Cheerwin Group Limited — Proxy Solicitation & Information Statement 2021

Jul 7, 2021

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 a stockbroker or other registered dealer in securities, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Cheerwin 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, stockbroker 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.

Cheerwin Group Limited 朝雲集團有限公司

(Incorporated in the Cayman Islands with limited liability )

(Stock Code: 6601)

PROPOSED ADOPTION OF SHARE OPTION SCHEME AND NOTICE OF EXTRAORDINARY GENERAL MEETING

The notice convening the Extraordinary General Meeting of Cheerwin Group Limited to be held at Conference Room, 7th Floor, North Podium Building, Liby Center, No. 2 Luju Road, Liwan District, Guangzhou, Guangdong Province, China on Friday, July 23, 2021 at 10:30 a.m. is set out in this circular.

Whether or not you are able to attend the Extraordinary General Meeting, please complete and sign the enclosed form of proxy for use at the Extraordinary General Meeting in accordance with the instructions printed thereon and return it to the Hong Kong share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the Extraordinary General Meeting (i.e. not later than 10:30 a.m. (Hong Kong time) on Wednesday, July 21, 2021) or the adjourned meeting (as the case may be). Completion and return of the form of proxy will not preclude shareholders from attending and voting in person at the Extraordinary General Meeting if they so wish.

This circular together with the form of proxy are also published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.cheerwin.com).

PRECAUTIONARY MEASURES FROM THE EXTRAORDINARY GENERAL MEETING Please refer to the notice of the Extraordinary General Meeting for measures being taken to prevent and control the spread of the respiratory illness caused by a novel coronavirus, COVID-19 (the “ Pandemic ”) at the Extraordinary General Meeting, including:

• compulsory body temperature checks and health declarations;

• • wearing of facial surgical mask for each attendee; and • no provision of corporate gift or refreshment. Due to the Pandemic, the Company may be required to change the Extraordinary General Meeting arrangements at short notice. Shareholders are advised to check the website of the Stock Exchange and the Company’s website for future announcements and updates on the Extraordinary General Meeting arrangements.

July 8, 2021

CONTENTS

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		4
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
2.	Proposed Adoption of the Share Option Scheme . . . . . . . . . . . . . . . . . . . .	5
3.	Conditions Precedent of the Share Option Scheme . . . . . . . . . . . . . . . . . .	8
4.	Extraordinary General Meeting and Proxy Arrangement . . . . . . . . . . . . . .	8
5.	Closure of Register of Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
6.	Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
7.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
**Appendix **	I – Summary of the Principal Terms of the
	Share Option Scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
**Notice of **	Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20

This circular is prepared in both English and Chinese.

In the event of inconsistency, the English text of this circular will prevail.

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DEFINITIONS

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

• “Adoption Date” the date on which the Share Option Scheme is conditionally adopted by an ordinary resolution to be passed by the Shareholders at the Extraordinary General Meeting;

• “Articles of Association” the articles of association of the Company, as amended from time to time;

• “Board” the board of Directors;

• “Business Day(s)”

• any day on which the Stock Exchange is open for the business of dealing in securities;

• “Company” or “our Company”

• Cheerwin Group Limited (朝雲集團有限公司), an exempted company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange (stock code: 6601);

• “Director(s)” the director(s) of the Company, and for the purpose of the proposed adoption of the Share Option Scheme, the director(s) of the Group;

• “Employee(s)”

• any employee(s) or officer(s) of any member of the Group;

• “Exercise Price”

• the price per Share at which a Grantee may subscribe for the Shares on the exercise of an Option as described in paragraph 9 of Appendix I to this circular;

• “Extraordinary General Meeting”

• the extraordinary general meeting of the Company to be held at Conference Room, 7th Floor, North Podium Building, Liby Center, No. 2 Luju Road, Liwan District, Guangzhou, Guangdong Province, China on Friday, July 23, 2021 at 10:30 a.m., to consider and, if appropriate, to approve the resolution contained in the notice of the extraordinary general meeting which is set out on pages 20 to 22 of this circular, or any adjournment thereof;

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DEFINITIONS

• “Grantee(s)” any Participant who accepts an Offer in accordance with the terms of the Share Option Scheme, or (where the context so permits) any person who is entitled to any Option in consequence of the death of the original Grantee;

• “Group” or “our Group” the Company and its subsidiaries;

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong;

• “Latest Practicable Date” July 2, 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular;

• “Listing Committee” the listing committee of the Stock Exchange;

• “Listing Date” March 10, 2021, being the date on which dealings in the Shares first commence on the Main Board of the Stock Exchange;

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchanges, as amended from time to time;

• “Offer(s)” the offer(s) of the grant of Option(s) made by the Board in accordance with the Share Option Scheme;

• “Offer Date” the date on which an Offer(s) is/are made to the Participant(s), which date must be a Business Day;

• “Option(s)” a right grant to subscribe for the Shares pursuant to the Share Option Scheme;

• “Option Period” a period to be determined and notified by the Board to each Grantee, during which an Option may be exercised (provided that such period shall not be more than ten (10) years commencing on the Offer Date and expiring on the last day of such period and the Board may also at its discretion impose any restrictions thereon);

• “Participant(s)”

