars by cheques which must be drawn on an account with, or by cashier’s orders which 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’’.

It should be noted that unless the duly completed PAL, together with the appropriate remittance, has been lodged with the Registrar by no later than 4:00 p.m. on Thursday, 12 January 2017, whether by the original allottee or any person in whose favour the provisional allotment has been validly transferred, that provisional allotment and all rights and entitlement thereunder will be deemed to have been declined and will be cancelled and such Rights Shares will be available for application under the EAFs by the Qualifying Shareholders. The Company may, at its sole discretion, treat a PAL as valid and binding on the person(s) by whom or on whose behalf it is lodged even if the PAL is not completed in accordance with the relevant instructions.

If the Qualifying Shareholders wish to accept only part of the provisional allotment or transfer part of their rights to subscribe for the Rights Shares provisionally allotted to them under the PAL or transfer part/all of their rights to more than one person, the original PAL must be surrendered for cancellation by no later than 4:30 p.m. on Wednesday, 4 January 2017 to the Registrar, who will cancel the original PAL and issue new PALs in the denominations required. The new PALs will be available for collection from the Registrar at Shops 1712– 1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, after 9:00 a.m. on the second Business Day after the surrender of the original PAL.

The PAL contains further information regarding the procedures to be followed for acceptance and/or transfer of the whole or part of the provisional allotment of the Rights Shares by the Qualifying Shareholders. All cheques or cashier’s orders will be presented for payment immediately following receipt and all interest earned on such monies (if any) will be retained for the benefit of the Company. Completion and return of the PAL with a cheque or a cashier’s order will constitute a warranty by such person that the cheque or the cashier’s order will be honoured on first presentation. Without prejudice to the other rights of the Company in respect thereof, the Company reserves the right to reject any PAL in respect of which the cheque or cashier’s order is dishonoured on first presentation, and in that event the provisional allotment and all rights thereunder will be deemed to have been declined and will be cancelled.

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LETTER FROM THE BOARD

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

If the Underwriter exercises the right to terminate or rescind the Underwriting Agreement or if any of the conditions of the Rights Issue as set out in the paragraph headed ‘‘Conditions of the Rights Issue and the Bonus Issue’’ below is not fulfilled or waived (as applicable) at or before 5:00 p.m. on Monday, 16 January 2017 (or such later time as the Company and the Underwriter may agree in writing), the remittance received in respect of acceptances of the Rights Shares will be returned to the Qualifying Shareholders or such other persons to whom the Rights Shares in the nil-paid form have been validly transferred or, in the case of joint acceptances, to the firstnamed person without interest, by means of cheques despatched by ordinary post at the risk of such Qualifying Shareholders or such other persons to their registered addresses by the Registrar on or before Monday, 23 January 2017.

Application for excess Rights Shares

Qualifying Shareholders shall be entitled to apply for (i) any Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders; and (ii) any Rights Shares arising out of the aggregation of fractional entitlements. Application may be made by completing the EAF for excess Rights Shares and lodging the same with a separate remittance for the excess Rights Shares being applied for. The Company will allocate the Rights Shares in excess of the entitlement at its discretion on a fair and equitable basis to the Qualifying Shareholders who have applied for excess Rights Shares. Shareholders who have been offered odd lots of the Rights Shares should note that there is no guarantee that such odd lots of the Rights Shares will be topped up to create whole board lots pursuant to applications for the excess Rights Shares. The Directors will allocate the excess Rights Shares at their sole discretion on a fair and equitable basis on the following principles:

(i) no preference will be given to applications for topping-up odd-lot holdings to wholelot holdings as the giving of such preference may potentially be abused by certain investors by splitting their Shares and thereby receiving more Rights Shares than they would receive if such preference is not given, which is an unintended and undesirable result; and
(ii) subject to availability of excess Rights Shares, the excess Rights Shares will be allocated to the Qualifying Shareholders who have applied for excess application on a pro rata basis based on the excess Rights Shares applied for by them. No reference will be made to Rights Shares subscribed through applications by PAL or the existing number of Shares held by the Qualifying Shareholders.

Shareholders with their Shares held by a nominee company should note that the Board will regard the nominee company as a single Shareholder according to the register of members of the Company. Accordingly, Shareholders should note that the aforesaid arrangement in relation to the allocation of the excess Rights Shares will not be extended to beneficial owners individually.

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LETTER FROM THE BOARD

If a Qualifying Shareholder wishes to apply for any Rights Shares in addition to his/her/ its provisional allotment, he/she/it must complete and sign the enclosed EAF in accordance with the instructions printed thereon and lodge the same with a separate remittance for the amount payable on application in respect of the excess Rights Shares being applied for with the Registrar at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong by no later than 4:00 p.m. on Thursday, 12 January 2017. All remittances must be made in Hong Kong dollars by cheques which must be drawn on a bank account with, or by cashier’s orders which must be issued by, a licensed bank in Hong Kong and made payable to ‘‘China New Economy Fund Limited — Excess Application Account’’ and crossed ‘‘Account Payee Only’’. The Registrar will notify the relevant Qualifying Shareholders of any allotment of excess Rights Shares made to them.

If no excess Rights Shares are allotted to a Qualifying Shareholder who has applied for excess Rights Shares, the remittance tendered on application is expected to be returned by refund cheque to that Qualifying Shareholder in full without interest by ordinary post at his/ her/its own risk by the Registrar on or before Monday, 23 January 2017. If the number of excess Rights Shares allotted to a Qualifying Shareholder is less than that applied for, the surplus remittance without interest is also expected to be returned by refund cheque to that Qualifying Shareholder by ordinary post at his own risk by the Registrar on or before Monday, 23 January 2017.

All cheques or cashier’s orders will be presented for payment immediately following receipt and all interest earned on such monies (if any) will be retained for the benefit of the Company. Completion and return of the EAF together with a cheque or a cashier’s order in payment for the excess Rights Shares applied for will constitute a warranty by the applicant that the cheque or the cashier’s order will be honoured on first presentation. Without prejudice to the other rights of the Company in respect thereof, the Company reserves the right to reject any EAF in respect of which the cheque or cashier’s order is dishonoured on first presentation.

The EAF is for use only by the person(s) to whom it is addressed and is not transferable. All documents, including cheques or cashier’s orders for amounts due, will be sent by ordinary post at the risk of the person(s) entitled thereto to their registered addresses by the Registrar. The Company may, at its discretion, treat an EAF as valid and binding on the person(s) by whom or on whose behalf it is lodged even if the EAF is not completed in accordance with the relevant instructions. No action has been taken to permit the offering of the Rights Shares or the distribution of the Prospectus Documents in any territory other than Hong Kong. Accordingly, no person receiving a copy of the EAF in any territory outside Hong Kong may treat it as an offer or invitation to apply for the excess Rights Shares, unless in a territory where such an offer or invitation could lawfully be made without compliance with any registration or other legal and regulatory requirements thereof. Completion and return of the EAF together with a cheque or cashier’s order in payment for the excess Rights Shares applied for will constitute a warranty and representation from such Qualifying Shareholder(s) to the Company that all registration, legal and regulatory requirements of all relevant jurisdictions in connection with the EAF and any application thereunder, have been, or will be, duly complied with. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited will give, or

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LETTER FROM THE BOARD

be subject to, any of the above warranty and representation. The Company reserves the right to refuse to accept any application for excess Rights Shares where it believes that doing so would violate the applicable securities or other laws or regulations of any jurisdiction.

If the Underwriter exercises the right to terminate or rescind the Underwriting Agreement or if any of the conditions of the Rights Issue as set out in the paragraph headed ‘‘Conditions of the Rights Issue and the Bonus Issue’’ below is not fulfilled or waived (as applicable) at or before 5:00 p.m. on Monday, 16 January 2017 (or such later time as the Company and the Underwriter may agree in writing), the remittance received in respect of application for excess Rights Shares will be returned to the Qualifying Shareholders or, in the case of joint applicants, to the first named person without interest, by means of cheques despatched by ordinary post at the risk of such Qualifying Shareholders to their registered addresses by the Registrar on or before Monday, 23 January 2017.

