Changyou International Group Limited — Proxy Solicitation & Information Statement 2017

Apr 3, 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Fortunet e-Commerce Group Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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FORTUNET E-COMMERCE GROUP LIMITED 鑫網易商集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1039)

RENEWAL OF

GENERAL MANDATE TO ISSUE SHARES AND TO REPURCHASE SHARES,

PROPOSED REFRESHMENT OF THE SCHEME MANDATE LIMIT, RE-ELECTION OF DIRECTORS AND NOTICE OF ANNUAL GENERAL MEETING

A notice convening the Annual General Meeting to be held at Room 1008, 10th Floor, Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong on Monday, 29 May 2017 at 11:00 a.m. is set out on pages 16 to 19 of this circular. Whether or not you intend to be present and vote at the Annual General Meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s Hong Kong share registrar, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the Annual General Meeting or any adjourned meeting. The completion of a form of proxy will not preclude you from attending and voting at the Annual General Meeting in person should you so wish. If you attend and vote at the Annual General Meeting, the authority of your proxy will be revoked.

3 April 2017

CONTENTS

		Page
Definitions . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		4
Appendix I –	Explanatory Statement on the Repurchase Mandate. . . . . . . . . .	10
Appendix II –	Details of the Directors to be re-elected. . . . . . . . . . . . . . . . . . . .	13
Notice of Annual General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		16

– i –

DEFINITIONS

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

• “Annual General Meeting”

• the annual general meeting of the Company to be held at Room 1008, 10th Floor, Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong on Monday, 29 May 2017 at 11:00 a.m., for the purpose of considering and if thought fit, approving the resolutions proposed in the notice convening the Annual General Meeting, or any adjournment thereof

• “Articles of Association”

• the articles of association of the Company as amended, modified or otherwise supplemented from time to time

• “Board”

• the board of Directors

• “close associate(s)”

• has the same meaning ascribed to it under the Listing Rules

• “Company”

• Fortunet e-Commerce Group Limited（鑫網易商集團有限 公司）, a company incorporated in the Cayman Islands with limited liability and the Shares of which are listed on the Stock Exchange

• “Companies Law”

• the Companies Law, Chapter 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands

• “connected person(s)”

• has the same meaning ascribed to it under the Listing Rules

• “Director(s)”

• the director(s) of the Company

• “General Mandate”

• a general and unconditional mandate to be granted to the Directors to allot, issue, and otherwise deal with new Shares and other securities with an aggregate nominal amount not exceeding the sum of 20% of the issued share capital of the Company as at the date of the passing of the relevant resolutions, and the aggregate nominal value of the share capital of the Company repurchased by the Company (if any)

• “Group”

• the Company and its subsidiaries

• “HK$”

Hong Kong dollar, the lawful currency of Hong Kong

• “Hong Kong”

the Hong Kong Special Administrative Region of the People’s Republic of China

– 1 –

DEFINITIONS

• “Latest Practicable Date” 30 March 2017, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “PRC” the People’s Republic of China, but shall not include Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan for the purpose of this circular

• “Repurchase Mandate” a general and unconditional mandate to the Directors to exercise the power of the Company to repurchase Shares up to a maximum of 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of the passing of the relevant resolutions

• “RMB” Renminbi, the lawful currency of the PRC

• “Scheme Mandate Limit” the maximum number of Shares which may be allotted and issued upon exercise of all share options to be granted under the Share Option Scheme and other such schemes of the Company which shall not in aggregate exceed 10% of the Shares in issue as at the date of approval of the refreshed Scheme Mandate Limit by the Shareholders

• “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Share(s)” ordinary shares of US$0.01 each in the share capital of the Company

• “Shareholder(s)” holder(s) of the Share(s)

• “Share Option Scheme” the share option scheme approved and adopted by the Company on 28 June 2010

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “substantial shareholder(s)” has the same meaning ascribed to it under the Listing Rules

• “Takeovers Code” The Hong Kong Code on Takeovers and Mergers “United States” the United States of America

– 2 –

	DEFINITIONS
“US$”	United States dollar, the lawful currency of the United
	States
“%”	per cent.