• any director(s) of the Group (including any Director(s)) or Employee(s) who the Board considers, in its sole discretion, have contributed or will contribute to the Group in accordance with the terms of the Share Option Scheme;

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DEFINITIONS

“PRC” or “China” the People’s Republic of China; “Share(s)” ordinary share(s) in the capital of the Company with a nominal value of US$0.0000002 each; “Share Option Scheme” the share option scheme proposed to be adopted by the Shareholders at the Extraordinary General Meeting pursuant to the ordinary resolution as set out in the notice of the Extraordinary General Meeting, a summary of the principal terms of which is set out in the Appendix I to this circular;

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

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

“Takeovers Codes”

The Codes on Takeovers and Mergers and Share Buy-backs issued by the Securities and Futures Commission of Hong Kong as amended, supplemented or modified from time to time;

• “US$” United States dollars, the lawful currency of the United States; and

• “%” per cent.

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LETTER FROM THE BOARD

Cheerwin Group Limited 朝雲集團有限公司

(Incorporated in the Cayman Islands with limited liability )

(Stock Code: 6601)

Executive Directors: Registered office: Ms. Chen Danxia (Chairman and Cricket Square, Hutchins Drive Chief Executive Officer) PO Box 2681 Mr. Xie Rusong Grand Cayman, KY1-1111 Mr. Zhong Xuyi Cayman Islands Non-executive Director: Head office in the PRC: Mr. Chen Zexing No. 2, Luju Road Liwan District Independent non-executive Directors: Guangzhou, Guangdong Province Dr. De-Chao Michael Yu China Mr. Guo Sheng Mr. Chan Wan Tsun Adrian Alan Principal place of business in Hong Kong: 31/F, Tower Two, Times Square 1 Matheson Street, Causeway Bay Hong Kong

July 8, 2021

To the Shareholders

Dear Sir/Madam,

PROPOSED ADOPTION OF SHARE OPTION SCHEME AND NOTICE OF EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

Reference is made to the announcement of the Company dated June 3, 2021 (“ Announcement ”) in respect of the proposed adoption of the Share Option Scheme. The purpose of this circular is to provide the Shareholders with information in respect of (a) a resolution to be proposed at the Extraordinary General Meeting to be held on Friday, July 23, 2021 at 10:30 a.m. for the adoption of the Share Option Scheme; and (b) the giving of notice of the Extraordinary General Meeting.

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LETTER FROM THE BOARD

2. PROPOSED ADOPTION OF THE SHARE OPTION SCHEME

The Company does not have any share option scheme. The Board has proposed to adopt the Share Option Scheme at the Extraordinary General Meeting. A summary of the principal terms of the Share Option Scheme is set forth in Appendix I to this circular.

The Share Option Scheme

The Board proposes to adopt the Share Option Scheme to attract, retain and motivate talented employees to strive towards long term performance targets set by the Group and to provide them with an incentive to work better for the interest of the Group. The Share Option Scheme will constitute a share option scheme under Chapter 17 of the Listing Rules.

Save that no Offer shall be made within six months from the Listing Date, the Board shall be entitled at any time during the life of the Share Option Scheme to make an Offer to any Participant as the Board may in its absolute discretion select to take up Options entitling him or her to subscribe for such number of Shares as the Board may determine at the Exercise Price. Subject to the provisions of the Listing Rules, Options may be granted on such terms and conditions in relation to their vesting, exercise or otherwise (e.g. by linking their exercise to the attainment or performance of milestones by any member of the Group, the Grantee or any group of Participants) as the Board may determine, provided that such terms and conditions shall not be inconsistent with any other terms and conditions of the Share Option Scheme. It is expected that the Share Option Scheme will link the value of the Company with the interests of the Participants, enabling the Participants and the Company to develop together and promote the Company’s corporate culture.

Subject to the approval of Shareholders with respect to the adoption of the Share Option Scheme at the Extraordinary General Meeting, the total number of Shares which may be issued upon exercise of all Options to be granted under the Share Option Scheme and any other share option schemes must not in aggregate exceed 10% of the total issued Shares as of the Adoption Date, unless the Company obtains a fresh approval from Shareholders to renew the 10% limit on the basis that the maximum number of Shares in respect of which the Options may be granted under the Share Option Scheme together with any Options outstanding and yet to be exercised under the Share Option Scheme and any other share option schemes must not exceed 30% of the issued Shares from time to time.

Assuming that there is no change in the issued Shares after the Latest Practicable Date and up to the Adoption Date, the number of Shares issuable pursuant to the Share Option Scheme and any other share option schemes under the scheme limit prescribed in Note 1 of Rule 17.03(3) of the Listing Rules will be 133,333,350 Shares, representing 10% of the issued Shares as of the Adoption Date.

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LETTER FROM THE BOARD

The Company does not at present intend to appoint a trustee under the Share Option Scheme. None of the Directors is and will be a trustee of the Share Option Scheme nor has a direct or indirect interest in the trustees of the Share Option Scheme. With respect to the operation of the Share Option Scheme, the Company will, where applicable, comply with the relevant requirements under Chapter 17 of the Listing Rules, especially where any related matters are required to be approved by the Shareholders/independent non-executive Directors separately. As at the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder has a material interest in the proposed adoption of the Share Option Scheme and no Shareholder is required to abstain from voting at the Extraordinary General Meeting for approving the Share Option Scheme.

