Concord New Energy Group Ltd. - Proxy Solicitation & Information Statement 2013

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

If you are in doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Cinda International Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

==> picture [69 x 50] intentionally omitted <==

==> picture [225 x 41] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock code: 111)

REVISION OF ANNUAL CAPS, CONTINUING CONNECTED TRANSACTIONS AND

NOTICE OF SPECIAL GENERAL MEETING

Financial Adviser to Cinda International Holdings Limited

Optima Capital Limited

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

Grand Vinco Capital Limited Wholly-owned subsidiary of Vinco Financial Group Limited

A letter from the Independent Board Committee is set out on page 16 of this circular. A letter from Vinco Capital, the independent financial adviser, containing its advice to the Independent Board Committee and the Independent Shareholders, is set out on pages 17 to 42 of this circular.

A notice convening the special general meeting of Cinda International Holdings Limited to be held at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong on Monday, 25 November 2013 at 9: 30 a.m. is set out on pages 47 to 48 of this circular.

A form of proxy for the special general meeting is enclosed with this circular. Whether or not you intend to attend the said meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so wish.

8 November 2013

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from	the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Letter from	Vinco Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Appendix	— General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	43
Notice of special general meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		47

– i –

DEFINITIONS

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

‘‘associate(s)’’ has the meaning ascribed to it under the Listing Rules
‘‘Board’’ the board of Directors
‘‘CCAM’’ China Cinda Asset Management Co., Ltd., a joint stock company established in the PRC
‘‘CCAM Group’’ CCAM and/or its associates
‘‘Company’’ Cinda International Holdings Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Main Board of the Stock Exchange
‘‘connected persons’’ has the meaning ascribed to it under the Listing Rules
‘‘Director(s)’’ director(s) of the Company
‘‘Existing Annual Caps’’ the existing annual caps in respect of the transactions contemplated under the Existing Master Agreement for the three years ending 31 December 2014
‘‘Existing Master the agreement dated 25 June 2012 (as supplemented by a Agreement’’ supplemental agreement dated 12 April 2013) entered into between the Company and Well Kent in relation to the provision of certain financial services to/by Well Kent and/or its associates, details of which were included in the announcements of the Company dated 25 June 2012 and 12 April 2013
‘‘Group’’ the Company and its subsidiaries
‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC
‘‘Independent Board the committee of the Board comprising all the independent nonCommittee’’ executive Directors established for the purpose of giving a recommendation to the Independent Shareholders on the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps
‘‘Independent Shareholders other than Sinoday and its associates Shareholders’’
‘‘Independent Third person(s) or company(ies) which is/are independent of the Party(ies)’’ directors, chief executives, controlling shareholders, substantial shareholders of the Company or its subsidiaries, and their respective associates

– 1 –

DEFINITIONS

‘‘Latest Practicable	7 November 2013, being the latest practicable date prior to the
Date’’	printing of this circular for the purpose of ascertaining certain
	information contained herein
‘‘Listing Rules’’	the Rules Governing the Listing of Securities on the Stock
	Exchange
‘‘New Master	the agreement dated 22 October 2013 entered into between the
Agreement’’	Company and CCAM in relation to the provision of certain
	financial services by the Group to the CCAM Group and vice
	versa
‘‘PRC’’	The People’s Republic of China which, for the purpose of this
	circular, excludes Hong Kong, the Macau Special Administrative
	Region and Taiwan
‘‘Proposed Annual	the annual caps in respect of the transactions contemplated
Caps’’	under the New Master Agreement for the three years ending 31
	December 2015 as proposed by the Board
‘‘RQFII’’	RMB Qualified Foreign Institutional Investors
‘‘SFO’’	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
‘‘SGM’’	the special general meeting of the Company convened and held to
	consider and approve the New Master Agreement and the
	transactions contemplated thereunder, and the Proposed
	Annual Caps
‘‘Shares(s)’’	the ordinary share(s) of HK$0.1 each in the share capital of the
	Company
‘‘Shareholder(s)’’	holder(s) of the Share(s)
‘‘Sinoday’’	Sinoday Limited, a company incorporated in the British Virgin
	Islands with limited liability and a wholly-owned subsidiary of
	Well Kent
‘‘Stock Exchange’’	The Stock Exchange of Hong Kong Limited

– 2 –

DEFINITIONS

‘‘Vinco Capital’’ Grand Vinco Capital Limited, a wholly-owned subsidiary of Vinco Financial Group Limited (Stock Code: 8340), a corporation licensed to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps
‘‘Well Kent’’ Well Kent International Investment Company Limited, a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of CCAM
‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong
‘‘RMB’’ Renminbi, the lawful currency of the PRC
‘‘%’’ per cent.

– 3 –

LETTER FROM THE BOARD

==> picture [69 x 50] intentionally omitted <==

==> picture [225 x 41] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock code: 111)

Executive Directors:

Mr. Chen Xiaozhou (Chairman) Mr. Gao Guanjiang (Deputy Chairman) Mr. Zhao Hongwei (Managing Director) Mr. Gong Zhijian Mr. Lau Mun Chung

Non-executive Director: Mr. Chow Kwok Wai

Independent Non-executive Directors:

Mr. Wang Tongsan Mr. Chen Gongmeng

Registered Office: Clarendon House 2 Church Street Hamilton, HM 11 Bermuda

Head Office and Principal Place of Business in Hong Kong: 45th Floor COSCO Tower 183 Queen’s Road Central Hong Kong

Mr. Hung Muk Ming

8 November 2013

To the Shareholders

Dear Sir or Madam,

REVISION OF ANNUAL CAPS AND CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

On 25 June 2012, the Company entered into the Existing Master Agreement with Well Kent, pursuant to which the Group has agreed to provide certain financial services to Well Kent and/or its associates and vice versa for the period commencing from the date of the Existing Master Agreement to 31 December 2014. The Existing Annual Caps were set as the maximum annual value of such transactions for each of the three years ending 31 December 2014.

In anticipation of the increasing volume of business transactions with Well Kent and its associates for the two years ending 31 December 2014, the Board expects that the Existing Annual Caps will no longer be sufficient. In addition, the Group is exploring further business opportunities with Well Kent and its associates involving the provision of financial services to/by the Group. Accordingly, on 22 October 2013, the Company and

– 4 –

LETTER FROM THE BOARD

CCAM entered into the New Master Agreement to broaden the scope of the transactions between the Group and the CCAM Group and to increase the Existing Annual Caps to the Proposed Annual Caps.

The New Master Agreement and the transactions contemplated thereunder and the Proposed Annual Caps are subject to the approval of the Independent Shareholders at the SGM.

The purpose of this circular is to provide you with, among other things, (i) details of the New Master Agreement and the Proposed Annual Caps for the transactions contemplated thereunder; (ii) the recommendation of the Independent Board Committee regarding the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps; (iii) the advice from Vinco Capital to the Independent Board Committee and the Independent Shareholders regarding the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps; (iv) notice convening the SGM; and (v) other information as required by the Listing Rules.

THE NEW MASTER AGREEMENT

Date:

22 October 2013

Parties:

(i) the Company; and
(ii) CCAM

Term:

Commencing from the effective date of the New Master Agreement up to 31 December 2015 (both days inclusive)

Nature of transactions:

(i) provision of brokering services for securities, futures and options trading; placing, underwriting and sub-underwriting services for securities (including but not limited to underwriting and sub-underwriting of securities issued by the CCAM Group) by the Group to the CCAM Group (‘‘Category I Transactions’’);
(ii) provision of corporate finance advisory services (including but not limited to advisory services in relation to (a) the compliance of the Listing Rules and The Codes on Takeovers and Mergers and Share Repurchases; (b) the issue of securities; and (c) group restructuring) by the Group to the CCAM Group (‘‘Category II Transactions’’);
(iii) provision of asset management services by the Group to the CCAM Group (‘‘Category III Transactions’’);

– 5 –

LETTER FROM THE BOARD

(iv) provision of brokering services for RQFII, A shares, B shares and other securities, and trust products by the CCAM Group to the Group (‘‘Category IV Transactions’’);
(v) provision of asset management services by the CCAM Group to the Group (‘‘Category V Transactions’’); and
(vi) provision of sub-underwriting services by the CCAM Group to the Group (‘‘Category VI Transactions’’).

Terms:

The commission rates to be charged under Category I Transactions by the Group for brokerage of securities, futures and options will be determined by the senior management of the Group who are Responsible Officers under the SFO in accordance with the Group’s internal commission policy which is applicable to all customers. Such internal commission policy is set by the executive management committee of the Company (which comprises the Managing Director of the Company, another two executive Directors and a head of back end division of the Company supervising, among others, the compliance and internal audit department) from time to time based on their experience, marketing strategy and with reference to the then prevailing market rates of each type of products, quality and size of the relevant client. The commission rates to be charged under Category I Transactions for placing, underwriting and sub-underwriting services will be determined by the senior management of the Group who are Responsible Officers under the SFO (or the lead underwriter in the case of underwriting under a underwriter syndicate) taking into account among other things, the size of placing or underwriting/sub-underwriting commitments, the market demand for the particular issue, the liquidity of the relevant securities, financial performance and industry of the issuer, pricing of the issue and the then prevailing market rates.

The fees to be charged under Category II Transactions by the Group will be determined based on a number of factors applicable to all customers, including but not limited to the complexity and urgency of transactions, the resources estimated to be spent on providing the relevant corporate finance services, the size of the transactions involved, the fees charged for historical transactions of similar nature and the then prevailing market rates. The fee for each individual corporate advisory transaction (including transactions with Independent Third Parties) shall then be reviewed and approved by the Group’s project engagement committee (which comprises the Managing Director of the Company and four Responsible Officers for type 6 regulated activities under the SFO) based on the aforesaid factors.

The management fee and performance fee to be charged under Category III Transactions by the Group will be determined based on a number of factors applicable to all customers, including but not limited to the size and nature of the fund, and the then prevailing market rates. The fee for each individual asset management transaction (including transactions with Independent Third Parties) shall then be reviewed and

– 6 –

LETTER FROM THE BOARD

approved by the Group’s investment management committee (which comprises the Managing Director of the Company and another two executive Directors) based on the aforesaid factors.

The commission rates to be charged under Category IV Transactions by the CCAM Group will be determined in accordance with the CCAM Group’s internal fee policy which is applicable to all customers and with reference to the minimum commission rates as recommended/stipulated by the relevant local securities industry association in the PRC from time to time (where applicable) and the then prevailing market rates.

The fees to be charged under Category V Transactions by the CCAM Group will be determined in accordance with the CCAM Group’s internal fee policy which is applicable to all customers and with reference to the then prevailing market rates.

The commission rates to be charged under Category VI Transactions by the CCAM Group will be determined in accordance with the CCAM Group’s internal commission policy applicable to all customers, the market demand for the particular issue and with reference to the then prevailing market rates.

The fees to be charged/paid for each individual transaction between the Group and the CCAM Group shall be reviewed and approved by the compliance and internal audit department of the Company prior to the entering into of the relevant transaction to ensure that the fees are set in compliance with the Group’s internal fee policy (where applicable) and are charged/paid on normal commercial terms and at rates no less favourable to the Group than rates at which the Group charges/pays Independent Third Parties for comparable transactions. Detailed payment terms will be specified in the individual contract governing the particular transaction. The auditors of the Company will also conduct annual review of the continuing connected transactions entered into by the Company such that the Company could be able to ensure compliance with the Group’s pricing policy.

