Concord New Energy Group Ltd. - Proxy Solicitation & Information Statement 2021

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 (the “ Company ”), you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, licensed securities dealers, 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

AND

NOTICE OF SPECIAL GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and

the Independent Shareholders

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A letter from the board (the “ Board ”) of directors of the Company is set out on pages 1 to 14 of this circular. A letter from the independent board committee (the “ Independent Board Committee ”) of the Board containing its recommendations to the independent shareholders (the “ Independent Shareholders ”) of the Company is set out on page 15 of this circular. A letter from Red Sun Capital Limited, the independent financial adviser, containing its opinions and recommendations to the Independent Board Committee and the Independent Shareholders is set out on pages 16 to 39 of this circular.

A notice convening the SGM to be held at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong on 17 December 2021 at 11:00 a.m. is set out on pages SGM-1 to SGM-3 of this circular. Whether or not you are able to attend the SGM, 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 appointed for holding the SGM (i.e., by 15 December 2021, at 11:00 a.m.) (or any adjournment thereof) to the office of the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited, at Level 54, 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 adjournment thereof) if you so wish and in such event, the instrument appointing a proxy shall be deemed to be revoked.

In order to qualify for attending the SGM, all transfer documents, accompanied by the relevant share certificates, must be lodged with the Hong Kong branch share registrar of the Company, Tricor Secretaries Limited, whose share registration public offices are located at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on 13 December 2021.

1 December 2021

This circular is printed on environmentally friendly paper

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CONTENT

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Letter from Red Sun Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Appendix – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	SGM-1

– i –

DEFINITIONS

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

“2018 Master Agreement”

the master agreement dated 30 October 2018 and entered into between the Company and CCAM in relation to, among other things, the provision of certain financial services by the Group to the CCAM Group for a term of three years commenced from 1 January 2019 and ending on 31 December 2021

“2021 Master Agreement”
the master agreement dated 2 November 2021 and entered into between the Company and CCAM in relation to, among other things, the provision of certain financial services by the Group to the CCAM Group for a term of three years commencing from 1 January 2022 and ending on 31 December 2024
“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 the 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) in return for commissions/service fees as contemplated under the 2021 Master Agreement
“Category II Transactions”
provision by the Group to the CCAM Group 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) in return for service fees as contemplated under the 2021 Master Agreement
“Category III Transactions”

provision by the Group to the CCAM Group of asset management services in return for service fees as contemplated under the 2021 Master Agreement

“CCAM”

China Cinda Asset Management Co., Ltd., a company incorporated in the PRC with limited liability, the H shares of which are listed on the Main Board of the Stock Exchange (stock code: 1359)

– ii –

DEFINITIONS

“CCAM Group” CCAM and/or its associates “Cinda Securities” Cinda Securities Co., Ltd., a company established in the PRC with limited liability, which is an 87.42% non-wholly owned subsidiary of CCAM

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

the Hong Kong Special Administrative Region of the PRC

“Independent Board Committee”

the committee of the Board comprising all the independent non-executive Directors established to advise the Independent Shareholders as to voting at the SGM on the resolution approving the 2021 Master Agreement and the transactions contemplated thereunder, including the Proposed Annual Caps

“Independent Financial Adviser” or “Red Sun Capital”

Red Sun Capital Limited, a corporation licensed under the SFO to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the 2021 Master Agreement and the Proposed Annual Caps

“Independent Shareholders”

Shareholders other than Cinda Securities and its associates

“Independent Third Party(ies)”

persons(s) or company(ies) which is/are independent of any 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

– iii –

DEFINITIONS

“Latest Practicable Date”	23 November 2021, being the latest practicable date prior to the
	printing of this circular for the purpose of ascertaining certain
	information contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“PRC”	the People’s Republic of China which, for the purpose of
	this circular, shall exclude Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan
“Proposed Annual Caps”	the annual caps in respect of each category of transactions
	contemplated under the 2021 Master Agreement for each of the
	three years ending 31 December 2024 respectively
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“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 2021 Master Agreement and the
	transactions contemplated thereunder, including the Proposed
	Annual Caps
“Share(s)”	ordinary share(s) of HK$0.1 each in the share capital of the
	Company
“Shareholder(s)”	holder(s) of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“%”	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: Registered office: Ms. Zhu Ruimin (Chairman) Clarendon House Mr. Zhang Yi (Chief Executive Officer) 2 Church Street Mr. Lau Mun Chung (Deputy Chief Executive Officer) Hamilton, HM 11 Bermuda

Non-executive Director:

Mr. Chow Kwok Wai

Independent non-executive Directors: Mr. Hung Muk Ming Mr. Xia Zhidong Mr. Liu Xiaofeng

Head office and principal place of business in Hong Kong: 45th Floor COSCO Tower 183 Queen’s Road Central Hong Kong

1 December 2021

To all Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

AND

NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the announcement of the Company dated 2 November 2021 in relation to, among other things, the entering into of the 2021 Master Agreement and the Proposed Annual Caps.

The purposes of this circular are to provide you with, among other things, (i) principal terms of, and information relating to, the 2021 Master Agreement and the transactions contemplated thereunder; (ii) information relating to the Proposed Annual Caps for the three years ending 31 December 2024; (iii) a letter from the Independent Board Committee, which sets out its recommendations to the Independent Shareholders in relation to the 2021 Master Agreement and the Proposed Annual Caps; (iv) a letter from

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LETTER FROM THE BOARD

Red Sun Capital, which sets out its opinions and recommendations to the Independent Board Committee and the Independent Shareholders in relation to the 2021 Master Agreement and the Proposed Annual Caps; and (v) the notice of the SGM.

THE 2021 MASTER AGREEMENT

References are made to the announcement of the Company dated 30 October 2018 and the circular of the Company dated 29 November 2018, in relation to, among other things, the entering into of the 2018 Master Agreement between the Company and CCAM and the continuing connected transactions of the Company contemplated thereunder. In contemplation of the expiry of the 2018 Master Agreement on 31 December 2021 and in view of the intention of the Company to continue certain types of transactions with the CCAM Group after such expiry, and to facilitate the development of the business of the Group, on 2 November 2021 (after trading hours of the Stock Exchange), the Company entered into the 2021 Master Agreement with CCAM in relation to the Category I Transactions, Category II Transactions and Category III Transactions between the Group and the CCAM Group.

Pursuant to the 2021 Master Agreement, the Group has agreed to provide (i) brokering services for securities, futures and options trading; placing, underwriting and sub-underwriting services for securities; (ii) corporate finance advisory services; and (iii) asset management services to the CCAM Group. The 2021 Master Agreement shall have a term of three years commencing from 1 January 2022 and ending on 31 December 2024.

Principal terms of the 2021 Master Agreement and the Proposed Annual Caps are summarized as follows:

Date: 2 November 2021

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

Term: Three years commencing from 1 January 2022 up to 31 December 2024 (both days inclusive).

Without prejudice to the right of any party to terminate the 2021 Master Agreement, the 2021 Master Agreement shall automatically terminate if (a) the Company or CCAM considers that it is not feasible to comply with the Listing Rules at the relevant time; or (b) compliance with the Listing Rules would require changes to the 2021 Master Agreement which are not acceptable to any of the parties thereto.

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LETTER FROM THE BOARD

Pursuant to the 2021 Master Agreement, the Group shall provide the following services to the CCAM Group:

(i) Category I Transactions: 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) in return for commissions/service fees;
(ii) Category II Transactions: provision of corporate finance advisory services (including but not limited to advisory services in relation to (a) the compliance of the Listing Rules and The Codes on Takeovers and Mergers and Share Buy-backs; (b) the issue of securities; and (c) group restructuring) in return for service fees; and
(iii) Category III Transactions: provision of asset management services in return for service fees.

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; and (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.

Payment terms

Members of the Group and the CCAM Group shall enter into separate contract in relation to a particular transaction contemplated under the 2021 Master Agreement. The terms of the contract shall be on normal commercial terms, fair and reasonable. Details of the payment terms will be specified in the individual contracts governing the particular transactions and the commissions/services fees will be determined on an arm’s length basis with reference to the pricing policies set out below.

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LETTER FROM THE BOARD

Credit terms provided by the Group to the CCAM Group will be the same as those provided to Independent Third Party clients for similar transactions. The accounts department of the Company will issue invoices to clients including both CCAM Group and Independent Third Party clients (except brokering services under Category I Transactions) pursuant to the terms of the individual contract. The settlement terms for each category of transactions provided by the Group to all clients are summarised below:

Services

Settlement terms

For Category I Transactions – provision of brokering services two to three days after the trade date of the transaction – provision of placing, underwriting and within 1 month after the date of invoice sub-underwriting services For Category II Transactions within 1 month after the date of invoice For Category III Transactions within 1 month after the date of each invoice issued for the period of the asset management service

Conditions Precedent to the 2021 Master Agreement

The effectiveness of the 2021 Master 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 2021 Master Agreement and the transactions contemplated thereunder, including the Proposed Annual Caps;
(ii) the Company having obtained all necessary approval for the entering into of the 2021 Master Agreement and for the performance of its obligations thereunder; and
(iii) CCAM having obtained all necessary approval for the entering into of the 2021 Master 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 31 December 2021, the 2021 Master Agreement shall automatically terminate and none of the parties thereto shall have any claims against each other.