Status of the Rights Shares and the Bonus Shares

The Rights Shares and the Bonus Shares (when allotted, fully paid and issued) will rank pari passu in all respects with the Shares in issue on the date of allotment and issue of the Rights Shares and the Bonus Shares. Holders of the Rights Shares in their fully paid form and the Bonus Shares will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the Rights Shares and the Bonus Shares.

Certificates of the Rights Shares and the Bonus Shares and refund cheques

Subject to fulfillment of the conditions of the Rights Issue, share certificates for all fully paid Rights Shares and the Bonus Shares are expected to be posted on or before Monday, 23 January 2017 to those entitled thereto by ordinary post at their own risk.

Application for listing

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

Dealings in the Rights Shares (both in nil paid and fully paid forms) and the Bonus Shares on the Stock Exchange will be subject to the payment of stamp duty (if any), Stock Exchange trading fee, SFC transaction levy and any other applicable fees and charges in Hong Kong.

No part of the securities of the Company is listed or dealt in on any other stock exchange other than the Stock Exchange and no such listing or permission to deal is proposed to be sought.

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LETTER FROM THE BOARD

Subject to the granting of listing of, and permission to deal in, the Rights Shares (both in nil paid and fully paid forms) and the Bonus Shares on the Stock Exchange, the Rights Shares (both in nil paid and fully paid forms) and the Bonus Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Rights Shares and the Bonus Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

All necessary arrangements will be made to enable the Rights Shares (both in nil paid and fully paid forms) and the Bonus Shares to be admitted into CCASS.

UNDERWRITING ARRANGEMENT

Underwriting Agreement

Date:	4 November 2016
Underwriter:	China Jianxin Financial Services Limited
Number of Rights Shares	Pursuant to the Underwriting Agreement, the Underwriter has
underwritten:	conditionally agreed to underwrite the Rights Shares which have
	not been taken up (the ‘‘Untaken Shares’’). Accordingly, the
	Rights Issue is fully underwritten.

The Company will pay the Underwriter an underwriting commission of 3.5% of the aggregate Subscription Price in respect of the 333,784,800 underwritten Rights Shares for which the Underwriter has agreed to subscribe or procure subscription and all reasonable legal fees and other reasonable out-of-pocket expenses of the Underwriter in respect of the Rights Issue. The Directors are of the view that the commission is fair and reasonable.

To the best of the Directors’ knowledge, information and belief, the Underwriter and its ultimate beneficial owners are Independent Third Parties.

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 29.9% of the voting rights of the Company upon the completion of the Rights Issue and the Bonus Issue. The Underwriter shall also use all reasonable endeavours to ensure that each of the subscribers or purchasers of the Untaken Shares procured by it (i) shall 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 shareholder(s) of the Company or their respective associates (as defined in the Listing Rules); and (ii), save for the Underwriter itself and its associates, shall not, together with any party acting in concert (within the meaning of the Takeovers Code) with it, hold 10.0% or more of the voting rights of the Company upon completion of the Rights Issue and Bonus Issue.

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LETTER FROM THE BOARD

The Company will take all appropriate steps to ensure that sufficient public float be maintained upon the completion of the Rights Issue and the Bonus Issue in compliance with Rule 8.08(1)(a) of the Listing Rules. To the best information, belief and knowledge of the Directors, as at the Latest Practicable Date, the Underwriter is not beneficially interested in any Shares in its own capacity but one client of the Underwriter has approximately 6.3 million Shares in the clients account with the Underwriter. As at the Latest Practicable Date, no subunderwriter has been engaged.

Termination of the Underwriting Agreement

(1) 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 and 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 of the Underwriting Agreement) of a political, military, financial, economic 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 which may, in the absolute opinion of the Underwriter materially and 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
(c) the imposition of any moratorium, suspension or material restriction on trading of the Shares on the Stock Exchange due to exceptional financial circumstances or otherwise; or
(2) any material 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) occurs which in the

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LETTER FROM THE BOARD

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

(3) 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
(4) 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
(5) any 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
(6) the Prospectus Documents when published contain information (either as to business prospects or the condition of the Company or as to its compliance with any laws or the Listing Rules or any applicable regulations) which has not prior to the date of the Underwriting Agreement been publicly announced or published by the Company and which may in the absolute opinion of the Underwriter is material to the Company and is likely to affect materially and adversely the success of the Rights Issue or might cause a prudent investor not to apply for its assured entitlements of Rights Shares under the Rights Issue (with Bonus Issue); or
(7) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than ten consecutive business days, excluding any suspension in connection with the clearance of the Announcement or the Prospectus Documents or other announcements or circulars in connection with the Rights Issue.

The Underwriter shall be entitled by notice in writing to the Company, served prior to the Latest Time for Termination, to terminate the Underwriting Agreement.

The Underwriter shall be entitled by notice in writing to rescind the Underwriting Agreement if prior to the Latest Time for Termination:

(1) any material breach of any of the representations, warranties or undertakings contained in the Underwriting Agreement comes to the knowledge of the Underwriter; or
(2) any Specified Event comes to the knowledge of the Underwriter.

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LETTER FROM THE BOARD

Conditions of the Rights Issue and the Bonus Issue

The Rights Issue and the Bonus Issue are conditional upon:

(1) the delivery to the Stock Exchange for authorisation and the 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) and otherwise in compliance with the Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance not later than the Prospectus Posting Date;
(2) the posting of the Prospectus Documents to the Qualifying Shareholders and the posting of the Prospectus and the Overseas Letter in the agreed form to the Prohibited Shareholders, if any, for information purpose only explaining the circumstances in which they are not permitted to participate in the Rights Issue on or before the Prospectus Posting Date;
(3) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked listing of and permission to deal in the Rights Shares and the Bonus Shares by no later than the first day of their dealings;
(4) the obligations of the Underwriter becoming unconditional and that the Underwriting Agreement is not terminated in accordance with its terms;
(5) the amendments to the Articles of Association becoming effective;
(6) the Authorised Share Capital Increase becoming effective;
(7) the passing of the necessary resolution(s) at the EGM to approve the Rights Issue and Bonus Issue (including but not limited to the allotment and issue of the Rights Shares and the Bonus Shares) by the Independent Shareholders and the Authorised Share Capital Increase and the amendments to the Articles of Association by the Shareholders and the transactions contemplated thereunder; and
(8) compliance with and performance of all undertakings and obligations of the Company under the Underwriting Agreement.

Neither of the Company nor the Underwriter may waive conditions (1) to (7) stated above. The Underwriter may waive the condition stated in (8) above by written notice to the Company. If the conditions precedent are not satisfied (or waived, as the case may be) in full by the Company by the Latest Time for Termination or such other date as the Company and

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LETTER FROM THE BOARD

the Underwriter may agree, the Underwriting Agreement shall terminate and no party shall have any claim against any other party for costs, damages, compensation or otherwise save for any antecedent breaches.

As at the Latest Practicable Date, conditions (5), (6) and (7) above have been fulfilled.

BUSINESS REVIEW, FINANCIAL AND TRADING PROSPECT OF THE COMPANY

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 the PRC, Hong Kong, Macau and Taiwan.

During the six months ended 30 June 2016 (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 first half of 2016 increased by 34,063.7 billion RMB over the corresponding period, which represents an increase of 6.7% compared with the first half of 2015. The GDP of the second quarter of 2016 went up by 1.8% on a quarter-to-quarter basis.

During the Period, the benchmark of Shanghai Composite Index dropped 17.22%, while Hang Seng Index declined 5.11%. 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 economic growth is expected to enter an L-shaped trajectory for the next few years, and China will maintain its accommodative monetary policy. During the Period, the People’s Bank of China has lowered once, the reserve requirement ratio (‘‘RRR’’) from 17.5% to 17% for all banks. The reduction of RRR is to add more liquidity to its market to help spur bank lending and combat slowing growth.

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

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

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LETTER FROM THE BOARD

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.

REASONS FOR THE RIGHTS ISSUE AND THE BONUS ISSUE AND USE OF PROCEEDS

The estimated net proceeds from the Rights Issue will be approximately HK$159 million. The net proceeds of the Rights Issue would be applied as to HK$150 million for the repayment of margin payable and as to the remaining balance for general working capital of the Company.

