Concord New Energy Group Ltd. - Proxy Solicitation & Information Statement 2016

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 a licensed securities dealer, 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, licensed dealer, or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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(Incorporated in Bermuda with limited liability) (Stock code: 111)

CONTINUING CONNECTED TRANSACTIONS SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT AND REVISION OF ANNUAL CAPS

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

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A letter from the Board is set out on pages 4 to 18 of this circular. A letter from the Independent Board Committee containing its advice to the Independent Shareholders is set out on pages 19 to 20 of this circular. A letter from RaffAello Capital, the Independent Financial Adviser, containing its advice and recommendations to the Independent Board Committee and the Independent Shareholders is set out on pages 21 to 34 of this circular.

A notice convening the SGM to be held at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong on 26 May 2016 at 10: 45 a.m. (or immediately after the conclusion of the AGM, whichever is later) is set out on pages 38 to 39 of this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as practicable and in any event not less than 48 hours before the time fixed for holding the SGM (or any adjournment thereof) to the office of the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting thereof if you so wish and in such event, the instrument appointing a proxy shall be deemed to be revoked.

10 May 2016

This circular is printed on environmentally friendly paper

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		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from	the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Letter from	RaffAello Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Appendix	— General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		38

– i –

DEFINITIONS

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

‘‘Acquisition’’ the acquisition by CCAM Group of certain equity interest in NCB (details as announced by CCAM on 18 December 2015)
‘‘AGM’’ the annual general meeting of the Company to be held at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong on 26 May 2016 at 10: 30 a.m.
‘‘associate(s)’’ has the meaning ascribed to it under the Listing Rules
‘‘Board’’ the board of Directors
‘‘Category I Transactions’’
provision by the Group to CCAM Group of brokering services for securities, futures and options trading; placing, underwriting and sub-underwriting services for securities (including but not limited to securities issued by the CCAM Group) as contemplated under the New Master Agreement
‘‘Category II provision by the Group to CCAM Group of corporate finance Transactions’’ advisory services (including but not limited to advisory services in relation to (i) the compliance of the Listing Rules and The Codes on Takeovers and Mergers and Share Buy-backs; (ii) the issue of securities; and (iii) group restructuring) as contemplated under the New Master Agreement
‘‘Category III provision by the Group to CCAM Group of asset management Transactions’’ services as contemplated under the New Master Agreement
‘‘Category IV Transactions’’
provision of corporate finance advisory services by the CCAM Group to the Group in relation to financial activities in the PRC (including but not limited to advisory services in relation to the (i) compliance of relevant PRC laws; (ii) the operation of asset management; and (iii) the target investees of the funds) as contemplated under the New Master Agreement
‘‘CCAM’’
China Cinda Asset Management Co., Ltd., a joint stock limited company incorporated in the PRC, the H shares of which are listed on the Main Board of the Stock Exchange (stock code: 1359)
‘‘CCAM Group’’
CCAM, its subsidiaries, and/or its associates
‘‘China Cinda (HK)’’ China Cinda (HK) Holdings Company Limited, a company incorporated in Hong Kong with limited liability and a whollyowned subsidiary of CCAM

– 1 –

DEFINITIONS

‘‘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 (stock code: 111)
‘‘connected persons’’ has the meaning ascribed to it under the Listing Rules ‘‘Director(s)’’ director(s) of the Company
‘‘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 to advise the Independent Shareholders as to voting at the SGM on the resolution approving the Supplemental Agreement and the transactions contemplated thereunder, including the Revised Annual Caps
‘‘Independent Financial RaffAello Capital Limited, a corporation licensed to carry out Adviser’’ or Type 6 (advising on corporate finance) regulated activity under ‘‘RaffAello Capital’’ the SFO
‘‘Independent Shareholders other than Sinoday and its associates Shareholders’’
‘‘Independent Third persons(s) or company(ies) which is/are independent of any Party(ies)’’ member of the Group, the Directors, the chief executives, the controlling shareholders, the substantial shareholders of the Company or its subsidiaries, and their respective associates
‘‘Latest Practicable 5 May 2016, being the latest practicable date prior to the printing Date’’ 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
‘‘NCB’’ Nanyang Commercial Bank, Limited, being the target of the Acquisition by CCAM
‘‘New Master the agreement dated 18 December 2015 and entered into between Agreement’’ the 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

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DEFINITIONS

‘‘Proposed Annual	the annual caps in respect of each category of transactions
Caps’’	contemplated under the New Master Agreement for the year
	ending 31 December 2016
‘‘Revised Annual Caps’’	the revised Proposed Annual Caps in respect of each of Category
	I Transactions, Category II Transactions and Category III
	Transactions contemplated under the New Master Agreement
	as supplemented by the Supplemental Agreement for the three
	years ending 31 December 2016, 2017 and 2018
‘‘SGM’’	the special general meeting of the Company to be convened and
	held for the Independent Shareholders to consider and approve
	the resolution in respect of the Supplemental Agreement and the
	transactions contemplated thereunder, including the Revised
	Annual Caps
‘‘SFO’’	the Securities and Futures Ordinance (Chapter 571 of the Laws
	of Hong Kong)
‘‘Share(s)’’	issued ordinary share(s) of HK$0.1 each of the Company
‘‘Shareholder(s)’’	holder(s) of the Shares
‘‘Sinoday’’	Sinoday Limited, a company incorporated in the British Virgin
	Islands with limited liability and a wholly-owned subsidiary of
	China Cinda (HK)
‘‘Stock Exchange’’	The Stock Exchange of Hong Kong Limited
‘‘Supplemental	the conditional supplemental agreement to the New Master
Agreement’’	Agreement dated 31 March 2016 entered into between the
	Company and CCAM to amend certain terms of the New
	Master Agreement
‘‘HK$’’	Hong Kong dollars, the lawful currency of Hong Kong
‘‘%’’	per cent.

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock code: 111)

Executive Directors: Mr. Zhao Hongwei (Chairman) Mr. Gong Zhijian (Managing Director) Mr. Lau Mun Chung

Non-executive Director: Mr. Chow Kwok Wai

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

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

10 May 2016

To Independent Shareholders,

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT AND REVISION OF ANNUAL CAPS

INTRODUCTION

Reference is made to the announcement made by the Company on 18 December 2015 in relation to, among other things, the entering into of the New Master Agreement and the Proposed Annual Caps, and to the announcement of the Company dated 31 March 2016 in relation to, among other things, the Supplemental Agreement and the Revised Annual Caps.

The purposes of this circular are to provide you with, among other things, (i) further details of the Revised Annual Caps; (ii) further details of the transactions contemplated under the New Master Agreement as supplemented by Supplemental Agreement and the proposed Revised Annual Caps for each of the three years ending 31 December 2016, 2017 and 2018; (iii) a letter from the Independent Board Committee with its recommendation to the Independent Shareholders regarding the Revised Annual Caps, the continuing connected transactions contemplated under the New Master Agreement as supplemented

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LETTER FROM THE BOARD

by the Supplemental Agreement; (iv) a letter from RaffAello Capital containing its advice to the Independent Board Committee and the Independent Shareholders; and (v) the notice of the SGM.

BACKGROUND OF THE SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT AND REVISION OF PROPOSED ANNUAL CAPS

On 18 December 2015, the Company and CCAM entered into the New Master Agreement, pursuant to which the Group has agreed to provide (i) brokerage services for securities, futures and options trading; placing and underwriting and sub-underwriting services for securities; (ii) corporate finance advisory service; and (iii) asset management services, to the CCAM Group; as well as to (iv) pay advisory fee to the CCAM Group for their provision of corporate finance advisory services to the Group, for a term of 1 year commencing from 1 January 2016 and ending on 31 December 2016. The Proposed Annual Caps in respect of each category of transactions contemplated under the New Master Agreement for the year ending 31 December 2016 were set as HK$9,990,000 for each of the Category I, Category II, Category III and Category IV Transactions respectively.

In light of the development of the business of the Group and that of the CCAM Group during the recent months, including but not limited to the updated business plan or proposed projects to be conducted by CCAM Group, and the expected increase of transaction volume between CCAM Group and the Group taking into account of the Acquisition by CCAM Group (details of which are announced by CCAM on 18 December 2015), the Board expects that the Proposed Annual Caps shall be revised to cater for the latest business plan of both the Group and the CCAM Group. As such, the Company and CCAM propose to amend the New Master Agreement by entering into the Supplemental Agreement to amend certain terms of the New Master Agreement and to revise the Proposed Annual Caps.

SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT

On 31 March 2016 (after trading hours), the Company and CCAM entered into the Supplemental Agreement to the New Master Agreement. The Supplemental Agreement is conditional upon the approval of the Independent Shareholders at the SGM.

Principal terms of the New Master Agreement as amended by the Supplemental Agreement are summarized as follows:

Parties: The Company CCAM Date: 31 March 2016 Terms: Original term under the New Master Agreement:

— One year commencing from 1 January 2016 up to 31 December 2016 (both days inclusive)

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LETTER FROM THE BOARD

The Company and CCAM are entitled to extend the New Master Agreement on or before 31 December 2016 and to take such action as may be appropriate to comply with the Listing Rules

New term under the New Master Agreement as amended by the Supplemental Agreement:

Three years commencing from 1 January 2016 up to 31 December 2018 (both days inclusive)
The Company and CCAM are entitled to extend the New Master Agreement on or before 31 December 2018 and to take such action as may be appropriate to comply with the Listing Rules

Proposed Annual Caps: For details of the revision to the Proposed Annual Caps please refer to the section headed ‘‘The Revised Annual Caps’’ below.

Save as disclosed above, the other terms and conditions of the New Master Agreement remain unchanged and effective.

The nature of transactions contemplated under the New Master Agreement (which were not amended by the Supplemental Agreement) are as follows:

Pursuant to the New Master Agreement, the Group shall provide the following services to the CCAM Group:

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

Also, pursuant to the New Master Agreement, the CCAM Group shall provide to the Group the following services:

(iv) provision of corporate finance advisory services in relation to financial activities in the PRC (including but not limited to advisory services in relation to the (i) compliance of relevant PRC laws; (ii) the operation of asset management; and (iii) the target investees of the funds) (known as Category IV Transactions).

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LETTER FROM THE BOARD

The above categories of transactions are viewed separately with separated Proposed Annual Caps as (i) Category I Transactions are generally commission-based transactions and the commissions/fees to be charged are generally determined with reference to the monetary value of the transaction orders; (ii) Category II Transactions are related to advisory services for corporate finance transactions and the fees to be charged are determined generally with reference to the complexity of the transactions; (iii) Category III Transactions are generally fee-based transactions and the fees to be charged are generally determined with reference to the monetary value of the sizes and the performance of the assets under management. Category IV Transactions are related to corporate finance advisory services in relation to financial activities in the PRC and the fees to be paid are determined generally with reference to the complexity of the transactions.

CONDITIONS PRECEDENT TO THE SUPPLEMENTAL AGREEMENT

The effective of the Supplemental Agreement is conditional upon the following conditions precedent being fulfilled:

(i) (where applicable) the Company and CCAM having obtained the approval at the SGM (or a general meeting, in the case of CCAM) on the Supplemental Agreement and the transactions contemplated thereunder, including the Revised Annual Caps;
(ii) the Company having obtained all necessary approval for the entering into of the Supplemental Agreement and for the performance of its obligations thereunder; and
(iii) CCAM having obtained all necessary approval for the entering into of the Supplemental Agreement and for the performance of its obligations thereunder.

None of the above conditions can be waived. As at the Latest Practicable Date, none of the abovementioned conditions has been fulfilled. Unless the above conditions have been fulfilled by 30 June 2016, the Supplemental Agreement shall automatically terminate and none of the parties thereto shall have any claims against each other, and the New Master Agreement and the original terms thereof shall continue to be effective.

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LETTER FROM THE BOARD

THE REVISED ANNUAL CAPS

Upon the Supplemental Agreement becoming effective, the Proposed Annual Caps will be revised and the Revised Annual Caps are as follows:

The Originally Proposed Annual Caps

For the year ending 31 December 2016 HK$ Category I Transactions 9,990,000 Category II Transactions 9,990,000 Category III Transactions 9,990,000 Category IV Transactions 9,990,000

The Revised Annual Caps

		For the	For the	For the
		year ending	year ending	year ending
		31 December	31 December	31 December
		2016	2017	2018
		(HK$)	(HK$)	(HK$)
Category	I Transactions	23,000,000	46,000,000	67,000,000
Category	II Transactions	15,000,000	15,000,000	15,000,000
Category	III Transactions	90,000,000	150,000,000	200,000,000

For the avoidance of doubt, the Proposed Annual Caps for Category IV Transactions for the year ending 31 December 2016 under the New Master Agreement remains unchanged at HK$9,990,000, and the annual caps for Category IV Transactions for the years ending 31 December 2017 and 2018, also at HK$9,990,000 each, were provided under the Supplemental Agreement in light of the revision of the terms of the New Master Agreement.

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LETTER FROM THE BOARD

The Revised Annual Caps were determined by the Company after taking into account of the following:

For Category I Transactions

The Company has taken into account of:

(i) the historical transactions amount for the relevant transactions for the year ended 31 December 2015 as detailed in the section headed ‘‘Historical Transaction Amount’’ below, which comprised bonds underwriting fee of approximately HK$8.1 million and securities brokerage fee of approximately HK$0.3 million;
(ii) the estimated total monetary value which would be brokered for securities and bonds trading, placing, underwriting and subunderwriting for each of the three years ending 31 December 2016, 2017 and 2018. In particular, the relevant estimated total monetary value going forward is expected to increase substantially in comparison with that of the previous years, taking into account of (a) the Acquisition and the consequential increase in the amount of securities brokerage services which will involve NCB and the Group, which are estimated based on the commission income of the securities brokerage earned by NCB of approximately HK$298 million for the year ended 31 December 2015 (as announced in its annual report for the year 2015, and an estimated natural growth thereof throughout the three years ending 31 December 2016, 2017 and 2018, plus an estimated gradual increase in the percentage of securities brokerage services of NCB to be processed by the Group for the three years ending 31 December 2016, 2017 and 2018; (b) the total amount of securities expected to be issued by CCAM Group to be underwritten or placed by our Group for each of the three years ending 31 December 2016, 2017 and 2018, and (c) the total amount of securities expected to be brokered or dealt with by our Group for CCAM Group for each of the years ending 31 December 2016, 2017 and 2018 respectively;
(iii) the relevant commission rates to be charged by the Group for each type of securities dealing, underwriting and placing as mentioned in (ii) above, in accordance with the Group’s pricing policy, which are determined with reference to the market ranges of 0.07% to 0.5% for securities brokerage and 0.5% to 5.0% for securities underwriting and placing respectively; and
(iv) a buffer of approximately 10% to provide flexibility to cater for any potential fluctuations of the actual size of the projects and market conditions over the term of the New Master Agreement as supplemented by the Supplemental Agreement.

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LETTER FROM THE BOARD

When determining the Revised Annual Caps for Category I Transactions, the Company has also based on the principal assumptions that (i) there will be a significant growth in the amount of securities brokerage services to CCAM Group (including those for NCB after the Acquisition is completed), and (ii) there will not be any adverse change or disruption in market conditions, operation and business environment or government policies which may materially affect the business of the Group and/or the CCAM Group.

For Category II Transactions

The Company has taken into account of:

(i) the estimated transaction amount of the services to be provided to the CCAM Group by the Group, which involve two to three potential corporate exercises to be undertaken by the CCAM Group involving services from the Group each year and the estimated nature and complexity of such transactions;
(ii) the estimated resources to be spent on providing the relevant corporate finance services (i.e. the labour and time costs to be incurred by the staff members of the Group expected to be involved in the potential projects);
(iii) where the transaction involves fund raising, the estimated size of the funds involved and the corresponding fee chargeable in line with the Company’s pricing policy; and
(iv) the fees charged by the Group to Independent Third Party clients for similar transactions.

When determining the Revised Annual Caps for Category II Transactions, the Company has also based on the principal assumption that there will not be any adverse change or disruption in market conditions, operation and business environment or government policies which may materially affect the business of the Group and/or the CCAM Group.

For Category III Transactions

The Company has taken into account of:

(i) the estimated total monetary value of the funds to be managed by the Group during the term of the New Master Agreement as supplemented by the Supplemental Agreement for each of the three years ending 31 December 2016, 2017 and 2018;
(ii) the management fee and performance fee rates to be charged by the Group in accordance with the Group’s and the CCAM Group’s pricing policy, which are determined with reference to the market range of 0.13% to 3.75%; and

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LETTER FROM THE BOARD

(iii) plus a buffer of approximately 10% to provide flexibility to cater for any potential fluctuations.