– 3 –

LETTER FROM THE BOARD

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FORTUNET E-COMMERCE GROUP LIMITED 鑫網易商集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1039)

Executive Directors:

Mr. Cheng Jerome (Chairman) Mr. Yuan Weitao

Non-executive Director:

Registered Office: Room 808-814, 8/F Sun Hung Kai Centre 30 Harbour Road Wanchai, Hong Kong

Mrs. Guo Yan

Principal Place of Business

Independent Non-executive Directors:

Mr. Wong Chi Keung Mr. Liu Jialin Mr. Chan Chi Keung, Alan

in Hong Kong: Room 808-814, 8/F Sun Hung Kai Centre 30 Harbour Road Wanchai, Hong Kong

3 April 2017

To the Shareholders

Dear Sir/Madam

RENEWAL OF GENERAL MANDATE TO ISSUE SHARES AND TO REPURCHASE SHARES, PROPOSED REFRESHMENT OF THE SCHEME MANDATE LIMIT, RE-ELECTION OF DIRECTORS AND

NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

The purpose of this circular is to give you notice of the Annual General Meeting and to provide you with information regarding resolutions to be proposed at the Annual General Meeting for (i) the renewal of the General Mandate and the Repurchase Mandate; (ii) the extension of the General Mandate to include Shares repurchased pursuant to the Repurchase Mandate; (iii) the proposed refreshment of the Scheme Mandate Limit; and (iv) the re-election of Directors.

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LETTER FROM THE BOARD

RENEWAL OF GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

At the last annual general meeting of the Company held on 20 May 2016, resolutions were passed by the Shareholders granting general mandates to the Directors (i) to allot and issue Shares with an aggregate nominal value not exceeding 20% of the aggregate nominal value of the issued share capital of the Company as at the date of the passing of the relevant resolutions; and (ii) to repurchase Shares up to 10% of the aggregate nominal amount of the issued shares capital of the Company as at the date of the passing of the relevant resolutions. Resolutions were also passed to extend the number of Shares to be issued and allotted under (i) above by an additional number representing such number of Shares repurchased under (ii) above. All of these general mandates will expire at the conclusion of the forthcoming Annual General Meeting.

At the Annual General Meeting, separate ordinary resolutions will be proposed:

• (a) to grant the General Mandate to the Directors to exercise the powers of the Company to allot and issue Shares with an aggregate nominal value not exceeding 20% of the aggregate nominal value of the issued share capital of the Company as at the date of passing the resolution. The General Mandate will end on the earliest of the date of the next annual general meeting, the date by which the next annual general meeting of the Company is required to be held by the Articles of Association or the date upon which such authority is revoked or varied by an ordinary resolution of the Shareholders at a general meeting of the Company. Based on 1,823,130,272 Shares in issue as at the Latest Practicable Date and assuming no further Shares will be issued or repurchased prior to the date of the Annual General Meeting, the Directors will be authorised to issue up to 364,626,054 Shares under the General Mandate;

• (b) to grant the Repurchase Mandate to the Directors to exercise all powers of the Company to repurchase issued Shares subject to the criteria set out in this circular. Under such Repurchase Mandate, the maximum number of Shares that the Company may repurchase shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the resolution. As at the Latest Practicable Date, the number of Shares in issue is 1,823,130,272 Shares. Subject to the passing of the proposed ordinary resolution approving the granting of the Repurchase Mandate and no further Shares are issued or repurchased prior to the Annual General Meeting, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 182,313,027 Shares, being 10% of the entire issued share capital of the Company as at the date of the passing of the resolution. The Repurchase Mandate will end on the earliest of the date of the next annual general meeting, the date by which the next annual general meeting of the Company is required to be held by the Articles of Association or the date upon which such authority is revoked or varied by an ordinary resolution of the Shareholders at a general meeting of the Company; and

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LETTER FROM THE BOARD

• (c) subject to the passing of the aforesaid ordinary resolutions of the General Mandate and the Repurchase Mandate, to extend the number of Shares to be issued and allotted under the General Mandate by an additional number representing such number of Shares repurchased under the Repurchase Mandate.

