Honghua Group Limited — AGM Information 2021

Apr 19, 2021

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action to be taken, you should consult your stockbroker, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Honghua Group Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, stockbroker 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.

Honghua Group Limited 宏華集團有限公司

(a company incorporated in the Cayman Islands with limited liability)

(Stock Code: 196)

PROPOSED RE-ELECTION OF DIRECTORS AND GRANTING OF GENERAL MANDATES TO BUY BACK SHARES AND TO ISSUE SHARES OF THE COMPANY AND NOTICE OF THE ANNUAL GENERAL MEETING

A notice convening the annual general meeting of Honghua Group Limited to be held at 10/F, United Centre, 95 Queensway, Admiralty, Hong Kong on Wednesday, 26 May 2021 at 2:00 p.m. is set out on pages 17 to 20 of this circular. A form of proxy for use at the annual general meeting is also enclosed. Such form of proxy is also published on the website of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk).

If you do not propose to attend the meeting, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company’s Branch Share Registrar and Transfer Office in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the annual general meeting (i.e. not later than 2:00 p.m. on Monday, 24 May 2021 (Hong Kong time)) or the adjourned meeting (as the case may be). Completion and return of the form of proxy will not preclude shareholders from attending and voting in person at the meeting should they so wish.

• References to time and dates in this circular are to Hong Kong time and dates.

20 April 2021

CONTENTS

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2.	Re-election of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
3A.	Proposed Granting of General Mandate to Buy Back Shares . . . . . . . . . . .	5
3B.	Proposed Granting of General Mandate to Issue Shares . . . . . . . . . . . . . . .	5
4.	Annual General Meeting and Proxy Arrangement . . . . . . . . . . . . . . . . . . .	6
5.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
6.	Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
7.	General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
**Appendix **	I – Explanatory statement on the Buy-back Mandate . . . . . . .	8
**Appendix **	II – Details of Directors proposed to be re-elected at
	the Annual General Meeting . . . . . . . . . . . . . . . . . . . . . .	11
**Notice of **	the Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17

– i –

DEFINITIONS

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

• “Annual General Meeting”

an annual general meeting of the Company to be held at 10/F, United Centre, 95 Queensway, Admiralty, Hong Kong on Wednesday, 26 May 2021 at 2:00 p.m. to consider and, if appropriate, to approve the resolutions contained in the notice of the meeting which is set out on pages 17 to 20 of this circular or any adjournment thereof;

• “Board”

• the Board of Directors or a duly authorised committee of the Board of Directors;

• “Buy-back Mandate”

• as defined in paragraph 3A of the Letter from the Board;

• “CASIC”

• China Aerospace Science and Industry Corporation Limited (中國航天科工集團有限公司), a company incorporated in the People’s Republic of China;

• “CASIC Group” CASIC and its subsidiaries;

• “Company”

• Honghua Group Limited, a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange;

• “Current Articles of Association” the current articles of association of the Company;

• “Director(s)” director(s) of the Company;

• “Group”

• the Company and its subsidiaries (as defined under the Listing Rules);

• “HK$”

• Hong Kong dollar, the lawful currency of Hong Kong;

• “Hong Kong”

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

• “Issuance Mandate”

• as defined in paragraph 3B of the Letter from the Board;

• “Latest Practicable Date”

• 16 April 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular;

– 1 –

DEFINITIONS

“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange;
“SFO”	the Securities and Futures Ordinance, Chapter 571 of the
	Laws of Hong Kong;
“Share(s)”	ordinary share(s) of HK$0.1 each in the capital of the
	Company or if there has been a subsequent sub-division,
	consolidation, reclassification or reconstruction of the
	share capital of the Company, shares forming part of the
	ordinary equity share capital of the Company;
“Shareholder(s)”	holder(s) of Share(s);
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Takeovers Code”	The Hong Kong Code on Takeovers and Mergers issued
	by the Securities and Future Commission in Hong Kong.

– 2 –

LETTER FROM THE BOARD

Honghua Group Limited 宏華集團有限公司

(a company incorporated in the Cayman Islands with limited liability)

(Stock Code: 196)

Executive Directors: Mr. Jin Liliang (Chairman) Mr. Zhang Mi (Vice Chairman) Mr. Ren Jie

Non-executive Directors: Mr. Han Guangrong Mr. Chen Wenle

Independent Non-executive Directors: Mr. Liu Xiaofeng Mr. Chen Guoming Ms. Su Mei Mr. Poon Chiu Kwok Mr. Chang Qing Mr. Wei Bin

Head Office: 99 East Road, Information Park Jinniu District, Chengdu Sichuan People’s Republic of China Post code: 610036

