Huazhang Technology Holding Limited — Proxy Solicitation & Information Statement 2019

Apr 30, 2019

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Huazhang Technology Holding Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank manager, licensed securities dealer or registered institution in securities 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.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the shares or other securities of Huazhang Technology Holding Limited.

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華章科技控股有限公司

Huazhang Technology Holding Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1673)

(1) PROPOSED EXTENSION OF MATURITY DATE OF CONVERTIBLE BONDS

(2) ALLOTMENT AND ISSUANCE OF NEW SHARES UNDER SPECIFIC MANDATE AND

(3) NOTICE OF EXTRAORDINARY GENERAL MEETING

Capitalised terms defined in the section headed “Definitions” of this circular have the same meanings when used in this cover page, unless the context otherwise requires.

A notice convening the EGM to be held at Room 805A, 8/F, Tower 1, South Seas Centre, 75 Mody Road, Tsim Sha Tsui, Kowloon, Hong Kong on 21 May 2019 (Tuesday) at 1 p.m. is set out on pages EGM-1 to EGM-2 of this circular. Whether or not you are able to attend the EGM, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not later than 48 hours (i.e. 1 p.m. on 17 May 2019 (Friday)) before the time appointed for the holding of the EGM or any adjourned meeting (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or at any adjourned meeting thereof (as the case may be) if you so wish and, in such event, the relevant form of proxy shall be deemed to be revoked. This circular is published on the website of The Stock Exchange of Hong Kong Limited at http://www. hkexnews.hk and on the website of the Company at http://www.hzeg.com.

30 April 2019

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
NOTICE OF THE EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EGM-1

• i -

DEFINITIONS

In this circular, unless the context otherwise requires, the following terms shall have the meanings set out below:

• “Board” the board of Directors “Bonds” the unlisted 5.0% convertible bonds due 29 March 2019 in an aggregate principal amount of HK$100,000,000 issued by the Company on 29 March 2017

• “Bondholder” Kaiser Asset Management Limited (金盛資產管理有限公司), a company incorporated under the laws of the British Virgin Islands with limited liability, that for the time being the registered holder of the Bonds and an Independent Third Party

• “Bond Instrument” the bond instrument executed by the Company on 29 March 2017 which created the Bonds

• “Company” Huazhang Technology Holding Limited, a company incorporated under the laws of the Cayman Islands with limited liability and the shares of which are listed on the Main Board of the Stock Exchange (Stock code: 1673)

• “Connected Person(s)” has the meaning given to it in the Listing Rules “Conversion Date” the conversion date in respect of the Bonds “Conversion Price” the price per Share at which the New Shares will be issued upon conversion of the Bonds, with the initial conversion price being HK$2.50 per New Share (subject to adjustments)

• “Conversion Rights” the rights of the Bondholder to convert, in whole or in part, the Bonds into New Shares pursuant to the terms and conditions of the Bonds

• “Current Market Price” in respect of a Share at a particular date, the arithmetic average of the closing price for one Share (being a Share carrying a full entitlement to dividends) as quoted on the Stock Exchange for the 20 consecutive trading days ending on the trading day immediately preceding such date

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

• 1 -

DEFINITIONS

“EGM”	the extraordinary general meeting of the Company to be convened
	and held at Room 805A, 8/F, Tower 1, South Seas Centre, 75
	Mody Road, Tsim Sha Tsui, Kowloon, Hong Kong on 21 May
	2019 (Tuesday) at 1 p.m. for considering, and if thought fit,
	approving the Proposed Extension and the allotment and issue of
	New Shares under the Specific Mandate
“Extended Maturity Date”	29 September 2019, being the six months after the Maturity Date
“Group”	the Company and its subsidiaries from time to time
“Hong Kong”	Hong Kong Special Administrative Region of the PRC
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Independent Third Party”	a person independent of the Company and its Connected Persons
	and their respective associates
“Issue Date”	29 March 2017, being the date of issue of the Bonds by the
	Company
“Last Trading Day”	25 March 2019, being the last trading day preceding the date of
	the first announcement on the Proposed Extension
“Latest Practicable Date”	23 April 2019, being the latest practicable date prior to the printing
	of this circular for the purpose of ascertaining certain information
	contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Maturity Date”	29 March 2019, being the second anniversary of the Issue Date
“New Shares”	the new Shares to be allotted and issued by the Company to the
	Bondholder upon conversion of the Bonds
“PRC”	People’s Republic of China (excluding Hong Kong, Macau and
	Taiwan)
“Previous General Mandate”	the general mandate granted to the Directors at the annual general
	meeting of the Company held on 11 November 2016 to allot, issue
	and deal with up to 20% of the total number of issued Shares as at
	the date of such annual general meeting