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LETTER FROM THE BOARD

The Proposed Annual Caps

The Board proposes the Proposed Annual Caps in respect of each category of transactions contemplated under the 2021 Master Agreement for each of the three years ending 31 December 2024 respectively as follows:

	For the	For the	For the
	year ending	year ending	year ending
	31 December 2022	31 December 2023	31 December 2024
	HK$	HK$	HK$
Category I Transactions	35,000,000	53,000,000	70,000,000
Category II Transactions	12,000,000	12,000,000	15,000,000
Category III Transactions	90,000,000	120,000,000	150,000,000

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

For Category I Transactions

The Company has taken into account of:

(i) the historical transactions amount for the relevant transactions as detailed in the section headed “Historical Transactions Amount and Annual Caps under the 2018 Master Agreement” below, adjusted by (a) the estimated total monetary value of the transactions during the term of the 2021 Master Agreement taking into account of the Company’s increasing collaboration with Nanyang Commercial Bank, Limited (“ NCB ”), an indirect wholly-owned subsidiary of CCAM, which had previously been acquired by CCAM in 2016, and the Company expects the portion of NCB’s securities brokerage transactions handled by the Group to increase; (b) the potential increase in the monetary value of debt securities issuance by the CCAM Group to be underwritten or placed by the Group during the term of the 2021 Master Agreement compared with the historical transactions amount for the year ending 31 December 2021 and hence the expected corresponding increase in underwriting commission receivable by the Group; and (c) the potential increase in the amount of brokering commission for the securities to be traded for the CCAM Group during the term of the 2021 Master Agreement;
(ii) the estimated total monetary value which would be brokered for securities and bonds trading, placing, underwriting and sub-underwriting for securities to be issued by the CCAM Group for each of the three years ending 31 December 2024 respectively;

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LETTER FROM THE BOARD

(iii) the relevant commission rates to be charged by the Group for each type of securities trading, placing and underwriting as mentioned in (ii) above, in accordance with the Group’s pricing policies for each of the three years ending 31 December 2024 respectively, which are determined with reference to the usual market ranges of 0.1% to 0.5% for securities brokering and 0.1% to 5.0% for securities underwriting during the term of the 2018 Master Agreement, which will be reviewed annually; 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 2021 Master Agreement.

When determining the Proposed 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 brokering services to the CCAM Group taking into account of potential transactions under negotiation with the CCAM Group for further expansion and growth of its business, and (ii) the market conditions, operation and business environment will remain stable and there will not be any adverse change in government policies, laws and regulations 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 may involve two to three potential corporate exercises which may be undertaken by the CCAM Group involving services from the Group each year during the term of the 2021 Master Agreement and the estimated nature and complexity of such transactions. Although there was no Category II Transaction conducted by the Group for the CCAM Group for the year ended 31 December 2019 and for the nine months ended 30 September 2021, and the historical transactions amount for the year ended 31 December 2020 was lower than the relevant proposed annual cap under the 2018 Master Agreement, the Group understood from the CCAM Group that no corporate finance advisory service was required from the Group in the year ended 31 December 2019 and for the nine months ended 30 September 2021, but there may potentially be two to three corporate transactions to be undertaken by the CCAM Group each year during the term of the 2021 Master Agreement;
(ii) the estimated resources to be spent on providing the relevant corporate finance advisory 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);

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LETTER FROM THE BOARD

(iii) where the transaction involves fund raising, the estimated size of the funds involved and the corresponding fee chargeable in line with the Group’s pricing policies; and
(iv) the fees charged by the Group to Independent Third Party clients for similar transactions.

When determining the Proposed Annual Caps for Category II Transactions, the Company has also based on the principal assumptions that (i) the market conditions, operation and business environment will remain stable and there will not be any adverse change in government policies, laws and regulations which may materially affect the business of the Group and/or the CCAM Group; and (ii) as the COVID-19 pandemic improves gradually with travel restrictions relaxed, there is a potential increase in collaboration with 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 2021 Master Agreement for each of the three years ending 31 December 2024 respectively, in particular, although the historical transactions amount for Category III Transactions under the 2018 Master Agreement was lower than the Proposed Annual Caps for Category III Transactions under the 2021 Master Agreement, the Company expects there will be approximately three new investment funds to be set up and one new intermediary project to be undertaken by the Group in each of the three years ending 31 December 2022, 2023 and 2024, hence substantially increasing the amount of management and advisory fees for the Group;
(ii) the management fee and performance fee rates to be charged by the Group in accordance with the Group’s pricing policies, which are determined with reference to the usual market ranges of approximately 0.1% to 2.0% for fund management fee and 5.0% to 20.0% of the fund performance fee during the term of the 2018 Master Agreement, which will be reviewed annually; and
(iii) a buffer of approximately 10% to provide flexibility to cater for any potential fluctuations of the actual size of the funds and market conditions over the term of the 2021 Master Agreement.

When determining the Proposed Annual Caps for Category III Transactions, the Company has also based on the principal assumptions that (i) the current trend of increasing number of funds being set up and hence the demand for professional fund management services to be provided by the Group, and the recent business development plan of the CCAM Group will remain unchanged during the term of the 2021 Master Agreement; and (ii) the market conditions, operation and business environment will remain stable and there will not be any adverse change in government policies, laws and regulations which may materially affect the business of the Group and/or the CCAM Group.

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LETTER FROM THE BOARD

The Board (other than the independent non-executive Directors whose opinion was included in the letter from the Independent Board Committee of this circular) is of the view that the Proposed Annual Caps are in line with the estimated development of the business of the Group, and are determined based on the principles of fairness and reasonableness.

Pricing Policies

The transactions contemplated under the 2021 Master Agreement shall be entered into on normal commercial terms and the services fees will be charged at rates not less favourable to the Group than rates at which the Group charges Independent Third Parties for comparable transactions. Detailed payment terms will be specified in the individual contracts 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 brokering services for securities, futures and options trading 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 of services, when and if applicable, whether approval by the Group’s supervisors of the securities department, executive Directors and/or chief executive officer of the Company (the “ CEO ”) is required. Such internal commission policy is set by the executive management committee of the Group (the “ EMC ”) (which comprises the CEO, another executive Director and a deputy CEO) 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 subunderwriting services for securities 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.

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LETTER FROM THE BOARD

The relevant Responsible Officers will then report such decision to the compliance and internal audit department of the Group (the “ CIA Department ”), which will then review such fee determined and countercheck it against the prevailing pricing policies of the Group for transactions similar to those contemplated under Category I Transactions, and to ensure such commission rates chargeable to the CCAM Group under Category I Transactions will fall within the range of commission rates chargeable to Independent Third Party clients, which is to be determined with reference to the then prevailing market range of commission rates 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 advisory services, the size of the transactions involved, the fees charged for historical transactions of similar nature within the recent year and the then prevailing market rates. The fee for each individual corporate finance advisory transaction (including transactions with Independent Third Parties) shall then be reviewed and approved by the project engagement committee of the Group (the “ PEC ”) (which comprises the CEO, the head of investment banking division of the Group, a handling Responsible Officer for type 6 regulated activities under the SFO in each particular transaction and the legal counsel of the Group) based on the aforesaid factors. The PEC 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 not less favourable to the Group than those chargeable by the 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 within the recent year and the then prevailing market rates. The fee for each individual asset management transaction (including transactions with Independent Third Parties) shall be reviewed and approved by the EMC or the investment management committee of the Group (the “ IMC ”) (which comprises the CEO, another executive Director, a deputy CEO and the head of risk management 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 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.

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LETTER FROM THE BOARD

Internal Control Measures

Detailed payment terms will be specified in the individual contracts governing the particular transactions. To ensure that the transactions contemplated under the 2021 Master Agreement are conducted in accordance with the terms of the 2021 Master Agreement, on normal commercial terms and comply with the pricing policies of the Group, (i) the fees to be charged for each individual transaction by the Group to the CCAM Group under the 2021 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 CIA Department, the EMC, the PEC or the IMC (as the case maybe), where applicable, will also review the prevailing market rates, quotations or invoices issued to Independent Third Party clients for comparison and as a reference to ensure that fees chargeable by the Group are comparable to those transacted with Independent Third Parties; and (iii) the CIA Department will review such terms determined and prices chargeable under the transactions contemplated under the 2021 Master Agreement to ensure that the fees are set in compliance with the Group’s internal pricing policies (where applicable) and are charged on normal commercial terms and at rates not less favourable to the Group than rates at which the Group charges Independent Third Party clients for comparable transactions. Moreover, the Company has established a connected transaction committee (the “ Connected Transaction Committee ”) in September 2018 to monitor, review and approve any connected transactions of the Company, and report its advice to the EMC when the transaction amounts exceed the authority of the committee. The auditors of the Company will also conduct annual review on 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 under Category I Transactions, Category II Transactions and Category III Transactions are regulated under the SFO, 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 receivable from the CCAM Group under the 2021 Master Agreement are not less favourable to the Group than those receivable from the Independent Third Party clients.

