Cheerwin Group Limited — Proxy Solicitation & Information Statement 2021

Oct 29, 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 GRANT OF SHARE OPTIONS AND NOTICE OF EXTRAORDINARY GENERAL MEETING

A 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 Tuesday, 16 November 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, 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 Meeting (i.e. not later than 10:30 a.m. (Hong Kong time) on Sunday, 14 November 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 FOR THE EXTRAORDINARY GENERAL MEETING

The Company will implement the following prevention and control measures 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.

1 November 2021

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16

– i –

DEFINITIONS

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

• “Announcement”

the announcement of the Company dated 23 September 2021 in relation to the grant of Share Options by the Company (including the Proposed Grant)

• “associate(s)”

has the same meaning as defined in the Listing Rules

• “Board” the board of Directors

• “CAGR”

compound annual growth rate, representing the year over year growth rate for a multi-period of time, calculating by computing the nth root of the ending value over beginning value then minus one, where n equals to the total number of periods minus one

• “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)

• “core connected person(s)”

• has the same meaning as defined in the Listing Rules

• “Date of Grant”

• 23 September 2021, being the date on which the grant of 69,800,000 Share Options and the grant of 19,800,000 Restricted Shares were approved by the Board

• “Director(s)” the director(s) of the Company

• “Employee(s)”

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

• “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 Tuesday, 16 November 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 16 to 17 of this circular, or any adjournment thereof

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DEFINITIONS

“Grantee(s)” any Participant(s) who accept(s) 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 Share Option in consequence of the death of the original Grantee “Group” the Company and its subsidiaries

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

• “Independent Shareholders” Shareholders other than those who are required to abstain from voting on the resolution at the Extraordinary General Meeting approving the transactions contemplated thereunder

• “KPI” key performance indicators

• “Latest Practicable Date” 27 October 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular

• “Listing Date” 10 March, 2021, the date on which the Shares are listed on the Stock Exchange

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

• “Ms. Chen” Ms. Chen Danxia, executive Director, chairman of the Board and chief executive officer of the Company

• “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

• “PRC” or “China” the People’s Republic of China

• “Proposed Grant” the conditional grant of the Share Options to Ms. Chen to subscribe for 65,000,000 Shares

• “Restricted Shares” the Shares granted or to be granted under the RSA Scheme

“RMB” Renminbi, the lawful currency of the PRC

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DEFINITIONS

• “RSA Grant” the grant of an aggregate of 19,800,000 Restricted Shares to a total of nine RSA Grantees pursuant to the RSA Scheme on 23 September 2021 as set out in the Announcement

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

• “RSA Scheme” the restricted share award scheme adopted by the Company on 3 June 2021

• “Share(s)” ordinary share(s) in the capital of the Company with a nominal value of US$0.0000002 each

• “Share Option(s)” the share option(s) granted or to be granted under the Share Option Scheme

• “Share Option Scheme” the share option scheme adopted by the Company on 23 July 2021

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

• “SOS Grant” the grant of an aggregate of 69,800,000 Share Options to a total of nine Participants entitled under the Share Option Scheme to subscribe for a total of 69,800,000 Shares on 23 September 2021 as set out in the Announcement

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

• “Substantial Shareholder(s)” has the same meaning as defined in the Listing Rules

• “Trustees”

• the two trustees appointed or to be appointed by the Company to hold Restricted Shares separately for the respective benefit of the connected persons and other non-connected persons of the Company for the purpose of the RSA Grant

• “US$”

United States dollars, the lawful currency of the United States

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DEFINITIONS

“Vesting Conditions” the vesting conditions for the grant of Restricted Shares pursuant to the RSA Scheme as set out in the Announcement “%” per cent

Notes:

1. All times and dates referred to in this circular refer to Hong Kong local times and dates.

2. In the event of any inconsistency, the English text of this circular and the accompanying form of proxy shall prevail over the Chinese text.