A summary of the principal terms of the Share Option Scheme is set out in Appendix I to this circular. A copy of the Share Option Scheme will be available for inspection at the Company’s principal place of business in Hong Kong at 31/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong, for a period of 14 days before the date of the Extraordinary General Meeting, and at the Extraordinary General Meeting.

The Group plans to grant Options to Participants in the coming 12 months under the Share Option Scheme after obtaining the approval through the Extraordinary General Meeting and after the expiry of six-month period from the Listing Date. As of the Latest Practicable Date, the first batch of target Participants included but not limited to (i) Ms. Chen Danxia, the executive Director, the chairman and chief executive officer of the Company, (ii) Mr. Xie Rusong, the executive Director and the vice president of the Company, (iii) Mr. Zhong Xuyi, the executive Director and the chief financial officer of the Company, and (iv) other six members of senior management of the Company. The expected size of first batch Options to be granted to the target Participants for each of Ms. Chen Danxia, Mr. Xie Rusong, Mr. Zhong Xuyi and the other six members of senior management of the Company is approximately 4.87%, 0.04%, 0.04% and 0.24% of the total issued Shares, respectively. As the proposed grant of Options to Ms. Chen Danxia will result in the Shares to be issued upon exercise of all Options to be granted to her being more than 1% of the Shares in issue in any 12-month period, pursuant to the Listing Rules, the grant of Options to Ms. Chen Danxia is conditional upon the approval by independent Shareholders at an extraordinary general meeting of the Company. The Company will make further announcement and/or circular in due course upon expiry of six-month period from the Listing Date with respect to any grant of the Options. Any exercise of the Options shall be subject to the Company’s compliance with the public float requirement under Rule 8.08 of the Listing Rules.

Value of the Options

Pursuant to the Listing Rules, the Directors are encouraged to state the value of all Options that can be granted under the Share Option Scheme as if they had been granted on the Latest Practicable Date in this circular. The Directors consider that it is not appropriate to state the value of all Options that can be granted under the Share Option Scheme as if they had been granted on the Latest Practicable Date as a number of variables which are crucial for the calculation of the value the Options have not been determined. Such variables include but are not limited to the exercise price, exercise period, any lock up period, any performance targets

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LETTER FROM THE BOARD

set and other variables. The Directors believe that any calculation of the value of the Options as at the Latest Practicable Date based on a great number of speculative assumptions would not be meaningful and would be misleading to the Shareholders.

Reasons for and benefits of the adoption of the Share Option Scheme

Reference is made to the Announcement containing summary information on the restricted share award scheme of the Company adopted on June 3, 2021 (“ Restricted Share Award Scheme ”). We note that the purpose, operations, selection criteria of Participants under the Share Option Scheme are similar to those of the Restricted Share Award Scheme. Despite the similarity in the purposes, operations, selection criteria regarding eligible participants, as the maximum number of award shares under the Restricted Share Award Scheme shall be no more than 25,000,000 Shares, representing 1.87% of the total number of issued Shares as at the Latest Practicable Date, the Board plans to first focus such grant of award shares to Directors and senior management of the Company, whereas as the Share Option Scheme is proposed to have a larger maximum quantity of grant with total number of Shares which may be issued upon exercise of Options to be no more than 10% of the total number of Shares in issue, the Board plans to also include mid-level core employees as potential target grantees under the Share Option Scheme other than Directors and senior management of the Company.

In addition, under the Share Option Scheme, there might be loss of incentive value if the share price languishes below the exercise price for an extended period of time, therefore the Board considers that the Share Option Scheme is more conducive in providing stronger long-term incentive to the Participants to improve the value of the Company, as compared to the Restricted Share Award Scheme which is more conducive to retaining the existing Directors and senior management of the Company with the purpose of maintaining a stable leadership and management within the Company. The management of the Company considers that the Share Option Scheme would provide an additional means to incentivize the talents of the Company without imposing additional pressure on the Group’s cash flow position and would facilitate the attraction and retention of talents who have made contributions to the success of the Company, whereas the Restricted Share Award Scheme will provide more direct incentive to encourage high-calibre individuals of the Group to perform their best in achieving business targets of the Group.

As the proposed Share Option Scheme and the Restricted Share Award Scheme may have different vesting schedule and different vesting conditions as determined by the Board from time to time, the adoption of two schemes will provide the Board more flexibility to determine and employ a combination of different share incentive to suit business needs of the Company. The Board will select the Participant(s) and eligible participants of the Restricted Share Award Scheme on a case-by-case basis based on the individual performance, salary grade/level, job title, time commitment, responsibilities or employment conditions according to the prevailing market practice and industry standard, or where appropriate, the financial resources of the employees, contribution to the revenue, profits or business development of the Group during the financial year or in the future, etc. in accordance to the internal human resource policy of the Company in effect from time to time.