The accounts department of the Company will regularly monitor the actual connected transaction amounts on monthly basis. If the estimated amounts of each category of transactions are likely to exceed the relevant Proposed Annual Caps, the accounts department will inform the Connected Transaction Committee and the EMC for considering the revision of the Proposed Annual Caps and comply with the relevant rules and regulations such as the approval from Independent Shareholders.

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LETTER FROM THE BOARD

Historical Transactions Amount and Annual Caps under the 2018 Master Agreement

Set out below are the historical income in respect of the Category I Transactions, Category II Transactions and Category III Transactions conducted under the 2018 Master Agreement for the two years ended 31 December 2019 and 2020 and the nine months ended 30 September 2021 respectively:

	For the	For the	For the
	year ended	year ended	9 months ended
	31 December 2019	31 December 2020	30 September 2021
	Actual income	Actual income	Actual income
	HK$	HK$	HK$
Category I Transactions	5,624,090	7,436,607	5,851,413
Category II Transactions	–	760,000	–
Category III Transactions	66,619,372	49,593,781	44,605,647

Set out below are the annual caps for the transactions contemplated under the 2018 Master Agreement:

	For the	For the	For the
	year ended	year ended	year ending
	31 December 2019	31 December 2020	31 December 2021
	HK$	HK$	HK$
Category I Transactions	42,000,000	60,000,000	78,000,000
Category II Transactions	15,000,000	15,000,000	15,000,000
Category III Transactions	120,000,000	150,000,000	180,000,000

REASONS FOR AND BENEFITS OF ENTERING INTO THE 2021 MASTER AGREEMENT

The Group is principally engaged in the provision of corporate finance advisory services, asset management, securities brokering, commodities and futures brokering.

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

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LETTER FROM THE BOARD

The Group has been providing (i) brokering services for securities, futures and options trading; placing, underwriting and sub-underwriting services for securities; (ii) corporate finance advisory services; and (iii) asset management services to the CCAM Group over the years. The transactions contemplated under the 2021 Master Agreement are in the ordinary and usual course of business of the Group. Taking into consideration that Category I Transactions, Category II Transactions and Category III Transactions will contribute positively to the Group’s income, the Directors (other than the independent non-executive Directors whose opinion was included in the letter from the Independent Board Committee of this circular) consider that the terms of the 2021 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 2021 Master Agreement is in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

Ms. Zhu Ruimin, the chairman of the Board and an executive Director, is a director of Cinda Securities, and Mr. Zhang Yi, the CEO and an executive Director, also holds management position in Cinda Securities, and therefore they are considered having interest in the 2021 Master Agreement and have therefore abstained from voting on the Board resolutions approving the 2021 Master Agreement and the transactions contemplated thereunder.

As at the Latest Practicable Date, Cinda Securities is interested in 403,960,200 Shares, representing approximately 63% of the issued share capital of the Company. Cinda Securities is an 87.42% non-wholly owned subsidiary of CCAM. Accordingly, members of the CCAM Group are connected persons of the Company and the transactions contemplated under the 2021 Master Agreement constitute continuing connected transactions of the Company under Rule 14A.31 of the Listing Rules.

Since the Proposed Annual Caps for Category I Transactions, Category II Transactions and Category III Transactions for each of the three years ending 31 December 2024 respectively exceed 5% of certain applicable percentage ratios under the Listing Rules and are more than HK$10 million each, the continuing connected transactions contemplated under Category I Transactions, Category II Transactions and Category III Transactions under the 2021 Master Agreement, and the respective Proposed Annual Caps therefore are subject to the reporting, annual review, announcement, circular and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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LETTER FROM THE BOARD

GENERAL

The SGM will be held for the Independent Shareholders to consider and, if thought fit, approve, among other things, (i) the entering into of the 2021 Master Agreement; and (ii) the Proposed Annual Caps for the three years ending 31 December 2024 by way of an ordinary resolution.

A notice convening the SGM to be held at 45th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong on 17 December 2021 at 11:00 a.m., is set out on pages SGM-1 to SGM-3 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 SGM, 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 appointed for holding the SGM (i.e., by 15 December 2021, at 11:00 a.m.) (or any adjournment thereof) to the office of the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited, at Level 54, 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 adjournment 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, Cinda Securities, being the controlling Shareholder and a non-wholly owned subsidiary of CCAM, is deemed to have material interests in the 2021 Master Agreement and the transactions contemplated thereunder, including the Proposed Annual Caps. Cinda Securities and its associates shall, therefore, abstain from voting at the SGM on the resolution in relation to the entering into of the 2021 Master Agreement and the transactions contemplated thereunder, including the Proposed Annual Caps.

RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee set out on page 15 of this circular which contains its recommendations to the Independent Shareholders. In addition, your attention is drawn to the letter from Red Sun Capital set out on pages 16 to 39 of this circular which contains its opinions and recommendations to the Independent Board Committee and the Independent Shareholders and the principal factors and reasons considered by it in formulating its advice.

– 13 –

LETTER FROM THE BOARD

The Board, having taken into account the advice of the Independent Financial Adviser, considers that the 2021 Master Agreement and the transactions contemplated thereunder (including the Proposed Annual Caps) were entered into in the ordinary and usual course of business of the Group on normal commercial terms, the terms thereof are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Independent Shareholders to vote in favour of the resolution to approve the 2021 Master Agreement and the transactions contemplated thereunder (including the Proposed Annual Caps) at the SGM as set out in the notice of the SGM.

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

– 14 –

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.

==> picture [45 x 39] intentionally omitted <==

==> picture [297 x 35] intentionally omitted <==

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

1 December 2021

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to the circular of the Company dated 1 December 2021 (the “ Circular ”) of which this letter forms part. Unless the context otherwise requires, terms used herein shall have the same meanings as those defined in the Circular.

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 2021 Master Agreement was entered into in the ordinary and usual course of business of the Group on normal commercial terms, the terms of the 2021 Master Agreement and the Proposed Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Having considered the terms of the 2021 Master Agreement and the advice of Red Sun Capital in relation thereto as set out on pages 16 to 39 of the Circular, we are of the opinion that the 2021 Master Agreement was entered into in the ordinary and usual course of business of the Group on normal commercial terms, the terms of the 2021 Master Agreement and the Proposed Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the SGM to approve the 2021 Master Agreement and the transactions contemplated thereunder, including the Proposed Annual Caps.

Yours faithfully,

For and on behalf of

the Independent Board Committee Mr. Hung Muk Ming Mr. Xia Zhidong

Mr. Liu Xiaofeng

Independent Non-executive Directors

– 15 –

LETTER FROM RED SUN CAPITAL

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

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==> picture [155 x 31] intentionally omitted <==

Unit 3303, 33/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong

Tel: (852) 2857 9208 Fax: (852) 2857 9100

1 December 2021

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

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTIONS

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 2021 Master Agreement and the Proposed Annual Caps, details of which are set out in the letter from the board (the “ Letter from the Board ”) in the circular of the Company dated 1 December 2021 (the “ Circular ”) of which this letter forms part. Unless otherwise defined, terms used in this letter shall have the same meanings as those defined in the Circular.

On 2 November 2021, the Company and CCAM entered into the 2021 Master Agreement, pursuant to which the Group has agreed to provide (i) brokering services for securities, futures and options trading; placing, underwriting and sub-underwriting services for securities; (ii) corporate finance advisory services; and (iii) asset management services to the CCAM Group. The 2021 Master Agreement shall have a term of three years commencing from 1 January 2022 and ending on 31 December 2024.

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LETTER FROM RED SUN CAPITAL

As stated in the Letter from the Board, as at the Latest Practicable Date, Cinda Securities is interested in 403,960,200 Shares, representing approximately 63% of the issued share capital of the Company. Cinda Securities is an 87.42% non-wholly owned subsidiary of CCAM. Accordingly, members of the CCAM Group are connected persons of the Company and the transactions contemplated under the 2021 Master Agreement constitute continuing connected transactions of the Company under Rule 14A.31 of the Listing Rules.

As at the Latest Practicable Date, Ms. Zhu Ruimin, the chairman of the Board and an executive Director is a director of Cinda Securities, and Mr. Zhang Yi, the CEO and an executive Director also holds management position in Cinda Securities, and therefore are considered having interest in the 2021 Master Agreement and have therefore abstained from voting on the Board resolutions approving the 2021 Master Agreement and the transactions contemplated thereunder.

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Hung Muk Ming, Mr. Xia Zhidong and Mr. Liu Xiaofeng, has been established for the purpose of advising the Independent Shareholders in respect of, among other things, the 2021 Master Agreement and the Proposed Annual Caps for the three years ending 31 December 2024. Red Sun Capital has been appointed to advise the Independent Board Committee and the Independent Shareholders as to (i) whether the transactions contemplated under the 2021 Master Agreement together with the Proposed Annual Caps are conducted in the ordinary and usual course of business, on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole; and (ii) how the Independent Shareholders should vote in respect of the relevant resolution to approve the 2021 Master Agreement and the transactions contemplated thereunder, together with the Proposed Annual Caps at the SGM.