Principal Place of Business in Hong Kong: Room 2508, Harcourt House 39 Gloucester Road Wan Chai, Hong Kong

Registered Office: Clifton House, 75 Fort Street PO Box 1350, Grand Cayman KY1-1108, Cayman Islands

20 April 2021

To Shareholders

Dear Sir/Madam,

PROPOSED RE-ELECTION OF DIRECTORS AND GRANTING OF GENERAL MANDATES TO BUY BACK SHARES AND TO ISSUE SHARES OF THE COMPANY AND NOTICE OF THE ANNUAL GENERAL MEETING

1. INTRODUCTION

The purpose of this circular is to provide you with information in respect of, amongst others, the resolutions to be proposed at the Annual General Meeting for (i) the re-election of Directors retiring at the Annual General Meeting; (ii) the granting of the Buy-back Mandate to

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LETTER FROM THE BOARD

the Directors; (iii) the granting of the Issuance Mandate to the Directors; and (iv) the extension of the Issuance Mandate by adding to it the aggregate number of the issued Shares bought back by the Company under the Buy-back Mandate; and to give you notice of the Annual General Meeting.

2. RE-ELECTION OF DIRECTORS

Pursuant to article 108(a) and (b) of the Current Articles of Association, at each annual general meeting, one-third of the Directors for the time being, or, if their number is not three or a multiple of three, then the number nearest to but not less than one-third, shall retire from office by rotation provided that every Director (including those appointed for a specific term) shall be subject to retirement by rotation at least once every 3 years. A retiring Director shall be eligible for re-election. The Company at the general meeting at which a Director retires may fill the vacated office.

The Directors to retire by rotation shall include (so far as necessary to obtain the number required) any Director who wishes to retire and not to offer himself for re-election. Any Director who has not been subject to retirement by rotation in the 3 years preceding the annual general meeting shall retire by rotation at such Annual General Meeting. Any further Directors so to retire shall be those who have been longest in office since their last re-election or appointment and so that as between persons who became or were last re-elected Directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot.

Pursuant to article 112 of the Current Articles of Association, the Board shall have power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy or as an additional Director but so that the number of Directors so appointed shall not exceed the maximum number determined from time to time by the Shareholders in general meeting. Any Director so appointed shall hold office only until the next general meeting of the Company and shall then be eligible for re-election at the meeting but shall not be taken into account in determining the Directors or the number of Directors who are to retire by rotation at such meeting.

Pursuant to articles 108(a), 108(b) and 112 of the Current Articles of Association, Mr. Jin Liliang, Mr. Zhang Mi, Ms. Su Mei and Mr. Poon Chiu Kwok shall retire at the Annual General Meeting. All the retiring Directors, being eligible to offer themselves for re-election.

Brief biographical details of the retiring Directors are set out in Appendix II of this circular.

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LETTER FROM THE BOARD

3A. PROPOSED GRANTING OF GENERAL MANDATE TO BUY BACK SHARES

At the annual general meeting of the Company held on 18 June 2020, a general mandate was granted to the Directors to buy back Shares. Such mandate will lapse at the conclusion of the Annual General Meeting. In order to give the Company the flexibility to buy back Shares if and when appropriate, an ordinary resolution will be proposed at the Annual General Meeting to approve the granting of the Buy-back Mandate to the Directors to buy back Shares on the Stock Exchange of not exceeding 10% of the total number of issued Shares of the Company as at the date of passing of the proposed ordinary resolution contained in item 4 of the notice of the Annual General Meeting as set out on pages 17 to 20 of this circular (i.e. a total of 535,599,490 Shares on the basis that the issued share capital of the Company remains unchanged on the date of the Annual General Meeting out of the total number of issued Shares of 5,355,994,900 Shares as at the Latest Practicable Date).

The Directors wish to state that the Company has no plan to buy back any Shares pursuant to the Buy-back Mandate as at the Latest Practicable Date.

The Buy-back Mandate will continue in force until the conclusion of the next annual general meeting of the Company or any earlier date as referred to in resolution numbered 4 set out in the notice of the Annual General Meeting (i.e. (i) the conclusion of the next annual general meeting of the Company; (ii) the revocation or variation of the authority given under the resolution numbered 4 set out in the notice of the Annual General Meeting by ordinary resolution passed by the Company’s shareholders in general meetings; or (iii) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable laws to be held).

An explanatory statement required by the Listing Rules to provide the Shareholders with requisite information reasonably necessary for them to make an informed decision on whether to vote for or against the granting of the Buy-back Mandate is set out in Appendix I to this circular.