When determining the Revised Annual Caps for Category III Transactions, the Company has also based on the principal assumptions that (i) the recent trend of increasing number of funds set up in the PRC and hence the demand for professional fund management services to be provided by the Group, and the recent business development plan of CCAM Group will remain unchanged during the terms of the New Master Agreement as supplemented by the Supplemental Agreement; and (ii) there will not be any adverse change or disruption in market conditions, operation and business environment or government policies which may materially affect the business of the Group and/or the CCAM Group.

For Category IV Transactions

The Company has taken into account of

(i) the estimated transaction amount of the services to be provided by the CCAM Group to the Group, in particular the new branch of the Group recently established in Qianhai, Shenzhen, the PRC in February 2016 and the financial business to be undertaken by it going forward;
(ii) the complexity of transactions involved;
(iii) the estimated resources to be spent on providing the relevant corporate finance services;
(iv) where the transaction involves fund raising, the size of the funds involved; and
(v) the fees charged to the Group by Independent Third Party service providers for similar transactions.

In relation to Category IV Transactions, there is no change to the relevant Proposed Annual Cap of HK$9,990,000. There was no historical transactions amount for reference. The Company has recently established the new branch in Qianhai, Shenzhen in the PRC and in order to save operating costs, the Company expects not to recruit substantive workforce for the branch but instead will engage the financial services to be provided by CCAM Group in the PRC and the estimated fees payable to CCAM Group will be approximately HK$9,990,000. Given the existing business plan of the Group in relation to its business in the PRC, the Company expects that fees to be spent for Category IV Transactions for the two years ending 31 December 2018 will be stable as compared to that for the year ending 31 December 2016. The Company will closely monitor the performance of the Category IV Transactions and will comply with the relevant Listing Rules as and when necessary.

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LETTER FROM THE BOARD

The Board also note that under the Listing Rules, the annual caps should be determined by reference to previous transactions. However, taking into account of the recent development and the latest business plan of the Group and the CCAM Group, in particular the Acquisition by CCAM Group, the Board considers that setting the Revised Annual Caps by reference to the historical transactions amount only, without adjusting by the estimations and changes in the business plans and settings of the Group and CCAM Group as explained above, will not be realistic and hence would not result in Revised Annual Caps which are fair and reasonable and suit the needs, and hence the best interest, of the Company and the Shareholders as a whole, hence, after taking into account of the above, the Board is of the view that the Revised Annual Caps are in line with the estimated latest development of the business of and the business plans of, the Group and the CCAM Group, and are determined based on the principles of fairness and reasonableness.

Pricing Policies

The transactions contemplated under the New Master Agreement 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 to Independent Third Parties for comparable transactions. Detailed payment terms will be specified in the individual contract governing the particular transactions.

In particular, in determining the pricing of each transaction under each category of services:

Category I Transactions

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 and serves as a management guidance for determining the commission rates for different category of clients and sets forth a tiered pricing structure under each category, when and if applicable, whether approval by the Group’s supervisor of the securities department, executive director and/or managing director is required. Such internal commission policy is set by the executive management committee of the Company (the ‘‘EMC’’) (which comprises the Managing Director of the Company, another one executive Director and a deputy general manager of the Company who supervises, among others, the compliance and internal audit department of the Group) 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.

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LETTER FROM THE BOARD

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 relevant Responsible Officers will then report such decision to the compliance and internal audit department of the Group, and the compliance and internal audit department of the Group will then review such fee determined and counter check it against the prevailing pricing policy of the Group for transactions similar to those contemplated under Category I Transactions, and to ensure such commission rate chargeable to CCAM Group under Category I transactions will fall within the range of commission rate chargeable to Independent Third Party clients, which is to be determined with reference to the then prevailing market range of commission rate from time to time.

Category II Transactions

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 the relevant Responsible Officers for type 6 regulated activities under the SFO) based on the aforesaid factors. The project engagement committee will also gather at least two most recent quotations or invoices issued by the Group to Independent Third Party clients for services provided which are comparable to the particular service to be provided under Category II Transactions for reference, and to make sure that the fees chargeable under Category II Transactions to the CCAM Group will be no less favorable to our Group than those chargeable by our Group to the Independent Third Party clients.

Category III Transactions

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, the fees charged for historical transactions of similar nature and the then prevailing market rates. Such management fee and performance fee will be determined by the relevant department head (including the deputy) after taking into account of the above factors, and will then report the terms of the fund and the proposed management fee and performance fee to the Group’s investment management committee (which comprises the Managing Director of the Company and another one executive Director and a deputy general manager of the Company who supervises, among others, the compliance and internal audit

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LETTER FROM THE BOARD

department of the Group) based on the aforesaid factors, as well as the prevailing range of management fee and performance fee chargeable by the Group to other Independent Third Party clients for funds with similar size and terms, which shall be set with reference to the then prevailing range of market rates.

Category IV Transactions

The fees to be paid under Category IV Transactions by the Group to CCAM Group will be determined based on a number of factors, including but not limited to the complexity and urgency of transactions, the size of the transactions involved, and the then prevailing market rates for the services which the Group may obtain from Independent Third Party service providers. The fee for each individual corporate advisory transaction shall then be reviewed and approved by the relevant Responsible Officers or the relevant department head (including the deputy) who are in charge of the relevant transaction and the EMC based on the aforesaid factors. The Company will, where practicable, obtain at least two quotations from other Independent Third Party service providers for review and comparison before confirming each separate transactions under Category IV Transactions with the CCAM Group. The compliance and internal audit department of the Group will then review such fee determined and the comparison to ensure that the fees to be charged by the CCAM Group under Category IV Transactions will not be less favorable to our Group than those chargeable by other Independent Third Party service providers to our Group.

Internal control

Detailed payment terms will be specified in the individual contract governing the particular transaction. To ensure that the transactions contemplated under the New Master Agreement are conducted in accordance with the terms of the New Master Agreement, on normal commercial terms and comply with the pricing policies of the Group, (i) the fees to be charged/paid for each individual transaction between the Group and the CCAM Group under the New Master Agreement shall be determined by the relevant Responsible Officers or department head (including the deputy) according to the pricing policies set by the EMC from time to time as disclosed in the section headed ‘‘Pricing Policies’’ above; (ii) the compliance and internal audit department of the Group, the EMC, project engagement committee or the investment management committee (as the case maybe), where applicable, will also review the prevailing market rates, quotations or invoices issued to Independent Third Parties clients for comparison and as a reference to ensure that fees chargeable by or to our Group is comparable to those transacted with Independent Third Party; and (iii) the compliance and internal audit department of the Group will review such terms and prices determined and chargeable (or payable) under the transactions contemplated under the New Master Agreement to ensure that the fees are set in compliance with the Group’s internal pricing 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 to Independent Third Parties for comparable transactions. The

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LETTER FROM THE BOARD

auditors of the Group 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 policies.

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 Party customers/service providers.

Historical transactions amounts

Set out below are the historical income in respect of the Category I, Category II and Category III transactions conducted under the agreement dated 22 October 2013 and entered into between the Company and CCAM in relation to the provision of certain financial services to CCAM and/or its associates (as renewed by the New Master Agreement), and under the New Master Agreement for the three months ended 31 March 2016:

				For the
		For the	For the	three months
		year ended	year ended	ended
		31 December	31 December	31 March
		2014	2015	2016
		Actual income	Actual income	Actual income
		HK$	HK$	HK$
Category	I Transactions	1,182,726	8,400,182	515
Category	II Transactions	0	0	0
Category	III Transactions	506,825	17,740,452	6,373,520

There was no historical amount of Category IV Transactions since it is a new type of services contemplated under the New Master Agreement in anticipation of the development of PRC business and to provide the clients with better services.

REASONS FOR AND BENEFITS OF THE SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT AND REVISION OF RELEVANT ANNUAL CAPS

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 finance advisory services in Hong Kong.

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LETTER FROM THE BOARD

CCAM Group is principally engaged in distressed asset management, and provides customized financial solutions and differentiated asset management services to its clients through its diversified business platforms.

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; and (ii) Category IV Transactions facilitate the Group in developing its business in the PRC and providing its clients with a wider product range and services in the PRC through the CCAM Group, the Directors (including the independent non-executive Directors) consider that the terms of the New Master Agreement (including the Proposed Annual Caps), 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.