Having considered (i) the view of the management of the Company on the importance of talents to the Group’s success; and (ii) the Company’s strategy to cultivate its talent-oriented culture and to incentivize or rewards the employees for their contributions to the Group which

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LETTER FROM THE BOARD

is beneficial to the long-term development of the Group, the Board considers that the adoption of the Share Option Scheme and the Restricted Share Award Scheme are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

3. CONDITIONS PRECEDENT OF THE SHARE OPTION SCHEME

The adoption of the Share Option Scheme is conditional upon:

• (i) the passing of the relevant ordinary resolution by the Shareholders at the Extraordinary General Meeting to approve and adopt the Share Option Scheme, and to authorize the Directors to grant Options to subscribe for Shares and to allot, issue and deal with Shares pursuant to the exercise of any Option granted under the Share Option Scheme; and

• (ii) the Listing Committee granting approval of the listing of, and permission to deal in, any Shares which may be issued pursuant to the exercise of Options under the Share Option Scheme.

An application will be made to the Listing Committee for the listing of, and permission to deal in, the Shares which may fall to be issued and allotted pursuant to the exercise of any Options granted under the Share Option Scheme.

4. EXTRAORDINARY GENERAL MEETING AND PROXY ARRANGEMENT

The notice of the Extraordinary General Meeting is set out on pages 20 to 22 of this circular.

Pursuant to the Listing Rules and the Articles of Association, any vote of Shareholders at a general meeting must be taken by poll where the chairman in good faith, decides to allow a resolution purely relating to a procedural or administrative matter to be voted on by a show of hands. An announcement on the poll results will be published by the Company after the Extraordinary General Meeting in the manner prescribed under the Listing Rules. None of the Shareholders is required to abstain from voting on any resolutions to be proposed at the Extraordinary General Meeting pursuant to the Listing Rules and/or the Articles of Association.

A form of proxy for use at the Extraordinary General Meeting is enclosed with this circular and such form of proxy is also published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.cheerwin.com). To be valid, the form of proxy must be completed and signed in accordance with the instructions printed thereon and deposited, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of attorney or authority at the Hong Kong share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the Extraordinary General

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LETTER FROM THE BOARD

Meeting (i.e. not later than 10:30 a.m. (Hong Kong time) on Wednesday, July 21, 2021) or the adjourned meeting (as the case may be). Completion and delivery of the form of proxy will not preclude you from attending and voting in person at the Extraordinary General Meeting if you so wish.

5. CLOSURE OF REGISTER OF MEMBERS

For the purpose of determining the entitlement to attend and vote at the Extraordinary General Meeting, the Company’s register of members will be closed from Tuesday, July 20, 2021 to Friday, July 23, 2021 (both days inclusive) during which period no transfer of Shares will be effected. In order to be eligible to attend and vote at the Extraordinary General Meeting, Shareholders whose Shares are not registered in their names should complete and lodge their respective instruments of transfer with the relevant share certificates with the Hong Kong share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, and in any case no later than 4:30 p.m. on Monday, July 19, 2021.

6. 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 respect to the Company. The Directors, having made all reasonable enquiries, 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.

Your attention is drawn to the additional information set out in the appendix to this circular.

7. RECOMMENDATION

The Directors consider that the proposed adoption of the Share Option Scheme is in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favor of the relevant resolution to be proposed at the Extraordinary General Meeting.

By order of the Board Cheerwin Group Limited Chen Danxia

Executive Director, Chairman and Chief Executive Officer

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX I

The following is a summary of the principal terms of the Share Option Scheme to be conditionally approved and adopted by the Shareholders at the Extraordinary General Meeting. It does not form part of, nor is it intended to be part of the rules of the Share Option Scheme and it would not be taken as affecting the interpretation of the rules of the Share Option Scheme required to be included in the Share Option Scheme pursuant to the Listing Rules.

1. PURPOSE OF THE SHARE OPTION SCHEME

The purpose of the Share Option Scheme is to attract, retain and motivate talented employees to strive towards long term performance targets set by the Group and to provide them with an incentive to work better for the interest of the Group. The Share Option Scheme will link the value of the Company with the interests of the Participants, enabling the Participants and the Company to develop together and promote the Company’s corporate culture.

2. PARTICIPANTS

Any Director or Employee who the Board considers, in its sole discretion, have contributed or will contribute to the Group.

3. MAXIMUM NUMBER OF SHARES FOR WHICH OPTIONS MAY BE GRANTED

• (i) Subject to sub-paragraph 3(ii):

• (a) The total number of Shares which may be issued upon exercise of Options to be granted under the Share Option Scheme or any other share option schemes adopted by the Company (and to which the provisions of Chapter 17 of the Listing Rules are applicable) shall not exceed 10% of the total number of the Shares in issue on the Adoption Date. Options which have lapsed shall not be counted in calculating the 10% limit.

• (b) The Company may refresh the 10% limit set out in sub-paragraph 3(i)(a) with Shareholders’ approval provided that each such limit (as refreshed) may not exceed the 10% of total number the Shares in issue as at the date of the Shareholders’ approval. Options previously granted under the Share Option Scheme and any other share option schemes adopted by the Company (and to which the provisions of Chapter 17 of the Listing Rules are applicable) (including those outstanding, cancelled or lapsed in accordance with the relevant scheme or exercised options) will not be counted for the purpose of calculating the limit to be refreshed. In such case, the Company shall send a circular to the Shareholders containing the information required under the Listing Rules.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX I

• (c) The Company may seek separate approval by Shareholders in general meeting of the Company for granting Options beyond the 10% limit set out in sub-paragraph 3(i)(a) provided that the Options in excess of the limit are granted only to Participants specially identified by the Company before such approval is sought. In such case, the Company shall send a circular to the Shareholders containing the information required under the Listing Rules.