If the Company conducts a share consolidation or subdivision after the Buy-back Mandate has been approved in Annual General Meeting, the maximum number of shares that may be bought back under the Buy-back Mandate as a percentage of the total number of issued shares at the date immediately before and after such consolidation or subdivision shall be the same.

3B. PROPOSED GRANTING OF GENERAL MANDATE TO ISSUE SHARES

At the annual general meeting of the Company held on 18 June 2020, a general mandate was granted to the Directors to issue Shares. Such mandate will lapse at the conclusion of the Annual General Meeting. In order to give the Company the flexibility to issue Shares if and when appropriate, an ordinary resolution will be proposed at the Annual General Meeting to approve the granting of the Issuance Mandate to the Directors to allot, issue or deal with additional Shares of not exceeding 20% of the total number of issued Shares of the Company as at the date of passing of the proposed ordinary resolution contained in item 5 of the notice

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LETTER FROM THE BOARD

of the Annual General Meeting as set out on pages 17 to 20 of this circular (i.e. a total of 1,071,198,980 Shares on the basis that the issued share capital of the Company remains unchanged on the date of the Annual General Meeting out of the total number of issued Shares of 5,355,994,900 Shares as at the Latest Practicable Date). An ordinary resolution to extend the Issuance Mandate by adding the number of Shares bought back by the Company pursuant to the Share Buy-back Mandate will also be proposed at the Annual General Meeting.

The Directors wish to state that the Company has no plan to issue any new Shares pursuant to the Issuance Mandate as at the Latest Practicable Date.

The Issuance Mandate will continue in force until the conclusion of the next annual general meeting of the Company or any earlier date as referred to in resolution numbered 5 set out in the notice of the Annual General Meeting (i.e. (i) the conclusion of the next annual general meeting of the Company; (ii) the revocation or variation of the authority given under the resolution numbered 5 set out in the notice of the Annual General Meeting by ordinary resolution passed by the Company’s shareholders in general meetings; or (iii) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable laws to be held).

If the Company conducts a share consolidation or subdivision after the Issuance Mandate has been approved in Annual General Meeting, the maximum number of securities that may be issued under the Issuance Mandate as a percentage of the total number of issued shares at the date immediately before and after such consolidation or subdivision shall be the same.

4. ANNUAL GENERAL MEETING AND PROXY ARRANGEMENT

The notice of the Annual General Meeting is set out on pages 17 to 20 of this circular. At the Annual General Meeting, resolutions will be proposed to approve, inter alia, the re-election of Directors, the granting of the Buy-back Mandate and the Issuance Mandate and the extension of the Issuance Mandate by the addition thereto of the number of Shares bought back pursuant to the Buy-back Mandate.

A form of proxy for use at the Annual General Meeting is also enclosed with this circular and such form of proxy is also published on the website of the Stock Exchange (www.hkexnews.hk). To be valid, the form of proxy must be completed and signed in accordance with the instructions printed thereon and deposited, together with the power of attorney or other authority (if any) under which it is signed or a certified copy of that power of attorney or authority, at the Company’s Branch Share Registrar and Transfer Office in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the Annual General Meeting (i.e. not later than 2:00 p.m. on Monday, 24 May 2021 (Hong Kong time)) or the adjourned meeting. Completion and delivery of the form of proxy will not preclude Shareholders from attending and voting at the Annual General Meeting if they so wish.

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LETTER FROM THE BOARD

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of the Shareholders at the Annual General Meeting must be taken by poll except where the chairman of the meeting, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. The Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

5. RECOMMENDATION

The Directors consider that the proposed re-election of Directors, the granting of the Buy-back Mandate and the granting/extension of the Issuance Mandate are in the interests of the Company, the Group and the Shareholders. Accordingly, the Directors recommend the Shareholders to vote in favour of the relevant resolutions to be proposed at the Annual General Meeting.

6. 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.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder has a material interest in and is required to abstain from voting on the resolutions to be proposed at the Annual General Meeting. The Board confirm that to the best of its knowledge, information and belief having made all reasonable enquiries, as at the Latest Practicable Date, there was no voting trust or other agreement or arrangement or understanding (other than an outright sale) entered into by or binding upon any Shareholder and there was no obligation or entitlement of any Shareholder whereby he has or may have temporarily or permanently passed control over the exercise of the voting right in respect of his Shares to a third party, either generally or on a case-by-case basis.

7. GENERAL INFORMATION

Your attention is drawn to the additional information set out in the Appendix I (Explanatory statement on the Buy-back Mandate) and Appendix II (Details of Directors proposed to be re-elected at the Annual General Meeting).