The Group has continuously spent efforts in developing the Group’s business and to maximize returns to the Shareholders, and have been actively negotiating with CCAM Group for cooperation on possible projects and business plans. The Acquisition of NCB by CCAM Group (as announced by CCAM on 18 December 2015) is also expected to contribute to the increase in the business transactions between the CCAM Group and the Group. The Company was also informed by CCAM that new business plans were emerging and previously contemplated projects which were at a preliminary stage have now become more concrete (though which may be subject to legally binding agreements or further implementation process). As such, details of the proposed transactions to be carried out which are covered by the New Master Agreement have been updated or revised, and hence the Proposed Annual Caps also need to be revised to cater the needs of the Company.

Based on the above factors, the Directors (including the independent non-executive Directors) consider that the New Master Agreement as supplemented by the Supplemental Agreement and the terms thereof and the Revised Annual Caps for the three years ending 31 December 2016, 2017 and 2018 are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

Mr. Zhao Hongwei, the chairman and an executive Director of the Company held a management position in CCAM is considered having conflict of interest in the New Master Agreement and has abstained from voting on the Board resolution approving the Supplemental Agreement and the transactions contemplated thereunder.

As at the Latest Practicable Date, Sinoday is interested in 403,960,200 Shares, representing approximately 63% of the issued share capital of the Company. Sinoday is a wholly-owned subsidiary of China Cinda (HK) which is in turn 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, as well as the Supplemental Agreement, which is supplementing the New Master Agreement, constitute continuing connected transactions of the Company under Rule 14A.14 of the Listing Rules.

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LETTER FROM THE BOARD

Since the Revised Annual Caps for Category I Transactions, Category II Transactions and Category III Transactions for each of the three years ending 31 December 2016, 2017 and 2018 are expected to represent more than 5% of each of the applicable percentage ratios (other than the profits ratio) under the Listing Rules and exceed HK$10,000,000 each, the continuing connected transactions contemplated under Category I Transactions, Category II transactions and Category III Transactions under the New Master Agreement as supplemented by the Supplemental Agreement, and the respective Revised Annual Caps (other than those for Category IV Transactions, which represent less than 5% of each of the applicable percentage ratios (other than the profits ratio) under the Listing Rules and are less than HK$10,000,000) therefore are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee comprising the independent non-executive Directors, namely Mr. Wang Tongsan, Mr. Chen Gongmeng, Mr. Hung Muk Ming, has been established for the purpose of advising the Independent Shareholders in respect of, among other things, the New Master Agreement as supplemented by the Supplemental Agreement and the Revised Annual Caps (other than those for Category IV Transactions) for the three years ending 31 December 2016, 2017 and 2018. RaffAello Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of, among other things, the New Master Agreement as supplemented by the Supplemental Agreement and the Revised Annual Caps (other than those for Category IV Transactions) for the three years ending 31 December 2016, 2017 and 2018.

GENERAL

The SGM will be held for the Independent Shareholders to consider and, if thought fit, among other things, (i) the entering into of the Supplemental Agreement; and (ii) the Revised Annual Caps for the three years ending 31 December 2016, 2017 and 2018 by way of ordinary resolution.

A notice convening the SGM to be held at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong on 26 May 2016 10: 45 a.m. (or immediately after the conclusion of the AGM, whichever is later), is set out on pages 38 to 39 of this circular.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as practicable and in any event not less than 48 hours before the time fixed for holding the SGM (or any adjournment thereof) to the office of the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited, Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting thereof if you so wish and in such event, the instrument appointing a proxy shall be deemed to be revoked.

As at the Latest Practicable Date, Sinoday, being the controlling shareholder of the Company, is deemed to have material interests in the New Master Agreement as supplemented by the Supplemental Agreement and the transactions contemplated

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LETTER FROM THE BOARD

thereunder, including the Revised Annual Caps. Sinoday and its associates shall, therefore, abstain from voting on the resolution in relation to the entering into of the Supplemental Agreement and the transactions contemplated thereunder, including the Revised Annual Caps at the SGM.

RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee set out on pages 19 to 20 of this circular which contains its recommendation to the Independent Shareholders. In addition, your attention is drawn to the letter from RaffAello Capital set out on pages 21 to 34 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders and the principal factors and reasons considered by it in formulating its advice.

ADDITIONAL INFORMATION

Your attention is also drawn to the information set out in the appendix to this circular and the notice of the SGM set out in this circular.

Yours faithfully For and on behalf of the Board Cinda International Holdings Limited Lau Mun Chung Executive Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the letter of advice from the Independent Board Committee to the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

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==> picture [226 x 33] intentionally omitted <==

(Incorporated in Bermuda with limited liability) (Stock code: 111)

10 May 2016

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT AND REVISION OF ANNUAL CAPS

We refer to the circular of the Company dated 10 May 2016 (the ‘‘Circular’’) of which this letter forms part. Unless the context otherwise requires, terms defined in the Circular shall have the same meanings when used herein.

We have been appointed by the Board to form the Independent Board Committee to consider and advise the Independent Shareholders as to whether, in our opinion, the New Master Agreement and the Supplemental Agreement were entered into in the ordinary and usual course of business of the Group on normal commercial terms, the terms of the New Master Agreement as supplemented by the Supplemental Agreement and the Revised Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered the terms of the New Master Agreement as supplemented by the Supplemental Agreement and the advice of RaffAello Capital in relation thereto as set out on pages 21 to 34 of the Circular, we are of the opinion that the New Master Agreement and the Supplemental Agreement were entered into in the ordinary and usual course of business of the Group on normal commercial terms, the terms of the New Master Agreement as supplemented by the Supplemental Agreement and the Revised 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 to be proposed at the SGM to approve the Supplemental Agreement, the transactions contemplated under it and the Revised Annual Caps.

Yours faithfully,

For and on behalf of

the Independent Board Committee Mr. Wang Tongsan Mr. Chen Gongmeng Mr. Hung Muk Ming Independent Non-executive Directors

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LETTER FROM RAFFAELLO CAPITAL

The following is the letter of advice from RaffAello Capital Limited to the Independent Board Committee and the Independent Shareholders prepared for the purpose of inclusion in this circular.

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RaffAello Capital Limited Rm 2002, Tower Two, Lippo Centre, 89 Queensway, Admiralty, Hong Kong

10 May 2016

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

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT AND REVISION OF ANNUAL CAPS

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders of the Company in respect of the terms under the New Master Agreement and the Supplemental Agreement to the New Master Agreement (the ‘‘Supplemental Agreement’’), details of which are contained in the Letter from the Board (the ‘‘Letter’’) in the circular dated 10 May 2016 (the ‘‘Circular’’), of which this letter forms part. Capitalised terms used in this letter shall have the same respective meanings as defined in the Circular unless the context requires otherwise.

On 18 December 2015, the Company and CCAM entered into the New Master Agreement, pursuant to which the Group has agreed to provide (i) brokerage services for securities, futures and options trading; placing and underwriting and sub-underwriting services for securities; (ii) corporate finance advisory services; and (iii) asset management services, to the CCAM Group; as well as to (iv) pay advisory fee to the CCAM Group for their provision of corporate finance advisory services to the Group, with a term of 1 year commencing from 1 January 2016 and ending on 31 December 2016. The original Proposed Annual Caps in respect of each category of transactions contemplated under the New Master Agreement for the year ending 31 December 2016 were set as HK$9,990,000 for each of the Category I Transactions, Category II Transactions, Category III Transactions and Category IV Transactions, respectively.

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LETTER FROM RAFFAELLO CAPITAL

Following to the announcement of the Company dated 18 December 2015 (the ‘‘New Master Agreement Announcement’’), on 31 March 2016, the Board announced that the Company had entered into the Supplemental Agreement such that the term under the New Master Agreement will be extended for three years commencing from 1 January 2016 to 31 December 2018 (both days inclusive). The Group has also revised the original Proposed Annual Caps (the ‘‘Revised Annual Caps’’) in respect of the Continuing Connected Transactions for each of the three years ending 31 December 2016, 2017 and 2018.

As stated in the Letter, as at the Latest Practicable Date, Sinoday is interested in 403,960,200 Shares, representing approximately 63% of the issued share capital of the Company. Sinoday is a wholly-owned subsidiary of China Cinda (HK) which is in turn 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, as well as the Supplemental Agreement, constitute continuing connected transactions of the Company under Rule 14A.14 of the Listing Rules.

