Honghua Group Limited — Proxy Solicitation & Information Statement 2024

Jun 3, 2024

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 RETIRING DIRECTORS AND PROPOSED RE-APPOINTMENT OF AUDITOR AND PROPOSED 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 Munich Conference Room, 4th Floor, IntercityHotel Shenzhen Futian Huanggang, 28 Fumin Road, Futian District, Shenzhen, Guangdong, China on Wednesday, 26 June 2024 at 10 a.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 10 a.m. on Monday, 24 June 2024 (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 and in such event, the instrument appointing a proxy shall be deemed to be revoked.

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

4 June 2024

CONTENTS

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2.	Proposed Re-election of Retiring Directors. . . . . . . . . . . . . . . . . . . . . . . . . .	4
3.	Proposed Re-appointment of Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
4A.	Proposed Granting of General Mandate to Buy Back Shares. . . . . . . . . . . . .	5
4B.	Proposed Granting of General Mandate to Issue Shares . . . . . . . . . . . . . . . .	6
5.	Annual General Meeting and Proxy Arrangement . . . . . . . . . . . . . . . . . . . . .	7
6.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
7.	Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
8.	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
**Appendix **	I – Explanatory statement on the Buy-back Mandate . . . . . . . . . . .	9
**Appendix **	II – Details of Directors proposed to be re-elected
	at the Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . .	12
**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:

• “%” per cent

• “Articles of Association” The articles of association of the Company currently in force

• “Annual General Meeting” an annual general meeting of the Company to be held at Munich Conference Room, 4th Floor, IntercityHotel Shenzhen Futian Huanggang, 28 Fumin Road, Futian District, Shenzhen, Guangdong, China on Wednesday, 26 June 2024 at 10 a.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

• “Audit Committee” Audit Committee of the Board

• “Board” the Board of Directors or a duly authorised committee of the Board of Directors

• “Share Buy-back Mandate” as defined in paragraph 4A of the Letter from the Board

• “PRC” or “China” the People’s Republic of China, except where the context requires otherwise and for the purpose of this circular only, excluding Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan

• “Company” Honghua Group Limited (Stock code: 196), an exempted company incorporated under the Cayman Islands laws with limited liability on 15 June 2007, the Shares of which are listed on the Main Board of the Stock Exchange on 7 March 2008

• “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

“Share Issuance Mandate” as defined in paragraph 4B of the Letter from the Board

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DEFINITIONS

“Latest Practicable Date” 30 May 2024 being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange, as amended from time to time

30 May 2024 being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular

• “Nomination Committee” Nomination Committee of the Board

• “Remuneration Committee” Remuneration Committee of the Board

“SFO” the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong, as amended, supplemented or otherwise modified from time to time

“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

• “Strategic Investment and Risk Strategic Investment and Risk Control Committee of Control Committee” the Board

“Takeovers Code” The Hong Kong Code on Takeovers, Mergers and share buy-back (as amended from time to time) issued by the Securities and Future Commission in Hong Kong

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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. Wang Xu (Chairman) Mr. Zhu Hua Mr. Yang Qiang

Independent Non-executive Directors: Mr. Chen Guoming Ms. Su Mei Mr. Chang Qing Mr. Wei Bin Mr. Zhang Shiju

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: 5/F, Manulife Place 348 Kwun Tong Road Kowloon Hong Kong

Registered Office: Windward 3, Regatta Office Park PO Box 1350, Grand Cayman KY1-1108, Cayman Islands

4 June 2024

To Shareholders

Dear Sir/Madam,

PROPOSED RE-ELECTION OF RETIRING DIRECTORS AND PROPOSED RE-APPOINTMENT OF AUDITOR AND PROPOSED 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 retiring Directors; (ii) the re-appointment of auditor; (iii) the granting of the Share Buy-back Mandate to the Directors; (iv) the granting of the Share Issuance Mandate to the

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LETTER FROM THE BOARD

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

2. PROPOSED RE-ELECTION OF RETIRING DIRECTORS

Pursuant to articles 108(a) and (b) of the 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 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 first annual 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) and 108(b) of the Articles of Association, Mr. Wang Xu, Mr. Zhu Hua and Mr. Zhang Shiju shall retire at the Annual General Meeting. Pursuant to article 112 of the Articles of Association, Mr. Yang Qiang was appointed by the Board as executive Director on 17 May 2024, and shall hold office only until the Annual General Meeting. All the retiring Directors, being eligible to offer themselves for re-election at the Annual General Meeting.