Yours faithfully, Jin Liliang Chairman of the Board

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APPENDIX I EXPLANATORY STATEMENT ON THE BUY-BACK MANDATE

This Appendix serves as an explanatory statement, as required by the Listing Rules, to provide requisite information to you for your consideration of the Buy-back Mandate.

1. REASONS FOR SHARE BUY-BACK

The Directors believe that the proposed granting of the Buy-back Mandate is in the interests of the Company and the Shareholders.

Share buy-back may, depending on market conditions and funding arrangements at the time, result in an enhancement of the net assets and/or earnings per Share. The Directors are seeking the granting of the Buy-back Mandate to give the Company the flexibility to do so if and when appropriate. The number of Shares to be bought back on any occasion and the price and other terms upon which the same are bought back will be decided by the Directors at the relevant time, having regard to the circumstances then pertaining.

2. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 5,355,994,900 Shares.

Subject to the passing of the ordinary resolution numbered 4 set out in the notice of the Annual General Meeting in respect of the granting of the Buy-back Mandate and on the basis that no Shares are issued or bought back by the Company prior to the Annual General Meeting, the Company would be allowed under the Buy-back Mandate to buy back a maximum of 535,599,490 Shares (representing 10 percent of the total number of Shares in issue as at the date of the Annual General Meeting) during the period in which the Buy-back Mandate remains in force.

3. FUNDING OF SHARE BUY-BACK

In buying back Shares, the Company may only apply funds legally available for such purpose in accordance with its memorandum and articles of association, the laws of the Cayman Islands and other applicable laws.

The Company is empowered by its memorandum and articles of association to buy back its Shares. The laws of the Cayman Islands provide that the amount of capital paid in connection with a share buy-back may only be paid out of either the profits of the Company or out of the proceeds of a fresh issue of Shares made for such purpose or, if so authorised by its Current Articles of Association and subject to the provisions of the Cayman Islands laws, out of capital. The amount of premium payable on buy-back may be paid out of profits of the Company or out of the share premium account of the Company, or, if so authorised by its Current Articles of Association and subject to the provisions of the Cayman Islands laws, out of capital before the Shares are bought back.

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APPENDIX I EXPLANATORY STATEMENT ON THE BUY-BACK MANDATE

4. IMPACT OF SHARE BUY-BACK

There might be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited accounts contained in the annual report of the Company for the year ended 31 December 2020) in the event that the Buy-back Mandate was to be carried out in full at any time during the proposed buy-back period. However, the Directors do not intend to exercise the Buy-back Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

5. TAKEOVERS CODE

If as a result of a buy-back of Shares pursuant to the Share Buy-back Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition of voting rights for the purposes of the Takeovers Code. Accordingly, a Shareholder or a group of Shareholders acting in concert (within the meaning under the Takeovers Code), depending on the level of increase in the Shareholder’s interest, could obtain or consolidate control of the Company and thereby become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

To the best knowledge of the Company, as at the Latest Practicable Date, Kehua Technology Co., Limited, Shenzhen Aerospace Industry Technology Research Institute and China Aerospace Science and Industry Corporation Limited, the substantial shareholders of the Company (as defined in the Listing Rules), were interested in 1,606,000,000 Shares representing approximately 29.98% of the total issued share capital of the Company. On the basis that no Shares are issued or bought back prior to the date of the Annual General Meeting, in the event that the Directors exercise in full the power to buy back Shares in accordance with terms of the relevant ordinary resolution to be proposed at the Annual General Meeting, the interests of Kehua Technology Co., Limited, Shenzhen Aerospace Industry Technology Research Institute and China Aerospace Science and Industry Corporation Limited would be increased to approximately 33.31% of the total issued share capital of the Company. Such an increase may give rise to an obligation to make a mandatory offer under Rule 26 of the Takeovers Code. The Directors have no intention to make buy-back of Shares to an extent that an obligation to make a mandatory offer under the Takeover Code will be triggered.

In addition, the Directors consider that the full exercise of the Buy-back Mandate will not lead to the percentage of the Company’s public float falling below 25% of the Company’s total issued share capital.

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APPENDIX I EXPLANATORY STATEMENT ON THE BUY-BACK MANDATE

6. GENERAL

To the best of their knowledge and having made all reasonable enquiries, none of the Directors nor any of their respective close associates (as defined in the Listing Rules) have any present intention to sell any Shares to the Company in the event that the granting of the Buy-back Mandate is approved by the Shareholders.

The Company has not been notified by any core connected persons (as defined in the Listing Rules) of the Company that they have a present intention to sell any Shares to the Company, or that they have undertaken not to sell any Shares held by them to the Company in the event that the granting of the Buy-back Mandate is approved by the Shareholders.