• 2 -

DEFINITIONS

“Proposed Extension” the proposed extension of the maturity date of the Bonds for six months after the Maturity Date “RMB” Renminbi, the lawful currency of the PRC “Share(s)” ordinary share(s) of the Company “Shareholder(s)” holder(s) of the Share(s) “Specific Mandate” the specific mandate to be sought from the Shareholders at the EGM to allot and issue the New Shares upon conversion of the Bonds “Stock Exchange” The Stock Exchange of Hong Kong Limited “subsidiary” shall have the meaning given to it in the Listing Rules “Subscription Agreement” the subscription agreement dated 29 March 2017 entered into between the Company and the Bondholder in respect of the subscription of the Bonds “%” per cent.

• 3 -

LETTER FROM THE BOARD

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華章科技控股有限公司

Huazhang Technology Holding Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1673)

Executive Directors: Mr. ZHU Gen Rong (Chairman) Mr. WANG Ai Yan (Chief Executive Officer) Mr. LIU Chuan Jiang Mr. JIN Hao Mr. LIANG Huiqun

Registered office in the Cayman Islands: Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman, KY1-1111 Cayman Islands

Independent Non-executive Directors: Mr. DAI Tian Zhu Mr. KONG Chi Mo Mr. Heng, Keith Kai Neng

Principal place of business in Hong Kong: Room 805A, 8th Floor Tower 1, South Seas Centre 75 Mody Road, Tsim Sha Tsui Kowloon Hong Kong Hong Kong, 30 April 2019

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED EXTENSION OF MATURITY DATE OF CONVERTIBLE BONDS (2) ALLOTMENT AND ISSUANCE OF NEW SHARES UNDER SPECIFIC MANDATE AND

(3) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to:

• (i) the announcements of the Company dated 29 March 2017 and 30 March 2017 respectively, in relation to the issue of the Bonds under the Previous General Mandate to the Bondholder; and

• (ii) the announcements of the Company dated 25 March 2019 and 26 March 2019, respectively, in relation to the proposed extension of the maturity date of the Bond for six months after the Maturity Date.

• 4 -

LETTER FROM THE BOARD

The purpose of this circular is to provide you with further details of the Proposed Extension, the grant of the Specific Mandate, the notice convening the EGM and other information as required under the Listing Rules.

BACKGROUND INFORMATION OF THE BONDS

On 29 March 2017, the Company and the Bondholder entered into the Subscription Agreement. On the same date, the Bonds were created and issued to the Bondholder. The principal terms of the Bonds were arrived at after arm’s length negotiations between the Company and the Bondholder and had been summarised and disclosed in the Company’s announcement dated 29 March 2017.

The Bondholder

The Bondholder is an investment holding company incorporated in the British Virgin Islands with limited liability and its ultimate beneficial owner is Mr. Yan Kam Cheong. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, there is no relationship between the Bondholder and the Company and its Connected Persons and their respective associates.

Conversion Price

The initial conversion price of HK$2.50 per New Share was determined after arm’s length negotiations between the Company and the Bondholder at the time when the Subscription Agreement was entered into in March 2017 with reference to the then market prices and performance of the Shares, the then market conditions and the historical financial performance and the business prospects of the Group.

New Shares

Based on the initial Conversion Price and assuming full conversion of the Bonds, the Bonds would be convertible into 40,000,000 New Shares. The New Shares were to be allotted and issued under the Previous General Mandate.

Use of proceeds

As disclosed in the announcement of the Company dated 29 March 2017, the net proceeds from the subscription of the Bonds pursuant to the Subscription Agreement, after deduction of all relevant costs and expenses, were estimated to be approximately HK$99,500,000. The Company intended to use the net proceeds to fund new intergraded solution projects that the Company undertook and for general working capital.

As at the Latest Practicable Date, the net proceeds from the subscription of the Bonds had been fully utilised. As intended and disclosed, out of the HK$99,500,000, approximately HK$79,600,000 had been used for the Group’s new intergraded solution projects and approximately HK$19,900,000 had been used for the Group’s general working capital in relation to project contracting services.

