Dufu Liquor Group Limited — Proxy Solicitation & Information Statement 2014

Sep 12, 2014

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all of your shares in China Environmental Energy Investment Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee, or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

China Environmental Energy Investment Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 986)

PROPOSED SHARE CONSOLIDATION; PROPOSED CHANGE IN BOARD LOT SIZE; RE-ELECTION OF DIRECTOR

AND

NOTICE OF SPECIAL GENERAL MEETING

Capitalised terms used in this cover page shall have the same meaning as those defined in this circular.

A notice convening the SGM to be held at 10:00 a.m. on Tuesday, 30 September 2014 at Falcon Room I, Gloucester Luk Kwok Hong Kong, 72 Gloucester Road, Wanchai, Hong Kong is set out on pages 18 to 19 of this circular. A form of proxy for use at the SGM is enclosed with this circular. Such form of proxy is also published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.986.com.hk).

Whether or not you intend to attend and vote at the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Hong Kong branch share registrar and transfer office of the Company, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting should you so wish, and in such event, the form of proxy shall be deemed to be revoked.

15 September 2014

• For identification purposes only

CONTENT

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix I – Details of the Retiring Director Proposed
to be Re-elected at the SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18

– i –

DEFINITIONS

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

“Board”

the board of Directors

• “Business Day(s)”

a day (other than a Saturday, Sunday or public holiday) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours

• “CCASS”

• Central Clearing and Settlement System established and operated by HKSCC

• “Change in Board Lot Size”

the proposed change in board lot size of the Shares for trading on the Stock Exchange from 4,000 Shares to 2,000 Consolidated Shares

• “Company”

• China Environmental Energy Investment Limited（中國 環保能源投資有限公司* ）, a company incorporated in Bermuda and whose Shares are listed on the main board of the Stock Exchange

• “Consolidated Share(s)”

• ordinary share(s) of par value of HK$0.01 each in the share capital of Company after the Share Consolidation having become effective

• “Director(s)”

• the director(s) of the Company

• “Existing Share Certificates”

the existing share certificates for the Shares

• “Group”

the Company and its subsidiaries

• “HKSCC”

the Hong Kong Securities Clearing Company Limited

• “Hong Kong”

the Hong Kong Special Administrative Region of the People’s Republic of China

• “Latest Practicable Date”

11 September 2014, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information in this circular

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DEFINITIONS

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange, as amended from time to time “New Share Certificates” new share certificates to be issued following the Share Consolidation for the Consolidated Shares “SGM” the special general meeting of the Company to be held and convened for the purpose of considering and, if thought fit, approving, among other things, the Share Consolidation and the proposed re-election of Director “Share Consolidation” the proposed consolidation of every twenty (20) issued and unissued Shares of par value of HK$0.0005 each in the existing share capital of the Company into one (1) Consolidated Share of par value of HK$0.01 each

“Shareholder(s)” the holder(s) of the Shares or the Consolidated Shares as the context may require “Share(s)” ordinary shares of par value of HK$0.0005 each in the existing share capital of the Company and shall include the Consolidated Share(s) upon the Share Consolidation becoming effective as the context may require “Stock Exchange” The Stock Exchange of Hong Kong Limited “HK$” Hong Kong dollars, the lawful currency of Hong Kong

Hong Kong dollars, the lawful currency of Hong Kong

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EXPECTED TIMETABLE

Set out below is the expected timetable in relation to the Share Consolidation and the Change in Board Lot Size:

2014

Latest time for lodging forms of transfer of Shares to qualify for attending and voting at the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Friday, 26 September Latest time for lodging the proxy form for the SGM . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Sunday, 28 September Book closure period (both days inclusive) . . . . . . . . . . . . . . . . . . . . . . . . Monday, 29 September to Tuesday, 30 September Date and time of the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Tuesday, 30 September Publication of the announcement of results of the SGM . . . . . . . . . . . . . . . Tuesday, 30 September

The following events are conditional on the fulfilment of the conditions for the implementation of the Share Consolidation as set out in the section headed “Conditions of the Share Consolidation” in this circular.