The Directors have undertaken to the Stock Exchange to exercise the power of the Company to buy back Shares pursuant to the Buy-back Mandate in accordance with the Listing Rules and the applicable laws of the Cayman Islands.

7. MARKET PRICES OF SHARES

The highest and lowest prices per Share at which the Shares have traded on the Stock Exchange during the period from 1 April 2020 and up to the Latest Practicable Date were as follows:

Month	Highest	Lowest
	HK$	HK$
2020
April	0.28	0.217
May	0.248	0.196
June	0.275	0.196
July	0.335	0.228
August	0.285	0.238
September	0.26	0.201
October	0.22	0.195
November	0.27	0.18
December	0.30	0.236
2021
January	0.295	0.242
February	0.385	0.241
March	0.32	0.25
April (up to the Latest Practicable Date)	0.26	0.234

8. SHARE BUY-BACK MADE BY THE COMPANY

No buy-back of Shares has been made by the Company during the previous six months (whether on the Stock Exchange or otherwise).

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE ANNUAL GENERAL MEETING

APPENDIX II

Pursuant to the Listing Rules, the details of the Directors who will retire at the Annual General Meeting according to the Current Articles of Association and be proposed to be re-elected at the Annual General Meeting are provided below.

Mr. Jin Liliang (金立亮先生), aged 54, has been an Executive Director of the Company and Chairman of the Board since 24 August 2018.

Experience

Mr. Jin joined in CASIC Group since 1993 and was a vice president of a subsidiary of CASIC. Mr. Jin has rich experience of corporation operation and management. Mr. Jin has rich experience of corporate operation and management. He holds a Master’s degree of Engineering from Harbin Institute of Technology.

Saved as disclosed, Mr. Jin did not hold any directorship in any other listed public companies in the last three years.

Length of service and emoluments

Mr. Jin has entered into an executive director’s service contract with the Company for a term of 3 years commencing from 24 August 2018, subject to retirement by rotation and re-election in accordance with the Current Articles of Association.

According to the service contract, the remuneration of Mr. Jin consists of annual basic remuneration and annual performance appraisal remuneration. The annual basic remuneration is about RMB0.69 million, and the annual performance appraisal remuneration is determined based on the executive director’s remuneration management method of the Company. Mr. Jin’s remuneration was determined by the Board after taking into consideration of his qualification, experience and responsibility.

Relationships

Other than the relationship arising from his being the Company’s executive director, chairman of the Board, chairman of Strategic Investment and Risk Control Committee and member of the Remuneration Committee and saved as disclosed above, Mr. Jin does not have any relationships with any other Directors, senior management, substantial shareholders (as defined in the Listing Rules), or controlling shareholders (as defined in the Listing Rules) of the Company.

Interests in Shares

As at the Latest Practicable Date, Mr. Jin did not have any interest in Shares under Part XV of the SFO.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE ANNUAL GENERAL MEETING

APPENDIX II

Matters that need to be brought to the attention of the Shareholders

There is no information that needs to be disclosed pursuant to any of the requirements of the provisions under paragraphs 13.51(2)(h) to 13.51(2)(v) of the Listing Rules, and there are no other matters concerning Mr. Jin that need to be brought to the attention of the Shareholders.

Mr. Zhang Mi (張弭先生), aged 64, has been an Executive Director of the Company since June 2007, the Chairman of the Board from June 2007 to March 2017 and the vice Chairman of the Board since March 2017. He is also the President of the Company.

Experience

Positions held by Mr. Zhang in the Company’s subsidiaries are set forth in the table below.

Subsidiary	Position	Term of Office
Honghua Holdings Limited	director	Since 18 August 2006
	chief executive	Since 8 September 2009
	officer
Sichuan Honghua Petroleum	director	Since 31 December 1997
Equipment Co., Ltd.
Honghua International Co., Ltd.	director	Since 13 January 2004
Honghua (China) Investment Co, Ltd.	director	Since 19 October 2009
	general manager	Since 15 October 2009
Honghua Oil & Gas Engineering	director	Since 14 April 2009
Services Co. Ltd.
Honghua America, LLC.	chairman	Since 11 October 2004
Gansu Hongteng Oil & Gas	director	Since 28 December 2011
Equipment Co., Ltd.