• 5 -

LETTER FROM THE BOARD

PROPOSED EXTENSION

The Bonds were issued to the Bondholder on 29 March 2017. Pursuant to the terms and conditions of the Bonds, among others, (a) unless previously converted or cancelled under the terms and conditions of the Bonds, the maturity date of the Bonds would be 29 March 2019, being the second anniversary of the Issue Date; and (b) the Bondholder has an option to extend the Maturity Date for one additional year after the Maturity Date subject to the agreement of the Company.

On 25 March 2019, the Company received a notice from the Bondholder requesting to extend the maturity date of the Bonds for six months after the Maturity Date, i.e., to 29 September 2019, under the same terms and conditions of the Bonds. The Company agreed to extend the Maturity Date as requested by the Bondholder.

As at the Latest Practicable Date, (i) the Bondholder had not exercised any of its Conversion Rights; (ii) no New Shares had been allotted and issued; and (iii) the Bonds in the principal amount of HK$100,000,000 had remained outstanding.

Principal terms and conditions of the Bonds

Save for the Proposed Extension, all other material terms and conditions of the Bonds have remained unchanged and are in full force and effect. The principal terms and conditions of the Bonds (as revised to give effect to the Proposed Extension) are summarised below:

Issuer : The Company. Principal amount : HK$100,000,000. Maturity Date : Unless previously converted or cancelled, each Bond will be redeemed at 100% of the principal amount outstanding on the Extended Maturity Date. Issue price : 100% of the principal amount of the Bonds Coupon : 5.0% per annum from the Issue Date to the Extended Maturity Date, payable in cash on a semi-annual basis in arrears. Default interest shall be payable on late payments at 5.0% per annum above the coupon rate.

• 6 -

LETTER FROM THE BOARD

• Conversion : Subject to certain conditions and the Proposed Extension becoming effective, the Bondholder has the right to convert its Bonds into New Shares at the Conversion Price at any time on and after the 30th day after the date on which the Proposed Extension becomes effective up to the close of business (at the place where the certificate evidencing such Bond is deposited for conversion) on the 30th day prior to the Extended Maturity Date (both days inclusive) (but, except as provided in the terms and conditions of the Bonds, in no event thereafter).

The number of New Shares to be issued on conversion of a Bond will be determined by dividing the principal amount of the Bond to be converted by the Conversion Price in effect at the relevant Conversion Date.

Conversion Price

• : The price at which New Shares will be issued upon conversion shall initially be HK$2.50 per New Share.

The Conversion Price is subject to adjustment for, among other things, consolidation, subdivision or reclassification of Shares, capitalisation of profits or reserves, distributions, rights issues of Shares or options over Shares, rights issues of other securities, issues at less than Current Market Price, other issues at less than Current Market Price, other offers to Shareholders and other dilutive events as described in the Bond Instrument.

The Conversion Price may not be reduced so that, on conversion of the Bonds, New Shares would fall to be issued at a discount to their par value.

• Ranking of New Shares : The New Shares will be fully paid and will in all respects rank pari passu with the fully paid Shares in issue on the date the name of the holder of record of the number of Shares issuable upon conversion are registered as such in the register of members of the Company.

• Redemption at maturity : Unless previously converted or cancelled, the Company will redeem each Bond at 100% of its principal amount on the Extended Maturity Date.

• Transferability : The Bonds will be freely transferable, subject to certain restricted transfer periods.

• 7 -

LETTER FROM THE BOARD

Voting rights	:	The Bonds do not carry any voting rights.
Form and denomination	:	The Bonds are issued in registered form in the denomination
		of HK$10,000,000 and integral multiples of HK$5,000,000
		in excess thereof each.
Status	:	The Bonds constitute direct, unsubordinated, unconditional
		and (subject to the negative pledge) unsecured obligations
		of the Company and shall at all times rank pari passu and
		without any preference or priority among themselves. The
		payment obligations of the Company under the Bonds shall,
		save for such exceptions as may be provided by mandatory
		provisions of applicable law and subject to the negative
		pledge, at all times rank at least equally with all of its other
		present and future senior, unsecured and unsubordinated
		obligations.
Listing	:	No listing of the Bonds will be sought from the Stock
		Exchange or any other stock exchanges.
		An application will be made by the Company to the Stock
		Exchange for the listing of, and permission to deal in, the
		New Shares on the Stock Exchange.
Events of default	:	The Bondholder by a special resolution may give notice to
		the Company that the Bonds are, and they shall accordingly
		thereby become, immediately due and repayable at the
		principal amount of the Bonds together with interest accrued
		but unpaid to such date (subject as provided below and
		without prejudice to the right of Bondholder to exercise the
		Conversion Right) if:
		(i) _Non-payment:_a default is made in the payment of
		any principal, premium, interest or any other amount
		due in respect of the Bonds and such default is not
		remedied within 15 days from the due date thereof;
		(ii) _Breach of other obligations:_the Company does not
		perform or comply with one or more of its other
		obligations in the Bonds which default is incapable
		of remedy or, if in the opinion of the Bondholder,
		capable of remedy, is not remedied within 30 days
		or such longer period as the Bondholder may permit
		after written notice of such default shall have been
		given to the Company by the Bondholder;