Effective date for the Share Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 3 October First day of free exchange of Existing Share Certificates for New Share Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 3 October Dealings in Consolidated Shares commence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 3 October Original counter for trading in Shares in board lots of 4,000 Shares (in the form of Existing Share Certificates) temporarily closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 3 October

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EXPECTED TIMETABLE

2014 Temporary counter for trading in Consolidated Shares in board lots of 200 Consolidated Shares (in the form of Existing Share Certificates) opens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 3 October Original counter for trading in Consolidated Shares in new board lots of 2,000 Consolidated Shares (in the form of New Share Certificates) re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 17 October Parallel trading in Consolidated Shares (in the form of New Share Certificates and Existing Share Certificates) commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 17 October Designated broker starts to stand in the market to provide matching services for odd lots of Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 17 October Temporary counter for trading in Consolidated Shares in board lots of 200 Consolidated Shares (in the form of Existing Share Certificates) closes . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 6 November Parallel trading in Consolidated Shares (in the form of New Share Certificates and Existing Share Certificates) ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 6 November Designated broker ceases to stand in the market to provide matching services for odd lots of Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 6 November Last day for free exchange of Existing Share Certificates for New Share Certificates . . . . . . . . . . . . . . . Monday, 10 November

All times and dates in this circular refer to Hong Kong local times and dates. Dates or deadlines specified in the expected timetable above are indicative only and may be extended or varied by the Company. Any changes to the expected timetable will be published or notified to the Shareholders as and when appropriate.

– 4 –

LETTER FROM THE BOARD

China Environmental Energy Investment Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 986)

Executive Directors: Ms. Chen Tong (Chairman and Chief Executive Officer) Ms. Chan Ching Ho, Kitty Mr. Xiang Liang Ms. Li Lin

Non-Executive Directors: Ms. Yao Zhengwei Mr. Wang Zhenghua

Independent non-executive Directors: Mr. Tse Kwong Chan Ms. Zhou Jue Ms. Zhang Ruisi

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Head Office and principal place of business: Room 2211, 22/F Lippo Centre, Tower Two 89 Queensway Hong Kong

15 September 2014

To the Shareholders

Dear Sir or Madam,

PROPOSED SHARE CONSOLIDATION; PROPOSED CHANGE IN BOARD LOT SIZE; RE-ELECTION OF DIRECTOR AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the announcement of the Company dated 20 August 2014 in relation to, among other things, the Share Consolidation and the Change in Board Lot Size. The Company proposed, among other things, to implement the followings:–

• (a) the Share Consolidation by consolidating every twenty (20) issued and unissued Shares of par value of HK$0.0005 each in the existing share capital of the Company into one (1) Consolidated Share of par value of HK$0.01 each; and

• For identification purposes only

– 5 –

LETTER FROM THE BOARD

• (b) the Change in Board Lot Size of the Shares for trading on the Stock Exchange from 4,000 Shares to 2,000 Consolidated Shares.

The purpose of this circular is to provide you among other things, details of (i) the Share Consolidation and the Change in Board Lot Size; (ii) the re-election of Director; and (iii) a notice convening the SGM.

PROPOSED SHARE CONSOLIDATION

The Company proposes to implement the Share Consolidation by consolidating every twenty (20) issued and unissued Shares of par value of HK$0.0005 each in the existing share capital of the Company into one (1) Consolidated Share of par value of HK$0.01 each.

Effects of the Share Consolidation

As at the Latest Practicable Date, the authorised share capital of the Company is HK$1,000,000,000 divided into 2,000,000,000,000 Shares of par value of HK$0.0005 each, of which 4,819,048,900 Shares had been allotted and issued as fully paid or credited as fully paid. Assuming no further Shares will be issued or repurchased from the Latest Practicable Date to the effective date of the Share Consolidation, upon the Share Consolidation having become effective, the authorised share capital of the Company will be HK$1,000,000,000 divided into 100,000,000,000 Consolidated Shares of par value of HK$0.01 each, of which 240,952,445 Consolidated Shares will be in issue. Upon the Share Consolidation becoming effective, the Consolidated Shares will rank pari passu in all respects with each other and the Share Consolidation will not be expected to result in any change in the relevant rights of the Shareholders.