Mr. Zhang graduated from the Sichuan Petroleum Administration Vocational University in 1982, with a diploma in machinery manufacture, design and equipment. He graduated from the Party Institute of Sichuan Provincial Committee Correspondence College in 1998, with a degree in Economics and Management. In 2004, he then obtained a senior engineer qualification granted by the Committee for Evaluation of Senior Technical Positions of the China National Petroleum Corp.. He has been receiving special subsidies granted by the State Council of the PRC government since February 2007, for his significant contribution to the development of machinery engineering in the PRC.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE ANNUAL GENERAL MEETING

APPENDIX II

In 2005, Mr. Zhang was awarded the Sichuan Province Prize for Outstanding Talent in Innovation (四川省第三屆傑出創新人才獎), by the Sichuan Provincial Party Committee and the Sichuan Provincial People’s Government. In 2007, he was granted the May 1 Labor Medal of Sichuan Province (四川省五一勞動獎章) by the Sichuan Provincial Federation of Trade Unions in 2007. Mr. Zhang was rewarded as Leading Entrepreneur of Foreign Trading and Export Enterprises in Sichuan for 2009. In 2005, he was rewarded as a national model worker.

Save as disclosed, Mr. Zhang did not hold any directorships in any other listed public companies in the last three years.

Length of service and emoluments

Mr. Zhang has entered into a service contract with the Company for a fixed term of 3 years commencing from 7 March 2020 unless and until terminated by, among others, either party giving to the other not less than three calendar months’ prior notice in writing or terminated according the terms and conditions of the service contract.

According to the service contract, the remuneration of Mr. Zhang is based on his management positions in the Company. The executive director appointed according to the terms of the service contract as director (whether executive director or non-executive director) of any other subsidiaries will not receive additional remuneration.

Relationships

Other than the relationship arising from his being the Company’s vice chairman of the Board and executive director, president, member of the Strategic Investment and Risk Control Committee, the member of the Remuneration Committee as well as his positions in the Company’s subsidiaries set forth in the table above, Mr. Zhang does not have any relationships with any other Directors, senior management, substantial shareholders (as defined in the Listing Rules), or controlling shareholders (as defined in the Listing Rules) of the Company.

Interests in Shares

As at the Latest Practicable Date, Mr. Zhang was interested in 324,598,548 Shares, representing 6.06% of the Company’s total issued Shares under Part XV of the SFO.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE ANNUAL GENERAL MEETING

APPENDIX II

Matters that need to be brought to the attention of the Shareholders

There is no information that needs to be disclosed pursuant to any of the requirements of the provisions under paragraphs 13.51(2)(h) to 13.51(2)(v) of the Listing Rules, and there are no other matters concerning Mr. Zhang that need to be brought to the attention of the Shareholders.

Ms. Su Mei (蘇梅女士), aged 52, has been an Independent Non-executive Director of the Company since 29 March 2017.

Experience

Ms. Su is currently the chief executive officer of Beijing YaMeiHeZhong Consultanting Co., Ltd.. Ms. Su once had leaderships in Discipline Inspection Commission of Sichuan Province and Sichuan Development and Reform Commission and State-owned Assets Supervision and Administration Commission of State Council, worked as the vice-president in Sichuan Provincial Investment Group, the chairman of Sichuan Chuantou Water Group and vice-president of Joneson Group. Ms. Su obtained Doctor’s degree in finance from Sichuan University in 2013, and obtained Bachelor’s degree of Chinese from Shandong University in 1991.

Save as disclosed, Ms. Su did not hold any directorships in any other listed public companies in the last three years.

Length of service and emoluments

Ms. Su has entered into an independent non-executive director’s service contract with the Company for a fixed term of 3 years with effect from 29 March 2020, subject to retirement by rotation and re-election in accordance with the Current Articles of Association. Ms. Su is entitled to director’s emolument of HKD120,000 per annum which was determined by the Board after taking into consideration of her qualification, experience and responsibility.

Relationships

Other than the relationship arising from her being the Company’s independent nonexecutive director, member of Audit Committee and member of Remuneration Committee, Ms. Su does not have any relationships with any other Directors, senior management, substantial shareholders (as defined in the Listing Rules), or controlling shareholders (as defined in the Listing Rules) of the Company.

Interests in Shares

As at the Latest Practicable Date, Ms. Su was interested in 150,000 Shares, representing approximately 0% of the Company’s total issued Shares under Part XV of the SFO.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE ANNUAL GENERAL MEETING

APPENDIX II

Matters that need to be brought to the attention of the Shareholders

There is no information that needs to be disclosed pursuant to any of the requirements of the provisions under paragraphs 13.51(2)(h) to 13.51(2)(v) of the Listing Rules, and there are no other matters concerning Ms. Su that need to be brought to the attention of the Shareholders.

Mr. Poon Chiu Kwok (潘昭國先生), aged 59, has been an Independent Non-executive Director of the Company since 15 June 2017.