For Category IV Transactions, Category V Transactions and Category VI Transactions, the Group will seek certain quotations from Independent Third Parties which offer the same services for the subject transactions to assess the market rates and compare against the fees to be charged by the CCAM Group. The Group will only select the CCAM Group as the service provider if they consider that the terms offered by the CCAM Group are comparable to the market rates unless the service is exclusively available from the CCAM Group and on normal commercial terms. The Group will also consider other factors when selecting service providers, including but not limited to their reputation, scope of services and quality of services.

The Directors are of the view that as the businesses of the Group and the CCAM Group are regulated businesses, the market in general is more transparent. Given the Directors’ experience in the market and their knowledge about the industry and information available from the public, the Group is able to obtain sufficient information to assess the market rates and determine whether the fees payable to or receivable from the CCAM Group under the New Master Agreement are not less favourable to the Group than those payable to or receivable from the Independent Third Parties.

– 7 –

LETTER FROM THE BOARD

Category I Transactions, Category IV Transactions and Category VI Transactions are settled in cash upon completion of the transactions. Category II Transactions are normally settled in cash by stages with reference to the progress of the transactions. Category III Transactions and Category V Transactions are settled in cash semi-annually or annually or upon maturity of the assets under management.

Effective date:

The New Master Agreement will become effective from the date on which the Independent Shareholders’ approval of the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps is obtained, and will supersede and replace the Existing Master Agreement since then.

The Company and CCAM are entitled to extend the New Master Agreement on or before 31 December 2015 and to take such action as may be appropriate to comply with the Listing Rules. Without prejudice to the right of any party to terminate the New Master Agreement, the New Master Agreement shall automatically terminate if (i) the Company considers that it is not feasible to comply with the Listing Rules at the relevant time; or (ii) compliance with the Listing Rules would require changes to the New Master Agreement which are not acceptable to any of the parties thereto.

The Proposed Annual Caps:

The Board proposes the Proposed Annual Caps in respect of the transactions contemplated under the New Master Agreement for each of the three years ending 31 December 2015 as follows:

		For the	year ending 31 December	year ending 31 December
		2013	2014	2015
		HK$	HK$	HK$
Category	I Transactions	150,000,000	150,000,000	150,000,000
Category	II Transactions	110,000,000	110,000,000	110,000,000
Category	III Transactions	150,000,000	150,000,000	150,000,000
Category	IV Transactions	20,000,000	20,000,000	20,000,000
Category	V Transactions	10,000,000	10,000,000	10,000,000
Category	VI Transactions	10,000,000	10,000,000	10,000,000

– 8 –

LETTER FROM THE BOARD

The bases and assumptions of determining the Proposed Annual Caps are set out below:

(i) Category I Transactions

The Proposed Annual Caps in respect of Category I Transactions for the three years ending 31 December 2015 were determined based on the estimated fees to be received from the CCAM Group under Category I Transactions by reference to the historical fees received from the CCAM Group under Category I Transactions plus a buffer to provide flexibility to cater for any potential fluctuations. The fees were estimated based on (i) the estimated total monetary value which would be brokered for securities, futures and options trading, placing, underwriting and sub-underwriting; and (ii) the relevant commission rates charged by the Group.

The Proposed Annual Caps in respect of Category I Transactions for each of the three years ending 31 December 2015 represents a significant increase as compared with the historical transaction amount for the year ended 31 December 2012. Such increase for the financial years ending 2013 and 2014 is mainly attributable to the estimated underwriting and/or placing commission fees in relation to the proposed corporate activities to be undertaken by the CCAM Group. These corporate activities may involve public or private offering of equity securities and/or debt securities by the CCAM Group which may be completed in either the financial year ending 2013 or the financial year ending 2014. The Proposed Annual Caps in respect of Category I Transactions are estimated taking into account the expected size of such corporate fund raising exercises and the commission rate to be charged. The increase for the financial year ending 31 December 2015 is mainly attributable to the estimated underwriting and/or placing commission fees to be derived from the prospective corporate activities to be undertaken by the CCAM Group, particularly the proposed corporate activities which may be undertaken by certain debt-converted-equity enterprises of the CCAM Group which plays a leading role in their respective industries. In view of the positive prospects of the equity and debt markets and the growing fund raising activities in Hong Kong and the PRC, the Company expects that the corporate actions of the CCAM Group will become more active in the coming years and the transaction volume is estimated to increase significantly.

As at the Latest Practicable Date, the Group had set up trading accounts with the CCAM Group for the provision of brokering services for securities trading but had not entered into any contracts with the CCAM Group in respect of any corporate activities of the CCAM Group under Category I Transactions.

(ii) Category II Transactions

The Proposed Annual Caps in respect of Category II Transactions for the three years ending 31 December 2015 were determined based on the estimated fees to be received from the CCAM Group under Category II Transactions by reference to the historical fees received from the CCAM Group under Category II Transactions plus a buffer to provide flexibility to cater for any potential fluctuations. The fees were estimated based on (i) the estimated number of corporate finance advisory

– 9 –

LETTER FROM THE BOARD

transactions; (ii) the complexity of transactions; (iii) the estimated resources to be spent on providing the relevant corporate finance services; (iii) where the transaction involves fund raising, the size of the funds involved; and (iv) the fees charged by the Group to independent clients for similar transactions.

The Proposed Annual Caps in respect of Category II Transactions for each of the three years ending 31 December 2013, 2014 and 2015 represents a significant increase as compared with the historical transaction amount for the year ended 31 December 2012. Such increase is mainly attributable to the expectation by the management of the Company that the provision of corporate finance advisory services by the Group to the CCAM Group will become more active throughout the three financial years ending 2015 in conjunction with the corporate exercise of the CCAM Group and certain debtconverted-equity enterprises of the CCAM Group referred to (i) above and the positive prospects of the equity and debt markets in Hong Kong and the PRC.

As at the Latest Practicable Date, the Group had not entered into any contracts with the CCAM Group in respect of any corporate activities of the CCAM Group under Category II Transactions.

(iii) Category III Transactions

The Proposed Annual Caps in respect of Category III Transactions for the three years ending 31 December 2015 were determined based on the estimated annual management fees and performance fees to be received from the CCAM Group under Category III Transactions by reference to the historical fees received from the CCAM Group under Category III Transactions plus a buffer to provide flexibility to cater for any potential fluctuations. The annual management fees and performance fees were estimated based on (i) the estimated total monetary value of the fund to be managed by the Group; and (ii) the management fee and performance fee rates charged by the Group.

The Proposed Annual Caps in respect of Category III Transactions for each of the three years ending 31 December 2013, 2014 and 2015 represents a significant increase as compared with the historical transaction amount for the year ended 31 December 2012. Such increase is mainly attributable to the expectation by the management of the Company that the provision of asset management services by the Group to the CCAM Group will become more active throughout the three financial years ending 2015 particularly after completion of the corporate exercises of the CCAM Group referred to in (i) above which are expected to enlarge the assets of the CCAM Group.

Cinda Asset Management (Cayman) Limited (a wholly-owned subsidiary of the Company) was engaged by Cinda Retail and Consumer Fund L.P. (the ‘‘Fund’’) as the investment manager of the Fund. A subsidiary of Well Kent is interested in approximately 61.11% of the Fund and the Fund is therefore an associate of Well Kent. Details of the aforesaid arrangement were disclosed in the announcement of the Company dated 24 May 2013. Save for the aforesaid and as at the Latest Practicable Date, the Group had not entered into any other contracts with the CCAM Group in respect of any Category III Transactions.

– 10 –

LETTER FROM THE BOARD

(iv) Category IV Transactions

The Proposed Annual Caps in respect of Category IV Transactions for the three years ending 31 December 2015 were determined based on the estimated commission fees payable to the CCAM Group under Category IV Transactions by reference to the historical fees paid to the CCAM Group under Category IV Transactions plus a buffer to provide flexibility to cater for any potential fluctuations. The commission fees were estimated based on (i) the estimated total monetary value which would be brokered for RQFII, A Shares, B Shares and other securities and trust products of approximately HK$1 billion for each year; and (ii) the estimated commission rate to be charged by CCAM Group.

In view of the current active and prosperous market sentiment in the PRC stock market, the Company expects that the clients of the Group are willing to invest in A shares, B shares, other securities and trust products in the PRC to generate returns and the transaction volume is estimated to increase significantly.

As at the Latest Practicable Date, the Group had set up trading accounts with the CCAM Group for B shares trading while the Group is in the process of setting up trading accounts for RQFII and A shares with the CCAM Group.

(v) Category V Transactions

The Proposed Annual Caps in respect of Category V Transactions for the three years ending 31 December 2015 were determined based on the estimated annual management fees and performance fees payable to the CCAM Group under Category V Transactions plus a buffer to provide flexibility to cater for any potential fluctuations. No Category V Transaction has been conducted for the year ended 31 December 2012 and the nine months ended 30 September 2013. The annual management fees and performance fees were estimated based on (i) the estimated size of a private equity fund(s) to be set up by the Group and managed by the CCAM Group; and (ii) the rate of management fee and performance fee to be charged by the CCAM Group.

As at the Latest Practicable Date, the Group had not entered into any contracts with the CCAM Group in respect of any Category V Transactions.

(vi) Category VI Transactions

The Proposed Annual Caps in respect of Category VI Transactions for the three years ending 31 December 2015 were determined based on the estimated commission fees payable to the CCAM Group under Category VI Transactions plus a buffer to provide flexibility to cater for any potential fluctuations. No Category VI Transaction has been conducted for the year ended 31 December 2012 and the nine months ended 30 September 2013. The commission fees were estimated based on (i) the estimated number and size of underwriting commitments to be undertaken by the Group; and (ii) the commission rate for sub-underwriting commitment charged by the CCAM Group.

– 11 –

LETTER FROM THE BOARD

In view of the improving trading volumes and fund raising exercise from initial public offering, the Company expects that the opportunities in terms of number and amounts for involving underwriting roles in relation to fund raising activities may increase, resulting in an increasing number and size for offering other brokerage firms to undertake sub-writing roles.

As at the Latest Practicable Date, the Group had not entered into any contracts with the CCAM Group in respect of any Category VI Transactions.

Based on the above, the Directors (including the independent non-executive Directors) consider that the Proposed Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Existing Annual Caps and usages:

Set out below are the Existing Annual Caps for the three years ending 31 December 2014 and the actual amount in respect of the transactions contemplated under the Existing Master Agreement for the year ended 31 December 2012 and the nine months ended 30 September 2013:

					For the year
					ending
	For the year	ended	For the year	ending	31 December
	31 December 2012		31 December 2013		2014
	Existing		Existing	Actual	Existing
	Annual	Actual	Annual	amount	Annual
	Caps	amount	Caps	(Note)	Caps
	HK$	HK$	HK$	HK$	HK$
Category I Transactions and
Category III Transactions	9,500,000	1,371,722	9,900,000	858,000	9,900,000
Category II Transactions	9,500,000	6,000,000	9,900,000	1,259,750	9,900,000
Category IV Transactions	—	—	—	34,513	—
Category V Transactions	—	—	—	—	—
Category VI Transactions	9,500,000	—	9,900,000	—	9,900,000

Note: Actual transaction amount for the nine months ended 30 September 2013

REASONS FOR AND BENEFITS OF ENTERING INTO THE NEW MASTER AGREEMENT

The Group is principally engaged in the provision of financial services in Hong Kong, including the provision of securities brokering and margin financing services, commodities and futures brokering, financial planning, asset management and corporate financial advisory services in Hong Kong.