Conditions of the Share Consolidation

The Share Consolidation is conditional upon

• (a) the passing by the Shareholders of an ordinary resolution to approve the Share Consolidation at the SGM; and

• (b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Consolidated Shares upon the Share Consolidation becoming effective.

The Share Consolidation will become effective after the conditions of the Share Consolidation above are fulfilled.

– 6 –

LETTER FROM THE BOARD

Dealings of the Consolidated Shares

The Consolidated Shares will be identical in all respects and rank pari passu in all respects with each other as to all future dividends and distributions which are declared, made or paid. Subject to the granting of the listing of, and permission to deal in, the Consolidated Shares on Stock Exchange, the Consolidated Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Consolidated Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

No part of the equity or debt securities of the Company is listed or dealt in on any other stock exchanges other than the Stock Exchange and no such listing permission to deal in is being or is currently proposed to be sought from any other stock exchange.

Other than the expenses to be incurred in relation to the Share Consolidation of approximately HK$350,000, the implementation thereof will not alter the underlying assets, business operations, management or financial position of the Company or the interests or rights of the Shareholders, save for any fractional Consolidated Shares to which Shareholders may be entitled. The Directors are of the view that the Share Consolidation will not have any material adverse effect on the financial position of the Group.

Listing Application

An application will be made to the Stock Exchange for the listing of, and permission to deal in, the Consolidated Shares to be in issue upon the Share Consolidation becoming effective.

PROPOSED CHANGE IN BOARD LOT SIZE

The existing Shares of par value of HK$0.0005 each in the share capital of the Company are trading in board lot size of 4,000 Shares. The Company proposed to change the board lot size of the Consolidated Shares for trading on the Stock Exchange to 2,000 Consolidated Shares upon the Share Consolidation becoming effective. Based on the closing price of the Shares of HK$0.101 as at the Latest Practicable Date and the existing board lot size of 4,000 Shares, the prevailing board lot value is HK$404. Based on the aforesaid closing price and assuming the Share Consolidation and Change in Board Lot Size have become effective, the new board lot value would be HK$4,040. The Change in Board Lot Size will not affect any rights of the Shareholders.

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LETTER FROM THE BOARD

OTHER ARRANGEMENTS

Exchange of Share Certificates

Subject to the Share Consolidation becoming effective, which is expected to be on Friday, 3 October 2014, Shareholders may, during a period between Friday, 3 October 2014 and Monday, 10 November 2014, submit the Existing Share Certificates, which are pink in color, to the registrar, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, to exchange, at the expense of the Company, for the New Share Certificates, which will be orange in color. It is expected that the New Share Certificates will be available for collection within 10 business days from the date of submission for the exchange. Thereafter, the Existing Share Certificates will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may be from time to time be specified by the Stock Exchange) for each New Share Certificate to be issued or each Existing Share Certificate cancelled, whichever the number of certificates issued or cancelled is higher.

The Existing Share Certificates will only be valid for delivery, trading and settlement purposes for the period up to 4:00 p.m. on Thursday, 6 November 2014 and thereafter will not be accepted for delivery, trading and settlement purposes. Nevertheless, the Existing Share Certificates will continue to be good evidence of legal title and may be exchanged for the New Share Certificates at any time but will not be accepted for trading, settlement and registration upon completion of the Share Consolidation.