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LETTER FROM RED SUN CAPITAL

OUR INDEPENDENCE

As at the Latest Practicable Date, we were independent from and not connected with the Company, CCAM and their respective shareholders, directors or chief executives, or any of their respective associates and accordingly, are qualified to give independent advice to the Independent Board Committee and the Independent Shareholders regarding the 2021 Master Agreement and the transactions contemplated thereunder, together with the Proposed Annual Caps. Save for our appointment as the Independent Financial Adviser, Red Sun Capital has not acted as an independent financial adviser to the Company under the Listing Rules in the past two years. Apart from the normal advisory fee payable to us in connection with our appointment as the Independent Financial Adviser, no arrangement exists whereby we shall receive any other fees or benefits from the Group that could reasonably be regarded as relevant to our independence. Accordingly, we consider that we are independent from the Group pursuant to Rule 13.84 of the Listing Rules.

BASIS AND ASSUMPTION OF OUR OPINION

In formulating our advice, we have relied solely on the statements, information, opinions, beliefs and representations for matters relating to the Group, CCAM and their respective shareholders and management contained in the Circular and the information and representations provided to us by the Group, its senior management (the “ Management ”) and/or the Directors. We have assumed that all information, representations and opinions contained or referred to in the Circular, which have been provided by the Company, the Directors and the Management, and for which they are solely and wholly responsible, were true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have assumed that all such statements, information, opinions, beliefs and representations contained or referred to in the Circular (including this letter) or otherwise provided or made or given by the Group, the Management and/or the Directors and for which it is/they are solely responsible were true and accurate, and valid and complete in all material respects at the time they were made and given and continue to be true and accurate, and valid and complete in all material respects as at the Latest Practicable Date and up to the date of SGM. We have assumed that all the opinions, beliefs and representations for matters relating to the Group made or provided by the Management and/or the Directors contained in the Circular have been reasonably made after due and careful enquiry. We have also sought and obtained confirmation from the Company, the Management and/or the Directors that no material facts have been omitted from the information provided and referred to in the Circular.

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LETTER FROM RED SUN CAPITAL

We consider that we have been provided with sufficient information and documents to enable us to reach an informed view and the Management has assured us no material information has been withheld from us to allow us to reasonably rely on the information provided so as to provide a reasonable basis for our advice. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions, beliefs and representations provided to us by the Group, the Management and/or the Directors and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents. We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the business and affairs of the Group and its respective shareholder(s) and subsidiaries or affiliates, and their respective histories, experience and track records, or the prospects of the markets in which they respectively operate.

This letter is issued to the Independent Board Committee and the Independent Shareholders solely in connection for their consideration of the terms of the transactions contemplated under the 2021 Master Agreement, together with the Proposed Annual Caps, and except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation to the Independent Board Committee and the Independent Shareholders, we have taken into consideration the following principal factors and reasons:

1. Information on the Group and the CCAM Group

(a) The Group

The Group is principally engaged in the provision of asset management, corporate finance advisory services, securities brokering, commodities and futures brokering.

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LETTER FROM RED SUN CAPITAL

The following consolidated segment revenue of the Group for the three years ended 31 December 2018, 2019 and 2020 have been extracted from the annual report for the year ended 31 December 2019 (the “ 2019 Annual Report ”) and the year ended 31 December 2020 (the “ 2020 Annual Report ”), while the consolidated segment revenue of the Group for the six months ended 30 June 2020 and 2021 have been extracted from the interim report for the six months ended 30 June 2021 (the “ 2021 Interim Report ”):

		Sales and
	Asset	trading	Corporate
	management	business	finance	Total
	HK$’000	HK$’000	HK$’000	HK$’000
For the six months ended
30 June 2021 (unaudited)	41,651	50,005	20,938	112,594
30 June 2020 (unaudited)	36,238	33,235	44,013	113,486
For the year ended
31 December 2020 (audited)	71,475	72,764	68,896	213,135
31 December 2019 (audited)	151,407	51,113	57,696	260,216
31 December 2018 (audited)	131,456	72,726	41,882	246,064

Financial performance for the six months ended 30 June 2020 and 2021

Based on the 2021 Interim Report, the operations of the asset management segment of the Group remained largely stable. The revenue was approximately HK$41.7 million for the six months ended 30 June 2021 and approximately HK$36.2 million for the six months ended 30 June 2020, representing an increase of approximately 14.9%.

In relation to its sales and trading business, the Group benefited from the increase in stock trading volume and the expansion of its own business scale, leading to an increase in its market share. As a result, the segment revenue increased by approximately 50.5% from approximately HK$33.2 million for the six months ended 30 June 2020 to approximately HK$50.0 million for the six months ended 30 June 2021.

As adversely affected by the progress of certain projects, the corporate finance business recorded operating revenue of approximately HK$20.9 million for the six months ended 30 June 2021, representing a decrease of approximately 52.4% as compared with the revenue of approximately HK$44.0 million for the six months ended 30 June 2020.

– 20 –

LETTER FROM RED SUN CAPITAL

Financial performance for the year ended 31 December 2019 and 31 December 2020

As set out in the 2020 Annual Report, in connection with the asset management business of the Group, as the size of structured products management business developed by the Group and an associate decreased during the year ended 31 December 2020, the asset management segment recorded revenue from external customers of approximately HK$58.4 million for the year ended 31 December 2020, as compared to approximately HK$140.6 million for the year ended 31 December 2019, representing a decrease of approximately 58.5%.

For the sales and trading business, the Group benefited from the increase in stock trading volume and the expansion of its own business scale, and an increase in its market share. As a result, the operating revenue of sales and trading business increased by approximately 42.4% from approximately HK$51.1 million for the year ended 31 December 2019 to approximately HK$72.8 million for the year ended 31 December 2020.

The operating revenue of corporate finance business increased by approximately 19.4% from approximately HK$57.7 million for the year ended 31 December 2019 to approximately HK$68.9 million for the year ended 31 December 2020. The Group acted as sponsor and underwriter in the initial public offering of four companies which successfully listed on the Main Board of the Stock Exchange in the year. At the same time, the Group completed two financial advisory projects in relation to merger and acquisitions during the year.

Financial performance for the year ended 31 December 2018 and 31 December 2019

According to the 2019 Annual Report, in relation to its asset management segment, as the Group developed structured products management business together with an associate and its scale increased during the subject financial year, this segment recorded revenue of approximately HK$140.6 million for the year ended 31 December 2019 from external customers, as compared to approximately HK$118.6 million for the year ended 31 December 2018, representing an increase of approximately18.5%.

For the sales and trading business, due to the lowering of commission rates by other online trading platforms, resulting in severe pricing competition, the Group recorded commission from sales and trading business of approximately HK$30.4 million for the year ended 31 December 2019 as compared to approximately HK$46.1 million for the year ended 31 December 2018, representing a decrease of approximately 34.1%, and interest income from securities financing and other interest income of approximately HK$20.7 million for the year ended 31 December 2019, as compared to approximately HK$26.4 million for the year ended 31 December 2018, representing a decrease of approximately 21.6%.

– 21 –

LETTER FROM RED SUN CAPITAL

The operating revenue of corporate finance business of the Group increased by approximately 37.8% from approximately HK$41.9 million for the year ended 31 December 2018 to approximately HK$57.7 million for the year ended 31 December 2019. Such was mainly attributable to the fact that the Group acted as sponsor and underwriter in the initial public offering of four PRC companies which successfully listed on the Stock Exchange during the year ended 31 December 2019.

(b) The CCAM Group

CCAM is 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). The principal business of which included distressed asset management, and provides customised financial solutions and differentiated asset management services to its clients through its diversified business platforms.

Based on the annual report of CCAM for the year ended 31 December 2020, the principal business segments of the CCAM Group included distressed asset management and provision of financial services.

The provision of distressed asset management, asset management and financial services in the PRC and Hong Kong by the CCAM Group were conducted through its various subsidiaries, including Nanyang Commercial Bank, Limited (“ NCB ”), Cinda Securities Co., Ltd., China Jingu International Trust Co., Ltd., Cinda Financial Leasing Co., Ltd., China Cinda (HK) Holdings Company Limited, Cinda Investment Co., Ltd. and Zhongrun Economic Development Co., Ltd..

2. Background of and reasons for entering into the 2021 Master Agreement

References are made to the 2018 Master Agreement entered into between the Company and CCAM and the continuing connected transactions of the Company contemplated thereunder. In contemplation of the expiry of the 2018 Master Agreement on 31 December 2021 and in view of the intention of the Company to continue certain types of transactions with the CCAM Group after such expiry, and to facilitate the development of the business of the Group, on 2 November 2021, the Company entered into the 2021 Master Agreement with CCAM in relation to the Category I Transactions, Category II Transactions and Category III Transactions between the Group and the CCAM Group.