– 12 –

LETTER FROM THE BOARD

In anticipation of the increasing volume of business transactions with Well Kent and/ or its associates for the two years ending 31 December 2014, the Board expects that the Existing Annual Caps will no longer be sufficient. In addition, the Group is exploring further business opportunities with the CCAM Group involving provision of financial services by the Group, in particular for potential corporate exercises to be undertaken by the CCAM Group; as well as expanding the product offering to the Group’s clients in the PRC financial markets via the platform and network of the CCAM Group. Accordingly, the Company and CCAM entered into the New Master Agreement to broaden the scope of transactions between the Group and the CCAM Group and to increase the Existing Annual Caps to the Proposed Annual Caps.

The transactions contemplated under the New Master Agreement are in the ordinary and usual course of business of the Group. Taking into consideration that (i) Category I Transactions, Category II Transactions and Category III Transactions will contribute positively to the Group’s income; (ii) Category IV Transactions and Category V Transactions facilitate the Group in providing its clients with a wider product range covering RQFII, A Shares, B Shares and other securities, trust products in the PRC through the CCAM Group; and (iii) Category VI Transactions enable the Group to discharge its obligation as underwriter and reduce the underwriting exposure, the Directors (including the independent non-executive Directors) consider that the terms of the New Master Agreement, which have been negotiated on an arm’s length basis, are on normal commercial terms, fair and reasonable and the entering into of the New Master Agreement is in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, Sinoday is interested in 408,286,200 Shares, representing approximately 63.67% of the issued share capital of the Company. Sinoday is a wholly-owned subsidiary of Well Kent which in turn is a wholly-owned subsidiary of CCAM. Accordingly, members of the CCAM Group are connected persons of the Company and the transactions contemplated under the New Master Agreement constitute continuing connected transactions of the Company under Rule 14A.14 of the Listing Rules.

– 13 –

LETTER FROM THE BOARD

Mr. Chen Xiaozhou, the chairman of the Company and an executive Director, is the chairman and an executive director of Well Kent and holds a management position in CCAM. Mr. Gong Zhijian, an executive Director, is a director of a subsidiary of Well Kent. They are therefore considered to have conflict of interest in the New Master Agreement and the transactions contemplated thereunder and had abstained from voting on the Board resolutions approving the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps.

The SGM will be convened by the Company at which an ordinary resolution will be proposed to seek approval from the Independent Shareholders by way of poll for the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps. Sinoday and its associates, which are interested in and control the voting rights of 408,286,200 Shares, shall abstain from voting at the SGM in respect of the resolution approving the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps. Save as disclosed above, no other Shareholder is required to abstain from voting on the resolution approving the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps.

The Independent Board Committee, which comprises all the independent nonexecutive Directors, has been established to advise the Independent Shareholders on the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps. Vinco Capital has been appointed as the independent financial adviser of the Company to advise the Independent Board Committee and the Independent Shareholders in this regard.

THE SGM

A notice convening the SGM to be held at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong on Monday, 25 November 2013 at 9: 30 a.m., is set out on pages 47 to 48 of this circular. A form of proxy for the SGM is enclosed with this circular. Whether or not Shareholders intend to attend the said meeting, they are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so wish.

RECOMMENDATION

The Independent Board Committee, having considered the advice of Vinco Capital, is of the view that the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps were entered into in the ordinary and usual course of

– 14 –

LETTER FROM THE BOARD

business of the Group on normal commercial terms and the terms of the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolution approving the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps at the SGM.

Your attention is drawn to the letter from the Independent Board Committee set out on page 16 of this circular which contains its recommendation to the Independent Shareholders, the letter of advice from Vinco Capital set out on pages 17 to 42 of this circular containing its advice to the Independent Board Committee and the Independent Shareholders and other information contained in the appendix to this circular.

Yours faithfully, For and on behalf of the Board Lau Mun Chung Executive Director

– 15 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [69 x 50] intentionally omitted <==

==> picture [225 x 41] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock code: 111)

8 November 2013

To the Independent Shareholders,

Dear Sir or Madam,

REVISION OF ANNUAL CAPS AND

CONTINUING CONNECTED TRANSACTIONS

We have been appointed as the Independent Board Committee to advise the Independent Shareholders in respect of the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps, details of which are set out in the letter from the Board contained in the circular of the Company (the ‘‘Circular’’) dated 8 November 2013. Unless the context otherwise requires, terms defined in the Circular shall have the same meanings when used in this letter.

We wish to draw your attention to the letter from the Board on pages 4 to 15 of the Circular and the letter from Vinco Capital to the Independent Board Committee and the Independent Shareholders containing its advice on the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps on pages 17 to 42 of the Circular.

Having considered the advice of Vinco Capital as stated in its letter, we are of the view that the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps were entered into in the ordinary and usual course of business of the Group on normal commercial terms and the terms of the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution approving the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps at the SGM.

Yours faithfully, For and on behalf of the Independent Board Committee

Wang Tongsan Chen Gongmeng Hung Muk Ming Independent Non-executive Directors

– 16 –

LETTER FROM VINCO CAPITAL

The following is the text of a letter of advice from Vinco Capital to the Independent Board Committee and the Independent Shareholders in connection with the continuing connected transactions under the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps, which has been prepared for the purpose of incorporation in this circular:

==> picture [48 x 31] intentionally omitted <==

Grand Vinco Capital Limited Units 4909-4910, 49/F., The Center 99 Queen’s Road Central, Hong Kong

8 November 2013

To the Independent Board Committee and the Independent Shareholders of Cinda International Holdings Limited

Dear Sirs,

REVISION OF ANNUAL CAPS AND

CONTINUING CONNECTED TRANSACTIONS

A. INTRODUCTION

We refer to our engagement as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps, details of which are set out in the Letter from the Board contained in the circular of the Company dated 8 November 2013 (the ‘‘Circular’’) to the Shareholders, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings ascribed to them in the Circular unless the context otherwise requires.

Pursuant to the Existing Master Agreement with Well Kent dated 25 June 2012, the Group has agreed to provide certain financial services to Well Kent and/or its associates and vice versa for the period commencing from the date of the Existing Master Agreement to 31 December 2014. The Existing Annual Caps were set as the maximum annual value of such transactions for each of the three years ending 31 December 2014. In anticipation of the increasing volume of business transactions with Well Kent and its associates for the two years ending 31 December 2014, the Board expects that the Existing Annual Caps will no longer be sufficient. In addition, the Group is exploring further business opportunities with Well Kent and its associates involving the provision of financial services to/by the Group. Accordingly, on 22 October 2013, the Company and CCAM entered into the New Master Agreement to broaden the scope of the transactions between the Group and the CCAM Group and to increase the Existing Annual Caps to the Proposed Annual Caps.

– 17 –

LETTER FROM VINCO CAPITAL

As at the Latest Practicable Date, given that (i) Sinoday is interested in 408,286,200 Shares, representing approximately 63.67% of the issued share capital of the Company; and (ii) Sinoday is a wholly-owned subsidiary of Well Kent which in turn is a wholly-owned subsidiary of CCAM. Accordingly, members of the CCAM Group are connected persons of the Company and the transactions contemplated under the New Master Agreement constitute continuing connected transactions of the Company under Rule 14A.14 of the Listing Rules.

As the relevant percentage ratios (other than the profits ratio) under Rule 14.07 of the Listing Rules in respect of the Proposed Annual Caps exceed 25%, the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps are subject to the reporting, announcement and Independent Shareholders’ approval requirements under the Listing Rules. In this regard, the SGM will be convened by the Company at which ordinary resolution will be proposed to seek approval from the Independent Shareholders by way of poll for the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps. Sinoday and its associates shall abstain from voting at the SGM in respect of the resolution approving the New Master Agreement and the Proposed Annual Caps. Save as disclosed above, no other Shareholder is required to abstain from voting on the resolution approving the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps. In addition, Mr. Chen Xiaozhou, the chairman of the Company and an executive Director, is the chairman and an executive director of Well Kent and holds a management position in CCAM. Mr. Gong Zhijian, an executive Director, is a director of a subsidiary of Well Kent. They are therefore considered to have conflict of interest in the New Master Agreement and have abstained from voting on the Board resolution approving the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps.

The Independent Board Committee, comprising Mr. Wang Tongsan, Mr. Chen Gongmeng, and Mr. Hung Muk Ming, all being the independent non-executive Directors, has been formed to advise the Independent Shareholders on the terms of the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps. We have been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps. In our capacity as the independent financial adviser to the Independent Board Committee and the Independent Shareholders for the purposes of the Listing Rules, our role is to give you an independent opinion as to whether the New Master Agreement were entered into in the ordinary and usual course of business of the Group on normal commercial terms and the terms of the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 18 –

LETTER FROM VINCO CAPITAL

B. BASIS OF OUR OPINION AND RECOMMENDATION

In forming our opinion and recommendation, we have relied on the information, facts and representations contained or referred to in the Circular and the information, facts and representations provided by, and the opinions expressed by the Directors, management of the Company and its subsidiaries. We have assumed that all information, facts, opinions and representations made or referred to in the Circular were true, accurate and complete at the time they were made and continued to be true, accurate and complete as at the date of the Circular and that all expectations and intentions of the Directors, management of the Company and its subsidiaries, will be met or carried out as the case may be. We have no reason to doubt the truth, accuracy and completeness of the information, facts, opinions and representations provided to us by the Directors, management of the Company and its subsidiaries. The Directors have confirmed to us that no material facts have been omitted from the information supplied and opinions expressed. We have no reason to doubt that any relevant material facts have been withheld or omitted from the information provided and referred to in the Circular or the reasonableness of the opinions and representations provided to us by the Directors, management of the Company and its subsidiaries.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading.

We have relied on such information and opinions and have not, however, conducted any independent verification of the information provided, nor have we carried out any independent investigation into the business, financial conditions and affairs of the Group or its future prospect.

Based on the foregoing, we confirm that we have taken all reasonable steps to arrive at our opinion and recommendation, which are applicable to the terms of the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps, as referred to in Rule 13.80 of the Listing Rules (including the notes thereto).

This letter is issued for the information for the Independent Board Committee and the Independent Shareholders solely in connection with their consideration of the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps and, except for its inclusion in the Circular and for the purpose of the SGM, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes, without our prior written consent.