Arrangement on odd lot trading

In order to facilitate the trading of odd lots (if any) of the Consolidated Shares arising from the Share Consolidation and the Change in Board Lot Size, the Company will appoint Partners Capital Securities Limited to provide matching services for sale and purchase of odd lots of Consolidated Shares at the relevant market price per Consolidated Share for Shareholders, on a best effort basis, during the period from 9:00 a.m. on Friday, 17 October 2014 to 4:00 p.m. on Thursday, 6 November 2014 (both days inclusive). Shareholders who wish to acquire odd lots of the Consolidated Shares to make up a full board lot, or to dispose of their holding of odd lots of the Consolidated Shares may contact Mr. Cyrus Wong of Partners Capital Securities Limited at B01, 10/F World Wide House 19 Des Voeux Road Central, Hong Kong (telephone number: (852) 21575462) during office hours in the aforesaid period. Shareholders should note that matching of the sale and purchase of odd lots of Consolidated Shares is not guaranteed. Any Shareholder who is in doubt about the odd lot trading arrangement is recommended to consult his/her/its own professional advisers. Shareholders may refer to the section headed “EXPECTED TIMETABLE” on pages 3 to 4 of this circular for the period during which the Company will provide matching service for the sale and purchase of the odd lots of the Consolidated Shares.

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LETTER FROM THE BOARD

Fractional Consolidated Shares

Fractional Consolidated Shares (if any) arising from the Share Consolidation will not be issued to the Shareholders otherwise entitled thereto but will be aggregated and sold if possible, for the benefit of the Company.

REASONS FOR THE SHARE CONSOLIDATION AND THE CHANGE IN BOARD LOT SIZE

As at the Latest Practicable Date, the trading price of each Share is HK$0.101 and the value of each board lot of 4,000 Shares is HK$404 only. The Share Consolidation will increase the par value and decrease the total number of Shares currently in issue. The Share Consolidation is expected to bring about a corresponding upward adjustment to the trading price of the Shares on the Stock Exchange and therefore reduce the overall transaction costs, and bring the new board lot value greater than HK$2,000 in accordance with the guideline of the Stock Exchange.

Based on the closing market price of the Shares of HK$0.101 as at the Latest Practicable Date and the Change in Board Lot Size and assuming the Share Consolidation have become effective, the board lot value will be HK$8,080 calculating on the existing board lot size of 4,000 Shares and HK$4,040 calculating on the new board lot size of 2,000 Consolidated Shares. Accordingly, the Board is of the view that the Change in Board Lot Size will result in the Consolidated Share being traded in a more reasonable value through bringing down the per board lot value so as to encourage trading liquidity of the Shares.

Accordingly, the Board is of the view that the Share Consolidation and the Change in Board Lot Size are in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

CAPITAL REORGANIZATIONS DURING THE PAST TWO YEARS

The Company conducted the following capital reorganizations during the past two years, as summarized below:–

				The	reasons disclosed in
Event	Date of circular	Effective Date	Expense incurred	respective circular
Share consolidation of every	15 August 2012	10 September 2012	Approximately	(i)	Bring about a correspondence
fifty (50) shares into one (1)			HK$300,000		increase in the trading price of the
consolidated share					Company’ share;
				(ii)	Avoid the market price of the
					Company’s share approaching
					the extremity of HK$0.01 and
					continually comply with the Rule
					13.64 of the Listing Rules; and
				(iii)	Give the Company greater
					flexibility in pricing the future
					issue of the Company’s shares.
Share subdivision of every	2 July 2013	18 July 2013	Approximately	(i)	Bring the per board lot trading
one (1) share into four (4)			HK$150,000		price down to a reasonable and
subdivided shares					affordable level to small investors;
					and
				(ii)	Reduce the nominal value and
					trading price of each Share and
					increase the total number of
					Shares in issue.
Share subdivision of every	16 January 2014	5 February 2014	Approximately	(i)	Bring the per board lot trading
one (1) share into five (5)			HK$200,000		price down to a reasonable and
subdivided shares					affordable level to small investors;
					and
				(ii)	Reduce the nominal value and
					trading price of each Share and
					increase the total number of
					Shares in issue.

For more information, please refer to the respective circular.