Experience

Mr. Poon is currently an executive director, vice president and company secretary of Huabao International Holdings Limited. Mr. Poon has years of experience in finance, compliance and listed companies management. Mr. Poon is currently the independent non-executive director of Sany Heavy Equipment International Holdings Company Limited, Greentown Service Group Co., Ltd., Sunac China Holdings Limited, Yuanda China Holdings Limited, Changan Minsheng APLL Logistics Co., Ltd., Jinchuan Group International Resources Co., Ltd., AUX International Holdings Limited and Yanzhou Coal Mining Company Limited. Mr. Poon retired as an independent non-executive director of TUS International Limited on 17 July 2020. Mr. Poon was an independent non-executive director of Tonly Electronics Holdings Limited (a company withdrawn from listing on the Stock Exchange in March 2021). Mr. Poon is a fellow member of CPA Australia, The Chartered Governance Institute (formerly known as The Institute of Chartered Secretaries and Administrators) in the U.K., The Hong Kong Institute of Chartered Secretaries and a member of its Technical Consultation Panel, Audit Committee and China Focus Group. He was granted postgraduate diploma in laws from the University of London. He holds a Master’s degree in international accounting, Master’s and Bachelor’s degree in laws and a Bachelor’s degree in business studies. In addition, Mr. Poon serves as the independent non-executive directors of over seven listed companies. The Company considers that Mr. Poon has been and will continue to fulfill his roles and obligations diligently as an independent non-executive Director. An independent non-executive Director is not required to take executive role in the management and operations of the Group but to supervise the management of the Group and to attend Board meetings and Board committee meetings (either physically or by other means of communications) as and when required. Before entering into a major transaction, a Board meeting is usually convened for communication and discussion, enabling independent non-executive Directors to fully understand the business and transactions of the Company, so as to fulfill their roles to provide advice and recommendations to the Board. Mr. Poon’s sufficient proven record of attendance and participation in the Company’s Board meetings since he joined the Company and his advice and recommendations on compliance management, corporate governance, transactions and other matters from time to time have shown his proactive commitment to the Company.

Saved as disclosed, Mr. Poon neither holds any position with the Company and other members of the Group nor any directorships in any other listed public companies in the last three years.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE ANNUAL GENERAL MEETING

APPENDIX II

Length of service and emoluments

Mr. Poon has entered into an independent non-executive director’s service contract with the Company for a fixed term of 3 years commencing from 15 June 2020 and shall be subject to retirement by rotation and re-election in accordance with the Current Articles of Association of the Company. Mr. Poon is entitled to director’s emolument of HKD180,000 per annum which was determined by the Board after taking into consideration of his qualification, experience and responsibility.

Relationships

Other than the relationship arising from his being the Company’s independent nonexecutive director, member of Audit Committee and Strategic Investment and Risk Control and saved as disclosed above, Mr. Poon does not have any relationships with any other Directors, senior management, substantial shareholders (as defined in the Listing Rules), or controlling shareholders (as defined in the Listing Rules) of the Company.

Interests in Shares

As at the Latest Practicable Date, Mr. Poon did not have any interest in Shares under Part XV of the SFO.

Matters that need to be brought to the attention of the Shareholders

There is no information that needs to be disclosed pursuant to any of the requirements of the provisions under paragraphs 13.51(2)(h) to 13.51(2)(v) of the Listing Rules, and there are no other matters concerning Mr. Poon that need to be brought to the attention of the Shareholders.

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NOTICE OF THE ANNUAL GENERAL MEETING

Honghua Group Limited 宏華集團有限公司

(a company incorporated in the Cayman Islands with limited liability)

(Stock Code: 196)

NOTICE IS HEREBY GIVEN that an Annual General Meeting (the “Meeting”) of Honghua Group Limited (the “Company”) will be held at 10/F, United Centre, 95 Queensway, Admiralty, Hong Kong on Wednesday, 26 May 2021 at 2:00 p.m. for the following purposes:

1. To receive and consider the Audited Consolidated Financial Statements and the Reports of the Directors and of the auditors of the Company (the “Auditors”) for the year ended 31 December 2020;

2. (i) (a) To re-elect Mr. Jin Liliang as executive Director;

   • (b) To re-elect Mr. Zhang Mi as executive Director;

   • (c) To re-elect Ms. Su Mei as independent non-executive Director;

   • (d) To re-elect Mr. Poon Chiu Kwok as independent non-executive Director; and

3. (ii) To authorize the Board of Directors to fix Directors’ remuneration;

4. To re-appoint PricewaterhouseCoopers as Auditors for the year ending 31 December 2021 and authorise the Board of Directors to fix their remuneration;