– 19 –

LETTER FROM VINCO CAPITAL

C. PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation to the Independent Board Committee and the Independent Shareholders in relation to the terms of the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps, we have considered the following principal factors and reasons:

1. Background and reasons for the entering of the New Master Agreement

i. Information of the Company

ii. Information of CCAM

CCAM is referred to as China Cinda Asset Management Co., Ltd., a joint stock company established in the PRC.

iii. Reasons for entering into the New Master Agreement

CCAM is a financial asset management company established in the PRC as a joint stock company in 2010 with registered capital of RMB25.1 billion which has been increased to RMB30.1 billion in 2012. Its predecessor, China Cinda Asset Management Corporation, was established on 20 April 1999 with capital of RMB10 billion fully contributed by The Ministry of Finance of the PRC. It is the first financial institution specialised in the management and disposal of nonperforming assets in the PRC. The book value of non-performing assets acquired and under custody by it has been over RMB1,000 billion. The CCAM Group are principally engaged in various types of business, including the provision of financial services, financial leasing services, general and life insurance business, property development and sale business and investment business etc. We are given to understand from the Directors that, among the CCAM Group, the Group is the only licensed institution to provide regulated financial services outside China. Hence, the Group plays an important role in internationalisation of CCAM. The Directors believe that there is strong synergy with CCAM which will bring enormous benefits to the Group. With such a strong financial background of CCAM, the Directors expect that more business opportunities will be brought to the Group through the engagement of the Group by the CCAM Group and vice versa.

On 25 June 2012, the Company and Well Kent entered into the Existing Master Agreement, pursuant to which the Group agreed to provide certain financial services to Well Kent and/or its associates and vice versa for the period

– 20 –

LETTER FROM VINCO CAPITAL

commencing from the date of the Existing Master Agreement to 31 December 2014. The Existing Annual Caps were set as the maximum annual value of such transactions for each of the three years ending 31 December 2014.

We noted that the total actual amount of commission and/or fees on the provision of brokering services for securities, futures and options trading, as well as asset management services were HK$1,371,722 and HK$858,000 in aggregate, representing approximately 14.44% and 8.67% of the Group’s Existing Annual Caps, for the year ended 31 December 2012 and for the nine months ended 30 September 2013 respectively. Moreover, the total actual amount of commission and/or fees on the provision of corporate finance advisory services were HK$6,000,000 and HK$1,259,750, representing approximately 63.16% and 12.72% of the Existing Annual Caps, for the year ended 31 December 2012 and for the nine months ended 30 September 2013 respectively. For provision of brokering services for RQFII, A shares, B shares and other securities, and trust products by the CCAM Group to the Group, the total actual amount of fees charged by the CCAM Group were HK$34,513 for the nine months ended 30 September 2013. Pursuant to the Existing Master Agreement, in anticipation of the increasing volume of business transactions with Well Kent and its associates for the two years ending 31 December 2014, the Board expects that the Existing Annual Caps will no longer be sufficient. In addition, the Group is exploring further business opportunities with Well Kent and its associates involving provision of financial services to/by the Group, in particular for potential corporate exercises to be undertaken by the CCAM Group; as well as expanding the product offering to the Group’s clients in the PRC financial markets via the platform and network of the CCAM Group. Accordingly, the Company and CCAM entered into the New Master Agreement to broaden the scope of transactions between the Group and the CCAM Group and to increase the Existing Annual Caps to the Proposed Annual Caps.

As stated in the Letter from the Board, the Directors considered that (i) Category I Transactions, Category II Transactions and Category III Transactions will contribute positively to the Group’s income; (ii) Category IV Transactions and Category V Transactions facilitate the Group in providing its clients with a wider product range covering RQFII, A Shares, B Shares and other securities, trust products in the PRC through the CCAM Group; and (iii) Category VI Transactions enable the Group to discharge its obligation as underwriter and reduce the underwriting exposure. The Directors confirmed that the terms and conditions of the New Master Agreement to be entered into with CCAM Group will be on normal commercial terms and at commercial rates which are no less favourable to those offers to/by other Independent Third Parties of the Group for comparable transactions. Detailed payment terms will be specified in the individual contract governing the particular transactions.

Having considered that (i) the provision of financial services is one of the principal business activities of the Group, (ii) the Group has been actively exploring new business opportunities and expanding its existing business with

– 21 –

LETTER FROM VINCO CAPITAL

CCAM Group; and (iii) the entering into of the New Master Agreement would allow flexibility of the Group to provide financial services to the CCAM Group and vice versa, which is in line with the dedication of the Group in expanding its business, we concur with the view of the Directors that the New Master Agreement is conducted in the ordinary and usual course of business of the Company, and is in the interests of the Company and the Shareholders as a whole.

iv. Prospects of the financial markets in Hong Kong

Set out below are the historical daily closing points of the Hang Seng Index from 1 September 2012 and up to 22 October 2013 (being the date of the New Master Agreement) (‘‘HSI Review Period’’), total turnovers for Main Board and Growth Enterprise Market (‘‘GEM’’) of the Stock Exchange, and number of new listing companies on the Main Board of the Stock Exchange from September 2012 to September 2013 (‘‘Turnover Review Period’’) as follows:

(i) Hang Seng Index

==> picture [362 x 217] intentionally omitted <==

Source: Bloomberg

– 22 –

LETTER FROM VINCO CAPITAL

(ii) Turnovers

		Average Daily
2012	Monthly Turnover	Turnover
	HK$’000,000	HK$’000,000
September	1,047,442	52,372
October	1,048,590	52,429
November	1,203,952	54,725
December	1,164,003	61,263
		Average Daily
2013	Monthly Turnover	Turnover
	HK$’000,000	HK$’000,000
January	1,721,924	78,269
February	1,220,242	71,779
March	1,444,855	72,243
April	1,168,537	58,427
May	1,269,913	60,472
June	1,299,891	68,415
July	1,137,065	51,685
August	1,147,288	54,633
September	1,193,848	59,692

Source: Hong Kong Stock Exchange

(iii) New listing companies

	Number of newly
	listed companies
	on the Main Board
	of the Stock
2012	Exchange	Funds raised
		HK$’000,000
Q1	15	9,623.84
Q2	10	20,429.18
Q3	12	13,628.71
Q4	13	45,234.54

– 23 –

LETTER FROM VINCO CAPITAL

	Number of newly
	listed companies
	on the Main Board
	of the Stock
2013	Exchange	Funds raised
		HK$’000,000
Q1	10	8,124.40
Q2	6	30,624.47
Q3	15	18,210.31

Source: Hong Kong Stock Exchange

As illustrated on the Hang Seng Index graph, the Hong Kong stock market saw an increasing trend during the year of 2012 and reached a local maximum on 30 January 2013, with a closing point of 23,822.06, which was the highest level of the HSI Review Period. During the same month, the total monthly turnover of the Main Board and the GEM hit their highest levels at HK$1,721,924 million and the average daily turnover at HK$78,269 million in January 2013 during the Turnover Review Period. However, daily trading activities started shrinking since then and average daily turnovers were generally below HK$60,000 million. This was mainly attributable to the weak fundamentals of the global economies, deriving from the sovereign debt crisis in Europe, fiscal problems in the US, and high debts beset in Japan, which heavily impacted the Hong Kong stock market. We noted that the largest decline in average daily turnover was in April 2013, of approximately 19.1% to HK$58,427 million. Even though the average daily turnover rebounded to HK$60,472 million in May 2013, the trend declined once more in July 2013, by approximately 14.5% to HK$51,685 million. Fortunately, the market momentum improved and the average daily turnover reached HK$59,692 million in September 2013. In line with the Hang Seng Index, trading activities had become more active since the third quarter of 2013.

There were 31 newly listed companies which raised HK$56,959.18 during the first three quarters of 2013, as compared with 37 newly listed companies which raised HK$43,681.73 during the first three quarters of 2012. Despite a decrease of approximately 16.2% in the number of companies listed, there was an increase of approximately 30.4% in the amounts raised. This impacted the average daily turnover in the Hong Kong stock market, which increased by approximately 13.98% from HK$52,372 million in September 2012 to HK$59,692 million in September 2013. Moreover, the total monthly turnover recorded approximately 13.98% increase too, from HK$1,047,442 million to HK$1,193,848 million under the same period.

– 24 –

LETTER FROM VINCO CAPITAL

(iv) Newly listed debt securities market in Hong Kong

	Number of newly
	listed debt
2012	securities	Funds raised
		HK$’000,000
Q1	24	69,041.82
Q2	30	113,905.00
Q3	26	77,396.31
Q4	29	80,894.77
	Number of newly
	listed debt
2013	securities	Funds raised
		HK$’000,000
Q1	37	113,959.19
Q2	69	237,646.45
Q3	16	34,683.76

Source: Hong Kong Stock Exchange

In respect of listed debt securities market in Hong Kong, there were 122 newly listed debt securities which raised approximately HK$386,289 million during the first three quarters of 2013, as compared with 80 newly listed debt securities which raised approximately HK$260,343 million during the first three quarters of 2012. There was an increase of approximately 52.5% in the number of debt securities listed and approximately 48.4% in the total amounts raised. The above data shows that the debt markets in Hong Kong is growing robustly.

In addition, according to an article issued by Hong Kong Monetary Authority in March 2013, namely ‘‘The Hong Kong debt market in 2012’’, the overall Hong Kong dollar debt issuance for non-public segment recorded significant growth in 2012 to nearly HK$253 billion of Hong Kong dollar debt paper, representing an increase of approximately 25% over 2011. Despite the fact that local corporate issued slightly less Hong Kong dollar debt in 2012, 2% less than in 2011 to approximately HK$27 billion, such amount issued was still the second highest on record. Moreover, local corporates became more active to issue foreign currency debt in 2012 with an increase of approximately 121% to US$35.1 billion in 2012 was recorded.

Based on the above, the amount raised in terms of listed debt securities and private debt issuance in Hong Kong is growing, we consider that the prospect of the debt issuance market in Hong Kong is positive.

– 25 –

LETTER FROM VINCO CAPITAL

v. Prospect of the financial market in the PRC

Set out below are the historical daily closing points of the Shanghai Stock Exchange Composite Index from 1 September 2012 and up to 22 October 2013 (being the date of the New Master Agreement) (‘‘SSE Composite Index Review Period’’), total turnovers on the Shanghai Stock Exchange from September 2012 to September 2013 (‘‘Turnover Review Period’’) as below. We consider that SSE Composite Index can provide an indication on the prospect PRC financial markets as it is a major stock market index in the PRC.

(i) Shanghai Stock Exchange Composite Index

==> picture [371 x 221] intentionally omitted <==

Source: Bloomberg

– 26 –

LETTER FROM VINCO CAPITAL

(ii) Turnovers

			Average Daily
2012	Monthly	Turnover	Turnover
	RMB	(Billion)	RMB (Billion)
September		4,531	227
October		4,260	237
November		4,970	226
December		5,786	276
			Average Daily
2013	Monthly	Turnover	Turnover
	RMB	(Billion)	RMB (Billion)
January		6,227	311
February		4,624	308
March		6,484	309
April		5,206	289
May		7,499	341
June		6,127	360
July		8,537	371
August		8,527	388
September		7,936	418

Source: Shanghai Stock Exchange

As illustrated on the Shanghai Stock Exchange Composite Index graph, the PRC stock market saw an increasing trend in the first quarter of 2013 and hit a local maximum on 5 February 2013 with a closing point of 2,433.13, which was the highest level of the SSE Composite Index Review Period. However, the daily trading activities on the market started shrinking since then which was in line with the Hong Kong’s stock market as the biggest decline was recorded in average daily turnover in April 2013.