– 10 –

LETTER FROM THE BOARD

ADJUSTMENT TO CONVERTIBLE BONDS

As at the Latest Practicable Date, there were outstanding convertible bonds in the principal amount of HK$1,800,000 and convertible into 2,343,750 new Shares at the exercise price of HK$0.768 per conversion share of the Company. Upon the Share Consolidation becoming effective, the conversion price and/or the number of Consolidated Shares falling to be issued upon exercise of the conversion rights attaching to the outstanding convertible bonds will be adjusted and certified in accordance with the instrument creating the outstanding convertible bonds. Further announcement(s) will be made by the Company of such adjustments as and when appropriate.

Save for the aforesaid convertible bonds, the Company held no outstanding options, warrants or convertible instruments which are convertible or exchangeable into any Shares as at the Latest Practicable Date.

BUSINESS UPDATES OF THE GROUP

Principal activities of the Group

The Group is principally engaged in waste paper, scrap metal and consumable wastes recycling.

According to the annual report of the Company for the financial year ended 31 March 2014 published on 28 July 2014 (the “ 2014 Annual Report ”), the revenue of the recycling business decreased from HK$99,655,000 in 2013 to HK$59,808,000 in 2014, representing a decrease of approximately 39.98%. The said decrease in revenue was mainly attributable to: (i) excess production in the paper manufacturing industry; (ii) doldrums of paper manufacturing business due to the slowdown of the People’s Republic of China (“ PRC ”) national macro economic; and (iii) international protectionism, for example, countervailing and anti-dumping, against the development of recycling paper business in the PRC.

The gross profit of the recycling business increased from HK$1,181,000 in 2013 to HK$5,404,000 in 2014, representing a significant increase of approximately 458%. The said increase was mainly attributable to the written down of inventories amounted to HK$5,937,000 in the previous year and the increase in sale price of the recycling paper.

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LETTER FROM THE BOARD

Acquisition of Pure Power Holdings Limited and Starfame Investment Limited

On 20 January 2014, the Company entered into the sale and purchase agreement with Fortune Glow Limited pursuant to which the Company has conditionally agreed to acquire for and Fortune Glow Limited has conditionally agreed to dispose of the sales shares, representing 10% equity interest in Pure Power Holdings Limited which principally engaged in the exploration and exploitation of natural resources in the United States of America, for the consideration of HK$125,000,000 which was settled as to HK$123,200,000 by way of delivery of the promissory notes and as to HK$1,800,000 by way of delivery of the convertible bonds. The acquisition was completed on 29 April 2014. As advised by the management of Pure Power Holdings Limited, they are currently requesting for extension of the application for permits of drill and planned to have more drillings in February 2015.

On 12 May 2014, the Company and Main Global Group Limited entered into the agreement pursuant to which Main Global Group Limited conditionally agreed to sell and the Company conditionally agreed to acquire the sale shares, representing 9.9% equity interest in Starfame Investments Limited which is principally engaged in wholesale and distribution products encompassing various aspect of production and livelihood, for a consideration of HK$30,000,000 which was settled by way of the issue of the Promissory Note. The acquisition was completed on 20 May 2014.

Further update on the above two investments will be disclosure in the interim report of the Group for the six months ended 30 September 2014.

Possible investment in Onedear Group

Reference is made to the announcement of the Company dated 15 August 2014 concerning, among others, the memorandum of understanding in respect of a possible investment (the “ MOU Announcement ”). As disclosed in the MOU Announcement, the Company has entered into the non-legal binding memorandum of understanding (the “ MOU ”) with Mr. Zhu Rui, (the “ Vendor ”) an independent third party, pursuant to which the Company is intended to acquire and the Vendor is intended to dispose certain equity stake (the “ Possible Investment ”) in the capital of Master Resourses Holdings Limited (the “ Target Company ”). For further details, please refer to the MOU Announcement.

As at the Latest Practicable Date, the Company is still under negotiation with the Vendor on the terms of the Possible Investment and the due diligence on the Target Company is in progress. However, the concrete terms of the Possible Investment are yet to be finalized and confirmed.