– 22 –

LETTER FROM RED SUN CAPITAL

It is also noted that the Group has been providing (i) brokering services for securities, futures and options trading; placing, underwriting and sub-underwriting services for securities; (ii) corporate finance advisory services; and (iii) asset management services, to the CCAM Group over the years. Hence, the transactions contemplated under the 2021 Master Agreement should broaden the income base of the Group and are a furtherance of the Group’s ordinary and usual course of business. Taking into consideration that Category I Transactions, Category II Transactions and Category III Transactions will contribute positively to the Group’s income, the Directors considered that the terms of the 2021 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 2021 Master Agreement is in the interests of the Company and the Shareholders as a whole.

Having considered, among others, (i) the scope of the Category I Transactions, Category II Transactions and Category III Transactions under the 2021 Master Agreement, are part of the principal business activities of the Group; and (ii) the pricing policies of the 2021 Master Agreement as set out in the Letter from the Board stated that the service fees to be charged by the Group to the CCAM Group under the 2021 Master Agreement should be at rates no less favourable to the Group than those charged by the Group to Independent Third Parties for comparable transactions, we concur with the Directors’ views that the transactions contemplated under the 2021 Master Agreement are in the interests of the Company and the Shareholders as a whole.

3. The 2021 Master Agreement

(a) Principal terms of the 2021 Master Agreement

Details of the 2021 Master Agreement and the Proposed Annual Caps are set out below:

Date: 2 November 2021 Parties: (i) the Company; and (ii) CCAM. Term: Three years commencing from 1 January 2022 up to 31 December 2024 (both days inclusive).

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LETTER FROM RED SUN CAPITAL

Nature of transactions:

Pursuant to the 2021 Master Agreement, the Group shall provide the following services to the CCAM Group:

(i) Category I Transactions: 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) in return for commissions/service fees;
(ii) Category II Transactions: provision of corporate finance advisory services (including but not limited to advisory services in relation to (a) the compliance of the Listing Rules and The Codes on Takeovers and Mergers and Share Buy-backs; (b) the issue of securities; and (c) group restructuring) in return for service fees; and
(iii) Category III Transactions: provision of asset management services in return for service fees.

– 24 –

LETTER FROM RED SUN CAPITAL

Payment terms

Services	Settlement terms
For Category I Transactions
– provision of brokering services	two to three days after the trade date of the transaction
– pr ovision of placing, underwriting	within 1 month after the date of invoice
and sub-underwriting services
For Category II Transactions	within 1 month after the date of invoice
For Category III Transactions	within 1 month after the date of each invoice issued
	for the period of the asset management service

Conditions precedent to the 2021 Master Agreement

The effectiveness of the 2021 Master 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 2021 Master Agreement and the transactions contemplated thereunder, including the Proposed Annual Caps;
(ii) the Company having obtained all necessary approval for the entering into of the 2021 Master Agreement and for the performance of its obligations thereunder; and

– 25 –

LETTER FROM RED SUN CAPITAL

(iii) CCAM having obtained all necessary approval for the entering into of the 2021 Master Agreement and for the performance of its obligations thereunder.

As disclose in the Letter from the Board, none of the above conditions can be waived. Unless the above conditions have been fulfilled by 31 December 2021, the 2021 Master Agreement shall automatically terminate and none of the parties thereto shall have any claims against each other.

(b) Pricing policies

Set out below are the pricing policies adopted by the Management 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 for placing, underwriting and sub-underwriting services for securities 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/sub-underwriting commitments, the market demand for the particular issue, the liquidity of the relevant securities, financial performance and industry of the issuer, pricing of the issue and the then prevailing market rates.

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LETTER FROM RED SUN CAPITAL

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 advisory services, the size of the transactions involved, the fees charged for historical transactions of similar nature within the recent year and the then prevailing market rates. The fee for each individual corporate finance advisory transaction (including transactions with Independent Third Parties) shall then be reviewed and approved by the project engagement committee of the Group (the “ PEC ”) (which comprises the CEO, the head of investment banking division of the Group, a handling Responsible Officer for Type 6 regulated activities under the SFO in each particular transaction and the legal counsel of the Group) based on the aforesaid factors. The PEC 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 not less favourable to the Group than those chargeable by the Group to the Independent Third Party clients.

Category III Transactions

– 27 –

LETTER FROM RED SUN CAPITAL

(c) Internal control measures

The Management advised that individual contract governing the particular transaction will specify, among others, the detailed payment terms. With a view to ensure that the transactions contemplated under the 2021 Master Agreement are conducted in accordance with the terms of the 2021 Master Agreement, on normal commercial terms and comply with the pricing policies of the Group, where applicable, (i) the fees to be charged for each individual transaction by the Group to the CCAM Group under the 2021 Master Agreement shall be determined by the relevant Responsible Officer(s) 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 “(b) Pricing policies” above; (ii) the CIA Department, the EMC, the PEC or the IMC (as the case maybe), where applicable, will also review the prevailing market rates, quotations or invoices issued to Independent Third Party clients for comparison and as a reference to ensure that fees chargeable by the Group are comparable to those transacted with Independent Third Parties; and (iii) the CIA Department will review such terms determined and prices chargeable under the transactions contemplated under the 2021 Master Agreement to ensure that the fees are set in compliance with the Group’s internal pricing policies (where applicable) and are charged on normal commercial terms and at rates not less favourable to the Group than rates at which the Group charges Independent Third Party clients for comparable transactions. In addition, the Company has established a connected transaction committee (the “ Connected Transaction Committee ”) since September 2018, which comprises the company secretary of the Company, the heads of company secretarial department, accounts department and risk management department of the Group to monitor, review and approve any connected transactions of the Company, and report its advice to the EMC when the transaction amounts exceed the authority of the committee. Furthermore, the auditors of the Company will also conduct annual review on the continuing connected transactions entered into by the Company.

The Directors are of the view that as the businesses of the Group under Category I Transactions, Category II Transactions and Category III Transactions are regulated under the SFO, the market in general is transparent. Given the Directors’ experience in the market, their knowledge about the industry and public information, the Group is able to obtain sufficient information to assess the market rates and determine whether the fees receivable from the CCAM Group under the 2021 Master Agreement are not less favourable to the Group than those receivable from the Independent Third Party clients.

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LETTER FROM RED SUN CAPITAL

(d) Our analysis on the internal control measures

As part of our analysis on the internal control measures, we have obtained samples of internal control documents, including relevant approval records under each of the Category I Transactions, Category II Transactions and Category III Transactions, conducted under the 2018 Master Agreement. Based on our review of the internal control documents provided by the Company, internal review and approval on the rates was obtained for the sampled transactions.

With reference to the internal approval records obtained, the relevant terms of the sampled transactions under each of the Category I Transactions, Category II Transactions and Category III Transactions were approved by, where applicable, the Directors and senior management of the Group, including mainly the EMC, the CIA Department, the PEC or the IMC (depending on the transaction categories) after taking into consideration the then prevailing market conditions, their experience as well as the information available to each of them at the relevant time. On this basis, the Management is of the view that the Group has considered sufficient information to determine whether the fees of the relevant continuing connected transactions were no less favourable to the Group than those charged to the Independent Third Parties.

Furthermore, we also compared a sample of transactions with connected persons and independent third parties, of a comparable nature, under each of the Category I Transactions, Category II Transactions and Category III Transactions, respectively.

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LETTER FROM RED SUN CAPITAL

In this connection, we have compared terms for different types of Category I Transactions, such as, (i) commission rates charged by the Group to connected parties and independent third parties, and we have also conducted research on commission rate for securities brokerage services by various service providers in the market; (ii) underwriting/subunderwriting fees charged by the Group to connected parties and independent third parties; and (iii) the credit terms imposed by the Group to connected parties and independent third parties. For Category II Transactions, we have reviewed the engagement letter of sampled transactions with the connected party and independent third party for the provision of corporate finance advisory services by the Group as financial adviser and we have also compared the payment terms and credit terms against other market transactions for the provision of financial advisory services by financial adviser. For Category III Transactions, we have reviewed the management fee rate charged and credit terms allowed by the Group to (i) connected parties; and (ii) independent third parties, for the provision of fund management services. Based on our work performed and documents reviewed, the terms and credit terms of the sampled transactions with connected persons were no less favourable to the Group than those available to/from independent third parties under comparable sampled transactions.

Moreover, as disclosed in the Letter from the Board, the accounts department of the Company will regularly monitor the actual connected transaction amounts on monthly basis. In this connection, we have obtained monthly review records conducted by the accounts department on the connected transactions and noted that the actual connected transaction amounts and the existing annual caps under the 2018 Master Agreement are being monitored.

Based on our analysis and work performed, including (i) the pricing policies under the 2018 Master Agreement were implemented and followed based on the sampled transactions, and that the effective application of the pricing policies should ensure that the transactions contemplated under the 2021 Master Agreement to be on normal commercial terms and the services fees shall be charged at rates no less favourable to the Group than rates at which the Group would charge Independent Third Party clients for comparable transactions; (ii) the fees to be charged and the credit terms granted for each individual transaction by the Group to the CCAM Group under the 2021 Master Agreement shall be determined by the relevant Responsible Officers or department head (including the deputy) according to the established pricing policies; (iii) the involvement of the EMC, the CIA Department, the PEC or the IMC (depending on the transaction categories), to review the terms for the transactions to be contemplated under the 2021 Master Agreement against, where applicable, the prevailing market rates, quotations or invoices issued to Independent Third Party clients; (iv) the involvement of the CIA Department to review such terms determined and prices chargeable under the transactions contemplated under the 2021 Master Agreement to ensure that the fees shall be set in compliance with the Group’s internal pricing policies and shall be charged based on the principle described above; and (v) the Company’s implemented internal control measures as mentioned above, we consider the transactions contemplated under the 2021 Master Agreement to be fair and reasonable so far as the Independent Shareholders are concerned.