In accordance with the Listing Rules, an explanatory statement is set out in Appendix I to this circular to provide you with requisite information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed resolution to renew the grant of the Repurchase Mandate at the Annual General Meeting.

PROPOSED REFRESHMENT OF THE SCHEME MANDATE LIMIT

The Share Option Scheme was adopted by the Company on 28 June 2010. Apart from the Share Option Scheme, the Company has no other share option scheme currently in force.

Pursuant to the terms of the Share Option Scheme and in compliance with Chapter 17 of the Listing Rules, the maximum number of Shares that may be issued upon exercise of all the share options which may be granted under the Share Option Scheme shall not exceed 80,000,000 Shares, being 10% of the Shares in issue as at the date of approval and adoption of the Share Option Scheme.

During the period from 28 June 2010 to the Latest Practicable Date, (i) 80,000,000 share options were granted to the eligible participants under the Share Option Scheme; and (ii) no share option was lapsed, exercised or cancelled. As at the Latest Practicable Date, a total of 80,000,000 outstanding share options entitle the holders thereof to subscribe for 80,000,000 Shares, representing 4.39% of the issued share capital of the Company. The Company has used up the existing Scheme Mandate Limit and as such, it may not grant any more share option pursuant to the Share Option Scheme unless the Scheme Mandate Limit is refreshed.

The Company conducted a subscription of shares and an issue of consideration shares in March 2015 and a placing of shares in December 2016 respectively, upon completion of which the issued share capital of the Company was increased. As at the Latest Practicable Date, there were a total of 1,823,130,272 Shares in issue. Assuming no further Shares are issued or repurchased during the period from the Latest Practicable Date to the Annual General Meeting, the number of Shares in issue as at the passing of the ordinary resolution will be 1,823,130,272 Shares. Accordingly it is expected that, upon the approval of the refreshment of the Scheme Mandate Limit at the Annual General Meeting, and on the assumption that no further Shares will be issued or repurchased by the Company from the Latest Practicable Date to the Annual General Meeting, the number of Shares in issue as at the date of passing the ordinary resolution granting the refreshment of the Scheme Mandate Limit will be 1,823,130,272 and therefore, the refreshed Scheme Mandate Limit under the Annual General Meeting would be 182,313,027 Shares, representing 10% of the number of shares in issue at the time of passing the ordinary resolution.

In order to provide the Company with greater flexibility in granting options to eligible participants under the Share Option Scheme as incentives or rewards for their contributions to the Group, an ordinary resolution as set out in the notice of Annual General Meeting is

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LETTER FROM THE BOARD

proposed to seek Shareholders’ approval at the Annual General Meeting to refresh the Scheme Mandate Limit of the Share Option Scheme to 10% of the Shares in issue as at the date of passing of the resolution.

Pursuant to the terms of the Share Option Scheme and in accordance with Chapter 17 of the Listing Rules, the Shares which may be issued upon exercise of all outstanding share options granted and yet to be exercised under the Share Option Scheme and any other share option scheme(s) of the Company shall not exceed 30% of the Shares in issue from time to time. No share options shall be granted under any scheme(s) of the Company if this will result in the 30% limit being exceeded.

Assuming no further Shares will be issued or repurchased by the Company from the Latest Practicable Date to the Annual General Meeting, the number of Shares in issue as at the date of passing the ordinary resolution granting the refreshment of the Scheme Mandate Limit will be 1,823,130,272 and therefore, the refreshed Scheme Mandate Limit under the Annual General Meeting would be 182,313,027 Shares, representing 10% of the number of shares in issue at the time of passing the ordinary resolution, in respect of which options may be granted under the Scheme Mandate Limit as refreshed together with all outstanding options granted and yet to be exercised as at the Latest Practicable Date for an aggregate of 262,313,027 Shares does not exceed the 30% limit as at the Latest Practicable Date.

The Directors consider that it is in the interest of the Company to refresh the Scheme Mandate Limit to permit the grant of further share options under the Share Option Scheme so as to provide incentives to, and recognise the contributions of, the Group’s employees and other selected grantees.