The margin payable is due to a securities broker of the Company as a result of trading in various listed securities through the securities broker’s margin account. As at the Latest Practicable Date, the margin payable to this securities broker is approximately HK$156 million and that the repayment of this margin payable could significantly reduce the interest expenses of the Company. The repayment of the margin payable would take place as soon as the Rights Issue is completed and currently there is no set timeframe with regards to the utilisation of the general working capital of the Company. Other than the HK$150 million margin repayment, the Company is obliged to redeem the note (the ‘‘Note’’) issued to Pitta Income Fund up to an amount of HK$8 million by October 2017. Further information on the Note is set out in the announcement of the Company dated 21 September 2016.

The Company has no plan to apply the funding of the Rights Issue for the repayment of the Note as the Note is only due for redemption in October 2017. As at the Latest Practicable Date, the Company does not have any plan to conduct further rights issue or other fund raising activities. However, should the Company identify any investment opportunity that is in line with the investment strategy of the Company and the expected return being higher than the finance cost, the Company may consider other funding methods to finance such investment.

The estimated expenses in relation to the Rights Issue, including financial, legal and other professional advisory fees, underwriting commission, printing and translation expenses are approximately HK$7.6 million and will be borne by the Company. Having considered other fund raising alternatives for the Company, such as issue of unlisted notes and placing of new Shares, and taking into account the benefits and cost of each of the alternatives, the Rights Issue allows the Company to strengthen its balance sheet by raising long term equity fund without the need for payment of interest and repayment. 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 and enables the Qualifying Shareholders to maintain their proportionate interests in the Company and continue to participate in the future development of the Company should they wish to do so. In addition, the Bonus Issue will be issued as an incentive for the Shareholders to take part into the Rights Issue. However, those Qualifying Shareholders who do not take up the Rights Shares to which they are entitled should note that their shareholdings in the Company will be diluted.

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LETTER FROM THE BOARD

The Company has considered fund raising by issuing debt security or debt financing but the Board considers that any further debt financing or borrowings would worsen the gearing ratio and incur further interest expenses of the Company and it is the intention of the Board to reduce the gearing ratio and interest expenses of the Company to a more favourable level to improve the rate of return of the Company’s investment portfolio. Therefore, the Board has ruled out debt financing as a source for raising funds in this occasion.

The Board also considered placing of new Shares. However as placing of new Shares would be on a best efforts basis of which the success is not guaranteed and the size of any placing would not be sufficient to meet the funding requirement on this occasion, placing of new Shares was not considered by the Board when it was considering the Rights Issue and hence did not proceed further. The Board considers that rights issue would be more favourable and attractive to the Shareholders than open offer because it would allow Shareholders to have more flexibility in dealing with the Shares and the nil paid rights attaching thereto.

The Board considers that disposal of investments in the Company to the extent required to fund the current funding needs of the Company would involve the disposal of a significant amount of the Company’s current investment portfolio and it would have a significant detrimental impact on the future earnings and returns of the Company. The Board considered that disposal of investments would not be in the best interests of the Company and Shareholders for the purpose of raising funds to meet the Company’s current funding needs.

The Rights Issue, when compared with other forms of equity fund raising, would offers the existing Shareholders the opportunity to participate in the future growth of the Company as it allows existing Shareholders to subscribe for Rights Shares in proportion to their existing shareholdings in the Company without having their relative shareholdings being diluted and the Board considers that the terms of the Rights Issue with Bonus Issue are fair and reasonable and in the best interest of the Shareholders as it allows existing Shareholders to participate in the future growth of the Company without having their relative shareholding diluted and it will improve the capital base and gearing ratio of the Company.

The Board, having considered the amount of funding required by the Company, the attractiveness of the Rights Issue with Bonus Issue and the par value of the Shares, considers that the current structure and the terms of the Rights Issue to be fair and reasonable and it is in the best interest of the Shareholders as the Rights Issue would strengthen the capital base of the Company and improve its gearing ratio.

The Company approached five financial institutions including the Underwriter concerning the Rights Issue with Bonus Issue based on the current proposed structure. Out of the five firms, two have indicated that they are not interested in participating in underwriting the Rights Issue and the other two firms quoted underwriting commission that is higher than the one offered by the Underwriter. Furthermore, the Underwriter was the underwriter to the rights issue of the Company which was completed in January this year and hence the Underwriter has a proven track record of successfully underwriting Shares for the Company in the past.

The Directors consider that the Rights Issue and the Bonus Issue are fair and reasonable and in the interests of the Company and the Shareholders as a whole having taken into account the terms of the Rights Issue and the Bonus Issue.

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LETTER FROM THE BOARD

Arrangement on odd lot trading

In order to facilitate the trading of odd lots (if any), the Company will arrange odd lot matching services during Tuesday, 24 January 2017 to Tuesday, 14 February 2017 (both dates inclusive). The Company has appointed the Underwriter to provide matching service, on a best effort basis to those Shareholders who wish to acquire odd lots of the Shares to make up full board lot, or to dispose of their holding of odd lot of the Shares. Shareholders should note that matching of the sale and purchase of odd lots of the Shares is on a best effort basis and successful matching of the sale and purchase of such odd lots is not guaranteed. Shareholders who wish to take advantage of this arrangement should contact Mr. Kenneth Wong of the Underwriter of Room 907, 9/F, Wing On Centre, 111 Connaught Road Central, Sheung Wan, Hong Kong (Telephone: 21683792 and Facsimile: 23253575) during the above mentioned period.

EFFECTS ON SHAREHOLDING STRUCTURE

The existing and enlarged shareholding structures of the Company as at the Latest Practicable Date and immediately upon completion of the Rights Issue and the Bonus Issue are set out below:

Shareholders The Underwriter and its sub- underwriter(s) and subscriber(s) procured by the Underwriter (if any) (Note 1) Public Shareholders Total Note:	As at the Latest Practicable Date Number of Shares Approximate % — — 222,523,200 100.00 222,523,200 100.00	Upon completion of the Rights Issue and the Bonus Issue Assuming no Qualifying Shareholders take up their respective entitlements under the Rights Issue Assuming full subscription by the Qualifying Shareholders as to their respective entitlements under the Rights Issue Number of Shares Approximate % Number of Shares Approximate % 556,308,000 71.43 — — 222,523,200 28.57 778,831,200 100.00 778,831,200 100.00 778,831,200 100.00	Upon completion of the Rights Issue and the Bonus Issue Assuming no Qualifying Shareholders take up their respective entitlements under the Rights Issue Assuming full subscription by the Qualifying Shareholders as to their respective entitlements under the Rights Issue Number of Shares Approximate % Number of Shares Approximate % 556,308,000 71.43 — — 222,523,200 28.57 778,831,200 100.00 778,831,200 100.00 778,831,200 100.00
			100.00

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 29.9% of the voting rights of the Company upon the completion of the Rights Issue and the Bonus Issue. The Underwriter shall also use all reasonable endeavours to ensure that each of the subscribers or purchasers of the Untaken Shares procured by it (i) shall 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 shareholder(s) of the Company or their respective associates (as defined in the Listing Rules); and (ii), save for the Underwriter itself and its associates, shall not,

– 24 –

LETTER FROM THE BOARD

together with any party acting in concert (within the meaning of the Takeovers Code) with it, hold 10.0% or more of the voting rights of the Company upon completion of the Rights Issue and Bonus Issue.

EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

On 23 November 2015, the Company announced a rights issue of 309,060,000 rights shares on the basis of one rights share for every two shares held and this rights issue became unconditional on 8 January 2016. The approximate amount of fund raised net of expenses was HK$70 million. As at the Latest Practicable Date, all the proceeds of this rights issue have been used for investment in the publicly listed enterprises in information technology, creative culture and healthcare sectors as intended.

On 13 June 2016, the Company announced a share placement of up to 185,436,000 Shares at the price of HK$0.14 per Share under the general mandate of the Company. The approximate amount of fund raised net of expenses was HK$25.1 million. As at the Latest Practicable Date, all the proceeds from this placing of shares have been used for investment in the publicly listed enterprises in consumer food, financial services and healthcare as well as creative culture sectors as intended.

Save as disclosed above, the Company has not conducted any equity fund raising activities in the past twelve months from the Latest Practicable Date.