Fortunately, the market momentum improved as the average daily turnover kept climbing and rose to approximately RMB418 billion in September 2013. We noted that the total monthly turnover increased from approximately RMB4,531 billion in September 2012 to approximately RMB7,936 billion in September 2013, by approximately 75.15%, and the average daily turnover increased from approximately RMB227 billion to approximately RMB418 billion, by approximately 84.14% under the same period.

As discussed with the Directors, given the aforementioned favourable market situation, they are generally optimistic about the stock markets in Hong Kong and the PRC, and anticipate that more potential investment

– 27 –

LETTER FROM VINCO CAPITAL

opportunities may arise in the near future. Based on the aforesaid analysis, we concur with the Directors’ view that there would be an expected increase in the trading volume of securities amid the improvement in the stock market and the prevailing investment sentiment in Hong Kong and the PRC. Given that the Group is exploring further business opportunities with the CCAM Group involving provision of various financial services to/by the Group, we consider that the Proposed Annual Caps in respect of the transactions contemplated under the New Master Agreement to be justifiable.

Principal terms of the New Master Agreement

The following table summarises the major terms of the New Master Agreement:

Date: 22 October 2013

Parties: (i) the Company; and (ii) CCAM.

Term:

Commencing from the effective date of the New Master Agreement up to 31 December 2015 (both days inclusive)

Nature of transactions: (i) Provision of brokering services for securities, futures and options trading, placing of securities, and underwriting and sub-underwriting for securities (including but not limited to underwriting and sub-writing of securities issued by the CCAM Group) by the Group to the CCAM Group (‘‘Category I Transactions’’);
(ii) provision of corporate finance advisory services (including but not limited to advisory services in relation to (a) the compliance of the Listing Rules and The Codes on Takeovers and Mergers and Share Repurchases; (b) the issue of securities; and (c) group restructuring by the Group to the CCAM Group (‘‘Category II Transactions’’);
(iii) provision of asset management services by the Group to the CCAM Group (‘‘Category III Transactions’’);
(iv) provision of brokering services for RQFII, A shares, B shares and other securities, and trust products by the CCAM Group to the Group (‘‘Category IV Transactions’’);

– 28 –

LETTER FROM VINCO CAPITAL

(v) provision of asset management services by the CCAM Group to the Group (‘‘Category V Transactions’’); and
(vi) provision of sub-underwriting services by the CCAM Group to the Group (‘‘Category VI Transactions’’).

Effective date:

The New Master Agreement will become effective from the date on which the Independent Shareholders’ approval of the New Master Agreement and the transactions contemplated thereunder, and the Proposed annual Caps is obtained, and will supersede and replace the Existing Master Agreement since then.

The Company and CCAM are entitled to extend the New Master Agreement on or before 31 December 2015 and to take such action as may be appropriate to comply with the Listing Rules. Without prejudice to the right of any party to terminate the New Master Agreement, the New Master Agreement shall automatically terminate if (i) the company considers that it is not feasible to comply with the Listing Rules at the relevant time; or (ii) compliance with the Listing Rules would require changes to the New Master Agreement which are not acceptable to any of the parties thereto.

Set out below are the Proposed Annual Caps in respect of the transactions contemplated under the New Master Agreement for each of the three years ending 31 December 2015 as follows:

		For the year ending 31 December	For the year ending 31 December	For the year ending 31 December
		2013	2014	2015
		HK$	HK$	HK$
Category	I Transactions	150,000,000	150,000,000	150,000,000
Category	II Transactions	110,000,000	110,000,000	110,000,000
Category	III Transactions	150,000,000	150,000,000	150,000,000
Category	IV Transactions	20,000,000	20,000,000	20,000,000
Category	V Transactions	10,000,000	10,000,000	10,000,000
Category	VI Transactions	10,000,000	10,000,000	10,000,000

– 29 –

LETTER FROM VINCO CAPITAL

Pursuant to the New Master Agreement, the provision of the financial services between the Group and the CCAM Group shall be entered into on normal commercial terms and the services fees will be charged at rates no less favourable to the Group than rates at which the Group charge/pay Independent Third Parties for comparable transactions.

As stated in the Letter from the Board, the commission rates to be charged under Category I Transactions by the Group will be determined by senior management of the Group who are responsible officers under the SFO in accordance with the Group’s internal commission policy which is applicable to all customers. The commission rates to be charged by the Group under Category I Transactions for placing, underwriting and sub-underwriting services will be determined taking into account among other things, the size of placing or underwriting/sub-underwriting commitments, the market demand for issue, industry of the issuer, pricing of issue, the liquidity of the relevant securities and prevailing market rates and/or following syndicate’s pricing (in the case of underwriting under a underwriter syndicate).

The fees to be charged under Category II Transactions by the Group will be determined in accordance with the Group’s internal fee policy and based on the complexity and urgency of transactions, the resources estimated to be spent on providing the relevant corporate finance services, the size of the transactions involved, the fees charged for historical transactions of similar nature and with reference to prevailing market rates.

The management fee and performance fee rates to be charged to all applicable customers under Category III Transactions by the Group will be determined by senior management in accordance to, including but not limited to the size and nature of fund and with reference to prevailing market rates.

The commission rates to be charged under Category IV Transactions by the CCAM Group will be determined in accordance with the CCAM Group’s internal fee policy which is applicable to all customers and with reference to the minimum commission rates as suggested by the relevant local securities industry association in the PRC from time to time (where applicable) and prevailing market rates.

The commission rates to be charged under Category VI Transactions by the CCAM Group will be determined with the CCAM Group’s internal commission policy, the market demand for the particular issue and with reference to prevailing market rates.

For our due diligence purpose on terms for each type of services under the New Master Agreement, we have reviewed (i) the Group’s internal records with the CCAM Group and the Independent Third Parties regarding their respective dealings in securities, futures and options trading in Hong Kong and in the PRC; (ii) the

– 30 –

LETTER FROM VINCO CAPITAL

engagement letters in relation to provision of corporate advisory services for various type of notifiable transactions entered into between (a) the Group and the CCAM Group and (b) the Group and Independent Third Parties; (iii) asset management contracts for asset management entered into between (a) the Group and the CCAM Group and (b) the Group and the Independent Third Parties; and (iv) the subunderwriting agreements entered into between the Group and the Independent Third Parties. We noted that similar terms and clauses were offered to the CCAM Group and the Independent Third Parties.

Furthermore, in order to assess whether the terms of financial services offered to/ by the CCAM Group (as the case might be) previously were in line with those offered in the market, we have reviewed (i) published documents of listed companies regarding placing, underwriting of securities from the website of the Stock Exchange; (ii) the commission and brokerage rates quoted by certain brokerage firms in the PRC; and (iii) the rate and terms charged to public regarding asset management services in the PRC. We noted that the principal terms thereunder were generally comparable to those offered by the Group to the CCAM Group.

In addition, as confirmed by the Directors, going forward the rates, fees and terms for various financial services to be offered to the CCAM Group will be determined with reference to the market price and practice of major security brokerage firms, asset management firms and other financial advisors providing similar services in the market. Transactions or contracts will only be entered after (i) the relevant senior management’s approval (other than those who have potential conflict of interest in the New Master Agreement) and (ii) review by the Group’s compliance and internal audit department to ensure that the terms are no less favourable to the Company on the terms of the each type of the services under the New Master Agreement.

For Category I Transactions, the internal commission policies for securities, futures and options trading are applicable to all customers of the Group including the CCAM Group and are decided and reviewed by the executive management committee of the Company comprised of the managing Director of the Company, another two executive Directors and a head of back end division of the Company supervising, among others, the compliance and internal audit department. As advised by the Directors, majority of the members of the executive committee do not possess material conflict of interest in the New Master Agreement. For the provision of placing, underwriting and sub-underwriting securities services to the CCAM Group under Category I Transactions, the commission charged by the Group are determined by the senior management mainly comprising responsible officers under the SFO of the securities department of the Group. As advised by the Directors, the relevant responsible officers have no material conflict of interest in the New Master Agreement and have the authority to determine the commission rates charged to the CCAM Group for provision of placing, underwriting and sub-underwriting securities services to the CCAM Group. In addition, we are given to understand from the Directors that the internal review procedures for approving the pricing mechanism are regularly

– 31 –

LETTER FROM VINCO CAPITAL

reviewed by the committee and senior management from time to time to ensure the rates charged to all applicable customers including the CCAM Group are comparable to those in the markets.

As stated in the Letter from the Board, for Category II Transactions, the fees charged to all applicable customers including the Independent Third Parties and the CCAM Group will be approved by the Group’s project engagement committee comprised of the managing Director of the Company and four responsible officers for type 6 regulated activities under the SFO of the Group’s investment banking division. As advised by the Directors, the members of the committee have no material conflict of interest in the New Master Agreement and have the authority to determine the commission to be charged to the CCAM Group for provision of corporate finance advisory services.

As stated in the Letter from the Board, for Category III Transactions, the fees charged to all applicable customers including the Independent Third Parties and the CCAM Group will be approved by the Group’s investment management committee comprised of the managing Director of the Company and another two executive Directors. As advised by the Directors, the majority of the committee have no material conflict of interest in the New Master Agreement and has the authority to decide the fees charged after making reference to prevailing market rates. In addition, we are given to understand from the Directors that the internal review procedures for approving the pricing mechanism are regularly reviewed by the committee from time to time to ensure the rates charged to all applicable customers including the CCAM Group are comparable to those in the markets.

For services provided by the CCAM Group (i.e. Category IV Transactions, Category V Transactions and Category VI Transactions, we understand from the Directors that the responsible officers under the SFO of the relevant departments will obtain at least three relevant quotations from the Independent Third Parties, based on the Independent Third Parties’ activeness in carrying out relevant transactions, financial strength, their reputation, scope of services and quality of services. Unless the service is exclusively available from the CCAM Group, the responsible officers under the SFO of the relevant departments or relevant committees (where applicable) will compare the terms charged by the Independent Third Parties with those charged by the CCAM Group. The responsible officers under the SFO of the relevant departments or the relevant committees (where applicable) has the authority to engage with the Independent Third Parties should the terms offered by CCAM is less favourable. As advised by the Directors, the majority of the committee have no material conflict of interest in the New Master Agreement.

In addition, before engaging or entering any contracts for all transactions under the New Master Agreement, the compliance and internal audit department will perform a final review on the proposed rate charged to or by the Group to ensure that the terms and pricing are no less favourable to the Company.

– 32 –

LETTER FROM VINCO CAPITAL

Based on the aforementioned and by reviewing the internal pricing policies for determining the terms of each type of services under the New Master Agreement, terms of reference for relevant committees, review and approval records from internal compliance and audit department, we are of the view that the terms for each type of the services under the New Master Agreement will be conducted on normal commercial terms and at rates no less favourable to the Company. The terms for each type of the services under the New Master Agreement are fair and reasonable so far and in the interest of the Company and the Shareholders as a whole.

3. Basis of the Proposed Annual Caps

The Proposed Annual Caps were determined by the Company after taking into consideration the principal factors, (i) the historical market conditions and the projected market conditions for the three years ending 31 December 2015; (ii) the estimated transaction amount of the services to be provided to the CCAM Group by the Group and vice versa for the three years ending 31 December 2015, in particular the potential corporate exercises to be undertaken by the CAAM Group involving services from the Group; and (iii) the historical transaction amount of services provided to the CCAM Group by the Group and vice versa for the year ended 31 December 2012, as set out under the section headed ‘‘The Proposed Annual Caps’’ in the Letter from the Board.