The adoption of the refreshment of the Scheme Mandate Limit is conditional upon:

• (a) the Shareholders passing an ordinary resolution to approve the refreshment of the Scheme Mandate Limit at the Annual General Meeting; and

• (b) the Listing Committee of the Stock Exchange granting the approval of the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of any options that may be granted pursuant to the Share Option Scheme under the Scheme Mandate Limit as refreshed.

Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Shares which may be issued pursuant to the exercise of the share options that may be granted under the Share Option Scheme under the Scheme Mandate Limit as refreshed.

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LETTER FROM THE BOARD

RE-ELECTION OF DIRECTORS

In accordance with Article 84 of the Articles of Association, Mr. Cheng Jerome and Mr. Yuan Weitao will retire from office as Directors at the Annual General Meeting and, being eligible, will offer themselves for re-election as Directors at the Annual General Meeting.

At the Annual General Meeting, ordinary resolutions will be proposed to re-elect Mr. Cheng Jerome and Mr. Yuan Weitao as executive Directors. The biographical details of Mr. Cheng Jerome and Mr. Yuan Weitao as required to be disclosed under the Listing Rules are set out in Appendix II to this circular.

Mr. Liu Jialin has been appointed as an independent non-executive Director with effect from 1 April 2017. Pursuant to article 83(3) of the articles of association of the Company, any Director appointed by the Board to fill a casual vacancy shall hold office until the first general meeting of Shareholders after his appointment and be subject to re-election at such meeting. Accordingly, Mr. Liu Jialin will stand for re-election at the Annual General Meeting. His biographical details are set out in Appendix II to this circular.

ANNUAL GENERAL MEETING

The Company will convene the Annual General Meeting at Room 1008, 10th Floor, Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong on Monday, 29 May 2017 at 11:00 a.m. at which resolutions will be proposed for the purpose of considering and if thought fit, approving the resolutions set out in the notice of the Annual General Meeting as set out on pages 16 to 19 of this circular.

A form of proxy for use in connection with the Annual General Meeting is enclosed herewith. Whether or not you intend to be present and vote at the Annual General Meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the Annual General Meeting or any adjournment thereof. The completion and delivery of a form of proxy will not preclude you from attending and voting at the Annual General Meeting in person should you so wish. If you attend and vote at the Annual General Meeting, the authority of your proxy will be revoked. Pursuant to Rule 13.39(4) of the Listing Rules, voting by the Shareholders at the Annual General Meeting will be by poll.

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regards to the Company. The Directors, having made all reasonable enquires, confirm that to the best of their knowledge and belief, the information contained in this circular 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 circular misleading.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors consider that (i) the renewal of the General Mandate and the Repurchase Mandate; (ii) the extension of the General Mandate to include Shares repurchased pursuant to the Repurchase Mandate; (iii) the proposed refreshment of the Scheme Mandate Limit; and (iv) the re-election of Directors are in the best interests of the Company as well as the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of all the resolutions to be proposed at the Annual General Meeting.

Yours faithfully By Order of the Board Mr. Cheng Jerome Chairman

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APPENDIX I EXPLANATORY STATEMENT ON THE REPURCHASE MANDATE

This is an explanatory statement given to all Shareholders relating to a resolution to be proposed at the Annual General Meeting for approving the Repurchase Mandate. This explanatory statement contains all the information required pursuant to Rule 10.06(1)(b) and other relevant provisions of the Listing Rules:

1. SHARE CAPITAL

As at the Latest Practicable Date, there was a total of 1,823,130,272 Shares in issue. Subject to the passing of the resolution granting the Repurchase Mandate and on the basis that no further Shares are issued or repurchased during the period from the Latest Practicable Date to the date of the Annual General Meeting, the Company will be allowed under the Repurchase Mandate to repurchase a maximum of 182,313,027 Shares, being 10% of the issued share capital of the Company as at the date of passing the relevant resolution at the Annual General Meeting.

2. REASONS FOR SHARE REPURCHASE

The Directors have no present intention to repurchase any Shares but consider that the ability to do so would give the Company additional flexibility that would be beneficial to the Company and the Shareholders as such repurchase may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets value of the Company and/or its earning per Share and will only be made when the Directors believe that such a repurchase will benefit the Company and the Shareholders as a whole.