WARNING OF THE RISK OF DEALINGS IN THE SHARES

Shareholders and potential investors should note that the Rights Issue and the Bonus Issue are conditional upon the Underwriting Agreement having become unconditional and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof. Accordingly, the Rights Issue and the Bonus Issue may or may not proceed.

Shareholders and potential investors should exercise extreme caution when dealing in the Shares, and if they are in any doubt about their position, they should consult their professional advisers.

Shareholders should note that the Rights Shares will be dealt the nil-paid form will take place from Thursday, 29 December 2016 to Monday, 9 January 2017 (both days inclusive) while the conditions to which the Underwriting Agreement is subject remain unfulfilled. Any Shareholder or other person dealing in Shares up to the date on which all conditions to which the Rights Issue and the Bonus Issue are subject are fulfilled (which is expected to be on Monday, 16 January 2017), will accordingly bear the risk that the Rights Issue and the Bonus Issue cannot become unconditional and may not proceed. Any Shareholder or other person contemplating selling or purchasing Shares, who is in any doubt about his/her/its position, is recommended to consult his/her/its own professional adviser.

– 25 –

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

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

By Order of the Board China New Economy Fund Limited GU Xu

Chairman, Chief Executive Officer and Executive Director

– 26 –

FINANCIAL INFORMATION OF THE COMPANY

APPENDIX I

A. FINANCIAL INFORMATION OF THE COMPANY

The audited financial information of the Company for each of the three years ended 31 December 2013, 2014, and 2015 can be referred to the annual reports of the Company for the years ended 31 December 2013 (pages 50 to 95), 2014 (pages 46 to 103) and 2015 (pages 49 to 111), which were published on 22 April 2014, 24 April 2015 and 21 April 2016 respectively. The above-mentioned financial information are available on the Company’s website at http://www.chinaneweconomyfund.com/document/EW0080AR.PDF (for the year ended 31 December 2013), http://www.chinaneweconomyfund.com/document/EW00080AR.pdf (for the year ended 31 December 2014) and http://www.chinaneweconomyfund.com/ document/484_EW00080-AR.PDF (for the year ended 31 December 2015) 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 2013, 2014 and 2015.

B. STATEMENT OF INDEBTEDNESS

As at the close of business on 31 October 2016, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this prospectus, the Company had outstanding borrowings comprise the following:

Securities margin borrowings

The total carrying amounts of the Company’s outstanding secured securities margin borrowings as at 31 October 2016 were approximately HK$159,611,000. Securities margin borrowings as at 31 October 2016 were unguaranteed and secured by the Company’s listed equity securities investments.

Notes payable

The Company had an outstanding principal of notes payable of approximately HK$79,300,000, which were unsecured and interest bearing at coupon rates of 7.5% to 8%.

At the close of business on 31 October 2016, except as disclosed in this section, the Company did not have any debt securities issued and outstanding, or authorised or otherwise created but unissued, term loans, other borrowings or indebtedness in the nature of borrowing including bank overdrafts, loans, liabilities under acceptances (other than normal trade bills), acceptance credits, hire purchase commitments, finance lease obligations, mortgages or charges, guarantees or other material contingent liabilities.

C. 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 in the absence of unforeseen circumstances.

– I-1 –

FINANCIAL INFORMATION OF THE COMPANY

APPENDIX I

D. 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 2015, being the date to which the latest audited financial statements of the Company were made up.

– I-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE COMPANY

APPENDIX II

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

The following is the unaudited pro forma statement of adjusted net tangible assets of the Company (the ‘‘Unaudited Pro Forma Financial Information’’) which has been prepared by the Directors in accordance with paragraph 4.29 of the Listing Rules to illustrate the effects of the Rights Issue with the Bonus Issue on the unaudited net tangible assets of the Company as if the Rights Issue with the Bonus Issue had taken place on 30 June 2016.

The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only, based on the judgments and assumptions of the Directors, and because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of: (i) the financial position of the Company as at 30 June 2016 or any future date; or (ii) the net tangible assets per Share of the Company as at 30 June 2016 or any future date.

The Unaudited Pro Forma Financial Information is prepared based on the unaudited net tangible assets of the Company as at 30 June 2016, as extracted from the published interim report of the Company for the six months ended 30 June 2016, and is adjusted for the effect of the Rights Issue with the Bonus Issue described below.

Based on the issue of 333,784,800 Rights Shares with 222,523,200 Bonus Shares	Unaudited net tangible assets of the Company as at 30 June 2016 HK$’000 (Note 1) 475,389	Add: Estimated net proceeds from the Rights Issue HK$’000 (Note 2) 159,301	Unaudited pro forma adjusted net tangible assets of the Company as at 30 June 2016 immediately upon completion of the Rights Issue with the Bonus Issue HK$’000 634,690	Unaudited net tangible assets of the Company per Share before completion of the Rights Issue with the Bonus Issue HK$ (Note 3) HK$2.14	Unaudited pro forma adjusted net tangible assets of the Company per Share upon completion of the Rights Issue with the Bonus Issue HK$ (Note 4) HK$0.81

Notes:

The unaudited net tangible assets of the Company as at 30 June 2016 of approximately HK$475,389,000 is extracted from the published interim report of the Company for the six months ended 30 June 2016.

The estimated net proceeds from the Rights Issue of approximately HK$159,301,000 are based on the proceeds of approximately HK$166,892,000 from the issue of 333,784,800 Rights Shares at the Subscription Price of HK$0.50 per Rights Share after deduction of the estimated related expenses of approximately HK$7,591,000.

– II-1 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE COMPANY

APPENDIX II

The calculation is determined based on the unaudited net tangible assets of the Company as at 30 June 2016 of approximately HK$475,389,000 divided by the number of Shares in issue of 222,523,200 as at the Latest Practicable Date and immediately before completion of the Rights Issue with the Bonus Issue.
The unaudited net tangible assets of the Company per Share upon completion of the Rights Issue with the Bonus Issue is arrived at on the basis that (i) 222,523,200 Shares in issue as at the Latest Practicable Date and (ii) 333,784,800 Rights Shares and 222,523,200 Bonus Shares to be issued upon completion of the Rights Issue with Bonus Issue, were in issue assuming that the Rights Issue with the Bonus Issue had been completed on 30 June 2016.
For the purpose of preparation of the Unaudited Pro Forma Financial Information, the number of Shares presented above have been calculated and based after taking into account the share consolidation of every five ordinary shares of a par value of HK$0.10 each into one consolidated share of a par value of HK$0.50 which has become effective on 23 September 2016. No other adjustment has been made to the Unaudited Pro Forma Financial Information to reflect any trading results or other transactions of the Company entered into subsequent to 30 June 2016.

– II-2 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE COMPANY

APPENDIX II

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

The following is the text of a report received from the Company’s reporting accountants, HLB Hodgson Impey Cheng Limited, Certified Public Accountants, Hong Kong, prepared for the sole purpose of inclusion in this prospectus, in respect of the Unaudited Pro Forma Financial Information of the Company.

==> picture [239 x 48] intentionally omitted <==

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF THE UNAUDITED 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’’) by the directors of the Company (‘‘Directors’’) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma net tangible assets of the Company as at 30 June 2016, and related notes (‘‘Unaudited Pro Forma Financial Information’’) as set out in Section A of Appendix II to the Company’s prospectus dated 23 December 2016 (the ‘‘Prospectus’’). The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are described in Section A of Appendix II to the Prospectus.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of proposed Rights Issue with the Bonus Issue (as defined in the Prospectus) on the net tangible assets of the Company as if the Rights Issue with the Bonus Issue had taken place at 30 June 2016. As part of this process, information about the Company’s financial position has been extracted by the Directors from the Company’s condensed interim financial statements for the six months ended 30 June 2016, on which no audit or review report has been published.

Directors’ responsibility for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the Unaudited 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 (‘‘AG 7’’) ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’).

– II-3 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE COMPANY

APPENDIX II

Our independence and quality control

We have complied with the independence and other ethical requirements 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. Our firm applies Hong Kong Standard on Quality Control 1 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 Unaudited 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 Unaudited 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 (HKSAE) 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 accountant plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 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 Unaudited 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 Unaudited Pro Forma Financial Information.