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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: Ms. Chen Danxia (Chairman and Chief Executive Officer) Mr. Xie Rusong Mr. Zhong Xuyi

Non-executive Director: Mr. Chen Zexing

Independent non-executive Directors: Dr. De-Chao Michael Yu Mr. Guo Sheng Mr. Chan Wan Tsun Adrian Alan

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

Principal place of business in Hong Kong: 31/F, Tower Two, Times Square 1 Matheson Street, Causeway Bay Hong Kong

1 November 2021

To the Shareholders

Dear Sir/Madam,

PROPOSED GRANT OF SHARE OPTIONS AND NOTICE OF EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

Reference is made to the Announcement in relation to, among others, the conditional grant of Share Options by the Company to Ms. Chen. Pursuant to the Announcement, the Company offered to grant the Share Options under the SOS Grant and the Restricted Shares under the RSA Grant on 23 September 2021. The Participants entitled under both grants are identical, consisting of three executive Directors and six senior management and Employees of the Company. Under the SOS Grant, the Company offered to grant an aggregate of 69,800,000 Share Options to the nine Participants to subscribe for a total of 69,800,000 Shares, representing approximately 5.23% of the issued Shares as at the Date of Grant. Under the RSA

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LETTER FROM THE BOARD

Grant, the Company granted an aggregate of 19,800,000 Restricted Shares to the nine RSA Grantees, representing approximately 1.48% of the issued Shares as at the Date of Grant, among which 15,000,000 Restricted Shares were granted to Ms. Chen, representing approximately 1.12% of the issued Shares as at the Date of Grant.

The purpose of this circular is to provide the Shareholders with (i) further information in respect of the Proposed Grant; (ii) the recommendation of the Board, including all independent non-executive Directors, in relation to the Proposed Grant; and (iii) the notice of the Extraordinary General Meeting at which the ordinary resolution will be proposed for the Independent Shareholders to consider and if thought fit, approve the Proposed Grant.

2. THE PROPOSED GRANT

Reference is made to the Announcement in relation to, among others, the grant of 65,000,000 Share Options to Ms. Chen, the Board (including all the independent non-executive Directors) has resolved to conditionally grant the Share Options to Ms. Chen to subscribe for a total of 65,000,000 Shares.

Details of the Proposed Grant are set out below:

Date of Grant : 23 September 2021 Grantee : Ms. Chen, executive Director, chairman of the Board and chief executive officer of the Company Exercise price of the Share : HK$4.33 per Share, which representing the highest of: Options granted (i) the closing price of HK$4.33 per Share as stated in the Stock Exchange’s daily quotation sheet on the Date of Grant; (ii) the average closing price of HK$4.098 per Share as stated in the Stock Exchange’s daily quotation sheets for the five business days immediately preceding the Date of Grant; and (iii) the nominal value of US$0.0000002 per Share. Consideration for : The amount payable by Ms. Chen to the Company on acceptance acceptance of the offer for the grant of the Share Options is HK$1.00. Such amount shall be paid in seven days from obtaining the Independent Shareholders’ approval at the Extraordinary General Meeting. Number of Share : 65,000,000 Share Options Options granted

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LETTER FROM THE BOARD

• Closing price of the Shares : HK$4.33 per Share on the Date of Grant

• Validity period of the : The option period of the Share Options shall be not Share Options more than 10 years commencing from the Date of Grant, and the Share Options shall lapse at the expiry of the option period (as defined under the Share Option Scheme).

In respect of the Share Options to be granted to Ms. Chen, from the date upon obtaining the Independent Shareholders’ approval at the Extraordinary General Meeting.