• (ii) Notwithstanding anything in sub-paragraph 3(i) and subject to paragraphs 4 and 5, the total number of Shares which may be issued upon exercise of all Options granted and yet to be exercised under the Share Option Scheme or any other share option schemes adopted by the Company (and to which the provisions of Chapter 17 of the Listing Rules are applicable) must not exceed 30% of the total number of the Shares in issue from time to time. No Options may be granted under the Share Option Scheme and any other share option schemes of the Company if this will result in such limit being exceeded.

4. MAXIMUM ENTITLEMENT TO EACH PARTICIPANT

• (i) Subject to sub-paragraph 4(ii) and paragraph 5, the total number of Shares issued and to be issued upon exercise of the Options granted to each Participant (including both exercised, cancelled and outstanding Options) under the Share Option Scheme or any other share option schemes adopted by the Company (and to which the provisions of Chapter 17 of the Listing Rules are applicable) in any 12-month period must not exceed 1% of the total number of the Shares in issue.

• (ii) Notwithstanding sub-paragraph 4(i), any further grant of Options which would result in the number of Shares issued as aforesaid exceeding the said 1% limit must be subject to separate prior Shareholders’ approval with the relevant Participant and his close associates (as defined under the Listing Rules) (or his associates (as defined under the Listing Rules) if the Participant is a connected person) abstaining from voting. The Company shall send a circular to its Shareholders containing the information required under the Listing Rules. The number and terms of the Options to be granted to such Participant shall be fixed before the Shareholders’ approval of the grant of such Options and the date of Board meeting for proposing such further grant should be taken as the Offer Date for the purpose of calculating the Exercise Price.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX I

5. GRANT OF OPTIONS TO CONNECTED PERSONS

• (i) In addition to paragraph 4, each grant of Options to any Director, chief executive or substantial shareholder of the Company (or any of their respective associates) (as such terms are defined in rule 1.01 of the Listing Rules) shall be subject to the prior approval of the independent non-executive Directors of the Company (excluding any independent non-executive Director who is a proposed Grantee of the Option).

• (ii) Where any grant of Options to a substantial shareholder or an independent non-executive Director of the Company, or any of their respective associates (as defined under the Listing Rules), would result in the Shares issued and to be issued upon exercise of all Options already granted and to be granted (including Options exercised, cancelled and outstanding) to such person in the 12-month period up to and including the date of such grant:

• (a) representing in aggregate over 0.1% (or such other higher percentage as may from time to time be specified by the Stock Exchange) of the Shares in issue; and

• (b) having an aggregate value, based on the closing price of the Shares as stated in the daily quotation sheets issued by the Stock Exchange on the date of such grant, in excess of HK$5 million (or such other higher amount as may from time to time be specified by the Stock Exchange), such grant of Options shall be subject to prior approval by the Shareholders (voting by way of poll) in general meeting of the Company. The Grantee, his associates (as defined in the Listing Rules) and all core connected persons (as defined in the Listing Rules) of the Company shall abstain from voting in favour at such general meeting. The Company shall send a circular to its Shareholders containing the information required under the Listing Rules.

The circular to be issued by the Company to the Shareholders pursuant to the above paragraph shall contain the following information:

• (i) details of the number and terms (including the Exercise Price) of the Options to be granted to each Participant, which must be fixed before the Shareholders’ meeting and the Offer Date (which shall be the date of Board meeting at which the Board proposes to grant the proposed Options to the Participant);

• (ii) a recommendation from the independent non-executive Directors (excluding any independent non-executive Director who is the Grantee) to the independent Shareholders as to voting;

• (iii) the information required under Rules 17.02(2)(c) and 17.02(2)(d) and the disclaimer required under Rule 17.02(4) of the Listing Rules; and

• (iv) the information required under Rule 2.17 of the Listing Rules.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX I

6. RESTRICTION ON THE TIME OF GRANT OF THE OPTIONS

The Board shall not grant any Options after inside information has come or inside information has been the subject of a decision until such inside information has been announced pursuant to the requirements of the Listing Rules and Part XIVA of the Securities and Futures Ordinance (Chapter 571 of The Laws of Hong Kong). In particular, no Option shall be granted during the period commencing one month immediately preceding the earlier of:

• (i) the date of the Board meeting (as such date is first notified to the Stock Exchange in accordance with the Listing Rules) for approving the Company’s results for any year, half-year, quarterly or any other interim period (whether or not required under the Listing Rules); and

• (ii) the deadline for the Company to announce its results for any year or half-year under the Listing Rules, or quarterly or any other interim period (whether or not required under the Listing Rules), and ending on the date of the publication of the results announcement.

No Option shall be granted during any period of delay in publishing a results announcement.

7. TIME OF EXERCISE OF THE OPTION

An Option may be exercised in accordance with the terms of the Share Option Scheme at any time during a period as the Board may determine which shall not exceed ten (10) years from the date of grant subject to the provisions of early termination thereof. No Option may be granted more than ten (10) years after the Adoption Date. Save as determined by the Board and provided in the offer of the grant of the relevant Options, there is no minimum period for which an Option must be held before it can be exercised.