Further announcement in respect of the Possible Investment will be made by the Company as and when appropriate in accordance with the Listing Rules.

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LETTER FROM THE BOARD

Litigation for the promissory notes in principal amount of HK$5 million

The Company announced that a writ of summons (the “ Writ ”) was issued in the Court of First Instance of the High Court of Hong Kong by First Federal Capital Limited (“ FDCL ”) against the Company and it was served on the Company by FDCL’s legal adviser on 8 July 2013. In the statement of claim under the Writ, FDCL claims as the holder in due course or, alternatively, the holder for value of a promissory note with principal amount of HK$5,000,000 issued by the Company (the “ Promissory Note ”) and claims for the principal amount of HK$5,000,000 under the Promissory Note, together with interest and costs.

The Promissory Note was issued by the Company to All Prosper Group Limited (the “ Note Holder ”) and have been overdue for repayment and remained outstanding. The Company has been in negotiation with the Note Holder for extension of the maturity date for the Promissory Note but as there has been dispute between the Note Holder with FDCL on the ownership of the Promissory Note, the negotiation for extension is pending. FDCL has through its legal adviser requested the Company to register a transfer of the Promissory Note from the Note Holder to FDCL but has not delivered all necessary documents as requested by the Company and as required under the terms and conditions of the Promissory Note. The Company considered that the registration of the transfer of the Promissory Note shall only be made upon strict compliance with the terms and conditions of the Promissory Note for the interest of the Company. The Company has made enquiry to the Note Holder on the transfer of the Promissory Note to FDCL and was informed that the Note Holder has all along been the registered holder of the Promissory Note and has not effected any transfer of the Promissory Note. The Company has instructed legal adviser to contest the claim and to handle all other legal issues arising with FDCL in connection with the dispute. Nevertheless, the Directors consider that the amount in dispute is not material as compared to the total asset of the Group and it will not have any material adverse impact to the financial position of the Group.

Further announcement in respect of the said litigation will be made by the Company as and when appropriate in accordance with the Listing Rules.

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LETTER FROM THE BOARD

Liquidity position and financing plan of the Company

Set out below is the summary of the Company’s outstanding promissory note, unconvertible bonds and loans as the Latest Practicable Date:–

• Type of payables Maturity Date Interest Rate (i) Promissory notes in principal amount of 31 January 2013 (in dispute) 5.25% per annum HK$5 million

• (ii) Promissory notes in principal amount of 28 April 2015 8% per annum HK$123.2 million

• (iii) Promissory notes in principal amount of 19 May 2015 8% per annum HK$30 million

• (iv) Loan in principal amount of 1 March 2014 (Note) 36% per annum HK$68 million

• (v) Unconvertible bonds in principal amount of 31 May 2017 5% per annum HK$20 million

Note: In the process of negotiating for an extension of a short period of time.

Reference is made to the announcement of the Company dated 19 June 2014 in respect of, among others, the grant of loan facility to the Company (the “ Loan Facility Announcement ”). As disclosed in the Loan Facility Announcement, the Company entered into the loan agreement (the “ Loan Agreement ”) with the lender, pursuant to which the lender has agreed to make available to the Company a loan of HK$200,000,000 (the “ Loan ”) at an annual interest rate of 20% and repayable on the business day falling on twelve months from the date of the first drawdown of any amount of the Loan by the Company. The Company plans to use the Loan to repay the existing outstanding loan of principal amount of HK$68 million and part of the promissory notes payable due by the Company. As at the Latest Practicable Date, none of the Loan has been withdrawn.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, save and except for the Loan Agreement, the Company has not entered into any negotiation, agreement, arrangement and understanding (concluded or otherwise) about any fund raising plans. Nevertheless, having considered the maturity date, total indebtedness amount, the financial burden in respect of the interest expenses of the above loans and the high interest rate of the Loan under the Loan Agreement, the Company will actively explore the possibility of conducting equity fund raising activities under appropriate market condition and other fund raising opportunities in the near future if the terms are commercially acceptable and in the interests of the Company and the Shareholders as a whole after taking into account of factors including the financial position, financing costs, investment opportunities and the working capital requirement of the Company from time to time and also options then available in the capital markets. However, as at the Latest Practicable Date, the Company does not have any concrete plan for fund raising activities.