As compared with the financial position of the Company as at 31 December 2016 (as disclosed in its latest audited financial statements for the year ended 31 December 2016), the Directors consider that there would not be any material adverse impact on the working capital and on the gearing position of the Company in the event that the proposed repurchase were to be carried out in full during the proposed repurchase period. In the circumstances, the Directors do not propose to exercise the Repurchase Mandate to such an extent as would have a material adverse impact on the working capital or gearing ratio of the Company.

3. FUNDING OF REPURCHASE

The Company is empowered by its memorandum and articles of association to repurchase its Shares. In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its memorandum and articles of association and the laws of the Cayman Islands. Under the laws of the Cayman Islands, payment for a share repurchase by the Company may only be made out of profits or the proceeds of a new issue of Shares made for such purpose or out of capital of the Company if authorised by its articles of association and subject to satisfaction of the solvency test as set out in the Companies Law. The amount of premium payable on a repurchase of Shares may only be paid out of either the profits or out of the share premium of the Company or out of capital of the Company if so authorised by its articles of association and subject to satisfaction of the solvency test as set out in the Companies Law.

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APPENDIX I EXPLANATORY STATEMENT ON THE REPURCHASE MANDATE

Under the laws of the Cayman Islands, payment out of capital by a company for the purchase by a company of its own shares is unlawful unless immediately following the date on which the payment is proposed to be made, the company shall be able to pay its debts as they fall due in the ordinary course of business. In accordance with the laws of the Cayman Islands, the shares so repurchased would be treated as cancelled but the aggregate amount of authorised share capital would not be reduced.

4. DIRECTORS, THEIR CLOSE ASSOCIATES AND CORE CONNECTED PERSONS

None of the Directors nor, to the best of their knowledge and belief having made all reasonable enquiries, any of their associates, has any present intention to sell any Shares to the Company in the event that the Repurchase Mandate is granted by the Shareholders.

No core connected person (as defined in the Listing Rules) of the Company has notified the Company that he/she/it has a present intention to sell Shares to the Company nor has he/she/it undertaken not to sell any of the Shares held by him/her/it to the Company in the event that the Repurchase Mandate is granted by the Shareholders.

5. UNDERTAKING OF THE DIRECTORS

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the Repurchase Mandate and in accordance with the Listing Rules, the Articles of Association and the laws of the Cayman Islands.

6. EFFECT OF TAKEOVERS CODE AND MINIMUM PUBLIC HOLDING

A repurchase of Shares by the Company may result in an increase in the proportionate interests of a substantial shareholder of the Company in the voting rights of the Company, which could give rise to an obligation by a Shareholder, or a group of Shareholders acting in concert, depending on the level of increase of its or their shareholding, to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

As at the Latest Practicable Date, to the best of the knowledge and belief of the Company, Century Investment (Holding) Limited was beneficially interested in 566,885,818 Shares or approximately 31.09% of the issued share capital of the Company. In the event that the Directors exercise in full the power to repurchase the Shares which is proposed to be granted pursuant to the Repurchase Mandate, the shareholding of Century Investment (Holding) Limited would be increased to approximately 34.55% of the then issued share capital of the Company, and such increase would give rise to an obligation to make a mandatory general offer under Rule 26 of the Takeovers Code. The Company currently has no intention to exercise the Repurchase Mandate to such extent that it would give rise to an obligation to make a mandatory offer under the Takeovers Code or result in the amount of shares held by the public being reduced to less than 25% of the issued share capital of the Company.

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APPENDIX I EXPLANATORY STATEMENT ON THE REPURCHASE MANDATE

7. SHARE REPURCHASES BY THE COMPANY

The Company had not repurchased any Shares (whether on the Stock Exchange or otherwise) in the previous six months preceding the Latest Practicable Date.