(i) Category I Transactions

As stated in the Letter from the Board, The Proposed Annual Caps in respect of Category I Transactions for the three years ending 31 December 2015 were determined based on the estimated fees to be received from the CCAM Group under Category I Transactions by reference to the historical fees received from the CCAM Group under Category I Transactions plus a buffer to provide flexibility to cater for any potential fluctuations. The fees were estimated based on (i) the estimated total monetary value which would be brokered for securities, futures and options trading, placing, underwriting and sub-underwriting; and (iii) the relevant commission rates charged by the Group.

In order to assess the fairness and reasonableness of the Proposed Annual Caps for Category I Transactions for the three years ending 31 December 2015, we reviewed the basis and/or breakdown on determining such annual caps provided by the Company. We noted that approximately 80% of the annual caps for the financial year ending 2013 and the financial year ending 2014 were estimated underwriting and/or placing commission fees in relation to the proposed corporate activities of the CCAM Group which may involve public or private offering of equity securities and/or debt securities which may be completed in either the financial year ending 2013 or the financial year ending 2014. Taking into account the proposed corporate activities of CCAM, although there were approximately only two months remaining in the financial year ending 31 December 2013, the Directors are of the view that the Group should not forego the potential likelihood that CCAM may complete the proposed corporate

– 33 –

LETTER FROM VINCO CAPITAL

activities on or prior to the financial year ending 31 December 2013. Thus, it is in the interests of the Company and the Shareholders to have the annual caps for the financial year ending 31 December 2013 as well as for the financial year ending 31 December 2014.

Similarly, we noted approximately 80% of the annual caps for the year ending 31 December 2015 were based on estimated underwriting and/or placing fees from proposed corporate activities that may be undertaken by several connected companies of CCAM in 2015. After our discussion with the Directors, we are given to understand that such corporate activities may be arisen from certain debt-converted-equity enterprises which are in a leading role in their respective industries with total monetary value over RMB30 billion as at 31 December 2012. As the Group may benefit from the underwriting and/or placing fees that arise from such prospective corporate activities on debt-converted-equity enterprises, we are of the view that it is in the interests of the Company and the Shareholders to include the estimated underwriting and/or placing fees into the annual caps for the financial year ending 31 December 2015.

As stated in the above sections headed ‘the prospect of financial markets in Hong Kong’ and ‘the prospect of financial market in the PRC’, the prospect of both equity and debt markets in Hong Kong and PRC are positive and the fund raising activities are growing. In addition, as advised by the Directors, the CCAM Group aims to internationalise and the Group plays an important role as the Group is the only licensed institution to provide regulated financial services outside China. The Group will be benefited from providing financial services to the CCAM Group in order fulfil its internationalisation strategy. Based on the above said, we concur with the Directors’ view that the corporate actions of CCAM Group will become active in coming years and the estimated transaction volume is fair and reasonable.

Regarding the fairness and reasonableness on the pricing of the underwriting and/or placing fees, we have reviewed certain public documents from the Independent Third Parties for similar corporate activities that CCAM and its connected companies proposed to undertake. As the underwriting fees charged by the Group were within the range that was charged to the Independent Third Parties, we are of the view that the proposed underwriting and or placing commission rate between the Group and CCAM is on normal commercial terms, and is fair and reasonable.

Aside from the estimated underwriting fees charged under the proposed corporate activities, we noted that approximately 5% of the Proposed Annual Caps for the 3 years ending 31 December 2015 were estimated brokering services fees on securities, futures and options trading charged to CCAM. We have reviewed the Group’s internal record of CCAM and the Independent Third Parties on the terms and rates charged on their respective dealing in securities, futures and options trading, and we noted similar terms and rates were charged to CCAM and the Independent Third Parties.

– 34 –

LETTER FROM VINCO CAPITAL

As advised by the Directors, the Group (i) have not entered any contracts with the CCAM Group for the provision of placing, underwriting and subunderwriting under the Category I Transactions and (ii) have set up trading accounts with CCAM Group for provision of brokering services fees on securities trading as at the Latest Practicable Date. Hence, the estimated future transaction volume may not be realised in the future. However, we are given to understand that it is normal market practice that placing, underwriting and sub-underwriting contracts will be entered at latter stage of the corporate activities. Therefore, we are of the view that the renewal of the Proposed Annual Caps for potential Category I Transactions is justifiable and in the interest of the Company and the Shareholders as a whole as it allows the Group to provide brokerage services and enter contracts in relation to placing, underwriting and sub-underwriting services with the CCAM Group in a timely manner should the opportunities arise.

Furthermore, we noted that approximately 15% of the Proposed Annual Caps are buffers for Category I transactions. As advised by the Directors, the cushion had been included with the intention to cater for potential fluctuations in (a) the size of the proposed corporate activities for CCAM and its connected companies, and (b) the underwriting and/or placing allocation to the Group in relation to the proposed corporate activities.

(ii) Category II Transactions

As stated in the Letter from the Board, the Proposed Annual Caps are determined based on (i) the estimated fees received from CCAM Group in respect of provision of corporate finance advisory services by reference to the historical fees received from the CCAM Group under Category II Transactions; and (ii) a cushion that had been included to provide additional flexibility for possible changes in the complexity of the transactions. The fees were estimated based on (i) the estimated number of corporate finance advisory transactions; (ii) the complexity of transactions; (iii) the estimated resources and time to be spent on providing the relevant corporate finance services; (iii) where the transaction involves fund raising, the size of the funds involved; and (iv) the fees charged by the Group to independent clients for similar transactions.

In order to assess the fairness and reasonableness of the Proposed Annual Caps for Category II Transactions for the three years ending 31 December 2015, we have reviewed on the basis for determining the annual caps. We noted that approximately 80% of each of the Proposed Annual Caps for Category II Transactions was the estimated fees of the provision of corporate finance advisory services while the remaining portions are buffers. As further discussed with the Directors, we understand that the provision of corporate finance advisory services to the CCAM Group will become active throughout the three years ending 31 December 2015 as the CCAM Group aims to internationalise and the Group plays an important role to fulfil CCAM Group’s internationalisation strategy. We are given to understand that the expected corporate finance advisory services are from the corporate exercise of the CCAM Group and certain debt-converted equity

– 35 –

LETTER FROM VINCO CAPITAL

enterprises with total monetary value over RMB30 billion as at 31 December 2012. As stated in the above sections headed ‘the prospect of financial markets in Hong Kong’ and ‘the prospect of financial market in the PRC’, the prospect of both equity and debt markets in Hong Kong and PRC are positive and the fund raising activities are becoming active and the size of fund raised through equity and debt are growing robustly. Hence, we concur with the Directors’ view that corporate activities for the CCAM and debt-converted equity enterprises will become active in the coming years. As advised by the Directors, the corporate activities of CCAM and certain debt-converted equity enterprises are still in preliminary stage and the Group have not entered any contracts with the CCAM and certain debt-converted equity enterprises for the provision of Category II Transactions as at the Latest Practicable Date. Hence, the estimated transaction volume may not be realised in the future. However, the renewal of the Proposed Annual Caps for potential Category II Transactions is justifiable and in the interest of the Company and the Shareholders as a whole as it allows the Group to enter corporate advisory services contracts with the CCAM Group and certain debt-converted equity enterprises in a timely manner should the opportunities arise.

Based on the above said, we concur with the Directors’ view that (i) the revision on annual caps on Category II Transactions are necessary since the Existing Annual Caps for Category II Transactions may not be sufficient to meet the additional needs arising from the expected increase in corporate finance advisory services provided by the Group to the CCAM Group and certain debtconverted equity enterprises with total monetary value over RMB30 billion as at 31 December 2012; (ii) the estimated transaction volume is fair and reasonable given high monetary value of debt-converted equity enterprises.

In addition, we have reviewed the engagement letters stating the terms and rates charged entered between (a) the Group and the CCAM Group under the Existing Master Agreement, and (b) the Group and Independent Third Parties on the provision of financial advisory services. We noted that the terms and rates charged to CCAM Group are comparable to those charged to Independent Third Parties. Hence, we are of the view that the terms and rates entered between the Group and the CCAM Group are fair and reasonable and on normal commercial terms.

We also noted that a cushion had been included in reference to determining the size of the annual caps for Category II transactions. As advised by the Directors, the cushion had been included with the intention to cater for potential fluctuations in the size and complexity of the corporate finance advisory services to the CCAM Group. Hence, we concur with the Directors’ view that the inclusion of buffer is justifiable.

– 36 –

LETTER FROM VINCO CAPITAL

(iii) Category III Transactions

As stated in the Letter from the Board, the Proposed Annual Caps in respect of Category III Transactions for the three years ending 31 December 2015 were determined based on the estimated annual management fees and performance fees to be received from the CCAM Group under Category III Transactions by reference to the historical fees received from the CCAM Group under Category III Transactions plus a buffer to provide flexibility to cater for any potential fluctuations. The annual management fees and performance fees were estimated based on (i) the estimated total monetary value of the fund to be managed by the Group; and (ii) the management and performance rate charged by the Group.

In determining the fairness and reasonableness of the Proposed Annual Caps for Category III transactions, we have reviewed the basis and noted that the estimated annual management fees and annual performance fees amounts up to approximately 80% of each of the Proposed Annual Caps while the remaining balance i.e. approximately 20% are buffer to provide flexibility. As advised by the Directors, following the completion of the corporate exercises of the CCAM Group, the size of assets held by the CCAM Group will be enlarged. Cinda Asset Management (Cayman) Limited (a wholly-owned subsidiary of the Company) was engaged by Cinda Retail and Consumer Fund L.P. (the ‘‘Fund’’) as the investment manager of the Fund. A subsidiary of Well Kent is interested in approximately 61.11% of the Fund and the Fund is therefore an associate of Well Kent. Details of the aforesaid arrangement were disclosed in the announcement of the Company dated 24 May 2013. Save for the aforesaid and as at the Latest Practicable Date, the Group had not entered into any other contracts with the CCAM Group in respect of any Category III Transactions. Hence, the estimated transaction volumes may not be realised in the future. However, the renewal of the Proposed Annual Caps for potential Category III Transactions is justifiable and in the interest of the Company and the Shareholders as a whole as it allows the Group to enter asset management contracts with the CCAM Group in a timely manner and earn management and performance fees arised from asset management services should the corporate activities of the CCAM Group complete in coming years.

Based on the above said, we concur with the Directors’ view that (i) the revision on annual caps on Category III Transactions are necessary since the Existing Annual Caps for Category III Transactions may not be sufficient to meet the additional needs arising from the enlarged assets of the CCAM Group following the completion of corporate activities and (ii) the estimated transaction volume is fair and reasonable given the estimated enlarged assets of the CCAM Group to be managed by the Group.

We have reviewed the management agreements stating the annual management fees and performance fees entered between the Group and (a) the CCAM Group and (b) other clients of the Group which are the Independent Third Parties, we note that the management fees and performance fees charged by the Group is essentially comparable and no less favourable to the corresponding fees

– 37 –

LETTER FROM VINCO CAPITAL

charged by the Group to other clients of the Group which are the Independent Third Parties. Hence, we are of the opinion that the major terms and rates of charged by the Group are on normal commercial terms.