Since the Revised Annual Caps for Category I Transactions, Category II Transactions and Category III Transactions for each of the three years ending 31 December 2016, 2017 and 2018 are expected to represent more than 5% of each of the applicable percentage ratios (other than the profits ratio) under the Listing Rules and are expected to exceed HK$10,000,000 each, the continuing connected transactions contemplated under Category I Transactions, Category II Transactions and Category III Transactions under the New Master Agreement as supplemented by the Supplemental Agreement, and the respective Revised Annual Caps (other than those for Category IV Transactions, which represent less than 5% of each of the applicable percentage ratios (other than the profits ratio) under the Listing Rules and are less than HK$10,000,000) therefore are subject to the reporting, announcement and approval by the Independent Shareholders requirements under Chapter 14A of the Listing Rules.

We have been appointed by the Company to advise the Independent Board Committee, comprising the independent non-executive Directors, and the Independent Shareholders as to whether the terms of Category I Transactions, Category II Transactions and Category III Transactions under New Master Agreement and the Supplemental Agreement and the Revised Annual Caps are fair and reasonable, and in the interests of the Company and the Shareholders as a whole.

BASIS OF OPINION

In formulating our opinions, advice and recommendation to the Independent Board Committee and the Independent Shareholders, we have relied upon the accuracy of the information and representations contained or referred in the Circular and information and facts supplied to us and representation and opinions expressed, by the Directors and/or management of the Company and its advisers. We have assumed that all statements, information and facts, and representations provided whether or not in the Circular and opinion expressed to us are true, accurate and complete in all material aspects at the time they were made and remain true, accurate and complete as at the date thereof and has been

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LETTER FROM RAFFAELLO CAPITAL

properly extracted from the relevant underlying accounting records (in case of financial information) and made after due and careful enquiry by the Directors and/or the management of the Company.

We have no reason to doubt on the truth, accuracy and completeness of the information and facts as well as representations and opinions provided to us by the Directors and management of the Company and its advisers, and have been confirmed by the Directors and management of the Company that no material facts and representations the omission of which would make any statement in the Circular, including this letter, untrue, inaccurate or misleading.

We have also relied on certain information available to the public and have assumed such information to be accurate and reliable. Our review and analysis were based upon, among others, the information provided by the Group including the New Master Agreement and the Supplemental Agreement, the Company’s annual report for the year ended 31 December 2015 (the ‘‘2015 Annual Report’’) and the Circular. We have also discussed with the Directors and/or the management of the Company with respect to the terms of and reasons for the entering into the New Master Agreement and the Supplemental Agreement.

The Directors have jointly and severally accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, after having made all reasonable enquires, which to the best of their knowledge and belief, there are no other fact the omission of which would make any statement in the Circular untrue, inaccurate or misleading. We consider that we have been provided sufficient information to reach an informed view and to provide a reasonable basis for our recommendation. We have not, however, conducted any independent in-depth investigation into the business, affairs and prospects of the Group and the related parties to the New Master Agreement and the Supplemental Agreement, nor have we carried out any independent verification of the information provided to us by the Company, or its subsidiaries or associates.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinions and recommendation to the Independent Board Committee and the Independent Shareholders, we have taken into consideration, inter alia, the following principal factors and reasons. Our conclusions are based on the results of all analysis taken as a whole.

1. Information on the Group and CCAM Group

(a) Information on the Group

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LETTER FROM RAFFAELLO CAPITAL

(b) Information on CCAM and the CCAM Group

As stated in the New Master Agreement Announcement, CCAM is a financial asset management company established by The Ministry of Finance of the PRC as a limited company in July 2010 with the registered capital of RMB25.1 billion which has been increased to RMB30.1 billion in May 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 specialized in the management and disposal of non-performing assets in the PRC.

The CCAM Group is principally engaged in distressed asset management, and the provision of customized financial solutions and differentiated asset management services to its clients through its diversified business platforms.

Background of and reasons for entering into the New Master Agreement and the Supplemental Agreement

As stated in the New Master Agreement Announcement, on 18 December 2015, in view of the intention of the Company to continue the provision of the Category I Transactions, Category II Transactions and Category III Transactions to the CCAM Group after the expiry of the agreement dated 22 October 2013 entered into between the Company and CCAM in relation to the provision of certain financial services to the CCAM Group, details of which have been included in the announcement of the Company dated 22 October 2013 and to facilitate the development of the business of the Group, the Company entered into the New Master Agreement with CCAM.

Pursuant to the New Master Agreement, the Group shall, inter alia, provide the following services to the CCAM Group with a term of 1 year commencing from 1 January 2016 to 31 December 2016:

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

As stated in the Letter, the Group has continuously spent efforts in developing the Group’s business and to maximize returns to the Shareholders, and have been actively negotiating with the CCAM Group for cooperation on possible projects and business plans. As such, in light of the development of the business of the Group and that of the CCAM Group during the recent months, including but not limited to the updated business plan or

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LETTER FROM RAFFAELLO CAPITAL

proposed projects to be conducted by the CCAM Group, and the expected increase of transaction volume between the CCAM Group and the Group taking into account of the Acquisition (details as announced by CCAM on 18 December 2015), the Board expects that the original Proposed Annual Caps shall be revised to cater for the latest business plan of both the Group and the CCAM Group. As a result, the Company and CCAM proposed to amend the New Master Agreement by entering into the Supplemental Agreement to amend certain terms of the New Master Agreement and to revise the original Proposed Annual Caps.

3. Principal terms of the Supplemental Agreement to the New Master Agreement

Changes on the principal terms of the New Master Agreement as amended by the Supplemental Agreement are summarized as follows:

		Revised terms under the
		New Master Agreement as
	Original terms under the New	amended by the
	Master Agreement	Supplemental Agreement
Duration of the	One year commencing from	Three years commencing
Agreement	1 January 2016 up to 31	from 1 January 2016 up
	December 2016 (both days	to 31 December 2018
	inclusive)	(both days inclusive)
Right of Extension to the	The Company and CCAM	The Company and CCAM
Agreement	are entitled to extend the	are entitled to extend the
	New Master Agreement on	New Master Agreement
	or before 31 December	on or before 31 December
	2016 and to take such	2018 and to take such
	action as may be	action as may be
	appropriate to comply	appropriate to comply
	with the Listing Rules.	with the Listing Rules.
Annual Cap(s) under	For the year ending	For the years ending
Category I	31 December 2016:	31 December 2016, 2017
Transactions	HK$9,990,000	and 2018, respectively:
		HK$23,000,000;
		HK$46,000,000;
		HK$67,000,000
Annual Cap(s) under	For the year ending	For the years ending
Category II	31 December 2016:	31 December 2016, 2017
Transactions	HK$9,990,000	and 2018, respectively:
		HK$15,000,000;
		HK$15,000,000;
		HK$15,000,000

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LETTER FROM RAFFAELLO CAPITAL

Revised terms under the New Master Agreement as Original terms under the New amended by the Master Agreement Supplemental Agreement Annual Cap(s) under For the year ending 31 For the years ending 31 Category III December 2016: December 2016, 2017 and Transactions HK$9,990,000 2018, respectively: HK$90,000,000; HK$150,000,000; HK$200,000,000

Analysis on the benefits to the Group for entering into the New Master Agreement and the Supplemental Agreement

(a) Positive and reliable income to the Group

The Group is principally engaged in the provision of financial services in Hong Kong, including the provision of securities brokering, asset management and corporate finance advisory services. As such, the transactions contemplated under the New Master Agreement are in the ordinary and usual course of business of the Group and will contribute positively to the Group’s income. As stated in the Letter, the Directors consider that the terms of the New Master Agreement have been negotiated on an arm’s length basis, are on normal commercial terms as well as fair and reasonable, therefore the extension of the duration of the New Master Agreement and the higher Revised Annual Caps under the Supplemental Agreement would contribute to longterm business relationship between the Group and the CCAM Group and may bring positive and reliable income to the Group for the forthcoming three years ending 31 December 2016, 2017 and 2018.

(b) Broadening of the Group’s new client base

According to CCAM’s announcement dated 18 December 2015, Cinda Financial Holdings Co., Limited (‘‘Cinda Financial’’), an indirectly wholly-owned subsidiary of CCAM, entered into a legally binding agreement with Bank of China (Hong Kong) Limited and China Cinda (HK) Holdings Company Limited, pursuant to which Cinda Financial had agreed to acquire all the issued shares of Nanyang Commercial Bank, Limited (‘‘NCB’’). NCB is a commercial bank with its principal operations and branches in Hong Kong and mainland China and offers a comprehensive range of personal and commercial banking services to its retail and corporate customers. Upon the completion of the Acquisition, NCB will become an indirect wholly-owned subsidiary of CCAM and become a member of the CCAM Group. Under Category I Transactions, the Group expects to commence the provision of securities brokerage services to NCB. Furthermore, under Category III Transactions, the Group expects to solicit six to eight new asset management clients from the CCAM Group every year for the forthcoming three financial years. As a result, the transactions contemplated under the New Master Agreement as supplemented by the Supplemental Agreement would help broaden the Group’s new client base and the source of income stream.