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LETTER FROM RED SUN CAPITAL

4. The Proposed Annual Caps

The Proposed Annual Caps for each category of transactions contemplated under the 2021 Master Agreement for each of the three years ending 31 December 2024 are set out below:

	For the year ending 31 December	For the year ending 31 December	For the year ending 31 December
HK$	2022	2023	2024
Category I Transactions	35,000,000	53,000,000	70,000,000
Category II Transactions	12,000,000	12,000,000	15,000,000
Category III Transactions	90,000,000	120,000,000	150,000,000

(a) Historical transaction amounts and annual caps under the 2018 Master Agreement

Set out below are the historical transaction amounts in respect of the Category I Transactions, Category II Transactions and Category III Transactions conducted under the 2018 Master Agreement for the two years ended 31 December 2019 and 2020 and the nine months ended 30 September 2021, respectively.

	For the	For the	For the nine
	year ended	year ended	months ended
	31 December	31 December	30 September
	2019	2020	2021
	HK$	HK$	HK$
Historical transaction amounts:
Category I Transactions	5,624,090	7,436,607	5,851,413
Category II Transactions	–	760,000	–
Category III Transactions	66,619,372	49,593,781	44,605,647

Set out below are the annual caps under the 2018 Master Agreement.

	For the	For the	For the
	year ended	year ended	year ending
	31 December	31 December	31 December
	2019	2020	2021
	HK$	HK$	HK$
Annual caps under the 2018
Master Agreement:
Category I Transactions	42,000,000	60,000,000	78,000,000
Category II Transactions	15,000,000	15,000,000	15,000,000
Category III Transactions	120,000,000	150,000,000	180,000,000

– 31 –

LETTER FROM RED SUN CAPITAL

(b) Basis of the Proposed Annual Caps

As disclosed in the Letter from the Board, the Proposed Annual Caps were determined by the Company after taking into account of the following factors.

For Category I Transactions

The Company has considered:

(i) the historical transactions amount for the relevant transactions as detailed in the section headed “Historical Transactions Amount and Annual Caps under the 2018 Master Agreement” in the Letter from the Board, adjusted by (a) the estimated total monetary value of the transactions during the term of the 2021 Master Agreement taking into account of the Company’s increasing collaboration with NCB, an indirect wholly-owned subsidiary of CCAM, which had previously been acquired by CCAM in 2016, and the Company expects the portion of NCB’s securities brokerage transactions handled by the Group to increase; (b) the potential increase in the monetary value of debt securities issuance by the CCAM Group to be underwritten or placed by the Group during the term of the 2021 Master Agreement compared with the historical transactions amount for the year ending 31 December 2021 and hence the expected corresponding increase in underwriting commission receivable by the Group; and (c) the potential increase in the amount of brokering commission for the securities to be traded for the CCAM Group during the term of the 2021 Master Agreement;
(ii) the estimated total monetary value which would be brokered for securities and bonds trading, placing, underwriting and sub-underwriting for securities to be issued by the CCAM Group for each of the three years ending 31 December 2024 respectively;
(iii) the relevant commission rates to be charged by the Group for each type of securities trading, placing and underwriting as mentioned in (ii) above, in accordance with the Group’s pricing policies for each of the three years ending 31 December 2024 respectively, which are determined with reference to the usual market ranges of 0.1% to 0.5% for securities brokering and 0.1% to 5.0% for securities underwriting during the term of the 2018 Master Agreement, which will be reviewed annually; 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 2021 Master Agreement.

– 32 –

LETTER FROM RED SUN CAPITAL

We understand from the Management that the Proposed Annual Caps for Category I Transactions was determined based on the principal assumptions that (i) there will be significant growth in the amount of securities brokering services to the CCAM Group taking into account of potential transactions under negotiation with the CCAM Group for further expansion and growth of its business; and (ii) the market conditions, operation and business environment will remain stable and there will not be any adverse change in government policies, laws and regulations which may materially affect the business of the Group and/or the CCAM Group.

Our analysis on the Proposed Annual Caps under Category I Transactions

We note that historical transactions amount for the relevant transactions under Category I Transactions for the two years ended 31 December 2019 and 2020 and the nine months ended 30 September 2021 were approximately HK$5.6 million, HK$7.4 million and HK$5.9 million, respectively. Having considered the relatively low utilisation of the relevant annual caps for the two years ended 31 December 2019 and 2020 and the nine months ended 30 September 2021, the Management has notably reduced the Proposed Annual Caps for Category I Transactions for the year ending 31 December 2022 (the “ 2022 Category I Annual Cap ”) by approximately 55.1% to HK$35.0 million.

As advised by the Management and based on the Proposed Annual Caps schedule (the “ Annual Caps Schedule ”) prepared by the Management, the 2022 Category I Annual Cap is based on, among other factors,

(i) the expected notable growth from the securities brokerage services related income generated from NCB, being part of the CCAM Group, which recorded a year-onyear growth of approximately 78.7% during the year ended 31 December 2020. The Management expected such to increase further going forward based on the securities brokerage services related income generated from NCB for the nine months ended 30 September 2021 and the continuous development of the securities brokerage services business provided to NCB, thereby contributing further to the income under Category I Transactions to the Group;
(ii) according to the website of the Hong Kong Monetary Authority (the “ HKMA ”), Hong Kong is a leading bond hub in Asia, ranking third in terms of issuance in Asia ex-Japan, after Mainland China and Korea. Based on the March 2021 quarterly bulletin issued by HKMA (www.hkma.gov.hk/media/eng/publication-and-research/ quarterly-bulletin/qb202103/fa1.pdf), Hong Kong dollar debt issuance amounted to approximately HK$4.32 trillion in 2020. Given the expected expansion of the overall securities underwriting business of the CCAM Group, which recorded a significant year-on-year increase of approximately 96.6% in its securities underwriting related

– 33 –

LETTER FROM RED SUN CAPITAL

revenue from approximately RMB107.9 million for the year ended 31 December 2019 to approximately RMB212.1 million for the year ended 31 December 2020 based on CCAM’s annual report for the year ended 31 December 2020 (the “ 2020 CCAM Annual Report ”). Such revenue was generated primarily from the PRC, including Hong Kong. With a view to capture further market share in the debt securities issuance market as part of the furtherance of CCAM Group’s securities underwriting business, CCAM Group shall continue to develop its securities underwriting business, during the course of which, the Group may be invited to, and subject to the relevant terms, participate in underwriting/sub-underwriting of such debt securities issuances from time to time. The Management therefore estimated an increase in the relevant underwriting fees arising from debt securities issuance by the CCAM Group to be underwritten or placed by the Group;

(iii) the estimated increase in the income arising from securities brokering services provided by the Group to the CCAM Group (other than NCB which has been covered under (i) above). As part of our analysis, we reviewed the 2020 CCAM Annual Report and noted that the CCAM Group recorded a notable year-on-year increase in securities and futures brokerage related revenue of approximately 27.0% from approximately RMB953.4 million for the year ended 31 December 2019 to approximately RMB1,210.8 million for the year ended 31 December 2020. Such revenue was generated primarily from the PRC, including Hong Kong. Based on the 2020 CCAM Annual Report, the securities and futures brokerage is one of the CCAM Group’s principal businesses and its continuous development shall bring further collaboration opportunities for the Group going forward; and
(iv) when determining the growth rate applied to the Proposed Annual Caps for Category I Transactions for the year ending 31 December 2023 and for the year ending 31 December 2024, the Management has considered the growth rate and factors as set out under (i), (ii) and (iii) above as well as the fact that the level of demand in relation to the transactions under Category I Transactions, including securities brokerage and debt issuance activities, are largely market driven which are beyond the Group’s control and may significantly increase due to unexpected fluctuations of the financial markets and economic conditions. Under such circumstances, the Group may record substantial and unexpected increase in transaction volumes of certain transactions under Category I Transactions. To ensure the Group can continue to generate income by carrying out transactions under Category I Transactions under the aforesaid circumstances in a timely manner, such factors were also considered when we assessed the Proposed Annual Caps for Category I Transactions.

– 34 –

LETTER FROM RED SUN CAPITAL

Further to the above, in terms of the estimated commission rates to be charged by the Group for Category I Transactions, we have reviewed the historical commission rates charged by the Group to the CCAM Group against the rates used in calculating the Proposed Annual Caps under Category I Transactions and noted that they are broadly in line.