8. SHARE PRICES

The highest and lowest traded prices at which the Shares had been traded on the Stock Exchange during each of the previous twelve months up to the Latest Practicable Date were as follows:

	Highest	Lowest
	HK$	HK$
2016
April	0.90	0.75
May	0.82	0.73
June	0.96	0.80
July	1.30	0.86
August	1.40	1.01
September	1.49	1.20
October	1.50	1.05
November	1.88	0.96
December	1.89	1.59
2017
January	1.74	1.44
February	1.67	1.41
March (up to the Latest Practicable Date)	1.62	1.35

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APPENDIX II DETAILS OF THE DIRECTORS TO BE RE-ELECTED

The biographical details of the Directors proposed to be re-elected at the Annual General Meeting are set out as follows:

Executive Directors

Mr. Cheng Jerome , aged 64, was appointed as the chairman and the executive director on 25 March 2015. He joined Beijing Century Fortunet Technology Co., Ltd（北京世紀鑫網科 技有限公司）(“OPCo”) a 51% owned subsidiary of the Company since 25 March 2015, in December 2014 and previously served as the chief information officer of OPCo till December 2015. Mr. Cheng graduated from University Paris 7 with a DEA (D’Etudes approfondies) French degree in information technology in 1986. He has working experience of over 24 years in the IT industry, serving the AXA Group and Oracle Corporation, both of which are among the Top 500 worldwide fortune companies. From 1986 to 1994, Mr. Cheng served the AXA Group successively as network engineer and architect, head of network architecture team and head of information technology system performance. From 1998 to 2008, Mr. Cheng worked for BEA Systems, Inc., a company specialized in enterprise infrastructure software products which was acquired by Oracle Corporation in 2008, as principal consulting engineer in BEA France, as managing consulting engineer in BEA France, as pre-sales consulting manager in BEA APAC region and as senior manager of BEA Technology Centre in Beijing, China. In June 2008, Mr. Cheng joined Oracle Systems Hong Kong Limited as the senior manager of soft development and served as Principal Solution Architect of Oracle Fusion Middleware worldwide architecture team from May 2010 to December 2014.

Mr. Cheng has entered into a service agreement with the Company for the period from 16 December 2015 to 24 March 2018 and he is subject to retirement by rotation at annual general meeting of the Company in accordance with the Articles of Association and the Listing Rules. Mr. Cheng is entitled to an annual salary of HK$300,000, which was determined by the Board with reference to the prevailing market conditions and his roles and responsibilities with the Company.

As at the Latest Practicable Date, Mr. Cheng had interest in the share options granted by the Company pursuant to the Share Option Scheme to subscribe for 15,000,000 Shares.

Save as disclosed above, Mr. Cheng (i) does not have any relationship with any other Directors, senior management, management shareholders, substantial shareholders or controlling shareholders of the Company, and (ii) had no interest in Shares within the meaning of Part XV of the SFO.

Mr. Yuan Weitao , aged 50, was appointed as the executive director on 25 March 2015. He joined OPCo in September 2014 and currently serves as a director and executive vice president of OPCo, and a director of each of Century Investment (Holding) Limited (“CIH”), a substantial shareholder of the Company, and Century East, a non-wholly owned subsidiary of CIH. Mr. Yuan graduated from Tsinghua University with a bachelor’s degree in engineering in 1989 and a master’s degree in engineering in 1992. He has working experience of over 20 years in international trade, telecommunications and media industries. Mr. Yuan joined China National Electronics Import & Export Company（中國電子進出口總公 司）, administered by the Ministry of Mechanical Electronic Devices of the People’s Republic

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APPENDIX II DETAILS OF THE DIRECTORS TO BE RE-ELECTED

of China, after his graduation and worked in its overseas subsidiary as a marketing manager in 1994. Mr. Yuan joined CIH as vice president in 1999 and was responsible for project development and external cooperation of CIH. Mr. Yuan has been the general manager of Beijing United Online Technology Co. Ltd（北京聯合在綫科技有限公司）, a subsidiary of China Mobile Communications Corporation （中國移動通信集團公司）(“China Mobile”), in 2000; a vice-president and the representative of the China office of CMBSat which was a subsidiary of Echostar, one of the US leading satellite television operators, in 2006; and a vice general manager of CSMM, a subsidiary of China Telecommunications Corporation（中國電信集團公 司）, from 2010 to August 2014.