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LETTER FROM RAFFAELLO CAPITAL

(c) Pricing Policies

Category I Transactions

As stated in the Letter, 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. The Group’s internal commission policy serves as a management guidance for determining the commission rates for different category of clients and sets forth a tiered pricing structure under each category, when and if applicable, whether approval by the Group’s supervisor of the securities department, executive director and/or managing director is required. Such internal commission policy is set by the executive management committee of the Company (the ‘‘EMC’’) 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 an underwriter syndicate) taking into account among other things, the size of placing or underwriting/subunderwriting 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.

For Category I Transactions, the Group proposed to receive fees from (i) commission rebate from NCB for securities brokerage services rendered by the Group; (ii) the placing and underwriting of securities issued by the CCAM Group; and (iii) securities dealing. In such regard, we have reviewed (i) the Group’s internal records regarding the commission policy of securities dealings with the external clients; (ii) the annual accounts of NCB for its past commission expense in relation to the provided securities brokerage services; (iii) brokerage commission rates quoted by fifteen brokerage firms listed on the Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’), among which, fourteen of them are charging their independent customers the market brokerage commission on securities dealing in Hong Kong with the fee rates ranging from 0.07% to 0.5% of the transaction amount. Apart from the fourteen listed brokerage firms mentioned above, the remaining one, as disclosed in its circular dated 26 April 2016, proposed to charge its connected clients with commission rates ranging from 0.01% to 2.75% of the consideration of the securities traded depending on the type of market, volume of business, etc.; (iv) the placing and underwriting agreements previously entered into between the Group and its independent customers as well as those between the Group and the CCAM Group; and (v) the published announcements of listed companies from the website of the Stock Exchange regarding placing and underwriting of securities

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LETTER FROM RAFFAELLO CAPITAL

including shares, bonds and warrants for the past six months. We noted that the brokerage commission rates expected to be charged by the Group were within the range of those charged by other comparable brokerage firms in the market. Furthermore, we noted that the proposed placing and underwriting commission rates expected to be charged by the Group were within the range of those charged by other placing and underwriting agents in the market that the current market placing and commission rates for securities issuance in Hong Kong range from 0.5% to 5.0% of the transaction amount.

Category II Transactions

As stated in the Letter, 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 the relevant Responsible Officers for type 6 regulated activities defined under the SFO) based on the aforesaid factors.

For Category II Transactions, we have reviewed (i) the Group’s internal records regarding the provision of corporate finance services such as the Group’s Procedure Manual for Continuing Connected Transactions (the ‘‘Procedure Manual’’); (ii) the historical fees specified under the engagement letters in relation to the provision of certain corporate finance services which are of higher complexity and more resource-consuming between the Group and the independent customers; and (iii) the fees charged to CCAM in relation to the provision of corporate finance services for the listing of the shares of CCAM on the Stock Exchange in December 2013. By comparing the fees charged by the Group to its independent customers and that to CCAM for corporate finance services of similar nature, we noted that the pricing terms charged to the CCAM Group were no less favourable to the Group than to the independent clients. The Company confirmed that although there is no standard fee to be charged under Category II Transactions which is contingent on a number of factors mentioned above, the expected fees for the corporate finance services under Category II Transactions will follow the pricing policy adopted by the management towards its independent clients and are expected to be no less favourable to the Group than those charged by the Group to its independent clients. In view of the above, we consider that the Group would comply with its internal control policy namely the Procedure Manual which aims to ensure that the Group would obtain sufficient information to assess the market rates and to determine the fees receivable from the CCAM Group are no less favourable to the Group than those receivable from the independent third party customers.

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LETTER FROM RAFFAELLO CAPITAL

Category III Transactions

As stated in the Letter, the management fee and/or performance fee expected 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 funds, the fees charged for historical transactions of similar nature and the then prevailing market rates. Such management fee and performance fee will be determined by the relevant department head who will then report the terms of the fund and the proposed management fee and performance fee to the Group’s investment management committee based on the aforesaid factors, as well as the prevailing range of management fee and performance fee chargeable by the Group to other independent third party clients for funds with similar size and terms. As further advised by the management, funds with more conservative or passive approach would generally be charged with a lower management fee than funds with aggressive approach or requiring active portfolio strategy. Besides, the larger the size of the fund (in terms of assets under management or ‘‘AUM’’), the lower the management fee would be charged due to the economies of scale.

For management fee, the Group expects that the fee rate would depend on various factors as mentioned above such as the size and nature of the funds, the fees charged for historical transactions of similar nature and the then prevailing market rates.

As advised by the Company, the lower bound of the management fee expected to be charged for funds to be managed by the Group under Category III Transactions are conservative funds which are similar to the risk metrics of the monetary funds. It also partly explains to the reason why the management expects that there would be no performance fee to be charged by the Group under the Category III Transactions as the management considers that the proposed fee structure for the conservative funds meets the prevailing market condition.

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LETTER FROM RAFFAELLO CAPITAL

Based on our desktop research, we noted that (i) according to a report by Asset Management Association of China (中國證券投資基金業協會)[1] , the prevailing average market rates regarding fund management fee in the PRC in 2014 range from approximately 0.3% to 1.5%. In particular, the management fee of monetary funds recorded a compound annual growth rate (‘‘CAGR’’) of approximately negative 6% during 2011 to 2013 and experienced a further slight decrease in 2014. Furthermore, in recent years, there is a general market trend to gradually lower the fee rates for fund management; (ii) according to ChinaFund (中國基金報)[2] on 21 October 2014, various PRC funds have voluntarily started to lower the management fee rates; (iii) according to CNSTOCK (中國証券網) and STCN (証券時報網)[3] , on 27 April 2015 and 4 November 2015 respectively, have reported the widespread trend of the PRC funds to continuously lower the management fee rates amidst the fiercely competitive market to retain their investors; and (iv) according to Mandatory Provident Fund Schemes Authority website, the prevailing market rate for fund management (measured in fund expense ratio or FER) in Hong Kong would be with a range of 0.13% to 3.75% as a percentage of fund size, which comprise mainly the management fee.

Besides, we have also reviewed (i) the asset management contracts entered into between the Group and the existing independent clients as well as between the CCAM and CCAM Group’s independent clients in the PRC; (ii) the asset management contracts of other fund management companies as provided by the Group; and (iii) the Procedure Manual. In view of the above factors as a whole, we consider that the proposed rates of management fee expected to be charged under the Category III Transactions are fair and reasonable under the current market condition, comparable to the prevailing market rate and would comply with the Group’s internal control policy namely the Procedure Manual as mentioned above.

(d) Internal Control

As stated in the Letter, in order to ensure the fees are set in compliance with the Group’s internal pricing policy, on normal commercial terms and in accordance with the terms under the New Master Agreement, the proposed fees to be charged for each of the transactions between the Group and the CCAM Group under the New Master Agreement shall be reviewed and approved by the compliance and internal audit department of the Group, the EMC, the project engagement committee or the investment management committee (as the case maybe) prior to the entering into each of the relevant transaction. Detailed payment terms will be specified in the individual contract governing the particular transaction. The auditors of the Group will also

1 Asset Management Association of China was established on 6 June 2012 as the fund industry related national voluntary and non-profit organization.

2 ChinaFund is the first domestic financial asset management professional newspapers administered by the People’s Daily.

3 CNSTOCK and STCN are both the designated media for disclosure of information by China Securities Regulatory Commission, China Banking Regulatory Commission and China Insurance Regulatory Commission.

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LETTER FROM RAFFAELLO CAPITAL

conduct annual review of the continuing connected transactions entered into by the Group such that the Group could be able to ensure compliance with the Group’s pricing policy. In such regard, we have obtained from the Company the record of internal pricing policy for the aforesaid internal control.

Based on the aforesaid (a) to (d), we are of the view that the terms in relation to the transactions contemplated under the New Master Agreement as supplemented by Supplemental Agreement are on normal commercial terms, fair and reasonable insofar the Company and the Independent Shareholders are concerned, and in the interests of the Company and the Shareholders as a whole.

5. The basis for the Revised Annual Caps

Tabulated below are the proposed Revised Annual Caps for the three years ending 31 December 2016, 2017 and 2018 in regard to the transactions contemplated under the New Master Agreement and the Supplemental Agreement.