RE-ELECTION OF DIRECTOR

According to 86(2)(b) of the bye-law of the Company, subject to authorisation by the members in general meeting, the Directors shall (until and unless such authorisation is revoked) have the power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy on the Board or as an addition to the existing Board but so that the number of Directors so appointed shall not exceed any maximum number determined from time to time by the members in general meeting. Any Director so appointed by the Board shall hold office only until the first general meeting of the Company after his appointment and shall then be eligible for reelection at that meeting provided that any Director who so retires shall not be taken into account in determining which particular Directors or the number of Directors who are to retire by rotation at such meeting pursuant to bye-law of the Company.

Ms. Zhang Ruisi (“ Ms. Zhang ”) who was appointed as the independent non-executive Director on 1 September 2014 shall hold office only until the next following general meeting of the Company; that is, the SGM. Ms. Zhang being eligible, offers herself for re-election as Director at the SGM.

Brief biographical details of Ms. Zhang is set out in Appendix I to this circular.

SGM

The Share Consolidation and the proposed re-election of Director will be conditional, among other things, upon passing by the Shareholders of ordinary resolutions at the SGM.

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LETTER FROM THE BOARD

A notice convening the SGM is set out on pages 18 to 19 of this circular. A form of proxy for the SGM is enclosed with this circular. Whether or not you intend to attend and vote at the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Hong Kong branch share registrar and transfer office of the Company, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting should you so wish, and in such event the instrument appointing the proxy shall be deemed to be revoked.

In compliance with the Listing Rules, the ordinary resolution will be voted on by way of a poll at the SGM. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, no Shareholders are required to abstain from voting on the ordinary resolutions to approve the Share Consolidation at the SGM.

RECOMMENDATION

The Directors are of the opinion that the Share Consolidation and the proposed re-election of Director are in the interests of the Company and the Shareholders as a whole. Therefore, the Directors recommend the Shareholders to vote in favour of the resolutions to be proposed at the SGM.

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.

Yours faithfully

By Order of the Board

China Environmental Energy Investment Limited

Chen Tong

Chairman

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DETAILS OF THE RETIRING DIRECTOR PROPOSED TO BE RE-ELECTED AT THE SGM

APPENDIX I

Ms. Zhang Ruisi

Ms. Zhang, aged 27, obtained a bachelor degree in business administration from The Chinese University of Hong Kong in 2009 and is now studying for a master degree in finance at The University of Hong Kong. She has over 4 years of experience in auditing listed companies and is a member of Hong Kong Institute of Certified Public Accountants. She is currently the financial manager of a private institution.

Save as disclosed above and at the Latest Practicable Date, Ms. Zhang has not held (i) any other position with the Company and its subsidiaries; (ii) any directorship in any other public companies the securities of which are listed on any securities market in Hong Kong or overseas in the last three years; and (iii) any other major appointments and professional qualifications.

Ms. Zhang does not have any other relationship with other Directors, senior management, substantial Shareholders (as defined in the Listing Rules) or controlling Shareholders (as defined in the Listing Rules) and she does not have any interests in the Shares within the meaning of Part XV of the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong.

Ms. Zhang entered into an appointment letter with the Company on 1 September 2014 for an initial term of one year commencing from 1 September, which is automatically renewable for successive terms of one year upon the expiry of the then current term. Ms. Zhang will be entitled to receive a director’s fee of HK$120,000 per annum which is determined by the Board and reviewed by the remuneration committee of the Company with reference to her qualification and experience, her duties and responsibilities in the Company, the Company’s performance and the prevailing market situation. Save as disclosed above and at the Latest Practicable Date, there is no other service contract signed between Ms. Zhang and the Company.