Mr. Yuan has entered into a service agreement with the Company for a term of three years commencing from 25 March 2015 and he is subject to retirement by rotation at annual general meeting of the Company in accordance with the Articles of Association and the Listing Rules. Mr. Yuan is entitled to an annual salary of RMB800,000, which was determined by the Board with reference to the prevailing market conditions and his roles and responsibilities with the Company. Mr. Yuan shall also be entitled, to an annual bonus in such sum as the Board may in its absolute discretion decide.

As at the Latest Practicable Date, Mr. Yuan had interest in the share option granted by the Company pursuant to the Share Option Scheme to subscribe for 15,000,000 Shares.

Save as disclosed above, Mr. Yuan (i) does not have any relationship with any other Directors, senior management, management shareholders, substantial shareholders or controlling shareholders of the Company, and (ii) had no interest in Shares within the meaning of Part XV of the SFO.

Independent non-executive Director

Mr. Liu Jialin , aged 54, was appointed as the independent non-executive director of the Company. Mr. Liu also serves as the independent non-executive director of China Merchants Securities Co., Ltd (stock code: 6099) and Far East Horizon Limited (stock code: 3360). Mr. Liu has been the managing director of Cinda International Asset Management Limited since February 2011. From 1992 to 2007, Mr. Liu worked for Morgan Stanley group of companies and once served as a member of the Management Committee and Asia Executive Committee as well as a Managing Director in the Fixed Income Division in Hong Kong. Mr. Liu has over 20 years of experience in finance and securities industry. Mr. Liu obtained a bachelor’s degree in science majoring in physics from Peking University and a master’s degree in science majoring in physics from Massachusetts Institute of Technology.

Mr. Liu has entered into a service agreement with the Company for a term of three years commencing from 1 April 2017 and he is subject to retirement by rotation at annual general meeting of the Company in accordance with the Articles of Association and the Listing Rules. Mr. Liu is entitled an annual salary of HK$300,000, which was determined by the Board with reference to the prevailing market conditions, his working experience and his roles and responsibilities with the Company.

As at the Latest Practicable Date, Mr. Liu has no interest in Shares within the meaning of Part XV of the SFO.

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APPENDIX II DETAILS OF THE DIRECTORS TO BE RE-ELECTED

Save as disclosed above, Mr. Liu (i) does not have any relationship with any other Directors, senior management, management shareholders, substantial shareholders or controlling shareholders of the Company, and (ii) had no interest in Shares within the meaning of Part XV of the SFO.

Others

There is no other information relating to the above retiring Directors that is required to be disclosed pursuant to Rule 13.51(2) sub-paragraphs (h) to (v) of the Listing Rules, and there is no other matter which needs to be brought to the attention of the Shareholders.

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NOTICE OF ANNUAL GENERAL MEETING

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FORTUNET E-COMMERCE GROUP LIMITED 鑫網易商集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1039)

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Fortunet e-Commerce Group Limited (the “ Company ”) will be held at Room 1008, 10th Floor, Sun Hung Kai Centre, 30 Harbour Road, Wanchai, Hong Kong on Monday, 29 May 2017 at 11:00 a.m. for considering and, if thought fit, passing the following resolutions (with or without modifications):

ORDINARY RESOLUTIONS

1. To receive, consider and adopt the audited consolidated financial statements and the reports of the directors of the Company (the “ Directors ”) and the auditors of the Company for the year ended 31 December 2016;

2. To re-elect the following Directors:

3. (a) Mr. Cheng Jerome as executive Director;

4. (b) Mr. Yuan Weitao as executive Director; and

5. (c) Mr. Liu Jialin as independent non-executive Director;

6. To authorise the board of Directors to fix the remuneration of the Directors;

7. To re-appoint KPMG as auditors of the Company and authorise the board of Directors to fix their remuneration;

8. “ THAT :

9. (a) subject to paragraph (c) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements and options which might require the exercise of such powers be and is hereby generally and unconditionally approved;

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NOTICE OF ANNUAL GENERAL MEETING

• (b) the approval in paragraph (a) shall be in addition to any other authorisation given to the Directors and shall authorise the Directors during the Relevant Period to make or grant offers, agreements, options and rights of exchange or conversion which might require the exercise of such powers after the end of the Relevant Period;