The Nomination Committee has reviewed the structure and composition of the Board, the confirmations and disclosures given by the Directors, the qualifications, skills and experience, time commitment and contribution of the retiring Directors, and reviewed the nomination principles and criteria set out in the Company’s Board Diversity Policy, the Director Nomination Policy and the Company’s corporate strategy. The Nomination Committee has recommended to the Board on the re-election of all the retiring Directors. The Company considers that the retiring Directors will continue to bring valuable business experience, knowledge and professionalism to the Board for its efficient and effective functioning and diversity.

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LETTER FROM THE BOARD

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

3. PROPOSED RE-APPOINTMENT OF AUDITOR

The financial statements of the Group for the year ended 31 December 2023 were audited by Deloitte Touche Tohmatsu whose term of office will expire upon the conclusion of the Annual General Meeting.

Following the recommendation of the Audit Committee, the Board proposed to re-appoint Deloitte Touche Tohmatsu as the auditor of the Company with a term expiring upon the next annual general meeting of the Company; and the Board proposed it be authorized to fix the remuneration of the auditor. An ordinary resolution in respect of the re-appointment of the auditor of the Company will be proposed at the Annual General Meeting for consideration and approval by the Shareholders and to authorise the Board to fix their remuneration for the year ending 31 December 2024.

4A. PROPOSED GRANTING OF GENERAL MANDATE TO BUY BACK SHARES

At the annual general meeting of the Company held on 29 June 2023, 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 Share 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 numbered 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 904,048,915 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 9,040,489,151 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 Share Buy-back Mandate as at the Latest Practicable Date.

The Share 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).

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LETTER FROM THE BOARD

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 Share Buy-back Mandate is set out in Appendix I to this circular.

If the Company conducts a share consolidation or subdivision after the Share Buy-back Mandate has been approved in Annual General Meeting, the maximum number of shares that may be bought back under the Share 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.

4B. PROPOSED GRANTING OF GENERAL MANDATE TO ISSUE SHARES

At the annual general meeting of the Company held on 29 June 2023, 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 Share 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 numbered 5 of the notice of the Annual General Meeting as set out on pages 17 to 20 of this circular (i.e. a total of 1,808,097,830 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 9,040,489,151 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 Share Issuance Mandate as at the Latest Practicable Date.

The Share 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 Share Issuance Mandate has been approved in Annual General Meeting, the maximum number of securities that may be issued under the Share 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.

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LETTER FROM THE BOARD

5. 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 proposed re-election of retiring Directors, the proposed re-appointment of auditor, the proposed granting of the Share Buy-back Mandate and the Share Issuance Mandate and the extension of the Share Issuance Mandate by the addition thereto of the number of Shares bought back pursuant to the Share 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 10 a.m. on Monday, 24 June 2024 (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 and in such event, the instrument appointing a proxy shall be deemed to be revoked.

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.

6. RECOMMENDATION

The Directors consider that the proposed re-election of retiring Directors, the proposed re-appointment of auditor, the proposed granting of the Share Buy-back Mandate, the granting and extension of the Share 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.

7. 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.

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LETTER FROM THE BOARD

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.

8. GENERAL INFORMATION

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

Yours faithfully, For and on behalf of Honghua Group Limited Wang Xu 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 Share Buy-back Mandate.

1. REASONS FOR SHARE BUY-BACK

The Directors believe that the proposed granting of the Share 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 Share 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 9,040,489,151 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 Share 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 Share Buy-back Mandate to buy back a maximum of 904,048,915 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 Share 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 2023) in the event that the Share 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 Share 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, Dongfang Electric International Investment Co., Limited and Dongfang Electric Corporation, the controlling shareholders of the Company (as defined in the Listing Rules), were interested in 5,290,494,251 Shares representing approximately 58.52% 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 Dongfang Electric International Investment Co., Limited and Dongfang Electric Corporation would be increased to approximately 65.02% of the total issued share capital of the Company. Such an increase would not give rise to an obligation to make a mandatory offer under Rule 26 of the Takeovers Code. Other than the above mentioned, the Directors are not aware of any consequences which may give rise to an obligation to make a mandatory offer under the rule of the Takeovers Code. Besides, 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.

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 Share Buy-back Mandate is approved by the Shareholders.

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APPENDIX I EXPLANATORY STATEMENT ON THE BUY-BACK MANDATE

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 Share Buy-back Mandate is approved by the Shareholders.

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

The Company confirmed that there is nothing unusual in the explanatory statement and the proposed Share Buy-Back.

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 2023 and up to the Latest Practicable Date were as follows:

Month	Highest	Lowest
	HK$	HK$
2023
April	0.215	0.191
May	0.216	0.188
June	0.198	0.116
July	0.165	0.124
August	0.149	0.125
September	0.140	0.112
October	0.122	0.112
November	0.125	0.111
December	0.115	0.100
2024
January	0.119	0.095
February	0.099	0.090
March	0.095	0.088
April	0.091	0.080
May (up to the Latest Practicable Date)	0.097	0.086

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 Articles of Association and be proposed to be re-elected at the Annual General Meeting are provided below.

