DFZQ — M&A Activity 2021

Jun 21, 2021

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this announcement, 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 announcement.

(A joint stock company incorporated in the People’s Republic of China with limited liability under the Chinese corporate name “ 東方證券股份有限公司 ” and carrying on business in Hong Kong as “ 東方證券 ” (in Chinese) and “DFZQ” (in English))

(Stock Code: 03958)

PROPOSED ABSORPTION OF AND MERGER WITH ORIENT SECURITIES INVESTMENT BANKING CO., LTD., A WHOLLY-OWNED SUBSIDIARY

The board of directors (the “ Board ”) of 東方證券股份有限公司 (the “ Company ”) held the fourth meeting of the fifth session of the Board on June 21, 2021, and considered and approved the Resolution on the Company’s Absorption of and Merger with Orient Securities Investment Banking Co., Ltd., a wholly-owned subsidiary. In order to further integrate resources, improve efficiency and effectively enhance the capabilities of business development and comprehensive customer services, the Company proposed to absorb and merge with Orient Securities Investment Banking Co., Ltd. (“ Orient Investment Banking ”), a wholly-owned subsidiary of the Company engaged in investment banking business (the “ Absorption and Merger ”).

The Absorption and Merger does not constitute a notifiable transaction or connected transaction under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. According to the relevant requirements of the Company Law of the People’s Republic of China, the Articles of Association and the relevant laws and regulations, the Absorption and Merger is still subject to the approval of the shareholders’ general meeting of the Company and the relevant regulatory authorities. Details are as follows.

The Board has agreed to convene the first extraordinary general meeting in 2021 (the “ EGM ”) to consider the above resolution.

I. BASIC INFORMATION OF THE PARTIES TO THE ABSORPTION AND MERGER

1. Merging party: DFZQ

Company name Orient Securities Company Limited Unified social credit code 913100001322947763

Type of company Joint stock company with limited liability (listed sino-foreign joint venture)

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Registered capital RMB6,993,655,803 Legal representative Jin Wenzhong Date of establishment December 10, 1997 Term of business Long-term operation Domicile Orient Securities Building, No. 119 South Zhongshan Road, Huangpu District, Shanghai Business scope Securities brokerage; margin financing and securities lending; securities investment advisory; financial advisory related to securities trading and securities investing activities; proprietary trading of securities; proxy sale of securities investment funds; intermediary introduction business for futures companies; proxy sale of financial products; securities underwriting (only including government bonds such as treasury bonds, local municipal bonds, financial bonds of policy banks, financing products governed by National Association of Financial Market Institutional Investors (including but not limited to debt financing instruments of non-financial institutions)); stock options market-making business and custodian business for securities investment funds. For items subject to approval pursuant to laws, its operations could only be commenced upon approval by relevant authorities

2. Merged party: Orient Investment Banking

(i) Basic information

Company name Orient Securities Investment Banking Co., Ltd. Unified social credit code 913100007178330852 Type of company Limited liability company (solely invested by a corporation that is invested or controlled by a non-natural person) Registered capital RMB800,000,000 Legal representative Ma Ji Date of establishment June 4, 2012

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Term of business June 3, 2022 operation Domicile 24/F, No. 318 South Zhongshan Road, Huangpu District, Shanghai

Business scope Underwriting and sponsoring of securities (excluding government bonds such as treasury bonds, local municipal bonds, financial bonds of policy banks, financing products governed by National Association of Financial Market Institutional Investors (including but not limited to debt financing instruments of non-financial institutions)); other business approved by the China Securities Regulatory Commission. For items subject to approval pursuant to laws, its operations could only be commenced upon approval by relevant authorities

(ii) Financial position

Deloitte Touche Tohmatsu Certified Public Accountants audited the financial statements of Orient Investment Banking as of December 31, 2020 and issued an unqualified audit report (De Shi Bao (Shen) Zi (21) No. P01978). As of December 31, 2020, Orient Investment Banking had audited total assets of RMB2,599,190,800, total liabilities of RMB1,048,107,500 and total owner’s equity of RMB1,551,083,200, and achieved operation revenue of RMB1,036 million and net profit of RMB79 million in 2020.