• Exercise period of the : Subject to the terms of the Share Option Scheme and Share Options the attainment of the Performance Target (as defined below) and terms set out in the letter of grant:

• (i) up to 8,750,000 Share Options (subject to the rounding to the prevailing board lot) will become exercisable from 15 April 2022;

• (ii) up to 8,750,000 Share Options (subject to the rounding to the prevailing board lot) will become exercisable from 15 April 2023;

• (iii) up to 8,750,000 Share Options (subject to the rounding to the prevailing board lot) will become exercisable from 15 April 2024;

• (iv) up to 8,750,000 Share Options (subject to the rounding to the prevailing board lot) will become exercisable from 15 April 2025;

• (v) up to 5,000,000 Share Options (subject to the rounding to the prevailing board lot) will become exercisable from 15 April 2026;

• (vi) up to 5,000,000 Share Options (subject to the rounding to the prevailing board lot) will become exercisable from 15 April 2027;

• (vii) up to 5,000,000 Share Options (subject to the rounding to the prevailing board lot) will become exercisable from 15 April 2028;

• (viii) up to 5,000,000 Share Options (subject to the rounding to the prevailing board lot) will become exercisable from 15 April 2029;

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LETTER FROM THE BOARD

• (ix) up to 5,000,000 Share Options (subject to the rounding to the prevailing board lot) will become exercisable from 15 April 2030; and

• (x) up to 5,000,000 Share Options (subject to the rounding to the prevailing board lot) will become exercisable from 15 April 2031.

• Vesting date of the : Among 65,000,000 Share Options pursuant to the Share Options Proposed Grant, of which 15,000,000 will be vested in four equal tranches annually from 2022, and of which 50,000,000 Share Options will be vested in ten equal tranches annually from 2022, subject to the terms of the Share Option Scheme and the fulfilment of the Performance Target:

• (i) if the Performance Target is achieved within first year from the Listing Date, 8,750,000 Share Options will vest on 15 April 2022;

• (ii) if the Performance Target is achieved between first to second year from the Listing Date, 8,750,000 Share Options will vest on 15 April 2023;

• (iii) if the Performance Target is achieved between second to third year from the Listing Date, 8,750,000 Share Options will vest on 15 April 2024;

• (iv) if the Performance Target is achieved between third to forth year from the Listing Date, 8,750,000 Share Options will vest on 15 April 2025;

• (v) if the Performance Target is achieved between forth to fifth from the Listing Date, 5,000,000 Share Options will vest on 15 April 2026;

• (vi) if the Performance Target is achieved between fifth to sixth from the Listing Date, 5,000,000 Share Options will vest on 15 April 2027;

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LETTER FROM THE BOARD

• (vii) if the Performance Target is achieved between sixth to seventh from the Listing Date, 5,000,000 Share Options will vest on 15 April 2028;

• (viii) if the Performance Target is achieved between seventh to eighth from the Listing Date, 5,000,000 Share Options will vest on 15 April 2029;

• (ix) if the Performance Target is achieved between eighth to ninth from the Listing Date, 5,000,000 Share Options will vest on 15 April 2030; and

• (x) if the Performance Target is achieved between ninth to tenth from the Listing Date, 5,000,000 Share Options will vest on 15 April 2031.

• Performance target : The Company has established an appraisal mechanism (“ Performance Target ”) for the purpose of calculating and assessing the fulfilment of performance targets by each of the Grantees, including Ms. Chen, in relation to vesting of Share Options granted to them. The appraisal mechanism is a scoring system which comprises a mixture of KPI components which vary among the Grantees. Such KPI applied to Ms. Chen solely comprises of performance targets for the business of the Group as a whole.

The KPI in relation to the Group as a whole include:

• (a) Annual revenue growth rate of the Group (with a weight of 50%); and

• (b) Annual net profit growth rate of the Group (with a weight of 50%).

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LETTER FROM THE BOARD

The weighted average calculation result (the “ Result ”) of the two indicators (a) and (b) above will be used to determine the performance coefficient of the Company (the “ Coefficient ”):

• (i) if the Result is 100% or more, the Coefficient will be 1;

• (ii) if the Result is between 90% and 100% (not including 100%), the Coefficient will be 0.9;

• (iii) if the Result is between 80% and 90% (not including 90%), the Coefficient will be 0.8;

• (iv) if the Result is between 70% and 80% (not including 80%), the Coefficient will be 0.7; and

• (v) if the Result is less than 70%, the Coefficient will be 0.