(1) Executive Director

Mr. Wang Xu（王旭先生） , aged 50, has been an Executive Director and the Chairman of the Board, the chairman of Nomination Committee, the chairman of Strategic Investment and Risk Control Committee and a member of Remuneration Committee of the Company since 25 November 2022.

Experience

Mr. Wang is currently an employee director of Dongfang Electric Corporation ( 中 國東方電氣集團有限公司, “Dongfang Electric” ). Previously, Mr. Wang served as the head of the partymasses work department of Dongfang Electric and the head of the corporate culture department of Dongfang Electric Corporation Limited, the deputy secretary of the party committee and the secretary of the discipline inspection committee of Dongfang Electric Wind Power Co., Ltd. and the manager of the Coil Branch Factory of Dongfang Electric, as well as the secretary of the joint party branch of the production management department and the warehouse management center of DongFang Electric Machinery Corporation Limited, and deputy head of the production management department of DongFang Electric Machinery Corporation Limited. Mr. Wang currently serves as the Chairman of the Board of the Company’s subsidiaries, Honghua Holdings Limited（宏華控股有限公司）, Honghua (China) Investment Co., Ltd.* （宏華（中國）投資有限公司） and Sichuan Honghua Petroleum Equipment Co., Ltd. Mr. Wang has extensive experience in production management and enterprise management. Mr. Wang received his Bachelor’s degree in Engineering from Chongqing University in 1995.

Save as disclosed above, Mr. Wang did not hold any positions with the Company and members of the Group in the past three years nor hold any directorships in any other listed companies.

Length of service and emoluments

Mr. Wang has entered into an executive director’s service contract with the Company for a term of three years with effect from 25 November 2022, and shall be subject to retirement by rotation and re-election in accordance with the Articles of Association of the Company. Mr. Wang will receive remuneration in accordance with the remuneration and appraisal management policy for executive directors and senior management of the Company. Under the aforementioned executive director’s service contract, Mr. Wang’s remuneration consists mainly of a basic remuneration of RMB220,000 per annum (excluding arrangements for pension payments) and variable remuneration (including incentives) based on his performance and the key performance indicators set by the Company (linked to the Group’s annual operating performance).

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

APPENDIX II

Relationships

Other than the relationship arising from his being the Company’s Executive Director and Chairman of the Board of Directors, the chairman of the Nomination Committee, the chairman of the Strategic Investment and Risk Control Committee, the member of Remuneration Committee and employee director of Dongfang Electric, Mr. Wang 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. Wang did not have any interest in any Shares or underlying 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. Wang that need to be brought to the attention of the Shareholders.

(2) Executive Director

Mr. Zhu Hua（朱驊先生） , aged 40, has been an Executive Director and a member of Strategic Investment and Risk Control Committee of the Company since 4 July 2022. Mr. Zhu has been the President of the Company with effect from 7 February 2024.

Experience

Mr. Zhu once served as a director, general manager and party secretary of MHI Power Dongfang Boiler Co., Ltd., a subsidiary of Dongfang Electric Corporation. He once served as the deputy director of the boiler technology department, the deputy director of the product project management department, the director of the marketing center and the director of the thermal power marketing department of Dongfang Boiler Co., Ltd. Mr. Zhu has extensive experience in technology and corporate management. Mr. Zhu currently serves as a director and general manager of Sichuan Honghua Petroleum Equipment Co., Ltd., a subsidiary of the Company. He also served as a director of Honghua Holdings Limited （宏華控股有限公司） and Honghua (China) Investment Co., Ltd.* （宏華（中國）投資有限公司）, both subsidiaries of the Company, from 14 September 2022 to 10 February 2023, respectively. Mr. Zhu obtained a Bachelor’s Degree in Thermal and Power Engineering from Zhejiang University in 2006, a Master’s Degree in Mechanical Engineering from the Hong Kong University of Science and Technology in 2008, and a Doctorate Degree in Power Engineering and Engineering Thermophysics from Xi’an Jiaotong University in 2020.

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

Saved as disclosed above, Mr. Zhu 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.

Length of service and emoluments

Mr. Zhu has entered into an Executive Director’s service contract with the Company for a term of three years commencing from 4 July 2022 and shall be subject to retirement by rotation and re-election in accordance with the Articles of Association of the Company. Mr. Zhu does not receive director’s emoluments from the Company.

Relationships

Other than the relationship arising from his being the Company’s Executive Director and the member of Strategic Investment and Risk Control Committee, Mr. Zhu 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. Zhu did not have any interest in any Shares or underlying 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. Zhu that need to be brought to the attention of the Shareholders.