In addition, having considered the fact that the size of the fund and performance fees may vary annually in accordance with the market conditions, we are also of the view that the inclusion of a buffer into the Proposed Annual Caps for asset management services by the Group to the CCAM Group for the three years ending 31 December 2015 to be fair and reasonable as far as the Company and the Independent Shareholders are concerned.

(iv) Category IV Transactions

As stated in the Letter from the Board, the Proposed Annual Caps for Category IV Transactions for the three years ending 31 December 2015 were determined based on the estimated commission fees payable to the CCAM Group under Category IV Transactions by reference to the historical fees paid to the CCAM Group under Category IV Transactions plus a buffer to provide flexibility to cater for any potential fluctuations. The commission fees were estimated based on (i) the estimated total monetary value which would be brokered for RQFII, A Shares, B Shares and other securities and trust products (the ‘‘PRC Products’’) of approximately HK$1 billion for each year; and (ii) the estimated commission rate to be charged by CCAM Group.

In order to assess the fairness and reasonableness of the Proposed Annual Caps for Category IV Transactions for the three years ending 31 December 2015, we have reviewed and discussed with the Directors the basis on determining the annual caps. We noted that a large portion i.e. approximately 80% of each of the annual caps for the three years ending 31 December 2015 were the estimated amount of commission fees payable to the CCAM Group while the remaining balance are the buffer to cater for potential fluctuations. As stated in the above sections headed ‘the prospect of the financial market in the PRC’, the equity trading activities in PRC is active and growing recently. The Directors are of the view that given the current active and prosperous market sentiment in the PRC stock market, the clients of the Group are willing to invest in PRC Products to generate returns.

As advised by the Directors, for Category IV Transactions, the Group have set up trading accounts with the CCAM Group for B shares trading while the Group are in the process to set up trading accounts for RQFII and A shares with the CCAM Group as at the Latest Practicable Date. Hence, estimated future transaction volume may not be realised in the future. However, the estimated average monthly monetary value to be brokered for PRC Products are insignificant when compared to recent monthly turnover for SSE Composite Index as discussed in the above section headed ‘the prospect of the financial market in the PRC’. Therefore, we are of the view that Directors has used marketoriented approach to determine the estimated annual amount of the PRC

– 38 –

LETTER FROM VINCO CAPITAL

Products to be brokered and the estimated annual amounts can be achieved given the current positive stock market sentiment in the PRC. Based on the above, we concur with the Directors’ view that (i) the annual caps on Category IV Transactions are necessary as it allows the Group to provide PRC Products brokerage services to clients via the CCAM Group in a timely manner and (ii) the estimated transaction volume is fair and reasonable given the current positive PRC stock market sentiment.

Regarding the fairness and reasonableness on the commission rates charged, we have reviewed the term sheets stating the terms and rates charged that was entered into between the Group and the CCAM Group. We have also reviewed the commission rate charged to the public (i.e. Independent Third Parties) for those PRC Products from brokerage firms in China through our desktop research. We noted that the commission rates charged to the Group for the PRC Products are comparable to those charged to Independent Third Parties by independent brokerage firms in China. Thus, we are of the view that the terms and rates entered between the Group and the CCAM Group are fair and reasonable and on normal commercial terms.

For the balance of each of the annual caps for the three years ending 31 December 2015, as advised by the Directors, such cushion had been included with the intention to cater for potential fluctuations in the brokering activities of the PRC Products. As mentioned in the above section ‘‘Prospect of the financial market in the PRC’’, the trading activities and the market sentiment in the PRC is improving. Hence, we concur with the Directors’ view inclusion of buffer is justifiable as there are possibilities that the total annual monetary value from the brokerage of the PRC Products may be higher than expected.

(v) Category V Transactions

As stated in the Letter from the Board, the Proposed Annual Caps in respect of Category V Transactions for the three years ending 31 December 2015 were determined based on the estimated annual management fees and performance fees payable to the CCAM Group under Category V Transactions plus a buffer to provide flexibility to cater for any potential fluctuations. The annual management fees and performance fees were estimated based on (i) the estimated size of a private equity fund(s) to be set up by the Group and managed by the CCAM Group; and (ii) the rate of management and performance to be charged by the CCAM Group.

In order to assess the fairness and reasonableness of the Proposed Annual Caps for Category V Transactions for the three years ending 31 December 2015, we have reviewed the basis for determining the Proposed Annual Caps for Category V Transactions. We noted that approximately 80% of the annual caps are estimated annual management fees and performance fees payable to the CCAM Group under Category V Transactions while the remaining portions are buffer to provide flexibility. Regarding the estimated fund size, we are advised by

– 39 –

LETTER FROM VINCO CAPITAL

the Directors that the Group is in the process of raising a sizable sum of money for its private equity fund business. As confirmed by the Directors, portion of the amount raised may be utilised to set up a private equity fund(s) to be managed by the CCAM Group for own investment and clients’ subscription. Hence, the fund would be subject to management fees paid by the CCAM Group, and includes a buffer based on the size of fund raised and performance fees. As advised by the Directors, the Group have not entered any fund management contracts with the CCAM Group for the provision of Category V Transactions as at the Latest Practicable Date. Hence the estimated transaction volumes may not be realised in the future. However, we are given to understand that it is normal market practice for not entering fund management contracts until the funds are raised and subscribed. Based on the above, we concur with the Directors’ view that the annual caps on Category V Transactions are necessary as it allows the Group to enter asset management contracts with the CCAM Group in a timely manner upon the completion of raising of fund.

As confirmed by the Directors, the annual management fees and performance fees charged by the CCAM Group should be comparable to those charged to the public which is Independent Third Parties. We have conducted desktop research about the annual management and performance fees to be charged to public by the CCAM Group regarding the asset management. We concluded that the rates used in determining the Proposed Annual Caps are comparable to those charged to the public by the CCAM Group. Therefore, we are of the view that the management fees and performance fees to be charged by the CCAM Group to the Group is essentially comparable and no less favourable to the corresponding fees charged by the CCAM Group to the Independent Third Parties and/or in the market, hence, the terms and rates charged by the CCAM Group to the Group are on normal commercial terms. Therefore we consider that the management and performance fees to be charged by the CCAM Group to the Group are fair and reasonable so far and in the interest of the Company and its Shareholder as a whole.

In addition, having considered the fact that the size of the fund and performance fees may vary annually, we are also of the view that the inclusion of a buffer into the Proposed Annual Caps for asset management services by the CCAM Group to the Group for the three years ending 31 December 2015 to be fair and reasonable as far as the Company and the Shareholders are concerned.

(vi) Category VI Transactions

As stated in the Letter from the Board, the Proposed Annual Caps in respect of Category VI Transactions for the three years ending 31 December 2015 were determined based on the estimated commission fees payable to the CCAM Group under Category VI Transactions plus a buffer to provide flexibility to cater for any potential fluctuations. The commission fees were estimated based on (i) the

– 40 –

LETTER FROM VINCO CAPITAL

estimated number and size of underwriting commitments to be undertaken by the Group; and (ii) the commission rate for sub-underwriting commitment charged by the CCAM Group.

In order to assess the fairness and reasonableness of the Proposed Annual Caps for Category VI Transactions for the three years ending 31 December 2015, we have discussed with the Directors on the basis for determining the annual caps. We noted that approximately 70% of the annual caps are estimated annual management fees and performance fees payable to the CCAM Group under Category VI Transactions while the remaining portions are buffer to provide flexibility. Regarding the estimated number and size of underwriting commitments to be undertaken by the Group, we have made reference to the underwriting commission received by the Group in providing underwriting services to clients. According to the annual report of the Company in 2012 and interim report of the Company in 2013, we note that the underwriting commission earned for the two years ended 31 December 2012 and six months ended 30 June 2013 are approximately HK$2.7 million, HK$9.7 million and HK$9.8 million, respectively. We note that there is significant increase in underwriting commission. In addition, after our discussion with the Directors, we are given to understand that the number and size of the underwriting roles undertaken by the Group in relation to fund raising activities in Hong Kong are expected to increase given the current market and investment sentiment in Hong Kong. As mentioned above section headed ‘‘Prospect of the financial markets in Hong Kong’’, the trading volumes and fund raising exercise from IPO is improving, we therefore concur with the Directors’ view that the opportunities in terms of number and amounts for involving underwriting roles in relation to fund raising activities may increase. In light of this, a portion of underwriting commitment can be discharged by offering CCAM Group to undertake sub-underwriting roles. Therefore, the number and size for offering the CCAM Group to undertake subunderwriting roles may also increase accordingly.

After our discussion with the Directors, the Group have not entered any contracts with the CCAM Group regarding the Category VI Transactions as at the Latest Practicable Date and hence the estimated transaction volumes may not be realised in the future. However, we are given to understand that it is normal market practice that sub-underwriting contracts will be entered at latter stage of the corporate activities. Based on the above, we are of the view that (i) the Proposed Annual Caps for potential Category VI Transactions is justifiable and in the interest of the Company and the Shareholders as a whole as it allows the Group to enter sub-underwriting contracts with the CCAM Group in a timely manner should the underwriting commitments opportunities to be undertaken by the Group arise in the coming years and (ii) the estimated transaction volume is fair and reasonable given the estimated increase in number and amount of offering sub-underwriting commitments opportunities to the CCAM Group resulted from the improving IPO markets.

– 41 –

LETTER FROM VINCO CAPITAL

To assess the fairness and reasonableness of the commission rate charged by the CCAM Group regarding the sub-underwriting commitment, we have reviewed the sub-underwriting agreements stating the terms and rates charged to the Group by other independent brokerage firms in relation to the sub-underwriting of a fund raising exercise. We have compared such rates with the proposed rates charged by the CCAM Group in relation to sub-underwriting. We note that the proposed rates to be charged to the Group by the CCAM Group are comparable to those charged by independent brokerage firms which are the Independent Third Parties. Thus, we are of the view that the rates entered between the Group and the CCAM Group in relation to undertaking sub-underwriting roles are fair and reasonable and on normal commercial terms.

We also note from the Directors that a portion of the annual caps have included a cushion to cater for potential fluctuations in the size and number of offering sub-underwriting roles by the Group to the CCAM Group. Given that the size of the underwriting and hence the size of sub-underwriting may vary, we are of the view that inclusion of a buffer is justifiable.

Based on the above, we are of the view that the Proposed Annul Caps for each type of services under the New Master Agreement are fair and reasonable and in the interest in the Company and the Shareholders as a whole.

Shareholders should note that as the Proposed Annual Caps are relating to future events and are estimated based on assumptions which may or may not remain valid for the entire period up to 31 December 2015, thus they do not represent forecasts of revenue to be generated from the transactions contemplated under the New Master Agreement. As such, we express no opinion as to how closely the actual revenue to be generated and/or actual cost to be spent under the New Master Agreement will correspond with the Proposed Annual Caps.

D. CONCLUSION

Having considered the above principal factors and reasons, we are of the view that the New Master Agreement and the transactions contemplated thereunder, and the Proposed Annual Caps were entered into in the ordinary and usual course of business of the Group on normal commercial terms and the terms of the New Master Agreement and the transaction contemplated thereunder, and the Proposed Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend (i) the Independent Shareholders; and (ii) the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the resolution approving the New Master Agreement and the transactions contemplated thereunder and the Proposed Annual Caps at the SGM.