8. PERFORMANCE TARGETS

Save as determined by the Board and provided in the offer of the grant of the relevant Options, there is no performance target which must be achieved before any of the Options can be exercised.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX I

9. EXERCISE PRICE

Subject to any adjustments made pursuant to the terms of the Share Option Scheme, the Exercise Price shall be at a price determined by the Board at its absolute discretion and notified to the Participant and shall be at least the highest of:

• (i) the closing price of the Shares as stated in the daily quotation sheet issued by the Stock Exchange on the Offer Date;

• (ii) the average closing price of the Shares as stated in the daily quotation sheets issued by the Stock Exchange for the five Business Days immediately preceding the Offer Date; and

(iii) the nominal value of a Share on the Offer Date.

10. PAYMENT ON ACCEPTANCE OF THE GRANT OF OPTIONS

An Offer for the grant of Options must be accepted within seven (7) days inclusive of the day on which such Offer was made. Upon acceptance of the grant of Options, the Participant shall pay HK$1.00 as consideration for the grant thereof.

11. LIFE OF SHARE OPTION SCHEME

Subject to paragraph 17, the Share Option Scheme shall be valid and effective for a period of ten (10) years commencing on the Adoption Date after which period no further Options will be granted but the provisions of the Share Option Scheme shall in all other respects remain in full force and effect and Options which are granted during the life of the Share Option Scheme may continue to be exercisable in accordance with their terms of issue.

12. RANKING OF SHARES

The Shares to be allotted upon the exercise of an Option will be subject to all the provisions of the memorandum and articles of association of the Company and the laws of the Cayman Islands from time to time and shall rank pari passu in all respects with the then existing fully paid Shares in issue on the allotment date or, if that date falls on a day when the register of members of the Company is closed, the first date of the re-opening of the register of members, and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the allotment date or, if that date falls on a day when the register of members of the Company is closed, the first day of the re-opening of the register of members, other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefore shall be before the allotment date.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX I

No dividends (including distributions made upon the liquidation of the Company) will be payable and no voting rights will be exercisable in relation to an Option that has not been exercised. A Share issued upon the exercise of an Option shall not carry voting rights until the completion of the registration of the Grantee (or any other person) on the register of members of the Company as the holder thereof.

13. TRANSFERABILITY OF OPTIONS

An Option shall be personal to the Grantee and shall not be assignable or transferable. No Grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interests in favour of any third party over or in relation to any Option.

14. RIGHTS ON CEASING EMPLOYMENT OR DEATH

If a Grantee ceases to be an employee of the Company or any of its subsidiaries:

• (i) by any reason other than death or termination of his/her employment on the grounds specified in paragraph 15 below, the Grantee may exercise the Option within a period of three (3) months from the date of such cessation or termination of such employment which date shall be the Grantee’s last actual working day with the Company or the relevant subsidiary; or

• (ii) by reason of death, none of the events which would be a ground for termination of his/her employment as specified in paragraph 15 below having arisen, his/her personal representative(s) shall be entitled to exercise the Option in full (to the extent not already exercised) within six (6) months from the date of death of the Grantee (or such longer period within the Option Period as the Board may determine) or the expiration or lapse of the relevant Option Period, whichever is earlier.

15. RIGHTS ON DISMISSAL

If a Grantee ceases to be an employee of the Company or any of its subsidiaries on the grounds that he/she has been guilty of serious misconduct, or on any other ground on which the Group as an employer would be entitled to terminate his/her employment at common law or pursuant to any applicable laws or under the Grantee’s service contract with the Group, or has been convicted of any criminal offence involving his/her integrity or honesty, his/her Option will lapse automatically and not be exercisable after the date of termination of his/her employment.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX I

16. RIGHTS ON COMPROMISE OR ARRANGEMENT

If a compromise or arrangement between the Company and its members or creditors is proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other companies, the Company shall give notice to all the Grantees on the same time as it gives notice of the meeting to its members or creditors to consider such a compromise or arrangement and any Grantee (or his/her legal personal representative or receiver) may by notice in writing to the Company accompanied by a remittance for the full amount of the aggregate Exercise Price in respect of which the notice is given (such notice to be received by the Company not later than seven (7) business days prior to the proposed meeting), exercise the Option to its full extent or to the extent notified by the Company and the Company shall as soon as possible and in any event no later than the business day prior to the date of the proposed meeting, allot and issue such number of Shares to the Grantee which falls to be issued on such exercise of the Option credited as fully paid and register the Grantee as a holder thereof.

17. RIGHTS ON GENERAL OFFER

If a general offer is made to all Shareholders (or all such shareholders other than the offeror and/or any person controlled by the offeror and/or any person acting in concert with the offeror (as defined in the Takeovers Codes)) and such offer becomes or is declared unconditional during the Option Period of the relevant Option, the Grantee shall be entitled to exercise the Option in full (to the extent not already exercised) at any time up to the close of the offer or the record date for entitlements under the scheme of arrangement, as the case may be.