(3) Executive Director

Mr. Yang Qiang（楊强先生） , aged 43, has been an Executive Director of the Company since 17 May 2024.

Experience

Mr. Yang Qiang once worked in Dongfang Electric Machinery Co., Ltd from 2004, served as deputy director of the equipment department, deputy director of the material purchasing department and deputy director of the procurement centre, and was the deputy secretary of the Party Committee and employee representative of Dongfang Electric Autocontrol Engineering Co., Ltd.. At present, Mr. Yang Qiang serves as the Party Deputy Secretary of Honghua (China) Investment Co., Ltd. and a director of Sichuan Honghua Petroleum Equipment Co., Ltd., both being the subsidiaries of the

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

Company. Mr Yang Qiang has extensive experience in material procurement, equipment management, technology management and human resources management. Mr. Yang holds a bachelor’s degree.

Save as disclosed above, Mr. Yang Qiang did not hold any positions with the Company and members of the Group in the past three years nor hold any directorships in any other listed companies.

Length of service and emoluments

Mr. Yang Qiang has entered into an Executive Director’s service contract with the Company for a term of three years, subject to retirement by rotation and re-election in accordance with the Articles of Association of the Company. Mr. Yang Qiang does not receive director’s remuneration from the Company.

Relationships

Mr. Yang Qiang 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. Yang Qiang did not have any interest in any Shares or underlying 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. Yang Qiang that need to be brought to the attention of the Shareholders.

(4) Independent Non-executive Director

Mr. Zhang Shiju （張士舉先生） , aged 46, has been an Independent Non-executive Director, the member of Remuneration Committee, a member of Audit Committee and a member of Nomination Committee of the Company since 4 July 2022.

Experience

Mr. Zhang is currently a Senior Counsel of AllBright Law Firm Shanghai Office. Mr. Zhang holds a Master’s Degree in Economic Law from Nanjing University. He is an external expert of the Shanghai Technology Exchange Expert Think Tank, and a management consulting service expert of the Management Consulting Professional Committee of the China Enterprise Confederation. Mr. Zhang served as a senior partner of Beijing Yingke Law Firm Shanghai Office, the Deputy Secretary-General of

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

APPENDIX II

Shanghai Youth Entrepreneurship and Employment Foundation, a co-tutor for graduate students of Tsinghua University and Shanghai Jiaotong University Law School, and an adjunct professor of Jilin University Business School. Mr. Zhang has extensive experience in legal services such as investment and mergers and acquisitions, IPO listing, corporate governance, and industrial funds.

Saved as disclosed above, Mr. Zhang 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.

Length of service and emoluments

Mr. Zhang has entered into an Independent Non-executive Director’s service contract with the Company for a term of three years commencing from 4 July 2022 and shall be subject to retirement by rotation and re-election in accordance with the Articles of Association of the Company. Mr. Zhang is entitled to receive the director’s emolument of HK$120,000 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 Non-executive Director, the member of Remuneration Committee, member of the Audit Committee and Nomination Committee, 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 did not have any interest in any Shares or underlying 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. Zhang 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 Munich Conference Room, 4th Floor, IntercityHotel Shenzhen Futian Huanggang, 28 Fumin Road, Futian District, Shenzhen, Guangdong, China on Wednesday, 26 June 2024 at 10 a.m. for the following purposes:

ORDINARY RESOLUTIONS

1. To receive and consider the Audited Consolidated Financial Statements and the Reports of the Directors and of the auditor of the Company (the “ Auditor ”) for the year ended 31 December 2023;

2. (i) (a) To re-elect Mr. Wang Xu as an executive Director;

   • (b) To re-elect Mr. Zhu Hua as an executive Director;

   • (c) To re-elect Mr. Yang Qiang as an executive Director;

   • (d) To re-elect Mr. Zhang Shiju as an independent non-executive Director; and

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

4. To re-appoint Deloitte Touche Tohmatsu as Auditor for the year ending 31 December 2024 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 Honghua Group Limited Wang Xu Chairman

PRC, 4 June 2024

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NOTICE OF THE ANNUAL GENERAL MEETING

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 10 a.m. on Monday, 24 June 2024 (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.

3. 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 June 2024 to Wednesday, 26 June 2024, 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 June 2024.

4. 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.

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

As at the date of this notice, the Board of directors of the Company comprises Mr. Wang Xu (Chairman), Mr. Zhu Hua and Mr. Yang Qiang as executive directors; and Mr. Chen Guoming, Ms. Su Mei, Mr. Chang Qing, Mr. Wei Bin and Mr. Zhang Shiju as independent non-executive directors.

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