The number of Share Options vested to Ms. Chen in a year will be calculated by multiplying the total number of Share Options planned to be vested to her in the year by the Coefficient of the same year.

The Shares to be allotted upon exercise of the Share Options shall rank pari passu with the Shares then in issue in all respects, including voting rights, entitlement to dividends, transfer and other rights (including those arising on liquidation of the Company) paid or made on or after the relevant exercise date of the Share Options. The Share Options themselves, however, do not carry any right to voting, dividend, transfer or other rights (including those arising on the liquidation of the Company) prior to their being exercised and the underlying Shares being issued.

As at the Latest Practicable Date, no grant of share options has been made to Ms. Chen by the Company under the Share Option Scheme and any other share option schemes of the Company except for, on a conditional basis, the Proposed Grant.

None of the Directors is the trustee of the Share Option Scheme nor do they have any direct or indirect interest in the trustee of the Share Option Scheme.

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LETTER FROM THE BOARD

3. REASONS FOR THE GRANT OF SHARE OPTIONS

The purpose of the Proposed Grant is to grant incentive and rewards to recognise the significant efforts and contribution of Ms. Chen in the development of the Group’s business. The Board considers that the above purpose can be achieved by granting the Share Options as it demonstrates to Ms. Chen that her efforts and contributions to the Group are valued and will be rewarded.

Ms. Chen is the executive Director, the chairman of the Board and the chief executive officer of the Company. She has more than 14 years of experience in the consumer goods industry. With her extensive experience in operation management and corporate strategic development in the consumer goods and cosmetic products industry, Ms. Chen is principally responsible for overseeing the overall management and business operation and formulating strategies and operational plans of our Group.

Ms. Chen joined the Group in January 2016 and assumed the roles of the executive Director, the chairman of the Board and the chief executive officer of the Company since then. Under the leadership of Ms. Chen, the financial performance of the Group has been continuously improving. From 2017 to 2020, the Company’s gross profit increased from RMB483.9 million for the year ended 31 December 2017 to RMB502.1 million for the year ended 31 December 2018, RMB599.9 million for the year ended 31 December 2019 and further to RMB742.6 million for the year ended 31 December 2020, representing a CAGR of 15.4%.

As evidenced by the Group’s continuous improvement of financial performance over the years, Ms. Chen’s leadership, expertise, management skills and insights into the industry are of critical importance to the development and growth of the Group. Through the Proposed Grant and the RSA Grant to Ms. Chen, the Company provides her with further incentives by offering her the opportunity to obtain further ownership interest in the Company in a period of ten years. The Board considered that this arrangement incentivises Ms. Chen to remain employed with the Group as the key management during such ten-year period and thereby enabling the Group and the Shareholders to benefit from the continued service of Ms. Chen during such period.

In addition, pursuant to the terms of the Proposed Grant and the RSA Grant to Ms. Chen, she could only exercise the Share Options and the Restricted Shares if and only if the respective Performance Target and Vesting Conditions, which comprise solely of KPI components relating to annual revenue growth rate and annual net profit growth rate of the Group, for the relevant period can be achieved. As such, the Board believes that the Proposed Grant and the RSA Grant to Ms. Chen will encourage her to perform her best in achieving the financial goals of the Group to promote the turnover and profitability of the Group and at the same time allow herself to enjoy her own benefit of the Share Options and the Restricted Shares.

Compared with other alternative means to incentivise the management, such as commission fees or cash incentives, the Board considered that the Proposed Grant and the RSA Grant to Ms. Chen are more appropriate as they will not impose additional pressure on the Group’s cash flow position. Furthermore, under the Proposed Grant, there might be loss of incentive value if the share price languishes below the exercise price for an extended period of time. The Board considered that the Proposed Grant will provide long-term incentive to

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LETTER FROM THE BOARD

Ms. Chen to improve the value of the Group and that Ms. Chen will share common interests and objectives with the Group as well as the Independent Shareholders upon her exercise of the Share Options and the Restricted Shares, which is beneficial to the long-term development of the Group.