Yours faithfully, For and on behalf of Grand Vinco Capital Limited Alister Chung Managing Director

– 42 –

APPENDIX

GENERAL INFORMATION

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 regard to the Group. 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.

DISCLOSURE OF INTERESTS

Directors’ and chief executives’ interests and short positions in shares, underlying shares and debentures of the Company or any associated corporations

As at the Latest Practicable Date, none of the Directors and chief executive of the Company were interested or were deemed to have interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

Interests of substantial Shareholders

			Appropriate
			percentage
		Number of	of the
		shares or	Company’s
		underlying	issued share
Name of substantial shareholder	Capacity	shares held	capital
Sinoday	Beneficial owner	408,286,200	63.67%
		(Note 1)
Well Kent	Interest through a	408,286,200	63.67%
	controlled corporation	(Note 1)
CCAM	Interest through a	408,286,200	63.67%
	controlled corporation	(Note 1)
Silver Grant International	Beneficial owner	48,026,400	7.49%
Securities Investment Limited		(Note 2)
(‘‘Silver Grant’’)
Silver Grant Securities	Interest through a	48,026,400	7.49%
Investment (BVI) Limited	controlled corporation	(Note 2)
(‘‘Silver Grant BVI’’)

– 43 –

APPENDIX

GENERAL INFORMATION

			Appropriate
			percentage
		Number of	of the
		shares or	Company’s
		underlying	issued share
Name of substantial shareholder	Capacity	shares held	capital
Silver Grant International	Beneficial owner and	50,441,200	7.87%
Industries Limited (‘‘Silver	interest through a	(Note 2)
Grant International’’)	controlled corporation
CCB International Asset	Investment manager	59,621,200	9.30%
Management Limited		(Note 3)
(‘‘CCBIAM’’)
CCB International (Holdings)	Beneficial owner	59,621,200	9.30%
Limited		(Note 3)
CCB Financial Holdings	Interest held by a	59,621,200	9.30%
Limited	controlled corporation	(Note 3)
CCB International Group	Interest held by a	59,621,200	9.30%
Holdings Limited	controlled corporation	(Note 3)
China Construction Bank	Interest held by a	59,621,200	9.30%
Corporation	controlled corporation	(Note 3)
Central Huijin Investment Ltd.	Interest held by a	59,621,200	9.30%
	controlled corporation	(Note 3)

Notes:

(1) These Shares were held by Sinoday. The issued share capital of Sinoday was wholly owned by Well Kent which was a wholly-owned subsidiary of CCAM. By virtue of the provisions of the SFO, Well Kent and CCAM were deemed to be interested in all the Shares in which Sinoday was interested.
(2) These Shares were held by Silver Grant and Silver Grant International as to 48,026,400 Shares and 2,414,800 Shares respectively. The issued share capital of Silver Grant was wholly owned by Silver Grant BVI, which was a wholly-owned subsidiary of Silver Grant International. By virtue of the provisions of the SFO, Silver Grant BVI and Silver Grant International were deemed to be interested in all the Shares in which Silver Grant was interested.
(3) These Shares were held by CCBIAM in the capacity of an investment manager for the beneficial owner, CCB International (Holdings) Limited. CCB International (Holdings) Limited is a whollyowned subsidiary of CCB Financial Holdings Limited which in turn is wholly owned by CCB International Group Holdings Limited. CCB International Group Holdings Limited is a whollyowned subsidiary of China Construction Bank Corporation which in turn 57.23% of its interest is owned by Central Huijin Investment Ltd. Accordingly, CCB Financial Holdings Limited, CCB International Group Holdings Limited, China Construction Bank Corporation and Central Huijin Investment Ltd. were deemed to be interested in 59,621,200 Shares by virtue of the provisions of the SFO.

So far as is known to the Directors, as at the Latest Practicable Date, no other persons (other than the Directors, the chief executive and substantial Shareholders disclosed above) had any interest or short position in the Shares or underlying Shares which would fall to be

– 44 –

APPENDIX

GENERAL INFORMATION

disclosed to the Company under the provisions of Divisions 2 and 3 of the Part XV of the SFO or was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any member of the Group.

COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and their respective associates was considered to have interests in businesses apart from the Group’s businesses which compete, or are likely to compete, either directly or indirectly, with the businesses of the Group pursuant to Rule 8.10 of the Listing Rules.

SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into any service contract with any member of the Group which is not determinable by the Group within one year without payment of compensation (other than statutory compensation).

EXPERT AND CONSENT

The following is the qualification of the expert who has given opinion or advice which is contained or referred to in this circular:

Vinco Capital a corporation licensed to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO

Vinco Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which they are included.

As at the Latest Practicable Date, Vinco Capital was not beneficially interested in the share capital of any member of the Group nor has any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group. In addition, Vinco Capital did not have any interest, either directly or indirectly, in any assets which have been, since 31 December 2012 (the date to which the latest published audited consolidated financial statements of the Company were made up), acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

MATERIAL ADVERSE CHANGE

Up to the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2012 (the date to which the latest published audited consolidated financial statements of the Company were made up).

– 45 –

APPENDIX

GENERAL INFORMATION

DIRECTORS’ INTERESTS IN ASSETS OF THE GROUP

Up to the Latest Practicable Date, none of the Directors had any direct or indirect material interest in any assets which have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2012 (the date to which the latest published audited consolidated financial statements of the Company were made up).

DIRECTORS’ INTERESTS IN CONTRACTS OR ARRANGEMENTS

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

MISCELLANEOUS

The English version of this circular and the accompanying form of proxy shall prevail over the Chinese text for the purpose of interpretation.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours from 9: 00 a.m. to 5: 00 p.m. (other than Saturdays, Sundays and public holidays) at the registered office of the Company in Hong Kong up to and including the date of the SGM:

(a) the memorandum of association of the Company;
(b) the Existing Master Agreement;
(c) the New Master Agreement;
(d) the letter addressed to the Independent Shareholders from the Independent Board Committee, the text of which is set out on page 16 of this circular;
(e) the letter of advice from Vinco Capital to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 17 to 42 of this circular; and
(f) the letter of consent from Vinco Capital referred to in the section headed ‘‘Expert and Consent’’ of this appendix.

– 46 –

NOTICE OF SPECIAL GENERAL MEETING

==> picture [69 x 50] intentionally omitted <==

==> picture [225 x 41] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock code: 111)

NOTICE IS HEREBY GIVEN that the Special General Meeting (‘‘SGM’’) of Cinda International Holdings Limited (the ‘‘Company’’) will be held at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong on Monday, 25 November 2013 at 9: 30 a.m. for the purpose of considering:

ORDINARY RESOLUTION

‘‘THAT

(a) the New Master Agreement (as defined in the circular of the Company dated 8 November 2013 (the ‘‘Circular’’)) (a copy of the New Master Agreement is marked ‘‘A’’ and produced to the SGM and signed by the chairman of the SGM for identification purpose) and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;
(b) the Proposed Annual Caps (as defined in the Circular) be and are hereby approved, confirmed and ratified; and
(c) any one or more of the director of the Company be and is/are hereby authorised to do all such acts and things and execute all such documents for the purpose of, or in connection with, the implementation of and giving effect to the New Master Agreement and the transactions ancillary thereto and of administrative nature which he/they consider necessary, desirable or expedient.’’

By Order of the Board Lau Mun Chung Executive Director

Hong Kong, 8 November 2013

Notes:

A form of proxy for use at the SGM is enclosed herewith.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of any officer, attorney or other person authorised to sign the same.

– 47 –

NOTICE OF SPECIAL GENERAL MEETING

A member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one or more than one proxies to attend and vote in his/her stead. A proxy need not be a member of the Company. If more than one proxy is so appointed, the appointment shall specify the number of shares in respect of which each such proxy is so appointed.
In order to be valid, the form of proxy must be deposited at the Company’s Hong Kong branch share registrar, Tricor Secretaries Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Hong Kong together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority, not less than 48 hours before the time for holding the meeting or adjourned meeting.
Completion and return of the form of proxy will not preclude members from attending and voting in person at the meeting convened by the above notice or at any adjourned meeting thereof (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoked.

– 48 –

AI assistant

Concord New Energy Group Ltd. — Proxy Solicitation & Information Statement 2013

35804_rns_2013-11-08_1da7b435-d6bc-4f57-b4df-ea24d64c6b65.pdf

REVISION OF ANNUAL CAPS, CONTINUING CONNECTED TRANSACTIONS AND

NOTICE OF SPECIAL GENERAL MEETING

Optima Capital Limited

CONTENTS

DEFINITIONS

DEFINITIONS

(Stock code: 111)

REVISION OF ANNUAL CAPS AND CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

LETTER FROM THE BOARD

THE NEW MASTER AGREEMENT

Date:

Parties:

Term:

Nature of transactions:

Terms:

Effective date:

The Proposed Annual Caps:

(i) Category I Transactions

(ii) Category II Transactions

(iii) Category III Transactions

(iv) Category IV Transactions

(v) Category V Transactions

(vi) Category VI Transactions

The Existing Annual Caps and usages:

REASONS FOR AND BENEFITS OF ENTERING INTO THE NEW MASTER AGREEMENT

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

THE SGM

RECOMMENDATION

LETTER FROM THE BOARD

REVISION OF ANNUAL CAPS AND

CONTINUING CONNECTED TRANSACTIONS

REVISION OF ANNUAL CAPS AND

CONTINUING CONNECTED TRANSACTIONS

A. INTRODUCTION

B. BASIS OF OUR OPINION AND RECOMMENDATION

C. PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background and reasons for the entering of the New Master Agreement

i. Information of the Company

ii. Information of CCAM

iii. Reasons for entering into the New Master Agreement

LETTER FROM VINCO CAPITAL

iv. Prospects of the financial markets in Hong Kong

(i) Hang Seng Index

(ii) Turnovers

(iii) New listing companies

(iv) Newly listed debt securities market in Hong Kong

v. Prospect of the financial market in the PRC

(ii) Turnovers

LETTER FROM VINCO CAPITAL

LETTER FROM VINCO CAPITAL

3. Basis of the Proposed Annual Caps

(i) Category I Transactions

LETTER FROM VINCO CAPITAL

(ii) Category II Transactions

LETTER FROM VINCO CAPITAL

(iii) Category III Transactions

(iv) Category IV Transactions

(v) Category V Transactions

LETTER FROM VINCO CAPITAL

(vi) Category VI Transactions

D. CONCLUSION

RESPONSIBILITY STATEMENT

DISCLOSURE OF INTERESTS

Directors’ and chief executives’ interests and short positions in shares, underlying shares and debentures of the Company or any associated corporations

Interests of substantial Shareholders

COMPETING INTERESTS

SERVICE CONTRACTS

EXPERT AND CONSENT

MATERIAL ADVERSE CHANGE

DIRECTORS’ INTERESTS IN ASSETS OF THE GROUP

DIRECTORS’ INTERESTS IN CONTRACTS OR ARRANGEMENTS

MISCELLANEOUS

DOCUMENTS AVAILABLE FOR INSPECTION

(Stock code: 111)

Concord New Energy Group Ltd. Proxy Solicitation & Information Statement 2013