The purpose of Unaudited Pro Forma Financial Information included in a prospectus is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Company as if the event had occurred or 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 event or transaction at 30 June 2016 would have been as presented.

– II-4 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE COMPANY

APPENDIX II

A reasonable assurance engagement to report on whether the Unaudited 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 Unaudited Pro Forma Financial Information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

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

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

The engagement also involves evaluating the overall presentation of the Unaudited 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 Unaudited 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 purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29 (1) of the Listing Rules.

HLB Hodgson Impey Cheng Limited Certified Public Accountants

Hong Kong, 23 December 2016

– II-5 –

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

The authorised and issued share capital of the Company (i) as at the Latest Practicable Date and (ii) immediately upon completion of the Rights Issue with the Bonus Issue are set out as follows:

(i) As at the Latest Practicable Date

Authorised: HK$ 2,000,000,000 Shares 1,000,000,000.00 Issued and fully paid: 222,523,200 Shares 111,261,600.00

(ii) Immediately upon completion of the Rights Issue with the Bonus Issue Authorised: HK$ 2,000,000,000 Shares 1,000,000,000.00

Issued and fully paid:

222,523,200 Shares 111,261,600.00 333,784,800 Rights Shares 166,892,400.00 222,523,200 Bonus Shares 111,261,600.00 778,831,200 Shares in total 389,415,600.00

– III-1 –

GENERAL INFORMATION

APPENDIX III

All the existing Shares in issue are fully-paid and rank pari passu in all respects including all rights as to dividends, voting and return of capital. The Rights Shares and the Bonus Shares (when allotted, fully paid or credited as fully paid) will rank pari passu in all respects with the Shares in issue on the date of allotment and issue of the Rights Shares and the Bonus Shares. Holders of the Rights Shares in their fully paid form and the Bonus Shares will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the Rights Shares and the Bonus Shares.

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 Rights Shares or Bonus Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

As at the Latest Practicable Date, the Company did not have any outstanding warrants, options or securities convertible into Shares.

As at the Latest Practicable Date, there was no arrangement under which future dividends are waived or agreed to be waived.

3. DISCLOSURE OF INTERESTS

Director’s and chief executive’s interests in the Company

As at the Latest Practicable Date, none of the Directors and chief executives of the Company and their associates had any interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO which were required (a) 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 are taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the ‘‘Model Code’’) contained in the Listing Rules to be notified to the Company and the Stock Exchange.

– III-2 –

GENERAL INFORMATION

APPENDIX III

Interests and short positions of substantial Shareholders

As at the Latest Practicable Date, so far as was known to the Directors, the following persons (other than the Directors and the chief executive of the Company) had, or were deemed to have, interests or short positions in the shares, debentures or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO and section 336 of the SFO, or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Company or had any options in respect of such Shares:

			% of issued
		Number of	share capital of
Name of substantial Shareholder	Nature of interest	Shares interested	the Company
China Jianxin Financial Services	Other	556,308,000 (L)	71.43 (L)
Limited (Note)		323,437,474 (S)	41.53 (S)
Universe International Financial	Interest of controlled	556,308,000 (L)	71.43 (L)
Holdings Limited	corporation	323,437,474 (S)	41.53 (S)
Astrum Capital Management Limited	Other	232,870,525 (L)	29.90 (L)
Astrum Financial Holdings Limited	Interest of controlled	232,870,525 (L)	29.90 (L)
	corporation
Autumn Ocean Limited	Interest of controlled	232,870,525 (L)	29.90 (L)
	corporation
Liu Ming Lai Lorna	Interest of spouse	232,870,525 (L)	29.90 (L)
Major Harvest Investments Limited	Interest of controlled	232,870,525 (L)	29.90 (L)
	corporation
Pan Chik	Interest of controlled	232,870,525 (L)	29.90 (L)
	corporation
Jun Yang Financial Holdings Limited	Interest of controlled	45,283,616 (L)	5.81 (L)
	corporation
Jun Yang Securities Company	Other	45,283,616 (L)	5.81 (L)
Limited
Fordjoy Holdings Company Limited	Other	45,283,333 (L)	5.81 (L)
Fordjoy Securities and Futures	Other	45,283,333 (L)	5.81 (L)
Limited
Trendluck Limited	Other	45,283,333 (L)	5.81 (L)
Yuen Shu Ming	Interest of controlled	45,283,333 (L)	5.81 (L)
	corporation

(L) denotes long position

(S) denotes short position

Note: Pursuant to the Underwriting Agreement, China Jianxin Financial Services Limited as the Underwriter is deemed to be interested in the maximum number of Shares underwritten by it under the Underwriting Agreement.

– III-3 –

GENERAL INFORMATION

APPENDIX III

4. DIRECTORS’ INTERESTS IN CONTRACT AND ASSETS

As at the Latest Practicable Date, none of the Directors, directly or indirectly, had any interest in any assets which had since 31 December 2015 (being the date to which the latest published audited financial statements of the Company were made up) been acquired or disposed of by or leased to the Company, or were proposed to be acquired or disposed of by or leased to the Company.

As at the Latest Practicable Date, none of the Directors was materially interested in any subsisting contract or arrangement which is significant in relation to the business of the Company.

5. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had a service contract with the Company which was not determinable by the Company within one year without payment of compensation, other than statutory compensation.

6. MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business) have been entered into by the Company within the two years immediately preceding the Latest Practicable Date which are or may be material:

a placing agreement dated 16 July 2015 and entered into between the Company and Astrum Capital Management Limited in relation to the placing of up to 103,020,000 shares of HK$0.1 each in the Company on a best efforts basis;
an underwriting agreement dated 23 November 2015 and entered into between the Company and the Underwriter (then known as Win Fung Securities Limited) in relation to the underwriting and other arrangements in respect of a rights issue of 309,060,000 rights shares of HK$0.1 each in the Company on the basis of one rights share for every two shares held;
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;
the administration agreement entered into between the Company and Amicorp Hong Kong Limited for the provision of certain administrative services;
a placing agreement dated 13 June 2016 and entered into between the Company and Nuada Limited in relation to the placing of up to 185,436,000 shares of HK0.1 each in the Company on a best efforts basis; and
the Underwriting Agreement.

– III-4 –

GENERAL INFORMATION

APPENDIX III

7. LITIGATION

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

8. COMPETING INTERESTS

As at the Latest Practicable Date, so far as the Directors are aware of, none of the Directors, proposed directors or any of their respective associates had any interest in business which competes with or may compete with the business of the Company or had any other conflict of interests which any person has or may have with the Company.

9. EXPERT AND CONSENT

The following is the qualification of the expert who has been named in this prospectus or has given opinions, letter or advice contained in this prospectus:

Name Qualification

HLB Hodgson Impey Cheng Limited Certified Public Accountants

As at the Latest Practicable Date, the above expert 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.

As at the Latest Practicable Date, the above expert did not have any interest, direct or indirect, in the promotion of, or in any assets which since 31 December 2015, the date to which the latest published audited financial statements of the Company were made up, have been acquired or disposed of by or leased to, the Company, or are proposed to be acquired or disposed of by or leased to the Company.

The above expert 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.