The Revised Annual Caps

		For the year	For the year	For the year
		ending	ending	ending
		31 December	31 December	31 December
		2016	2017	2018
		(HK$)	(HK$)	(HK$)
Category	I Transactions	23,000,000	46,000,000	67,000,000
Category	II Transactions	15,000,000	15,000,000	15,000,000
Category	III Transactions	90,000,000	150,000,000	200,000,000

(a) Category I Transactions

Regarding the Revised Annual Caps for Category I Transactions for the three years ending 31 December 2016, 2017 and 2018, the Group has considered (i) the acquisition of NCB which is expected to be completed no later than 30 June 2016 (being the long stop date as stated in the CCAM’s announcement dated 18 December 2015) and the commencement of securities brokerage services to be rendered by the Group to NCB; (ii) the commission income to be received from securities placement and underwriting expected by the management for the forthcoming three financial years with reference to the historical total size of securities placement and underwriting for the year ended 31 December 2015; (iii) the commission income to be received from securities dealing expected by the management for the forthcoming three financial years with reference to the historical total monetary value of securities transactions for the year ended 31 December 2015; and (iv) a buffer of approximately 10% to provide flexibility to cater for any potential fluctuations of the actual size of the projects and market conditions and any alternative fund raising activity of the CCAM Group.

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LETTER FROM RAFFAELLO CAPITAL

In assessing the fairness and reasonableness of the Revised Annual Caps under the Category I Transactions, we have considered that (i) the commission expense of NCB for its securities brokerage services received grew at a CAGR of approximately 21.5% during 2013 to 2015 as disclosed from its annual accounts; (ii) the proportion of securities transaction expected to be brokered by the Group to NCB will increase gradually thereafter the completion of the acquisition of NCB; (iii) according to the Company’s 2015 Annual Report, the brokerage income from fees and commission constitutes a major part of the total revenue and experienced a substantial growth of approximately 28.7% from approximately HK$44.6 million for the year ended 31 December 2014 to approximately HK$57.4 million for the year ended 31 December 2015; (iv) according to the HKEx Fact Book — 2014 and 2015, the stock markets continued to show robust growth. Notably, the average daily turnover value amounted to approximately HK69,456 million in 2014 as compared to approximately HK$62,560 million in 2013, representing an annual growth of approximately 11.0%, and further increased to HK$105,630 million in 2015, surging by approximately 52.1%; and (v) the expectation of Shenzhen-Hong Kong Stock Connect in 2016 as announced by the top PRC government official in March 2016.

As a result of above, we consider that the Revised Annual Caps under Category I Transactions (including the approximately 10% buffer) enable the Group to capture the profitable business cooperation with the CCAM Group and to meet the potential market demand to increase the revenue of the Group. As such, we are of the view that the Revised Annual Caps for Category I Transactions are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

(b) Category II Transactions

As stated in the Letter, the Revised Annual Caps in respect of Category II Transactions for the three years ending 31 December 2016, 2017 and 2018 were determined based on the estimated transaction amount of the corporate finance services to be provided to the CCAM Group by the Group, which involve two to three potential corporate exercises each year.

We understand that the fees to be charged under each different type of corporate finance project vary with the nature and complexity of the transaction and the estimated resources involved. In assessing the fairness and reasonableness of the Revised Annual Caps under Category II Transactions, we have considered that the number of corporate finance projects handled by the Group in the year 2015 with different complexities and the rate charged to its independent clients. Furthermore, we noted that a historical corporate finance fee of approximately HK$5.0 million was charged to CCAM regarding the provision of corporate finance services for its listing of shares on the Stock Exchange in December 2013.

In light of aforesaid, we are of the view that the Revised Annual Caps under Category II Transactions for two to three potential corporate exercises each year are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM RAFFAELLO CAPITAL

(c) Category III Transactions

As stated in the Letter, the Revised Annual Caps in respect of Category III Transactions for the three years ending 31 December 2016, 2017 and 2018 were determined based on (i) the estimated total monetary value of the funds expected to be managed by the Group under the New Master Agreement as supplemented by the Supplemental Agreement; (ii) the management fee rates expected to be charged by the Group in accordance with the Group’s and the CCAM Group’s pricing policy; and (iii) a buffer of approximately 10% to provide flexibility to cater for any potential fluctuations.

The Revised Annual Caps for the Category III Transactions are primarily derived from management fee, based on the proposed fee structure, taking into account the nature and funds size, while accounting for certain headroom due to fund establishment and market fluctuations. In arriving the Revised Annual Caps, the management expects to solicit six to eight new asset management clients from the CCAM Group with AUM ranging from approximately HK$1 billion to 3 billion every year for the forthcoming three years. In such regard, we have reviewed the CCAM’s annual report for the year ended 31 December 2015 and noted that as at 31 December 2015, the CCAM Group has established 74 private funds with a total committed capital (in terms of AUM) of RMB168.6 billion for which its subsidiaries act as a general partner (or manager). On average, the AUM per fund established by the CCAM Group is approximately RMB2.3 billion.

We also noted from the Letter that the historical actual income from asset management services under Category III Transactions has substantially increased by 3,400.3% from approximately HK$0.5 million for the year ended 31 December 2014 to HK$17.7 million for the year ended 31 December 2015. Such increase reflects that the Group is currently expanding in the provision of asset management services. Furthermore, according to the 2014 annual report published by the China Securities Regulatory Commission, we noted that the fund size of securities investment funds to be managed by fund management companies in PRC increased notably from approximately 3,118 billion units in 2013 to approximately 4,201 billion units in 2014, representing an annual growth of approximately 34.7%. Moreover, the total number of securities investment funds surged from 1,552 in 2013 to 1,897 in 2014, representing an increase of approximately 22.2%. Other initiatives include (i) the opening up of the PRC interbank bond market, which allow eligible foreign institutions including commercial banks, fund managers and asset management institutions to access to China onshore bonds; and (ii) the launch of Mainland-Hong Kong Mutual Recognition of Funds through a mutual cooperation between the China Securities Regulatory Commission and the Hong Kong Securities and Futures Commission since 1 July 2015, which would allow international investors direct access to China domestic securities investment funds. Given the positive outlook of the asset management market in the PRC, the Revised Annual Caps for Category III Transactions would probably enable the Group to capture the potential flourishing asset management business opportunities in a timely manner.

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LETTER FROM RAFFAELLO CAPITAL

Another reason for the larger buffer in the Revised Annual Caps for each period is due to the potential fluctuation caused by the volatility in the A-share market. In respect of the volatility in the A-share market, we noted that the closing index of the Shanghai Stock Exchange Composite Index fluctuated between 1,991.25 points and 5,166.35 points during the period from 22 October 2013 to the Latest Practicable Date, while the closing index of the Shenzhen Stock Exchange Composite Index fluctuated between 996.37 points and 3,140.66 within the same period. For such high volatility, the market value of the asset under management may be potentially higher, which means that the potential management fees to be derived from the asset management services under the Category III Transactions would also be potentially higher. Further, the potential fluctuation of market volatility will be carried forward to the next, hence having a larger buffer on the Revised Annual Caps could help maintain the required flexibility for the Category III Transactions.

Having considered the above, we are of the view that the Revised Annual Caps for the Category III Transactions (including the approximately 10% buffer) for the three years ending 31 December 2016, 2017 and 2018 are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

RECOMMENDATION

Taking into consideration of the above principal factors and reasons, we are of the view that the terms for the Category I Transactions, Category II Transactions and Category III Transactions under the Supplemental Agreement to the New Master Agreement are on normal commercial terms and that the Category I Transactions, Category II Transactions and Category III Transactions contemplated thereunder (together with the Revised Annual Caps) are conducted in the ordinary and usual course of business of the Group and are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and its Shareholders as a whole.

Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM.

Yours faithfully, For and on behalf of RaffAello Capital Limited Sam Lum Director

Mr. Sam Lum has served as a licensed responsible officer since 2004 under the SFO to carry Type 6 (advising on corporate finance) regulated activities and participated in initial public offerings and transactions involving companies listed in Hong Kong, including the provision of independent financial advisory services.

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APPENDIX

GENERAL INFORMATION

1. 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 Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

As at the Latest Practicable Date, none of the Directors and the chief executive of the Company has interests and short positions in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV to the SFO) which are 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 he is taken or deemed to have under such provisions of SFO), or are required, pursuant to Section 352 of the SFO, to be recorded in the register required to be kept by the Company, or which are required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules.