• 8 -

LETTER FROM THE BOARD

• (iii) Failure to deliver Shares: any failure by the Company to deliver any Shares as and when the Shares are required to be delivered following conversion of the Bonds and such failure is not remedied within 15 days from the due date thereof;

• (iv) Insolvency: the Company or any of its principal subsidiaries is (or is, or could be, deemed by law or a court to be) insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or suspend payment of all or a material part of (or of a particular type of) its debts, proposes or makes any agreement for the deferral, rescheduling or other readjustment of all of (or all of a particular type of) its debts (or of any part which it will or might otherwise be unable to pay when due), proposes or makes a general assignment or an arrangement or composition with or for the benefit of the relevant creditors in respect of any of such debts or a moratorium is agreed or declared in respect of or affecting all or any part of (or of a particular type of) the debts of the Company or any of its principal subsidiaries; an administrator or liquidator of the Company or any of its principal subsidiaries or the whole or any material part of the assets and turnover of the Company or any of its principal subsidiaries is appointed (or application for any such appointment is made);

• (v) Cross-default: (a) any other present or future indebtedness (whether actual or contingent) of the Company or any of its subsidiaries for or in respect of moneys borrowed or raised becomes (or becomes capable of being declared) due and payable prior to its stated maturity by reason of any actual or potential default, event of default or the like (howsoever described); or (b) any such indebtedness is not paid when due or, as the case may be, within any applicable grace period; or (c) the Company or any of its subsidiaries fails to pay when due any amount payable by it under any present or future guarantee for, or indemnity in respect of, any moneys borrowed or raised, provided that the aggregate amount of the relevant indebtedness, guarantees and indemnities in respect of which one or more of the events mentioned above in the Bond Instrument have occurred equals or exceeds RMB500 million or its equivalent (as determined on the basis of the middle spot rate for the relevant currency against Renminbi as quoted by an independent investment bank on the day on which such amount becomes due and payable or is not paid) in any other currency on the day on which such indebtedness becomes due and payable or is not paid or any such amount becomes due and payable or is not paid under any such guarantees or indemnity;

• 9 -

LETTER FROM THE BOARD

• (vi) Enforcement proceedings: a distress, attachment, execution, seizure before judgment or other legal process is levied, enforced or sued out on or against any material part of the property, assets or turnover of the Company or any of its principal subsidiaries and is not discharged or stayed within 90 days;

• (vii) Winding-up: an order is made or an effective resolution passed for the winding-up or dissolution or administration of the Company or any of its principal subsidiaries (except for a members’ voluntary solvent winding up of a principal subsidiary), or the Company or any of its principal subsidiaries ceases or threatens to cease to carry on all or substantially all of its business or operations (other than the occurrence of an event set out in the Bond Instrument), except for the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation (a) on terms approved by a special resolution of the Bondholder; or (b) in the case of a principal subsidiary, whereby the undertaking and assets of such principal subsidiary are transferred to or otherwise vested in the Company or another of its principal subsidiaries;

• (viii) Security enforced: an encumbrance takes possession or an administrative or other receiver or an administrator or other similar officer is appointed of the whole or a material part of the property, assets or turnover of the Company or any of its principal subsidiaries (as the case may be) and is not discharged within 90 days;

• (ix) Nationalisation: any step is taken by any person with a view to the seizure, compulsory acquisition, expropriation or nationalisation of all or a material part of the assets of the Company or any of its subsidiaries; and

• (x) Illegality: it is or will become unlawful for the Company to perform or comply with any one or more of its obligations under any of the Bonds.