Having considered that, (i) the Group is expected to continue the provision of, among others, brokerage services, underwriting and sub-underwriting services under Category I Transactions to members of the CCAM Group from time to time; (ii) our work performed and analysis as set out above, including the historical growth rates in relation to the relevant services; (iii) the Category I Transactions are a furtherance of the Group’s principal businesses which would broaden the income base of the Group; (iv) the Category I Transactions shall be carried out in accordance with the pricing policies under the 2021 Master Agreement, which shall be conducted on normal commercial terms that are fair and reasonable; (v) the level of demand for Category I Transactions, including securities brokerage and debt issuance activities, are largely market driven which are beyond the Group’s control and may therefore increase significantly due to the unexpected fluctuations of the financial markets and economic conditions at the material time; (vi) the Proposed Annual Caps for the years ending 31 December 2022, 2023 and 2024, if approved, would facilitate the Category I Transactions to be conducted in an effective and efficient manner without the need for the Company to seek Shareholders’ approval on a transaction-bytransaction basis; and (vii) the Group has the right but not the obligation to provide the relevant services to the CCAM Group, we are of the view that the Proposed Annual Caps for Category I Transactions are fair and reasonable.

For Category II Transactions

The Company has considered:

(i) the estimated transaction amount of the services to be provided to the CCAM Group by the Group, which may involve two to three potential corporate exercises which may be undertaken by the CCAM Group involving services from the Group each year during the term of the 2021 Master Agreement and the estimated nature and complexity of such transactions. Although there was no Category II Transaction conducted by the Group for the CCAM Group for the year ended 31 December 2019 and for the nine months ended 30 September 2021, and the historical transactions amount for the year ended 31 December 2020 was lower than the relevant proposed annual cap under the 2018 Master Agreement, the Group understood from the CCAM Group that no corporate finance advisory service was required from the Group in the year ended 31 December 2019 and for the nine months ended 30 September 2021, but there may potentially be two to three corporate transactions to be undertaken by the CCAM Group each year during the term of the 2021 Master Agreement;

– 35 –

LETTER FROM RED SUN CAPITAL

(ii) the estimated resources to be spent on providing the relevant corporate finance advisory 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 Group’s pricing policies; and
(iv) the fees charged by the Group to Independent Third Party clients for similar transactions.

We understand from the Management that the Proposed Annual Caps for Category II Transactions was determined based on the principal assumption that (i) the market conditions, operation and business environment will remain stable and there will not be any adverse change in government policies, laws and regulations which may materially affect the business of the Group and/or the CCAM Group; and (ii) as the COVID-19 pandemic improves gradually with travel restrictions relaxed, there is a potential increase in collaboration with the CCAM Group.

Our analysis on the Proposed Annual Caps under Category II Transactions

We noted from the Letter from the Board that the scope of the Category II Transactions covered financial advisory services, including, among others, 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. Based on the Annual Caps Schedule prepared by the Management, the Management estimated that the Group may charge advisory fee in the range of HK$0.5 million to HK$6.5 million for a financial advisory engagement, subject to factors, such as, the transaction nature, work scope, type of advisory service, deal structure, complexity, duration and man power involvement. In this connection, we noted that the Proposed Annual Caps for Category II Transactions of HK$15.0 million would be able to cater for two advisory engagements with an advisory fee at the top estimated range of HK$6.5 million. Based on our discussion with the Management, when determining the Proposed Annual Caps for Category II Transactions, the Company estimated that there would be two to three major financial advisory engagements under the Category II Transactions per year as well as smaller scale financial advisory engagements from time to time. It is also considered that the number of transactions, timing and scale of Category II Transactions is largely market driven and beyond the Group’s control, thus may increase notably due to a small number of significant ad hoc corporate exercise of members of the CAAM Group which is not foreseeable currently. Having considered our analysis and work performed, in particular, the Category II Transactions shall be carried out in accordance with the pricing policies under the 2021 Master Agreement, which shall be conducted on normal commercial terms, and that corporate exercises of the CAAM Group that require

– 36 –

LETTER FROM RED SUN CAPITAL

advisory services may become available during any of the three years ending 31 December 2022, 2023 and 2024, we are of the view that the Proposed Annual Caps for Category II Transactions are fair and reasonable.

For Category III Transactions

The Company has considered:

(i) the estimated total monetary value of the funds to be managed by the Group during the term of the 2021 Master Agreement for each of the three years ending 31 December 2024 respectively, in particular, although the historical transactions amount for Category III Transactions under the 2018 Master Agreement was lower than the Proposed Annual Caps for Category III Transactions under the 2021 Master Agreement, the Company expects there will be approximately three new investment funds to be set up in each of the three years ending 31 December 2022, 2023 and 2024, and one new intermediary project to be undertaken by the Group in each of the three years ending 31 December 2022, 2023 and 2024, hence substantially increasing the amount of management and advisory fees for the Group;
(ii) the management fee and performance fee rates to be charged by the Group in accordance with the Group’s pricing policies, which are determined with reference to the usual market ranges of approximately 0.1% to 2.0% for fund management fee and 5.0% to 20.0% of the fund performance fee during the term of the 2018 Master Agreement, which will be reviewed annually; and
(iii) a buffer of approximately 10% to provide flexibility to cater for any potential fluctuations of the actual size of the funds and market conditions over the term of the 2021 Master Agreement.

We understand from the Management that the Proposed Annual Caps for Category III Transactions was determined with the principal assumptions that (i) the current trend of increasing number of funds being set up and hence the demand for professional fund management services to be provided by the Group, and the recent business development plan of the CCAM Group will remain unchanged during the term of the 2021 Master Agreement; and (ii) the market conditions, operation and business environment will remain stable and there will not be any adverse change in government policies, laws and regulations which may materially affect the business of the Group and/or the CCAM Group.

– 37 –

LETTER FROM RED SUN CAPITAL

Our analysis on the Proposed Annual Caps under Category III Transactions

As set out in the Letter from the Board, historical transaction amount for the relevant transactions under Category III Transactions for the two years ended 31 December 2019 and 2020 and the nine months ended 30 September 2021 were approximately HK$66.6 million, HK$49.6 million and HK$44.6 million, respectively. Having considered the utilisation rate of the relevant annual caps for the two years ended 31 December 2019 and 2020 and the nine months ended 30 September 2021, the Management has reduced the Proposed Annual Caps for Category III Transactions for the year ending 31 December 2022 (the “ 2022 Category III Annual Cap ”) by approximately 50.0% to HK$90.0 million. As advised by the Management and based on the Annual Caps Schedule, the 2022 Category III Annual Cap is based on, among other factors, (i) the expected growth from the provision of asset management services to the CCAM Group for the year ending 31 December 2021; (ii) as disclosed in the 2020 CCAM Annual Report, the unlisted investments of the CCAM Group, which comprised, among others, equity investments, debt instruments, securities investments, distressed debt assets, amounted to approximately RMB414,067.5 million as at 31 December 2020 and approximately RMB405,123.0 million as at 30 June 2021. Given the size of unlisted investment of the CCAM Group and the Group’s capability to provide asset management services should members of the CCAM Group require asset management services for certain class of its unlisted investments, in part or in whole, the Group may be invited to, and subject to the relevant terms, provide asset management services to the CCAM Group, and as such, the Management therefore estimated an increase in revenue from the provision of asset management services to the CCAM Group; and (iii) when determining the growth rate applied to the Proposed Annual Caps for Category III Transactions for the year ending 31 December 2023 and for the year ending 31 December 2024, the Management has considered the growth rate and factors as set out under (i) and (ii) above as well as the fact that the demand for the asset management services provided by the Group are beyond the Group’s control and may significantly increase due to the asset management services for new investment funds of the CCAM Group. Under such circumstances, the Group may record substantial increase in the revenue from Category III Transactions. To ensure the Group can capture the unexpected increase in revenue from Category III Transactions in a timely manner, such factors were also considered when we assessed the Proposed Annual Caps for Category III Transactions.

Further to the above, in terms of the fee to be charged by the Group for the provision of the Category III Transactions, we have reviewed the historical rates charged by the Group to the CCAM Group against the rates used in calculating the Proposed Annual Caps under Category III Transactions and noted that they are broadly similar.

– 38 –

LETTER FROM RED SUN CAPITAL

Having considered that, (i) the Group is expected to continue the provision of asset management services under Category III Transactions to the CCAM Group from time to time; (ii) our work performed and analysis as set out above, including the size of the unlisted investments of the CCAM Group; (iii) the Category III Transactions are part of the Group’s principal businesses which would broaden the income base of the Group; (iv) the Category III Transactions shall be carried out in accordance with the pricing policies under the 2021 Master Agreement on normal commercial terms; (v) the demand for Category III Transactions by the CCAM Group are beyond the Group’s control and given the relatively large asset size of the CCAM Group, the asset management services to be provided by the Group may increase significantly; (vi) the Proposed Annual Caps for the years ending 31 December 2022, 2023 and 2024, if approved, would facilitate the Category III Transactions to be conducted in an effective and efficient manner without the need for the Company to seek Shareholders’ approval on a transaction-by-transaction basis; and (vii) the Group has the right but not the obligation to provide the relevant services to the CCAM Group, we are of the view that the Proposed Annual Caps for Category III Transactions are fair and reasonable.