As confirmed by Ms. Zhang and as far as the Board is aware, Ms. Zhang has met the independence criteria as set out in Rule 3.13 of the Listing Rules, and save as disclosed above and at the Latest Practicable Date, there are no other matters relating to the appointment of Ms. Zhang that need to be brought to the attention of the Shareholders and there is no other information that should be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules.

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NOTICE OF SGM

China Environmental Energy Investment Limited

(Incorporated in Bermuda with limited liability)

(Stock Code: 986)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the “ SGM ”) of China Environmental Energy Investment Limited (the “ Company ”) will be held at Falcon Room I, Gloucester Luk Kwok Hong Kong, 72 Gloucester Road, Wanchai, Hong Kong on Tuesday, 30 September 2014 at 10:00 a.m., for the purpose of considering and, if thought fit, passing the following resolutions:

ORDINARY RESOLUTIONS

1. “ THAT subject to and conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting approval for the listing of, and permission to deal in, the Consolidated Shares (as defined below) in issue and to be issued, every twenty (20) issued and unissued ordinary share of par value of HK$0.0005 each in the share capital of the Company be consolidated into one (1) Consolidated Share of par value of HK$0.01 each (the “ Consolidated Share(s) ”) so that the authorised share capital of the Company will be HK$1,000,000,000 divided into 100,000,000,000 Consolidated Shares of par value of HK$0.01 each immediately upon the said share consolidation, and such Consolidated Share(s) shall rank pari passu in all respects with each other and have the rights and privileges and be subject to the restrictions in respect of ordinary shares contained in the bye-laws of the Company, and any director of the Company be and is hereby authorised to sign and execute such documents and do all such acts and things and to effect all necessary actions as he considers necessary, desirable or expedient in order to effect, implement and complete any and all of the aforesaid matters.”

2. “ THAT Ms. Zhang Ruisi be re-elected as an independent non-executive director of the Company and the board of directors of the Company be authorized to fix her remuneration.”

Yours faithfully

By Order of the Board

China Environmental Energy Investment Limited Chen Tong

Chairman

• For identification purposes only

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NOTICE OF SGM

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Head Office and principal place of business: Room 2211, 22/F Lippo Centre, Tower Two 89 Queensway Hong Kong

Hong Kong, 15 September 2014

Notes:

1. A form of proxy for use at the SGM is enclosed herewith.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of any officer or attorney duly authorised.

3. Any shareholder of the Company (the “ Shareholder(s) ”) entitled to attend and vote at the SGM convened by the above notice shall be entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a Shareholder of the Company. A Shareholder who is the holder of two or more shares of the Company may appoint more than one proxy to represent him/her/it to attend and vote on his/her/its behalf. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.

4. In order to be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power of attorney or authority, must be deposited at the Hong Kong branch share registrar and transfer office of the Company, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding of the above SGM or any adjournment thereof at which the person named in the form of proxy proposes to vote or, in the case of a poll taken subsequently to the date of the SGM or any adjournment thereof, not less than 24 hours before the time appointed for the taking of the poll and in default the form of proxy shall not be treated as valid.

5. Completion and return of the form of proxy will not preclude a shareholder of the Company from attending and voting in person at the SGM convened or at any adjourned meeting (as the case may be) and in such event, the form of proxy will be deemed to be revoked.

6. Where there are joint holders of any share of the Company, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he/she/it were solely entitled thereto, but if more than one of such joint holders are present at the SGM, whether in person or by proxy, priority shall be determined by the order in which the names stand on the register of members of the Company in respect of the joint holding.

7. As at the date of this notice, the board of Directors comprises four executive Directors, namely Ms. Chen Tong (Chairman), Ms. Chan Ching Ho, Kitty, Mr. Xiang Liang and Ms. Li Lin; two non-executive Directors, namely Ms. Yao Zhengwei and Mr. Wang Zhenghua; and three independent non-executive Directors, namely Mr. Tse Kwong Chan, Ms. Zhou Jue and Ms. Zhang Ruisi.

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