• 10 -

LETTER FROM THE BOARD

Summary of changes to the principal terms and conditions of the Bonds

Set out below is a summary of the changes to the principal terms and conditions of the Bonds under the Proposed Extension:

• (i) Unless previously converted or cancelled, each Bond will be redeemed at 100% of the principal amount outstanding on the Extended Maturity Date, instead of the Maturity Date.

• (ii) The interest on the Bonds will be paid from the Issue Date to the Extended Maturity Date, instead of the Maturity Date, payable in cash on a semi-annual basis in arrears.

• (iii) The conversion period of the Bonds will commence at any time on and after the 30th day after the date on which the Proposed Extension becomes effective up to the close of business on the 30th day prior to the Extended Maturity Date, instead of the Maturity Date.

Conversion Price

The initial Conversion Price, which was determined when the Subscription Agreement was entered into in March 2017, represents:

• (a) a discount of approximately 45.89% to the closing price of HK$4.62 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (b) a discount of approximately 39.02% to the closing price of HK$4.10 per Share as quoted on the Stock Exchange as at the Latest Practicable Date;

• (c) a discount of approximately 45.75% to the average closing price of approximately HK$4.61 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to and including the Last Trading Day;

• (d) a discount of approximately 45.50% to the average closing price of approximately HK$4.59 per Share as quoted on the Stock Exchange for the last ten consecutive trading days immediately prior to and including the Last Trading Day; and

• (e) a premium of approximately 98.68% over the audited net asset value per Share of approximately RMB1.06 per Share (equivalent to approximately HK$1.26, at the exchange rate of HK$1.00 = RMB0.8431) based on the audited net asset value of the Company as at 30 June 2018 and 722,609,001 Shares in issue as at the Latest Practicable Date.

Considering the initial Conversion Price was determined when the Subscription Agreement was entered into in March 2017 with reference to the then market prices of the Shares, the Directors are of the view that the Conversion Price is fair and reasonable and in the interests of the Company and its Shareholders as a whole.

• 11 -

LETTER FROM THE BOARD

New Shares

Based on the initial conversion price of HK$2.50 per New Share (subject to adjustment), a maximum number of 40,000,000 New Shares may fall to be allotted and issued upon exercise in full of the Conversion Rights attached to the Bonds, representing approximately 5.54% of the issued share capital of the Company as at the Latest Practicable Date and approximately 5.25% of the issued share capital of the Company as enlarged by the issue of the New Shares.

The New Shares to be allotted and issued upon full conversion of the Bonds at the Conversion Price of HK$2.50 (subject to adjustments) will be allotted and issued pursuant to the Specific Mandate to be sought from the Shareholders at the EGM.

Conditions

The Proposed Extension will become effective immediately after the fulfilment of the following conditions:

• (a) the approval from the Stock Exchange under Rule 28.05 of the Listing Rules having been obtained;

• (b) the approval by the Shareholders of the Proposed Extension and the allotment and issue of the New Shares upon full conversion of the Bonds under the Specific Mandate having been obtained; and

• (c) the Listing Committee of the Stock Exchange having granted the listing of and permission to deal in the New Shares.

As at the Latest Practicable Date, the Conditions are not yet satisfied in full.

REASONS FOR AND BENEFITS OF THE PROPOSED EXTENSION

The Group is principally engaged in the research and development, manufacture and sale of industrial products, project contracting services, environmental products, and the provision of supporting services in the PRC.

The Bonds had been matured on 29 March 2019. Unless the Maturity Date is extended, the Company would be required to repay the outstanding principal amount of the Bonds (together with all interests accrued thereon up to and including the date of actual payment) to the Bondholder.

As disclosed in the Company’s interim results announcement for the six months ended 31 December 2018 published on 28 February 2019, the Group has planned to develop waste recycling projects overseas. It may involve setting up a waste recycling plant overseas and adopting advanced technology to dismantle metal solid waste, which may require a significant amount of capital commitment. From the Company’s perspective, the Proposed Extension for a period of six months, which was proposed by the Bondholder, will provide reasonable buffer time and flexibility to the Company’s deployment of its financial resources to fund its operation and development as well as to plan its working capital and cash flow arrangement.