Having considered the above, the Board and the remuneration committee of the Company considered that the Proposed Grant together with the RSA Grant to Ms. Chen is fair and reasonable and in the interest of the Company and the Shareholders as a whole.

4. LISTING RULES IMPLICATIONS

Pursuant to Rule 17.04(1) of the Listing Rules and the Share Option Scheme, the grant of Share Options by the Company to any Director, chief executive, or Substantial Shareholder(s) of the Company or any of their respective associates must be approved by the independent non-executive Directors (excluding independent non-executive Directors who are the grantees of the Share Options concerned). The grant of Share Options to Ms. Chen have been reviewed and approved by the independent non-executive Directors accordingly.

Pursuant to Rule 17.03(4), where any further grant of Share Options to the grantees would result in the Shares issued and to be issued upon exercise of all Share Options granted and to be granted to such person (including exercised, cancelled and outstanding) in the 12-month period up to and including the date of such further grant representing in aggregate over 1% of the relevant class of Shares in issue, such further grant must be separately approved by Shareholders in general meeting with such grantee and his close associates (or his associates if the grantee is a connected person) abstaining from voting.

As at the Date of Grant, there were 1,333,333,500 Shares in issue. The Proposed Grant of 65,000,000 Share Options to Ms. Chen, being an executive Director, the chairman of the Board and the chief executive officer of the Company, will result in the Shares to be issued upon exercise in full of the Share Options to be granted to her in the 12-month period up to and including the Date of Grant representing in aggregate over 1% of the Shares in issue.

Accordingly, the Company proposes to seek the approval of the Proposed Grant by the Independent Shareholders at the Extraordinary General Meeting. As required under the Note to Rule 17.03(4) of the Listing Rules, Ms. Chen and her respective associates, being Mr. Chen Kaixuan, Mr. Chen Kaichen, Ms. Li Ruohong, Ms. Ma Huizhen and Cheerwin Global Limited, shall abstain from voting at the Extraordinary General Meeting for the purpose of approving the Proposed Grant. As at the Latest Practicable Date, without taking into account the Restricted Shares under the RSA Grant, Ms. Chen and her associates held in aggregate 991,743,500 Shares, representing approximately 74.38% of the total number of Shares in issue.

For the purpose of the RSA Grant, the Company will appoint two Trustees to hold Restricted Shares separately for the respective benefit of the connected persons and other non-connected persons of the Company. Pursuant to the Announcement and the RSA Scheme, the 19,800,000 Restricted Shares granted to the nine RSA Grantees, including the 15,000,000 Restricted Shares granted to Ms. Chen, representing approximately 1.12% of the issued Shares as at the Date of Grant, under the RSA Grant will be existing Shares transferred from Cheerwin Global Limited, the controlling Shareholder of the Company, to the Trustees (the “ Transfer ”), and no new Shares will be issued by the Company as a result of the RSA Grant. As of the Latest

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LETTER FROM THE BOARD

Practicable Date, the Trustees and their respective ultimate beneficial owners are third parties independent of the Company and its connected persons and Cheerwin Global Limited has not transferred any Shares to the Trustees. No consideration will be involved for the Transfer and the Transfer will take place after six months from the Listing Date, in compliance with the relevant requirements under Chapter 14A and Rule 10.07(1) of the Listing Rules.

5. EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is the shareholding structure of the Company (a) as at the date of the Latest Practicable Date; (b) immediately after the allotment and issuance of new Shares upon the full exercise of the Share Options, excluding the Proposed Grant to Ms. Chen; and (c) immediately after the allotment and issuance of new Shares upon the full exercise of the Share Options and the Proposed Grant to Ms. Chen, assuming there being no other change in the share capital or shareholding of the Company from the Latest Practicable Date to the date of such allotment and issuance of new Shares:

				(b) Immediately after the	(b) Immediately after the	(b) Immediately after the
				allotment and issuance			(c) Immediately after the
				of new Shares upon full			allotment and issuance of
				**exercise of **	**the **	Share	**new Shares **	upon full
				Options, excluding the			exercise of the Share
	(a) As at the Latest			**Proposed **	Grant to		Options and the Proposed
Name(1)	Practicable Date			Ms. Chen			Grant to Ms. Chen(2)
	Number of	Approximate		Number of	Approximate		Number of	Approximate
	Shares	percentage(8)		Shares	percentage(8)		Shares	percentage(8)
Non-public Float
Ms. Chen and her
associates(3)	991,743,500	74.38%		991,743,500		74.11%	1,056,743,500	75.31%
Mr. Xie Rusong(4)	–		–	600,000		0.04%	600,000	0.04%
Mr. Zhong Xuyi(5)	–		–	600,000		0.04%	600,000	0.04%
Public Float
Ms. Wang Dong(6)	–		–	600,000		0.04%	600,000	0.04%
Five other Grantees
under the Share
Option Scheme(7)	–		–	3,000,000		0.22%	3,000,000	0.21%
Public Shareholders	341,590,000	25.62%		341,590,000		25.53%	341,590,000	24.34%
Sub-total	341,590,000	25.62%		345,190,000		25.80%	345,190,000	24.60%
Total	1,333,333,500	100.00%		1,338,133,500		100.00%	1,403,133,500	100.00%
Notes:

• (1) All the Grantees under the Share Option Scheme are each subject to the undertaking that, if he/she is/becomes a core connected person of the Company or otherwise not recognised as a member of the public pursuant to the Listing Rules, he/she shall not exercise the Share Option(s) if and to the extent that the public float of the Company as required in accordance with the Listing Rules (i) has fallen as at the date of the intended exercise of such Share Option(s); or (ii) will fall as a result of his/her exercise of the Share Option(s) to a level lower than required under the Listing Rules. In light of the Grantees’

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LETTER FROM THE BOARD

undertaking as set out above, the Company is of the view that the risk of the potential non-compliance in relation to Rules 8.08(1)(a) and 13.32(1) of the Listing Rules is remote as the Share Options under the SOS Grant would only become exercisable and be fully exercised by portion in a period of ten years subject to attainment of the Performance Target as set out in the Announcement. During such ten-year period, the Company may consider to conduct fund raising activities towards independent investors which will broaden the shareholder base of the Company and can lead to dilution of the shareholding of core connected persons of the Company and also the increase in the public float of the Company.

• (2) The shareholding is for illustrative purpose only as all the Grantees are subject to the undertaking as stated in note (1) above.

• (3) The shares held by Ms. Chen and her respective associates have not taken into account the Restricted Shares under the RSA Grant.

• (4) Mr. Xie Rusong is an executive Director and the vice president of the Company. Hence, Mr. Xie Rusong is a connected person of the Company and the Shares held by him will not be counted as public float. According to the Share Option Scheme, he was granted 600,000 Share Options to subscribe for a total of 600,000 Shares.

• (5) Mr. Zhong Xuyi is an executive Director and the chief financial officer of the Company. Hence, Mr. Zhong Xuyi is a connected person of the Company and the Shares held by him will not be counted as public float. According to the Share Option Scheme, he was granted 600,000 Share Options to subscribe for a total of 600,000 Shares.

• (6) Ms. Wang Dong is the chief operating officer and one of the joint company secretaries of the Company. Hence, Ms. Wang Dong is not a connected person of the Company and the Shares held by her will be counted as public float. According to the Share Option Scheme, she was granted 600,000 Share Options to subscribe for a total of 600,000 Shares.