– III-5 –

GENERAL INFORMATION

APPENDIX III

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. Faris Ibrahim Taha AYOUB Mr. PUN Tit Shan Head office and principal place Room 707, 7/F, New World Tower 1 of business 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 Underwriter China Jianxin Financial Services Limited Legal advisers to the Company Michael Li & Co. as to Hong Kong Law 19/F, Prosperity Tower No. 39 Queen’s Road Central Hong Kong Legal advisers to the Company Conyers Dill & Pearman as to Cayman Islands Law 2901 One Exchange Square 8 Connaught Place Central Hong Kong Independent Financial Adviser Royal Excalibur Corporate Finance Company Limited Unit 1204, 12/F Office Plus@Sheung Wan 91–103 Wing Lok Street Sheung Wan, Hong Kong Auditors HLB Hodgson Impey Cheng Limited 31/F Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong Principal banker DBS Bank (Hong Kong) Limited 73/F, The Center 99 Queen’s Road Central Hong Kong

– III-6 –

GENERAL INFORMATION

APPENDIX III

Hong Kong share registrar and	Computershare Hong Kong Investor
transfer office	Services Limited
	Shops 1712–1716, 17th Floor, Hopewell Centre
	183 Queen’s Road East
	Wanchai
	Hong Kong
Investment manager	China Everbright Securities (HK) Limited
	24/F., Lee Garden One
	33 Hysan Avenue
	Causeway Bay
	Hong Kong
Custodian	Deutsche Bank AG, Hong Kong Branch
	52/F, International Commerce Centre
	1 Austin Road West
	Kowloon, Hong Kong
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)

– III-7 –

GENERAL INFORMATION

APPENDIX III

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. Faris Ibrahim Taha AYOUB G/F Pokfulam Heights 86C Pok Fu Lam Road Hong Kong Mr. PUN Tit Shan Flat B, Ground Floor Block 3, Kent Court 137 Boundary Street Kowloon Tong, Kowloon Hong Kong

– III-8 –

GENERAL INFORMATION

APPENDIX III

(b) Profiles of Directors

Executive Directors

Mr. GU Xu (‘‘Mr. Gu’’), aged 52, 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 20 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 is currently the supervisor of 中海集裝箱股份有限公司 (China Shipping Container Lines Company Limited. He is also the president of 河南中原聯創投資基金管理有限公司 (Henan Zhong Yuan Lian Chuang Investment Fund Management Company Limited) and independent supervisor of 蘇州金融租賃股份有限公司 (Suzhou Financial Leasing Company Limited).

Mr. CHAN Cheong Yee (‘‘Mr. Chan’’), aged 52, 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 nonexecutive 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 redesignated as an executive director of Bingo Group Holdings Limited in April 2009. Mr. Chan was appointed as an executive director of China Investment and Finance

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Group Limited (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 34, 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 9 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 non-executive director of China Wah Yan Healthcare Limited (648.HK), a company listed on the main board of the Stock Exchange.

Mr. Faris Ibrahim Taha AYOUB (‘‘Mr. Ayoub’’), aged 37, 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 14 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 specialising in lower middle-market companies across Asia.

Mr. PUN Tit Shan (‘‘Mr. Pun’’), aged 55, has been appointed as an independent non executive Director since 8 April 2016. He is a member of the Audit Committee, Nomination Committee and the Remuneration Committee of the Company. Mr. Pun is currently the chief executive officer of Asia Wealth Securities Limited and the independent non-executive directors of Convoy Global Holdings Limited (1019.HK) since 9 May 2016 and CPMC Holdings Limited (906.HK) since 1 September 2016 respectively, who holds a master of business administration degree (with honour) from the University of Manchester. Mr. Pun is currently a licensed person to carry out Type 1 (dealing in securities), Type 2 (dealing in futures contracts) and Type 9 (asset management) regulated activities under the SFO. He has over 31 years of experience in the finance field, such as strategic dealing and arbitraging in the derivatives market, sales and marketing management in the primary and secondary equity market and sales and assets managing of high net-worth clients and investment advisory. From 1984 to 1989, Mr. Pun was a chief trader and dealing room manager of legacy Po Sang Bank Ltd., Hong Kong and was a vice president and senior dealer of Credit Suisse, Hong Kong from 1989 to 1993, both focusing on foreign exchange and precious metals trading. From 1993 to 1994, he was a manager

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APPENDIX III

of Po Sang Financial Investment Services Co., Ltd. From 1994 to 1996, he was appointed as directors of Po Sang Futures Ltd. and Chung Mao Commodities & Futures Ltd. From 1996 to 2003, he acted as vice president of Bank of China International Securities Ltd. looking after the stock options and the financial derivatives and the brokerage sales department. From 2003 to 2008, he was the responsible officer and director of Southwest Securities (HK) Brokerage Ltd. (formerly known as Tanrich Securities Co. Ltd.), Southwest Securities (HK) Asset Management Ltd. (formerly known as Tanrich Asset Management Ltd.), and Southwest Securities (HK) Futures Ltd. (formerly known as Tanrich Futures Ltd.). From 2008 to 2015, he was the responsible officer of Haitong International Securities Co. Ltd, Haitong International Futures Ltd., and in the years of 2008 to 2014, he was also the responsible officer of Haitong International Assets Management Ltd. In January 2015 to September 2015, he was also the responsible officer of Haitong International Consultants Ltd of which the principal activities were engaged in asset management. From November 2015 to July 2016, He was the chief investment officer of Astrum Capital Management Limited. Currently, he is the vice chairman of Institute of Financial Analyst and Professional Commentator; a member of Lions Club of Hong Kong Shouson Hill and the honorary consultant of Hong Kong Ningxia Youth Association (香港寧夏青年會) since 2015. Mr. Pun was previously a board director of Hong Kong Futures Exchange Ltd. (1995–1999); a board director of Hong Kong Stock Exchange Options Clearing House Ltd. (1997–2000); a membership committee member of Hong Kong Securities Institute (1998–2002); a panel member of Derivatives Market Consultative Panel (2000–2003); and a committee member of Hong Kong Securities Institute Professional Education Committee (2002–2004).

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$7.6 million and will be payable by the Company.

12. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

A copy of each of the Prospectus Documents and the written consent as referred to under the paragraph headed ‘‘Expert and Consent’’ in this Appendix, have been registered by 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).

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

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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 summarised 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 realisation 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 authorise, may decide from time to time, so as to achieve capital appreciation.

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 authorise 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;

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(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 authorise from time to time, as being special or in recovery situations on a case-by-case basis, such as 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 authorise 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

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(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 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.

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14. INVESTMENT PORTFOLIO

Details of all the Company’s financial assets at fair value through profit or loss as at 31 December 2015 and 30 June 2016 respectively are as follows:

At 30 June 2016

Listed Equity Securities — Hong Kong

									Dividend
				Proportion				Net assets	received/	% of gross
				of investee’s			Unrealised	attributable	receivable	assets of
		Place of	Particular of issued	capital		Market	gain/(loss)	to the	during the	the
	Name of investee	incorporation	shares held	owned	Cost	value	recognised	Company	Period	Company
					HK$’000	HK$’000	HK$’000		HK$’000
							(Note 1)	(Note 2)
(a)	LEAP Holdings Group Limited	The Cayman	70,000,000 ordinary	2.85%	26,250	50,400	24,150	HK$4.74	—	7.25
		Islands	shares of					million
			HK$0.01 each
(b)	Luen Wong Group Holdings	The Cayman	8,120,000 ordinary	0.65%	2,111	44,660	42,549	HK$0.52	—	6.42
	Limited	Islands	shares of					million
			HK$0.01 each
(c)	First Credit Finance Group Limited	Bermuda	180,000,000 ordinary	4.96%	32,574	43,020	10,446	HK$44.96	—	6.19
			shares of					million
			HK$0.02 each
(d)	Town Health International Medical	Bermuda	31,704,000 ordinary	0.41%	46,708	39,947	(6,761)	HK$18.39	311	5.74
	Group Limited		shares of					million
			HK$0.01 each
(e)	RCG Holdings Limited	Bermuda	69,600,000 ordinary	4.57%	22,294	37,584	15,290	HK$30.36	—	5.40
			shares of					million
			HK$0.04 each
(f)	Interactive Entertainment China	Bermuda	289,800,000 ordinary	5.88%	40,297	33,327	(6,970)	HK$73.05	—	4.79
	Cultural Technology		shares of					million
	Investments Limited		HK$0.01 each
(g)	Convoy Global Holdings Limited	The Cayman	93,564,000 ordinary	0.63%	47,221	32,747	(14,474)	HK$31.09	—	4.71
	(Formerly known as Convoy	Islands	shares of					million
	Financial Holdings Limited)		HK$0.1 each
(h)	China Parenting Network Holdings	The Cayman	14,002,000 Ordinary	1.36%	19,463	32,205	12,742	RMB4.46	—	4.63
	Limited	Islands	shares of					million
			HK$0.01 each

Private Equity Fund — Cayman Islands

										Dividend
					Proportion				Net assets	received/	% of gross
					of investee’s			Unrealised	attributable	receivable	assets of
			Place of	Particular of issued	capital		Market	gain/(loss)	to the	during the	the
	Name	of investee	incorporation	shares held	owned	Cost	value	recognised	Company	Period	Company
						HK$’000	HK$’000	HK$’000		HK$’000
								(Note 1)	(Note 2)
(i)	Hydra	Capital SPC	The Cayman	3,750 shares of	16.74%	37,500	41,368	3,868	HK$41.37	—	5.95
			Islands	HK$10,000 each					million