18. RIGHTS ON WINDING UP

In the event a notice is given by the Company to its members to convene a general meeting for the purposes of considering, and if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall forthwith give notice thereof to all Grantees and thereupon, each Grantee (of his/her legal personal representative(s)) shall be entitled to exercise all or any of his/her Options (to the extent not already exercised) at any time prior to the proposed general meeting of the Company referred to above by giving notice in writing to the Company, accompanied by a remittance for the full amount of the aggregate Exercise Price for the Shares in respect of which the notice is given, whereupon the Company shall as soon as possible and, in any event, no later than the business day immediately prior to the date of the proposed general meeting, allot the relevant Shares to the Grantee credited as fully paid.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX I

19. LAPSE OF OPTION

An Option shall lapse automatically on the earliest of:

• (i) the expiry of the period referred to in paragraph 7 above;

• (ii) the expiry of the periods or the occurrence of the relevant event referred to in paragraphs 14, 15, 17 and 18 above;

• (iii) the expiry of the period referred to in paragraph 16 above subject to any court of competent jurisdiction making an order to prohibit the offeror from acquiring the remaining Shares in the offer, the relevant period within which the Options may be exercised shall not begin to run until the discharge of the order in question or unless the offer lapses or is withdrawn before that date;

• (iv) subject to the scheme of arrangement becoming effective, the expiry of the period for exercising the Options;

• (v) the date of the commencement of the winding-up of the Company (as determined in accordance with the Companies Law (as revised) of the Cayman Islands);

• (vi) the date on which the Grantee ceases to be a Participant by reason of the termination of his/her relationship with the Group on the grounds that he/she has been guilty of serious misconduct, or has been convicted of any criminal offence involving his/her integrity or honesty, or has become insolvent, bankrupt or has made arrangements or compositions with his/her creditors generally, or in relation to an employee of the Group on any other grounds as determined by the Board on which the Group as an employer would be entitled to terminate his/her employment at common law or pursuant to any applicable laws or under the Grantee’s service contract with the Group. A resolution of the Board or the board of directors of the relevant subsidiary to the effect that the relationship of a Grantee has or has not been terminated on one or more of the grounds specified in this paragraph shall be conclusive and binding on the Grantee, and where appropriate, his/her legal personal representative(s);

(vii) the date on which the Grantee commits a breach of paragraph 13 above;

• (viii) the date on which the Grantee commits a breach of any term or condition attached to the grant of the Option, unless otherwise resolved to the contrary by the Board; and

• (ix) the date on which the Board resolves that the Grantee has failed or otherwise is or has been unable to meet the continuing criteria to be a Participant for any other reason.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX I

20. EFFECTS OF ALTERATIONS TO CAPITAL

In the event of any capitalisation issue, rights issue, sub-division or consolidation of shares or reduction of capital of the Company, such corresponding alterations (if any) shall be made (except on an issue of securities of the Company as consideration in a transaction to which the Company is a party which shall not be regarded as a circumstance requiring alteration or adjustment) in:

• (i) the aggregate number of Shares subject to the Option so far as unexercised; and/or

• (ii) the Exercise Price of each outstanding Option,

an independent financial adviser to the Company or the auditors shall confirm in writing to the Directors, either generally or as regards any particular Grantee that any such alterations shall satisfy the requirements set out in the Rule 17.03(13) of the Listing Rules and the note thereto and the supplementary guidance attached to the letter from the Stock Exchange dated September 5, 2005 to all issuers relating to share option schemes and shall give the Grantee the same proportion of the issued share capital of the Company as that to which the Grantee was previously entitled, provided that no such alterations shall be made if the effect of such alterations would be to enable a Share to be issued at less than its nominal value (if any). The capacity of the auditors or the independent financial adviser, as the case may be, in this paragraph is that of experts and not arbitrators and their confirmation shall, in the absence of manifest error, be final and conclusive and binding on the Company and the Grantees.

21. CANCELLATION OF OPTIONS

Subject to paragraphs 14 and 15 above, any cancellation of Options granted by the Board but not exercised must notify the Grantees of the relevant Options in writing. Where the Company cancels Options and issues new ones to the same share option holder, the issue of such new Options may only be made under a scheme with available unissued Options (excluding the cancelled Options) within the limit approved by the Shareholders as mentioned in note (1) to Rule 17.03(3) of the Listing Rules.

22. TERMINATION OF THE SHARE OPTION SCHEME

The Company may by the necessary resolution in a general meeting or the Board may at any time resolve to terminate the Share Option Scheme and in such event no further Option may be offered or granted but in all other respects the provisions of the Share Option Scheme shall remain in full force and effect in respect of the Options which are granted during the life of the Share Option Scheme and which remain unexpired immediately prior to the termination of the operation of the Share Option Scheme. Granted Options which are unexercised and unexpired immediately prior to the termination of the operation of the Share Option Scheme shall continue to be valid and exercisable in accordance with their terms of issue after the termination of the Share Option Scheme.

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SUMMARY OF THE PRINCIPAL TERMS OF THE SHARE OPTION SCHEME

APPENDIX I

23. ALTERATION OF THE SHARE OPTION SCHEME

Subject to the terms set out in the paragraph below, the Board may amend any of the provisions of the Share Option Scheme (including without limitation amendments in order to comply with changes in legal or regulatory requirements and amendments in order to waive any restrictions, imposed by the provisions of the Share Option Scheme, which are not found in Chapter 17 of the Listing Rules) at any time (but not so as to affect adversely any rights which have accrued to any Grantee at that date). Those specific provisions of the Share Option Scheme which relate to the matters set out in Rule 17.03 of the Listing Rules cannot be altered to the advantage of the Participants, and no changes to the authority of the Board or administrators of the Share Option Scheme in relation to any alteration of the terms herein shall be made, without the prior approval of Shareholders in general meeting.