3. SUBSTANTIAL SHAREHOLDERS

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

			Approximately
		Number of	percentage of
Name	Capacity	Shares	shareholding
Sinoday	Beneficial owner	403,960,200	63.00%
		(Note)
China Cinda (HK)	Interest through a	403,960,200	63.00%
	controlled corporation	(Note)
CCAM	Interest through a	403,960,200	63.00%
	controlled corporation	(Note)

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APPENDIX

GENERAL INFORMATION

Note:

These shares were held by Sinoday. The issued share capital of Sinoday was wholly owned by China Cinda (HK) which was a wholly-owned subsidiary of CCAM. By virtue of the provisions of the SFO, China Cinda (HK) and CCAM were deemed to be interested in all the shares in which Sinoday was interested.

4. INTEREST OF DIRECTORS IN COMPETING BUSINESS

As at the Latest Practicable Date, the Directors are not aware that any of them or any of their associates had interests in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group which would fall to be discloseable under the Listing Rules.

5. DIRECTORS’ INTEREST IN ASSETS AND CONTRACTS OF THE GROUP

As at the Latest Practicable Date, none of the Directors had (i) any direct or indirect interests in any assets which have been since 31 December 2015 (being the date to which the latest published audited consolidated financial statements of the Group were made up) acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group; and (ii) any material interest in any contract or arrangement at the Latest Practicable Date which is significant in relation to the business of the Group.

6. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any of its subsidiaries which is not terminable within one year without payment of compensation (other than statutory compensation).

7. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading positions of the Group since 31 December 2015, the date to which the latest published audited consolidated financial statements of the Group were made up.

8. EXPERT AND CONSENT

The following is the qualification of the expert who has given opinion or advice for inclusion in this circular:

Name Qualification

RaffAello Capital a corporation licensed to carry out type 6 (advising on corporate finance) regulated activity under the SFO

RaffAello Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter of advice or references to its name in the form and context in which they respectively appear.

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GENERAL INFORMATION

APPENDIX

As at the Latest Practicable Date, RaffAello Capital did not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, RaffAello Capital has no direct or indirect interests in any assets which has been acquired or disposed of by or leased to any member of the Group since 31 December 2015 (the date to which the latest published audited consolidated financial statements of the Company were made up) or proposed to be acquired, disposed of or leased to.

9. GENERAL

(a) The Company’s registered office is at Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda.
(b) The company secretary of the Company is Mr. Lau Mun Chung. Mr. Lau is a fellow member of the Association of Chartered Certified Accountants, an associate member of the Hong Kong Institute of Certified Public Accountants, an associate of The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators.
(c) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Secretaries Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.
(d) The English texts of this circular and the accompanying proxy form shall prevail over the Chinese texts.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the Company’s principal place of business in Hong Kong at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong from the date of this circular up to and including the date of the SGM:

(a) the New Master Agreement;
(b) the Supplemental Agreement;
(c) the letter from the Independent Board Committee, the text of which is set out on page 19 to 20 of this circular;
(d) the letter from RaffAello Capital, the text of which is set out on pages 21 to 34 of this circular; and
(e) the letter of consent from RaffAello Capital referred to in the paragraph headed ‘‘Expert and consent’’ in this Appendix.

– 37 –

NOTICE OF SGM

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==> picture [226 x 33] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

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NOTICE IS HEREBY GIVEN that a special general meeting (the ‘‘SGM’’) of Cinda International Holdings Limited (the ‘‘Company’’, together with its subsidiaries the ‘‘Group’’) will be held at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong on 26 May 2016 at 10: 45 a.m. (or immediately after the conclusion of the annual general meeting which is to be held on the same date and at the same place at 10: 30 a.m., whichever is later) for the purpose of considering and, if thought fit, with or without amendment, passing the following resolution:

ORDINARY RESOLUTION

‘‘THAT:

(i) the supplemental agreement dated 31 March 2016 (a copy of which is tabled at the SGM marked ‘‘A’’ and initialled by the Chairman of the meeting for identification purpose) to the master agreement dated 18 December 2015 entered into between the Company and China Cinda Asset Management Co., Ltd. (‘‘CCAM’’) in relation to the provision of certain financial service by the Group to the CCAM, its subsidiaries, and/or its associates and vice versa (the ‘‘Supplemental Agreement’’) (a copy of which is tabled at the SGM marked ‘‘B’’ and initialled by the Chairman of the meeting for identification purpose), and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;
(ii) the Revised Annual Caps for Category I Transactions, Category II Transactions and Category III Transactions (as defined in the circular of the Company dated 10 May 2016) as contemplated under the Supplemental Agreement be and are hereby approved, confirmed and ratified; and
(iii) the execution of the Supplemental Agreement by any director of the Company be and is hereby approved, ratified and confirmed and any director of the Company be and is hereby authorised to sign, execute, perfect and deliver all such documents and, where necessary, to affix the common seal of the Company on any such document as and when necessary and do all such acts, matters and things as

– 38 –

NOTICE OF SGM

he may in his discretion consider necessary or desirable for the purposes of or in connection with the implementation of the Supplemental Agreement and the transactions contemplated thereunder.’’

By order of the Board Cinda International Holdings Limited Lau Mun Chung Executive Director

Hong Kong, 10 May 2016

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.
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 Level 22, Hopewell Centre, 183 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.

– 39 –

AI assistant

Concord New Energy Group Ltd. — Proxy Solicitation & Information Statement 2016

35804_rns_2016-05-09_5aa79da8-b8f3-439a-b1da-28da95bc1c90.pdf

CONTINUING CONNECTED TRANSACTIONS SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT AND REVISION OF ANNUAL CAPS

CONTENTS

DEFINITIONS

DEFINITIONS

(Stock code: 111)

CONTINUING CONNECTED TRANSACTIONS SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT AND REVISION OF ANNUAL CAPS

INTRODUCTION

BACKGROUND OF THE SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT AND REVISION OF PROPOSED ANNUAL CAPS

SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT

LETTER FROM THE BOARD

CONDITIONS PRECEDENT TO THE SUPPLEMENTAL AGREEMENT

THE REVISED ANNUAL CAPS

The Originally Proposed Annual Caps

LETTER FROM THE BOARD

For Category I Transactions

LETTER FROM THE BOARD

For Category II Transactions

For Category III Transactions

For Category IV Transactions

LETTER FROM THE BOARD

Pricing Policies

Category I Transactions

LETTER FROM THE BOARD

Category II Transactions

Category III Transactions

Category IV Transactions

Internal control

LETTER FROM THE BOARD

Historical transactions amounts

REASONS FOR AND BENEFITS OF THE SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT AND REVISION OF RELEVANT ANNUAL CAPS

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

GENERAL

LETTER FROM THE BOARD

RECOMMENDATIONS

ADDITIONAL INFORMATION

CONTINUING CONNECTED TRANSACTIONS SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT AND REVISION OF ANNUAL CAPS

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Yours faithfully,

For and on behalf of

CONTINUING CONNECTED TRANSACTIONS SUPPLEMENTAL AGREEMENT TO THE NEW MASTER AGREEMENT AND REVISION OF ANNUAL CAPS

INTRODUCTION

LETTER FROM RAFFAELLO CAPITAL

BASIS OF OPINION

LETTER FROM RAFFAELLO CAPITAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Information on the Group and CCAM Group

LETTER FROM RAFFAELLO CAPITAL

3. Principal terms of the Supplemental Agreement to the New Master Agreement

(a) Positive and reliable income to the Group

(b) Broadening of the Group’s new client base

(c) Pricing Policies

Category I Transactions

LETTER FROM RAFFAELLO CAPITAL

Category II Transactions

Category III Transactions

LETTER FROM RAFFAELLO CAPITAL

(d) Internal Control

5. The basis for the Revised Annual Caps

The Revised Annual Caps

(a) Category I Transactions

LETTER FROM RAFFAELLO CAPITAL

(b) Category II Transactions

(c) Category III Transactions

LETTER FROM RAFFAELLO CAPITAL

RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

3. SUBSTANTIAL SHAREHOLDERS

4. INTEREST OF DIRECTORS IN COMPETING BUSINESS

5. DIRECTORS’ INTEREST IN ASSETS AND CONTRACTS OF THE GROUP

6. DIRECTORS’ SERVICE CONTRACTS

7. MATERIAL ADVERSE CHANGE

8. EXPERT AND CONSENT

APPENDIX

9. GENERAL

Concord New Energy Group Ltd. Proxy Solicitation & Information Statement 2016