– III-15 –

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APPENDIX III

Private Equity — British Virgin Islands

									Dividend
				Proportion				Net assets	received/	% of gross
				of investee’s			Unrealised	attributable	receivable	assets of
		Place of	Particular of issued	capital		Market	gain/(loss)	to the	during the	the
	Name of investee	incorporation	shares held	owned	Cost	value	recognised	Company	Period	Company
					HK$’000	HK$’000	HK$’000		HK$’000
							(Note 1)	(Note 2)
(j)	Gransing Financial Holdings Limited	British Virgin	20 shares of	16.67%	31,619	32,000	381	HK$12.45	—	4.60
		Islands	US$1 each					million

At 31 December 2015

Listed Equity Securities — Hong Kong

								Dividend
			Proportion				Net assets	received/	% of gross
			of investee’s			Unrealised	attributable	receivable	assets of
	Place of	Particular of issued	capital		Market	gain/(loss)	to the	during the	the
Name of investee	incorporation	shares held	owned	Cost	value	recognised	Company	year	Company
				HK$’000	HK$’000	HK$’000		HK$’000
						(Note 3)	(Note 2)
Town Health International Medical	Bermuda	31,704,000 ordinary	0.42%	46,621	50,409	3,789	HK$19.23	83	14.82
Group Limited		shares of					million
		HK$0.01 each
China Parenting Network Holdings	The Cayman	14,002,000 ordinary	1.36%	19,463	33,325	13,862	RMB4.12	—	9.80
Limited	Islands	shares of					million
		HK$0.01 each
Convoy Financial Holdings Limited	The Cayman	63,564,000 ordinary	0.43%	36,438	27,333	(9,105)	HK$21.17	—	8.04
	Islands	shares of					million
		HK$0.1 each
RCG Holdings Limited	Bermuda	69,600,000 ordinary	4.63%	22,294	18,444	(3,850)	HK$30.76	—	5.42
		shares of					million
		HK$0.04 each
AMCO United Holding Limited	Bermuda	31,430,000 ordinary	2.53%	17,042	15,558	(1,484)	HK$6.17	—	4.57
		shares of					million
		HK$0.01 each
Suncorp Technologies Limited	Bermuda	102,000,000 ordinary	0.67%	24,990	12,546	(12,444)	HK$4.18	—	3.69
		shares of					million
		HK$0.0003 each
China Wah Yan Healthcare Limited	Hong Kong	100,424,554 ordinary	3.84%	16,148	12,252	(3,896)	HK$14.54	—	3.60
		shares					million

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APPENDIX III

Private Equity Funds — Cayman Islands

									Dividend
				Proportion				Net assets	received/	% of gross
				of investee’s			Unrealised	attributable	receivable	assets of
		Place of	Particular of issued	capital		Market	gain/(loss)	to the	during the	the
Name of	investee	incorporation	shares held	owned	Cost	value	recognised	Company	year	Company
					HK$’000	HK$’000	HK$’000		HK$’000
							(Note 3)	(Note 2)
Hydra Capital SPC		The Cayman	3,750	16.74%	37,500	32,221	(5,279)	HK$32.22	10,365	9.47
		Islands						million
SBI China M&A Opportunities Fund		The Cayman	1,612	13.49%	12,897	12,070	(827)	HK$12.07	—	3.55
SPC		Islands						million
	Private Equity — Hong		Kong
									Dividend
				Proportion				Net assets	received/	% of gross
				of investee’s			Unrealised	attributable	receivable	assets of
		Place of	Particular of issued	capital		Market	gain/(loss)	to the	during the	the
Name of	investee	incorporation	shares held	owned	Cost	value	recognised	Company	year	Company
					HK$’000	HK$’000	HK$’000		HK$’000
							(Note 3)	(Note 2)
Sense Key Design Holdings Limited		Hong Kong	199	19.9%	25,000	25,000	—	HK$1.28	—	7.35
								million

Notes:

(1) The unrealised 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 unrealised gain/(loss) represented the changes in fair value of the respective investments during the year ended 31 December 2015.

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

(a) LEAP Holdings Group Limited (‘‘LEAP Holdings GP’’) is principally engaged in provision of foundation works and ancillary services and construction wastes handling. The audited profit attributable to shareholders of LEAP Holdings GP for the year ended 31 March 2016 was approximately HK$29,225,000 and the audited net assets attributable to shareholders of LEAP Holdings GP as at 31 March 2016 was approximately HK$166,461,000. The fair value of the investment in LEAP Holdings GP is based on quoted market bid prices.

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APPENDIX III

(b) Luen Wong Group Holdings Limited (‘‘Luen Wong GP’’) is principally engaged in provision of civil engineering works and investment holding. The unaudited profit attributable to shareholders of Luen Wong GP for the three months ended 30 June 2016 was approximately HK$3,703,000 and the unaudited net assets attributable to shareholders of Luen Wong GP as at 30 June 2016 was approximately HK$79,950,000. The fair value of the investment in Luen Wong GP is based on quoted market bid prices.
(c) First Credit Finance Group Limited (‘‘First Credit’’) is principally engaged in money lending business which provides customers with a wide range of loan products and services to meet their financial needs. The unaudited profit attributable to shareholders of First Credit for the six months ended 30 June 2016 was approximately HK$14,643,390 and the unaudited net assets attributable to shareholders of First Credit as at 30 June 2016 was approximately HK$906,408,322. The fair value of the investment in First Credit is based on quoted market bid prices.
(d) Town Health International Medical Group Limited (‘‘Town Health’’) is principally engaged in healthcare business investment; provision and management of medical, dental and other healthcare care related services; investments and trading in properties and securities. The unaudited profit attributable to shareholders of Town Health for the six months ended 30 June 2016 was approximately HK$54,239,000 and the unaudited net assets attributable to shareholders of Town Health as at 30 June 2016 was approximately HK$4,501,188,000. The fair value of the investment in Town Health is based on quoted market bid prices.
(e) RCG Holdings Limited (‘‘RCG Holdings’’) is principally engaged in the provision of biometric and Radio Frequency Identification products and solution services. The audited profit attributable to shareholders of RCG Holdings for the year ended 31 December 2015 was approximately HK$156,498,000 and the audited net assets attributable to shareholders of RCG Holdings as at 31 December 2015 was approximately HK$664,602,000. The fair value of the investment in RCG Holdings is based on quoted market bid prices.
(f) Interactive Entertainment China Cultural Technology Investments Limited (‘‘IE China’’) is principally engaged in (i) mobile internet cultural business and provision of IT services; (ii) provision of hospitality and related services in Australia; (iii) provision of medical diagnostic and health check services; (iv) provision of integral marketing services; (v) money lending business; and vi) assets investments business. The unaudited loss attributable to shareholders of IE China for the six months ended 30 June 2016 was approximately HK$98,791,000 and the unaudited net assets attributable to shareholders of IE China as at 30 June 2016 was approximately HK$1,241,673,000. The fair value of the investment in IE China is based on quoted market bid prices.

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(g) Convoy Global Holdings Limited (‘‘Convoy’’) is principally engaged in the independent financial advisory business, money lending business, proprietary investment business, asset management business, corporate finance advisory services and securities dealing business and investment holdings. The unaudited profit attributable to shareholders of Convoy for the six months ended 30 June 2016 was approximately HK$7,916,000 and the unaudited net assets attributable to shareholders of Convoy as at 30 June 2016 was approximately HK$4,963,533,000. The fair value of the investment in Convoy is based on quoted market bid prices.
(h) China Parenting Network Holdings Limited (‘‘China Parenting’’) is principally engaged in online platform focusing on the Children-Babies-Maternity market in China to provide marketing and promotional service and e-commerce business. The unaudited profit attributable to shareholders of China Parenting for the six months ended 30 June 2016 was approximately RMB20,597,000 and the unaudited net assets attributable to shareholders of China Parenting as at 30 June 2016 was approximately RMB326,720,000. The fair value of the investment in China Parenting is based on quoted market bid prices.
(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) Gransing Financial Holdings Limited (‘‘Gransing Holdings’’) is principally engage in provision of quality brokerage, corporate finance, asset management and financial adviser services to institutional and individual investors through its subsidiaries. The fair value of the investment in Gransing Holdings is stated as recent arm’s length market transactions.