• (7) The five other Grantees under the Share Option Scheme are senior management and Employees of the Company and they are not connected persons of the Company. Hence, the Shares held by them will be counted as public float.

• (8) The percentages may not add up to the total due to rounding.

6. THE EXTRAORDINARY GENERAL MEETING

The notice convening the Extraordinary General Meeting is set out on pages 16 to 17 of this circular, at which ordinary resolution will be proposed to approve the Proposed Grant. For determining the entitlement to attend and vote at the Extraordinary General Meeting, the register of members of the Company will be closed from Thursday, 11 November 2021 to Tuesday, 16 November 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, all transfers accompanied by the relevant share certificates must be lodged with the Hong Kong share registrar of the Company, Computershare Hong Kong Investor Services Limited, at Shops 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 Wednesday, 10 November 2021.

Pursuant to Rules 13.39(4) and 13.39(5) of the Listing Rules, the voting on the proposed resolution at the Extraordinary General Meeting will be taken by way of a poll and an announcement on the poll results will be made by the Company after the Extraordinary General Meeting.

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LETTER FROM THE BOARD

A form of proxy for use at the Extraordinary General Meeting is enclosed with this circular. To be valid, the form of proxy must be completed in accordance with the instructions printed thereon and deposited, together with the power of attorney or other 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 holding the Extraordinary General Meeting (i.e. at or before 10:30 a.m. on Sunday, 14 November 2021) or any adjourned meeting. Completion and delivery of the form of proxy will not preclude you from attending and voting at the Extraordinary General Meeting or the adjourned meeting if you so wish.

7. 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.

8. RECOMMENDATION

The Board (including all the independent non-executive Directors and excluding Ms. Chen and her associates) considers that the terms of the Proposed Grant are fair and reasonable so far as the Independent Shareholders are concerned, and that the Proposed Grant is in the best interests of the Company and its Shareholders as a whole. Therefore, the Directors recommend the Independent Shareholders to vote in favour of the resolution set out in the notice of Extraordinary General Meeting.

By order of the Board

Cheerwin Group Limited Chen Danxia

Executive Director, Chairman and Chief Executive Officer

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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 Tuesday, 16 November 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 the grant of share options (the “ Share Options ”) to Ms. Chen Danxia (“ Ms. Chen ”), the executive director, the chairman of the board of directors of the Company (the “ Board ”) and the chief executive officer of the Company, to subscribe for 65,000,000 ordinary shares of US$0.0000002 each of the Company (the “ Shares ”) at an exercise price of HK$4.33 per Share under the share option scheme adopted by the Company on 23 July 2021 (the “ Share Option Scheme ”) and otherwise on such terms as stipulated in the offer letter to be issued by the Company pursuant to the Share Option Scheme be and is hereby approved and THAT the Board be and is hereby authorised to exercise all rights and powers available to it as it may in its sole discretion consider necessary or expedient to give full effect to the grant of the Share Options to Ms. Chen and the issue of the Shares upon the exercise of the Share Options by Ms. Chen.”

By order of the Board Cheerwin Group Limited Chen Danxia

Executive Director, Chairman and Chief Executive Officer

Hong Kong, 1 November 2021

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NOTICE OF EXTRAORDINARY GENERAL MEETING

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

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 Sunday, 14 November 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 register of members of the Company will be closed from Thursday, 11 November, 2021 to Tuesday, 16 November, 2021, both dates inclusive, during which period no transfer of shares will be registered. In order to be eligible to attend and vote at the Extraordinary General Meeting, unregistered holders of shares of the Company shall ensure that all transfer documents accompanied by the relevant share certificates must be lodged with the Hong Kong share registrar of the Company, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong for registration not later than 4:30 p.m. on Wednesday, 10 November 2021.

In the event that the Extraordinary General Meeting is adjourned to a date later than Tuesday, 16 November 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. In the case of joint holders of Shares in the Company, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the vote(s) of the other joint holder(s), seniority being determined by the order in which names stand in the register of members.

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

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