• (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors pursuant to the approval in paragraph (a), otherwise than pursuant to (i) a Rights Issue (as hereinafter defined); (ii) the share option scheme of the Company approved by The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”); or (iii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the articles of association of the Company, shall not exceed 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this resolution, and the said approval shall be limited accordingly; and

• (d) for the purposes of this resolution:

“ Relevant Period ” means the period from the passing of this resolution until whichever is the earliest of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable laws to be held; and

• (iii) the date upon which the authority set out in this resolution is revoked or varied by way of ordinary resolution of the Company in general meeting; and

“ Rights Issue ” means an offer of shares open for a period fixed by the Directors to holders of ordinary shares on the register of members of the Company on a fixed record date in proportion to their then holdings of such shares (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any regulatory body or any stock exchange in, any territory outside Hong Kong).”;

1. “ THAT :

2. (a) subject to paragraph (c) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to purchase issued shares in the capital of the Company, subject to and in

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NOTICE OF ANNUAL GENERAL MEETING

accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange as amended from time to time, be and is hereby generally and unconditionally approved;

• (b) the approval in paragraph (a) shall be in addition to any other authorisation given to the Directors and shall authorise the Directors on behalf of the Company during the Relevant Period to procure the Company to purchase its shares at a price determined by the Directors;

• (c) the aggregate nominal amount of shares of the Company which are authorised to be purchased by the Directors pursuant to the approval in paragraph (a) above shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this resolution, and the said approval shall be limited accordingly; and

• (d) for the purposes of this resolution:

“ Relevant Period ” means the period from the passing of this resolution until whichever is the earliest of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable laws to be held; and

• (iii) the date on which the authority set out in this resolution is revoked or varied by way of ordinary resolution of the Company in general meeting.”;

• “ THAT conditional upon the passing of resolutions nos. 5 and 6 above, the general mandate to the Directors pursuant to resolution no. 5 be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of share capital of the Company purchased by the Company under the authority granted pursuant to the resolution no. 6, provided that such amount shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this resolution.”; and

• “ THAT subject to and conditional upon the Listing Committee of the Stock Exchange granting approval of the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of share options which may be granted under the Refreshed Scheme Mandate Limit (as defined below), the existing limit on the grant of share options under the share option scheme adopted by the Company on 28 June 2010 (the “ Share Option Scheme ”) be refreshed provided that the total number of Shares which may be allotted and issued upon exercise of any options to be granted under the Share Option Scheme and any other schemes of the Company (excluding share options previously granted, outstanding, cancelled, lapsed or exercised in accordance with the Share Option Scheme or such other

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NOTICE OF ANNUAL GENERAL MEETING

scheme(s) of the Company), shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of this resolution (the “ Refreshed Scheme Mandate Limit ”) and the Directors be and are hereby authorised to do such acts and things and execute such documents, including under seal where applicable, as they consider necessary or expedient to give effect to the Refreshed Scheme Mandate Limit and to grant share options up to the Refreshed Scheme Mandate Limit and to exercise all powers of the Company to allot, issue and deal with shares of the Company pursuant to the exercise of such share options.”

Yours faithfully By Order of the Board Mr. Cheng Jerome Chairman

Hong Kong, 3 April 2017

Notes:

• (1) A member entitled to attend and vote at the above meeting may appoint one or, if he holds two or more shares, more proxies to attend and vote instead of him. A proxy need not be a member of the Company.

• (2) Where there are joint holders of any share of the Company (the “Share”), any one of such joint holder may vote, either in person or by proxy, in respect of such Share as if he were solely entitled thereto, but if more than one of such joint holders be present at the Annual General Meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

• (3) In order to be valid, a form of proxy together with the power of attorney (if any) or other authority (if any) under which it is signed or a certified copy thereof shall be deposited at the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. The proxy form will be published on the website of the Stock Exchange.

• (4) The register of members of the Company will be closed from Wednesday, 24 May 2017 to Monday, 29 May 2017 (both days inclusive) during which period no transfer of shares will be registered. In order to qualify for the entitlement to attend and vote at the forthcoming Annual General Meeting, all transfers accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Tuesday, 23 May 2017.

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