– III-19 –

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APPENDIX III

The top three investments with realised gain and loss for the Period are summarised as below:

Top three realised gain for the Period

Name of investment	Realised gain
	HK$’000
Amco United Holding Ltd.	9,328
Luen Wong Group Holdings Ltd.	9,305
Gameone Holdings Ltd.	1,904
Top three realised loss for the Period
Name of investment	Realised loss
	HK$’000
Smartac Group China Holdings Ltd.	2,657
ICO Group Ltd.	1,860
Sky Light Holdings Ltd.	364

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 Hong Kong 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 29 January 1996 and effected on 1 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 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

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GENERAL INFORMATION

APPENDIX III

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 is subject to the fiscal law and practice of Hong Kong. The following summary of the anticipated tax treatment generally applicable to the Company 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 will be subject to tax in Hong Kong if it carry on business in Hong Kong and derive Hong Kong sourced profits from such business. In that case, the Company 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.

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)

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GENERAL INFORMATION

APPENDIX III

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.

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.

18. BORROWING POWERS

Generally the Company will not exceed aggregate borrowings of 100% 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.

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GENERAL INFORMATION

APPENDIX III

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

24/F., Lee Garden One 33 Hysan Avenue Causeway Bay 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 24/F, Lee Garden One 33 Hysan Avenue Causeway Bay Hong Kong

Mr. Cheung Pang To 24/F, Lee Garden One 33 Hysan Avenue Causeway Bay Hong Kong

Mr. So Hin Pong 24/F, Lee Garden One 33 Hysan Avenue Causeway Bay Hong Kong

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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.

(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.

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GENERAL INFORMATION

APPENDIX III

(d) On 18 December 2013, the Company has entered into the agreement (the ‘‘Investment Management 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 Investment Management Agreement will not exceed HK$960,000 per annum. The Investment Manager will provide nondiscretionary investment management services to the Company under the 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.

21. 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.

The Company had terminated the custodian agreement with HSBC Institutional Trust Services (Asia) Limited effective on 2 August 2015 and appointed Deutsche Bank AG, Hong Kong Branch (the ‘‘Custodian’’) as its new custodian. The custodian agreement with Deutsche Bank AG, Hong Kong Branch (the ‘‘Custodian Agreement’’) was effective and will continue to be in force until terminated by either the Company or the Custodian by giving the other party not less than one month’s advance notice in writing.

Pursuant to the Custodian Agreement, the Company will pay the Custodian a monthly fee of the higher of (a) the net asset value of the Company at valuation day equal to the rate 0.02% per annum, or (b) USD2,500 per month.

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GENERAL INFORMATION

APPENDIX III

22. 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.

23. MISCELLANEOUS

(a) The company secretary of the Company is Mr. Tai Man Hin Tony (CPA, ACA, FCCA) who is a fellow member of The Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants.
(b) The English text of this prospectus shall prevail over the Chinese text in the event of inconsistency.

24. DOCUMENTS FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours in any weekday (excluding Saturdays, Sundays and public holidays) at the office of the Company at Room 707, 7/F, New World Tower 1, 16–18 Queen’s Road Central Hong Kong, Hong Kong for a period of 14 days from the date of this prospectus:

(a) the memorandum and articles of association of the Company;
(b) the annual reports of the Company for the years ended 31 December 2014 and 2015 and the interim report of the Company for the six months ended 30 June 2016;
(c) the letter issued by the reporting accountants regarding the unaudited pro forma financial information as set out in appendix II of this prospectus;
(d) the written consent referred to in the paragraph headed ‘‘Expert and Consent’’ in this appendix;
(e) the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ in this appendix;
(f) the Circular; and
(g) the Prospectus Documents.

– III-26 –

AI assistant

CAI Corp — Capital/Financing Update 2016

48926_rns_2016-12-23_9afbe601-0e20-41e3-9b60-83832d28629f.pdf

CHINA NEW ECONOMY FUND LIMITED 中 國 新 經 濟 投 資 有 限 公 司

RIGHTS ISSUE OF 333,784,800 RIGHTS SHARES ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY TWO (2) EXISTING SHARES HELD ON THE RECORD DATE WITH BONUS ISSUE ON THE BASIS OF TWO (2) BONUS SHARES FOR EVERY THREE (3) RIGHTS SHARES TAKEN UP UNDER THE RIGHTS ISSUE

UNDERWRITER TO THE RIGHTS ISSUE

CONTENTS

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES AND FOR APPLICATION AND PAYMENT FOR EXCESS RIGHTS SHARES

DEFINITIONS

DEFINITIONS

TERMINATION OF THE UNDERWRITING AGREEMENT

CHINA NEW ECONOMY FUND LIMITED 中 國 新 經 濟 投 資 有 限 公 司

(Stock code: 80)

PROPOSED RIGHTS ISSUE OF 333,784,800 RIGHTS SHARES ON THE BASIS OF THREE (3) RIGHTS SHARES FOR EVERY TWO (2) EXISTING SHARES HELD ON THE RECORD DATE WITH BONUS ISSUE ON THE BASIS OF TWO (2) BONUS SHARES FOR EVERY THREE (3) RIGHTS SHARES TAKEN UP UNDER THE RIGHTS ISSUE

INTRODUCTION

LETTER FROM THE BOARD

RIGHTS ISSUE WITH BONUS ISSUE

Issue statistics

Bonus Issue

Subscription Price

LETTER FROM THE BOARD

Qualifying Shareholders

Prohibited Shareholders

Fractional entitlements to the Rights Shares

Rights of the Overseas Shareholders

Procedures for acceptance and payment and/or transfer

Application for excess Rights Shares

LETTER FROM THE BOARD

Status of the Rights Shares and the Bonus Shares

Certificates of the Rights Shares and the Bonus Shares and refund cheques

Application for listing

LETTER FROM THE BOARD

UNDERWRITING ARRANGEMENT

Underwriting Agreement

LETTER FROM THE BOARD

Termination of the Underwriting Agreement

LETTER FROM THE BOARD

Conditions of the Rights Issue and the Bonus Issue

BUSINESS REVIEW, FINANCIAL AND TRADING PROSPECT OF THE COMPANY

REASONS FOR THE RIGHTS ISSUE AND THE BONUS ISSUE AND USE OF PROCEEDS

LETTER FROM THE BOARD

Arrangement on odd lot trading

EFFECTS ON SHAREHOLDING STRUCTURE

LETTER FROM THE BOARD

EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

WARNING OF THE RISK OF DEALINGS IN THE SHARES

ADDITIONAL INFORMATION

By Order of the Board China New Economy Fund Limited GU Xu

A. FINANCIAL INFORMATION OF THE COMPANY

B. STATEMENT OF INDEBTEDNESS

Securities margin borrowings

Notes payable

C. WORKING CAPITAL STATEMENT

D. MATERIAL ADVERSE CHANGE

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

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

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

Directors’ responsibility for the Unaudited Pro Forma Financial Information

Our independence and quality control

Reporting accountants’ responsibilities

Opinion

HLB Hodgson Impey Cheng Limited Certified Public Accountants

1. RESPONSIBILITY STATEMENT

2. SHARE CAPITAL

3. DISCLOSURE OF INTERESTS

Director’s and chief executive’s interests in the Company

Interests and short positions of substantial Shareholders

4. DIRECTORS’ INTERESTS IN CONTRACT AND ASSETS

5. DIRECTORS’ SERVICE CONTRACTS

6. MATERIAL CONTRACTS

7. LITIGATION

8. COMPETING INTERESTS

9. EXPERT AND CONSENT

Name Qualification

10. PARTIES INVOLVED IN THE RIGHTS ISSUE AND CORPORATE INFORMATION

Particulars of the Directors

(b) Profiles of Directors

Executive Directors

Independent Non-executive Directors

CAI Corp Capital/Financing Update 2016

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

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