RECOMMENDATION

Having taken into account the above principal factors and reasons, we are of the view that (i) the entering into of the 2021 Master Agreement is in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole; and (ii) the terms of the 2021 Master Agreement, including the Proposed Annual Caps, are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the 2021 Master Agreement and the transactions contemplated thereunder, including the Proposed Annual Caps.

Yours faithfully, For and on behalf of Red Sun Capital Limited Lewis Lai Managing Director

Mr. Lewis Lai is a licensed person registered with the SFC and a responsible officer of Red Sun Capital Limited to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and has around 15 years of experience in the corporate finance industry.

– 39 –

GENERAL INFORMATION

APPENDIX

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 executives 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 of 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 executives 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 of 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:

			Approximate
			percentage of
Name	Capacity	Number of Shares	shareholding
Cinda Securities(1)	Beneficial owner	403,960,200(2)	63.00%
CCAM	Interest through a	403,960,200(2)	63.00%
	controlled corporation

Notes:

Ms. Zhu Ruimin, the chairman of the Board and an executive Director, is a director of Cinda Securities, and Mr. Zhang Yi, the CEO and an executive Director, also holds management position in Cinda Securities.
These shares were held by Cinda Securities, a subsidiary of CCAM. By virtue of the provisions of the SFO, CCAM was deemed to be interested in all the shares in which Cinda Securities was interested.

– 40 –

GENERAL INFORMATION

APPENDIX

4. INTEREST OF DIRECTORS IN COMPETING BUSINESS

As at the Latest Practicable Date, the Directors were 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 2020 (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 as 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 2020, the date to which the latest published audited consolidated financial statements of the Group were made up.

8. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration or claim of material importance and, so far as the Directors were aware, no litigation or claims of material importance are pending or threatened by or against any member of the Group.

– 41 –

GENERAL INFORMATION

APPENDIX

9. EXPERT AND CONSENT

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

Name

Qualification

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

Red Sun 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.

As at the Latest Practicable Date, Red Sun 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, Red Sun Capital has no direct or indirect interests in any assets which have been since 31 December 2020 (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, disposed of by or leased to any member of the Group.

10. 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 Chartered Governance Institute and The Chartered Governance Institute in the United Kingdom.
(c) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Secretaries Limited at Level 54, 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.

– 42 –

GENERAL INFORMATION

APPENDIX

11. DOCUMENTS ON DISPLAY

Copies of the following documents are available for inspection (i) on the website of the Stock Exchange (www.hkexnews.hk) and (ii) on the website of the Company (www.cinda.com.hk) from the date of this circular up to and including the date of the SGM:

(a) the 2021 Master Agreement;
(b) the letter from the Board, the text of which is set out on pages 1 to 14 of this circular;
(c) the letter from the Independent Board Committee, the text of which is set out on page 15 of this circular;
(d) the letter from Red Sun Capital, the text of which is set out on pages 16 to 39 of this circular; and
(e) the letter of consent from Red Sun Capital referred to in the paragraph headed “Expert and Consent” in this Appendix.

– 43 –

NOTICE OF SGM

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==> picture [297 x 35] intentionally omitted <==

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

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 17 December 2021 at 11:00 a.m. for the purpose of considering and, if thought fit, with or without amendment, passing the following resolution:

ORDINARY RESOLUTION

“ THAT:

(i) the master agreement dated 2 November 2021 (a copy of which is tabled at the SGM marked “A” and initialled by the chairman of the meeting for identification purpose) entered into between the Company and China Cinda Asset Management Co., Ltd. (“ CCAM ”) in relation to the provision of certain financial services by the Group to CCAM, its subsidiaries, and/or its associates (the “ 2021 Master Agreement ”), and the transactions contemplated thereunder be and are hereby approved, ratified and confirmed;
(ii) the Proposed Annual Caps for Category I Transactions, Category II Transactions and Category III Transactions (as defined in the circular of the Company dated 1 December 2021) as contemplated under the 2021 Master Agreement be and are hereby approved, ratified and confirmed; and
(iii) the execution of the 2021 Master 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 he may in his absolute discretion consider necessary or desirable for the purpose of or in connection with the implementation of the 2021 Master Agreement and the transactions contemplated thereunder.”

By order of the Board

Cinda International Holdings Limited

Lau Mun Chung

Executive Director

Hong Kong, 1 December 2021

– SGM-1 –

NOTICE OF SGM

Notes:

A form of proxy for use at the SGM is enclosed herewith.
In order to qualify for attending the SGM, all transfer documents, accompanied by the relevant share certificates, must be lodged with the Hong Kong branch share registrar of the Company, Tricor Secretaries Limited, whose share registration public offices are located at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on 13 December 2021.
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 54, 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 (i.e. by 15 December 2021, at 11:00 a.m.) or any adjournment thereof.
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 adjournment thereof (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoked.

PRECAUTIONARY MEASURES FOR SGM

The health of the Shareholders, staff and stakeholders of the Company is of paramount importance. To prevent and control the spread of the ongoing novel coronavirus (“ COVID-19 ”) pandemic, the Company will implement the following at the SGM as part of the control measures to safeguard the health and safety of the attending Shareholders, staff and stakeholders of the Company:

(a) compulsory body temperature checks will be conducted for every attending Shareholder, proxy or other attendee at the entrance of the meeting venue. Any person who has a body temperature of over 37.5 degree Celsius or is subject to the mandatory quarantine order imposed by the Hong Kong Government will be denied entry into or be required to leave the meeting venue, and the Company will request such persons to stay in an isolated place for completing the voting procedures;
(b) each attendee must wear a surgical face mask throughout the SGM and inside the meeting venue;
(c) the Company will maintain a safe distance between seats;
(d) no refreshments and beverages will be served;

– SGM-2 –

NOTICE OF SGM

(e) no distribution of coupons for subsequent consumption; and
(f) attendees will be accommodated in separate partitioned rooms or areas of not more than 20 persons (or such number as may be allowed under the Prevention and Control of Disease (Prohibition or Group Gathering) Regulation (Chapter 599G of the Laws of Hong Kong)) each.

In addition, the Company would like to remind all attending Shareholders that physical attendance in person at the SGM is not necessary for the purpose of exercising voting rights. The Company strongly encourages the Shareholders to consider appointing the chairman of the SGM as their proxy to vote as instructed by the Shareholders on the relevant resolution at the SGM, instead of attending the SGM in person.

In the event of any regulation imposed by the Hong Kong Government due to COVID-19 requiring the change of the date or place of the meeting, the Company will publish an announcement on the websites of both the Company (www.cinda.com.hk) and the HKEXnews (www.hkexnews.hk) to notify the Shareholders that the SGM has been adjourned (however, a failure to publish such a notice shall not affect the adjournment of such meeting). The Company will publish a further announcement on its corporate website (www.cinda.com.hk) and the HKEXnews’ website (www.hkexnews.hk) to notify the Shareholders of the date, time and location of the adjourned SGM.

– SGM-3 –

AI assistant

Concord New Energy Group Ltd. — Proxy Solicitation & Information Statement 2021

35804_rns_2021-11-30_2dbbdf04-135a-4324-b598-9716c27f13f2.pdf

CONTINUING CONNECTED TRANSACTIONS

AND

NOTICE OF SPECIAL GENERAL MEETING

CONTENT

DEFINITIONS

CONTINUING CONNECTED TRANSACTIONS

AND

NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

LETTER FROM THE BOARD

THE 2021 MASTER AGREEMENT

Payment terms

Services

Settlement terms

Conditions Precedent to the 2021 Master Agreement

LETTER FROM THE BOARD

The Proposed Annual Caps

For Category I Transactions

LETTER FROM THE BOARD

For Category II Transactions

For Category III Transactions

LETTER FROM THE BOARD

Pricing Policies

Category I Transactions

LETTER FROM THE BOARD

Category II Transactions

Category III Transactions

Internal Control Measures

Historical Transactions Amount and Annual Caps under the 2018 Master Agreement

REASONS FOR AND BENEFITS OF ENTERING INTO THE 2021 MASTER AGREEMENT

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LISTING RULES IMPLICATIONS

GENERAL

RECOMMENDATIONS

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ADDITIONAL INFORMATION

CONTINUING CONNECTED TRANSACTIONS

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

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THE INDEPENDENT BOARD COMMITTEE

OUR INDEPENDENCE

BASIS AND ASSUMPTION OF OUR OPINION

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PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Information on the Group and the CCAM Group

(a) The Group

Financial performance for the year ended 31 December 2019 and 31 December 2020

(b) The CCAM Group

2. Background of and reasons for entering into the 2021 Master Agreement

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3. The 2021 Master Agreement

(a) Principal terms of the 2021 Master Agreement

Payment terms

(b) Pricing policies

Category I Transactions

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Category II Transactions

Category III Transactions

(c) Internal control measures

(d) Our analysis on the internal control measures

4. The Proposed Annual Caps

(a) Historical transaction amounts and annual caps under the 2018 Master Agreement

(b) Basis of the Proposed Annual Caps

For Category I Transactions

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For Category II Transactions

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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. LITIGATION

Concord New Energy Group Ltd. Proxy Solicitation & Information Statement 2021