• 12 -

LETTER FROM THE BOARD

In light of the recent uncertain economic conditions, the Directors believe that (i) it may not be the right time to reallocate its financial resources to repay the Bonds; and (ii) any placing of new bonds to new investors at a conversion price to be determined with reference to the recent market prices of the shares of the Company (which have much increased since the Issue Date) may not be successful. Considering the financial resources presently available to the Group, the Group has and will have sufficient financial resources to repay the redemption monies when the Bonds become due. In the circumstances, based on the above considerations, the Directors are of the view that the Proposed Extension is in the best interests of the Company and its Shareholders as a whole.

CHANGES IN SHAREHOLDING STRUCTURE

The following table sets out the shareholding structure of the Company as at the Latest Practicable Date and immediately upon exercise in full of the conversion rights attached to the Bonds (based on the Conversion Price without any adjustment, and assuming there being no other change in the shareholding structure and share capital of the Company immediately after the Latest Practicable Date):

			Immediately upon exercise in full of the	Immediately upon exercise in full of the
Name	As at the Latest	Practicable Date	conversion rights attached to the Bonds
		Approximate		Approximate
		percentage of the		percentage of the
	Number of Shares	total issued share	Number of Shares	total issued share
	held directly or	capital of the	held directly or	capital of the
	indirectly	Company	indirectly	Company
Mr. Zhu Gen Rong, Mr. Wang Ai Yan and
Mr. Liu Chuan Jiang_(Note)_	412,732,000	57.11%	412,732,000	54.12%
The Bondholder	–	–	40,000,000	5.25%
Public Shareholders	309,877,001	42.89%	309,877,001	40.63%
Total:	722,609,001	100.00%	762,609,001	100.00%

Note: Mr. Zhu Gen Rong, Mr. Wang Ai Yan and Mr. Liu Chuan Jiang are our executive Directors. Out of the 412,732,000 Shares, 411,924,000 Shares are held by Florescent Holdings Limited, which is beneficially owned as to 77.9% by Lian Shun Limited, which in turn is beneficially owned as to 61.31% by Mr. Zhu Gen Rong, 20.74% by Mr. Wang Ai Yan and 17.95% by Mr. Liu Chuan Jiang. The remaining 608,000 Shares and 200,000 Shares are held by Mr. Zhu Gen Rong and Mr. Wang Ai Yan respectively. Mr. Zhu Gen Rong, Mr. Wang Ai Yan and Mr. Liu Chuan Jiang are parties acting in concert.

FUND RAISING ACTIVITIES IN THE PAST TWELVE-MONTH PERIOD

The Company did not engage in any fund raising activities in the past 12 months from the Latest Practicable Date.

• 13 -

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

Stock Exchange’s approval

Pursuant to Rule 28.05 of the Listing Rules, any alterations in the terms of convertible debt securities after issue must be approved by the Stock Exchange, except where the alterations take effect automatically under the existing terms of such convertible debt securities.

As the Proposed Extension involves the Bondholder exercising its option and requires the agreement from the Company, it is not regarded to be taking effect automatically under the existing terms of the Bonds. The Proposed Extension is regarded as a new arrangement of the Company. The Company has made an application to the Stock Exchange for the approval for the Proposed Extension.

Specific mandate

Pursuant to Rule 13.36(6) of the Listing Rules, an issuer may not issue securities convertible into new shares of the issuer for cash consideration pursuant to a general mandate given under Rule 13.36(2)(b) of the Listing Rules, unless the initial conversion price is not lower than the benchmarked price (as defined in Rule 13.36(5) of the Listing Rules) of the shares at the time of the placing (in the case of the Company, at the time of the new arrangement, i.e., the Proposed Extension).

As the initial conversion price of HK$2.50 is lower than the benchmarked price of HK$4.62 (being the closing price per Share as quoted on the Stock Exchange on the Last Trading Day), the Company is required by the Stock Exchange to obtain a specific mandate from the Shareholders for the allotment and issuance of the New Shares upon conversion of the Bonds.

THE EGM

The notice convening the EGM to be held at Room 805A, 8/F, Tower 1, South Seas Centre, 75 Mody Road, Tsim Sha Tsui, Kowloon, Hong Kong on 21 May 2019 (Tuesday) at 1 p.m. is set out on pages EGM-1 to EGM-2 of this circular. An ordinary resolution will be proposed to the Shareholders at the EGM to consider and, if thought fit, approve the grant of the Specific Mandate. The votes on the resolution proposed to be approved at the EGM will be taken by poll and an announcement will be made by the Company after the EGM on the results of the EGM.