5. To consider as special business and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

“ THAT

• (a) the exercise by the Directors during the Relevant Period (as defined below) of all the powers of the Company to buy back its shares, subject to and in accordance with the applicable laws, be and is hereby generally and unconditionally approved;

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NOTICE OF THE ANNUAL GENERAL MEETING

• (b) the total number of shares of the Company to be bought back pursuant to the approval in paragraph (a) above shall not exceed 10% of the total number of shares of the Company in issue as at the date of passing of this resolution and the said approval shall be limited accordingly; and

• (c) for the purpose of this resolution, “Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:

  • (i) the conclusion of the next annual general meeting of the Company;

  • (ii) the revocation or variation of the authority given under this resolution by ordinary resolution passed by the Company’s shareholders in general meetings; or

  • (iii) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable laws to be held;”

• To consider as special business and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

“ THAT

• (a) the exercise by the Directors during the Relevant Period (as defined below) of all the powers of the Company to issue, allot and deal with additional shares of the Company and to make or grant offers, agreements and options which would or might require shares to be allotted, issued or dealt with during or after the end of the Relevant Period (as defined below), be and is hereby generally and unconditionally approved, provided that, otherwise than pursuant to (i) a rights issue where shares are offered to shareholders on a fixed record date in proportion to their then holdings of shares (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in any territory outside Hong Kong), or (ii) any option scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries and/or any eligible grantee pursuant to the scheme of shares or rights to acquire shares of the Company, or (iii) any scrip dividend scheme or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the articles of association of the Company, the total number of shares to be issued, allotted, dealt with or agreed conditionally or unconditionally to be issued, allotted or dealt with shall not in total exceed 20% of the total number of shares of the Company in issue as at the date of passing of this resolution and the said approval shall be limited accordingly; and

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NOTICE OF THE ANNUAL GENERAL MEETING

• (b) for the purpose of this resolution, “Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:

  • (i) the conclusion of the next annual general meeting of the Company;

  • (ii) the revocation or variation of the authority given under this resolution by ordinary resolution passed by the Company’s shareholders in general meetings; or

  • (iii) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable laws to be held;” and

• To consider as special business and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

“ THAT the general mandate granted to the Directors of the Company pursuant to resolution numbered 5 above and for the time being in force to exercise the powers of the Company to allot shares and to make or grant offers, agreements and options which might require the exercise of such powers be and is hereby extended by the number of shares of the Company bought back by the Company pursuant to the exercise by the Directors of the Company of the powers of the Company to buy back such shares since the granting of such general mandate referred to in the above resolution numbered 4 provided that such amount shall not exceed 10% of the total number of shares of the Company in issue as at the date of passing of this resolution.”

On behalf of the Board Jin Liliang Chairman

PRC, 20 April, 2021

Notes:

1. A member of the Company who is entitled to attend and vote at the Meeting convened by the above notice is entitled to appoint a proxy to attend and vote on his behalf. A proxy need not be a member of the Company but must attend in person to represent the member. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his 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. Every member present in person or by proxy shall be entitled to one vote for each share held by him.

2. In order to be valid, the form of proxy together with any power of attorney or other authority under which it is signed or a certified copy of such power of attorney or authority, must be deposited with the Company’s Branch Share Registrar and Transfer Office in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 2:00 p.m. on Monday, 24 May 2021 (Hong Kong time) or the adjourned meeting (as the case may be). Delivery of the form of proxy shall not preclude a member of the Company from attending and voting in person at the meeting and in such event, the instrument appointing a proxy shall be deemed to be revoked.

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NOTICE OF THE ANNUAL GENERAL MEETING

1. For determining the entitlement to attend and vote at the above Meeting, the Register of Members of the Company will be closed from Friday, 21 May 2021 to Wednesday, 26 May 2021, both dates inclusive, during which period no transfer of shares of the Company will be registered. In order to be eligible to attend and vote at the Meeting, all transfer documents accompanied by the relevant share certificates must be lodged with the Company’s Branch Share Registrar and Transfer Office in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Thursday, 20 May 2021.

2. In relation to the ordinary resolutions numbered 4 to 6 set out in the above notice, the Directors wish to state that they have no immediate plan to issue any new shares or buy back any existing shares of the Company.

3. References to time and dates in this notice are to Hong Kong time and dates.

As at the date of this notice, Mr. Jin Liliang, Mr. Zhang Mi and Mr. Ren Jie are the executive Directors of the Company, and Mr. Han Guangrong and Mr. Chen Wenle are the non-executive Directors of the Company, and Mr. Liu Xiaofeng, Mr. Chen Guoming, Ms. Su Mei, Mr. Poon Chiu Kwok, Mr. Chang Qing and Mr. Wei Bin are the independent non-executive Directors of the Company.

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