II. METHOD, SCOPE AND RELATED ARRANGEMENTS OF THE ABSORPTION AND MERGER

1. The Company proposes to merge all assets, liabilities, business and employees of Orient Investment Banking by way of absorption and merger. Upon completion of the Absorption and Merger, all assets of Orient Investment Banking, including but not limited to fixed assets, current assets, customer agreements, will be merged into the Company, all creditors’ rights and liabilities of Orient Investment Banking will be assumed by the Company, all employees of Orient Investment Banking will be accepted and managed by the Company, the status of independent legal person of Orient Investment Banking will be cancelled, and former branches of Orient Investment Banking will become branches of the Company after approval by or filing with relevant regulatory authorities.

2. The Absorption and Merger does not involve any change in the registered capital or shareholders of the Company.

3. The record date of the Absorption and Merger is December 31, 2020, and the Absorption and Merger shall be conducted based on the audited financial data of the Company and Orient Investment Banking on the record date.

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1. The gains and losses incurred during the period from the record date to the completion date of the Absorption and Merger shall be enjoyed and borne by the Company.

2. Both parties to the Absorption and Merger shall prepare balance sheets and property lists, conduct corresponding audits and appraisals (if required), and fulfill the procedures of notifying creditors and publishing announcements in newspapers.

3. Both parties to the Absorption and Merger shall jointly go through the procedures for the approval of the securities regulatory authorities, the approval of the state-owned assets administrations and the filing and appraisal (if required) in relation to the Absorption and Merger.

4. All assets of Orient Investment Banking will be delivered to the Company, and both parties to the Absorption and Merger will jointly go through the procedures of asset transfer and registration of change of ownership of relevant assets.

5. Once the Absorption and Merger is approved by the Board and the shareholders’ general meeting of the Company, both parties to the Absorption and Merger will sign the Absorption and Merger Agreement and proceed with the deregistration procedures of Orient Investment Banking and other relevant matters as soon as possible after obtaining the approval of the state-owned assets administrations (if required) and securities regulatory authorities.

III. IMPACT OF THE ABSORPTION AND MERGER ON THE COMPANY

1. Upon completion of the Absorption and Merger, the problem of splitting of investment banking business licenses of the Company will be solved, which is conducive to fully utilizing the advantages of comprehensive licenses, improving the efficiency of business development, and thus enhancing the Company’s comprehensive financial services.

2. Upon completion of the Absorption and Merger, it can effectively solve the impact and constraints of liquidity risk and other indicators on carrying out investment banking business when Orient Investment Banking operates as a subsidiary.

3. Upon completion of the Absorption and Merger, the Company’s investment banking business will operate as a department as a whole, and the management and decision-making efficiency will be effectively enhanced, which is conducive to facilitating the overall development of the Company’s investment banking business.

4. As Orient Investment Banking is a wholly-owned subsidiary of the Company, the Absorption and Merger will not have a material impact on the current profit or loss in the Company’s consolidated statements and will not have a significant impact on the assets and liabilities within the scope of the Company’s consolidated statements.

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IV. AUTHORIZATION FOR MATTERS RELATED TO THE ABSORPTION AND MERGER

The Board of the Company proposed to the EGM to consider and approve the matters related to the Absorption and Merger of Orient Investment Banking, a wholly-owned subsidiary of the Company (including the method, scope and related arrangements), and authorize the management of the Company to handle all matters related to the Absorption and Merger, including but not limited to the audit, appraisal (if necessary), approval or filing, signing of the Absorption and Merger Agreement, transfer of assets and change of ownership and business registration in relation to the Absorption and Merger.

The above Absorption and Merger is subject to consideration and approval at the EGM of the Company and the approval of relevant regulatory authorities. A circular containing, among other things, details of the above resolution, together with the notice of the EGM, will be despatched to the shareholders in due course.

By order of the Board of Directors JIN Wenzhong Chairman

Shanghai, the PRC June 21, 2021

As at the date of this announcement, the Board of Directors comprises Mr. SONG Xuefeng and Mr. JIN Wenzhong as executive Directors; Mr. YU Xuechun, Mr. LIU Wei, Mr. ZHOU Donghui, Mr. CHENG Feng, Mr. REN Zhixiang and Ms. ZHU Jing as non-executive Directors; and Mr. XU Zhiming, Mr. JIN Qinglu, Mr. WU Hong, Mr. FENG Xingdong and Mr. LUO Xinyu as independent non-executive Directors.

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