Any alterations to the terms and conditions of the Share Option Scheme which are of a material nature, or any change to the terms of Options granted, must be approved by the Shareholders in general meeting, except where the alterations take effect automatically under the existing terms of the Share Option Scheme. The Share Option Scheme so altered must comply with Chapter 17 of the Listing Rules.

Any change to the authority of the Board or administrators of the Share Option Scheme in relation to any alteration to the terms of the Share Option Scheme must be approved by Shareholders in general meeting of the Company.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

Cheerwin Group Limited 朝雲集團有限公司

(Incorporated in the Cayman Islands with limited liability )

(Stock Code: 6601)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the extraordinary general meeting (the “ Extraordinary General Meeting ”) of Cheerwin Group Limited (the “ Company ”) will be held at Conference Room, 7th Floor, North Podium Building, Liby Center, No. 2 Luju Road, Liwan District, Guangzhou, Guangdong Province, China on Friday, July 23, 2021 at 10:30 a.m. for the purpose of considering and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

“ THAT subject to and conditional upon The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) granting approval of the listing of and permission to deal in the shares falling to be issued pursuant to the exercise of any options granted under the share option scheme referred to in the circular despatched to the shareholders of the Company on the same day as this notice, the terms of which are set out in the printed document marked “A” now produced to this meeting and for the purpose of identification signed by the chairman of this meeting hereof (the “ Share Option Scheme ”), the Share Option Scheme be and is hereby approved and adopted by the Company and that the directors of the Company be authorized, at their sole discretion, to:

• (a) grant options in accordance with the Share Option Scheme, provided that the total number of shares of the Company (the “ Shares ”) which may be issued upon exercise of all options to be granted under the Share Option Scheme and any other share option schemes of the Company (if any), shall not exceed 10% of the issued Shares as at the date of passing this resolution;

• (b) alter and/or modify the Share Option Scheme from time to time provided that such alteration and/or modification is effected in accordance with the provisions of the Share Option Scheme relating to the alteration and/or modification and subject to Chapter 17 of the Rules Governing the Listing of Securities on the Stock Exchange (the “ Listing Rules ”);

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (c) allot and issue from time to time such number of Shares as may be required to be allotted and issued pursuant to the exercise of options granted under the Share Option Scheme and subject to the Listing Rules; and

• (d) take all such steps as may be necessary, desirable and/or expedient to implement the Share Option Scheme.”

By order of the Board Cheerwin Group Limited Chen Danxia Executive Director, Chairman and Chief Executive Officer

Hong Kong, July 8, 2021

Registered office: Head office in the PRC: Cricket Square, Hutchins Drive No. 2, Luju Road PO Box 2681 Liwan District Grand Cayman, KY1-1111 Guangzhou, Guangdong Province Cayman Islands China

Principal place of business in Hong Kong:

31/F, Tower Two, Times Square 1 Matheson Street, Causeway Bay Hong Kong

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NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

1. A resolution at the meeting will be taken by poll (except where the chairman in good faith, decides to allow a resolution purely relating to a procedural or administrative matter to be voted on by a show of hands) pursuant to the Company’s articles of association and the Listing Rules. The results of the poll will be published on the websites of the Stock Exchange and the Company in accordance with the Listing Rules.

2. Any shareholder of the Company entitled to attend and vote at the above meeting is entitled to appoint another person as his proxy to attend and vote instead of him. A shareholder may appoint any number of proxies to represent him and vote on his behalf at the above meeting. A proxy need not be a shareholder of the Company. If more than one proxy is appointed, the number of shares in respect of which each such proxy so appointed must be specified in the relevant form of proxy. Every shareholder present in person or by proxy shall be entitled to one vote for each share held by him.

3. In order to be valid, the form of proxy together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of attorney or authority, must be deposited at the Hong Kong share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong not less than 48 hours before the time appointed for the above meeting (i.e. not later than 10:30 a.m. (Hong Kong time) on Wednesday, July 21, 2021) or the adjourned meeting (as the case may be). Completion and return of the form of proxy shall not preclude a shareholder of the Company from attending and voting in person at the meeting and, in such event, the instrument appointing a proxy shall be deemed to be revoked.

4. Closure of Register of Members

For the purpose of determining the entitlement to attend and vote at the Extraordinary General Meeting, the Company’s register of members will be closed from Tuesday, July 20, 2021 to Friday, July 23, 2021 (both days inclusive) during which period no transfer of Shares will be effected. In order to be eligible to attend and vote at the Extraordinary General Meeting, unregistered holders of shares of the Company whose Shares are not registered in their names should complete and lodge their respective instruments of transfer with the relevant share certificates with the Hong Kong share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, and in any case no later than 4:30 p.m. on Monday, July 19, 2021.

In the event that the Extraordinary General Meeting is adjourned to a date later than Friday, July 23, 2021 because of bad weather or other reasons, the book closure period and record date for determination of entitlement to attend and vote at the above meeting will remain the same as stated above.

1. References to time and dates in this notice are to Hong Kong time and dates.

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