A member entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and, on a poll, vote on his/her behalf. A form of proxy for use at the EGM is accompanied with this circular. A proxy need not be a member of the Company. Whether or not you intend to attend the EGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

• 14 -

LETTER FROM THE BOARD

To the best of the knowledge, information and belief of the Directors, and having made all reasonable enquiries, no Shareholder has material interest in the granting of the Specific Mandate and no Shareholder would be required to abstain from voting at the EGM.

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 Group. 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 is not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

RECOMMENDATION

The Directors (including the independent non-executive Directors) are of the opinion that the Proposed Extension is fair and reasonable, and the granting of the Specific Mandate is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) recommend that all Shareholders should vote in favour of the resolutions to be proposed at the EGM.

Yours faithfully, By Order of the Board Huazhang Technology Holding Limited ZHU GEN RONG Chairman and Executive Director

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NOTICE OF THE EGM

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華章科技控股有限公司

Huazhang Technology Holding Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1673)

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (the “ Meeting ”) of Huazhang Technology Holding Limited (the “ Company ”) will be held at Room 805A, 8th Floor, Tower 1, South Seas Centre, 75 Mody Road, Tsim Sha Tsui, Kowloon, Hong Kong on Tuesday, 21 May 2019 at 1 p.m. for the purpose of considering and, if thought fit, passing, with or without modifications, the following ordinary resolution of the Company.

ORDINARY RESOLUTION

“ THAT:

• (a) the extension of the maturity date of the unlisted 5.0% convertible bonds due 29 March 2019 in an aggregate principal amount of HK$100,000,000 issued by the Company on 29 March 2017 (the “ Bonds ”) for six months to 29 September 2019 (the “ Proposed Extension ”) and the revision of the terms and conditions of the Bonds to give effect to the Proposed Extension be and are hereby approved, confirmed and ratified;

• (b) the directors of the Company be and are hereby granted a specific mandate to allot and issue new shares of the Company (the “ New Shares ”) upon exercise of the conversion rights attached to the Bonds; and

• (c) the directors of the Company be and are hereby authorised to do all such acts and things and execute all such documents which they consider necessary, desirable or expedient for the purpose of, or in connection with, the Proposed Extension and the allotment and issue of the New Shares.”

Yours faithfully, By Order of the Board Huazhang Technology Holding Limited ZHU GEN RONG Chairman and Executive Director

Hong Kong, 30 April 2019

• EGM-1 -

NOTICE OF THE EGM

Registered office in Cayman Islands: Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman, KY1-1111 Cayman Islands

Principal place of business in Hong Kong: Room 805A, 8th Floor Tower 1, South Seas Centre 75 Mody Road, Tsim Sha Tsui Kowloon Hong Kong

Notes:

1. Any member entitled to attend and vote at the meeting is entitled to appoint one or more proxies (if such member is the holder of two or more shares) to attend and to vote instead of them. A proxy need not be a member of the Company.

2. Where there are joint holders of any share, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at any meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose, seniority shall be determined by the order in which the names stand in the register of members in respect of the joint holding.

3. A form of proxy for use at the meeting is enclosed.

4. To be valid, the form of proxy, together with the power of attorney or other authority, if any, under which it is signed or a certified copy of such power or authority, must be deposited at the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the meeting or adjourned meeting. Completion and return of the form of proxy will not preclude members from attending and voting in person at the meeting or adjourned meeting.

5. For the purpose of ascertaining shareholders’ entitlement to attend and vote at the EGM, the register of members of the Company will be closed from 16 May 2019 (Thursday) to 21 May 2019 (Tuesday), both days inclusive, during which period no transfer of shares will be effected. In order to be eligible to attend and vote at the EGM, all transfer documents accompanied by the relevant share certificates must be lodged for registration with the Company’s share registrar in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on 15 May 2019 (Wednesday).

6. According to Rule 13.39(4) of the Listing Rules, the voting at the EGM will be taken by poll.

As at the date of this notice, the executive Directors are Mr. Zhu Gen Rong, Mr. Wang Ai Yan, Mr. Liu Chuan Jiang, Mr. Jin Hao and Mr. Liang Huiqun, and the independent non-executive Directors are Mr. Dai Tian Zhu, Mr. Kong Chi Mo and Mr. Heng, Keith Kai Neng.

• EGM-2 -