Jiyi Holdings Limited — Proxy Solicitation & Information Statement 2021

Jan 25, 2021

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 a licensed securities dealer, registered institution in securities, a bank manager, solicitor, professional accountant or other professional advisers.

If you have sold or transferred all your shares in Jiyi Holdings Limited , you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or the 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 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 any securities of the Company.

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Jiyi Holdings Limited 集一控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1495)

(1) PROPOSED EXTENSION OF THE OUTSTANDING CONVERTIBLE BONDS

(2) ISSUE OF NEW SHARES UNDER SPECIFIC MANDATE AND

(3) NOTICE OF EXTRAORDINARY GENERAL MEETING

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed “Definitions” in this circular.

A letter from the Board is set out on pages 5 to 24 of this circular.

A notice convening the EGM to be held at 14th Floor, China Railway South Headquarters Building, No. 3333 Zhongxin Road (Shenzhen Bay Section), Nanshan District, Shenzhen, PRC at 11:00 a.m. on Monday, 22 February 2021 is set out on pages EGM-1 to EGM-3 of this circular. A form of proxy for use at the EGM is also enclosed. Whether or not you intend to attend the EGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to Computershare Hong Kong Investor Services Limited on 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for holding the EGM or any adjournment thereof (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 any adjournment thereof (as the case may be) should you so wish.

26 January 2021

CONTENTS

	Page
PRECAUTIONARY MEASURES FOR THE EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

– i –

PRECAUTIONARY MEASURES FOR THE EGM

In view of the ongoing development of coronavirus epidemic and recent requirements for prevention and control of its spread by the Hong Kong Government, the Company strongly encourages Shareholders not to attend the EGM in person and the Company strongly recommends Shareholders to exercise their voting rights by appointing the Chairman of the EGM as their proxy to vote on the relevant resolution(s) at the EGM as an alternative to attending the EGM in person. Shareholders are reminded that physical attendance at the EGM is not necessary for the purpose of exercising the voting rights. Shareholders who choose to do so should take action as soon as possible to ensure the proxy instructions reach our share registrar not less than 48 hours before the time fixed for holding the EGM.

Taking into consideration the guidelines issued by the Government of the Hong Kong Special Administrative Region and the Joint Statement dated 1 April 2020 made by The Securities and Futures Commission and The Stock Exchange of Hong Kong Limited in relation to General Meetings in light of the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation, the Company will implement the following preventive measures at the EGM to protect attending Shareholders from the risk of infection:

• compulsory body temperature check will be conducted for every Shareholder or proxy at the entrance of the venue and anyone with abnormal body temperature may be denied entry into the venue;

• every Shareholder or proxy is mandatorily required to use of surgical face masks during their attendance of the EGM; and

• no distribution of corporate gifts and no refreshments will be served.

Shareholders are in any event asked (a) to consider carefully the risk of attending the EGM, which will be held in an enclosed environment; (b) to follow any requirements or guidelines of the Hong Kong Government relating to COVID-19 in deciding whether or not to attend the EGM; and (c) not to attend the EGM if they have contracted or are suspected to have contracted COVID-19 or have been in close contact with anybody who has contracted or is suspected to have contracted COVID-19.

– ii –

DEFINITIONS

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

• “Announcement”

the announcement of the Company dated 31 December 2020 in relation to, among other matters, the Extension

“Board”

the board of Directors

• “Business Day”

a day (excluding Saturdays) on which banks are generally open for business in Hong Kong; and for all other purposes, a day on which the Stock Exchange is open for transaction of business

• “CB Circular”

the circular of the Company dated 14 May 2019 in relation to, among other matters, the issue of the Convertible Bonds under specific mandate

“Company”

Jiyi Holdings Limited（集一控股有限公司）, an exempted company incorporated in the Cayman Islands with limited liability

• “connected person”

has the meaning ascribed to it under the Listing Rules

• “Conversion Price”

• HK$1.0 per Conversion Share, being the initial price for conversion of the Convertible Bonds, which is subject to the adjustments pursuant to the terms and conditions of the Convertible Bonds

• “Conversion Shares”

the Shares to be issued upon the exercise of the conversion rights attaching to the Convertible Bonds

• “Convertible Bonds”

the convertible bonds with an aggregate principal amount of HK$102,100,000 issued by the Company to the Subscribers on 25 June 2019 pursuant to the Subscription Agreements

– 1 –

DEFINITIONS

“Extension”

the extension of the maturity date of the Outstanding Convertible Bonds from the date falling the eighteenth (18th) month after the date of issue thereof (i.e. 24 December 2020) to the date falling the second (2nd) anniversary of the date of issue thereof (i.e. 24 June 2021) by mutual consents from the Company and Outstanding Bondholders pursuant to the terms and conditions of the Convertible Bonds

“EGM”

the extraordinary general meeting of the Company to be convened and held at which resolution(s) will be proposed to consider, and, if thought fit, approve the Extension and the allotment and issue of the Outstanding Conversion Shares under the Specific Mandate, notice of which will be contained in a circular to be despatched to the Shareholders

“Group” the Company and its subsidiaries “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

“Independent Third any person or company and their respective ultimate Party(ies)” beneficial owner(s) (if applicable) who, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties independent of the Company and its connected persons

“HK$”

Hong Kong dollar, the lawful currency of Hong Kong

“Latest Practicable Date” Wednesday, 20 January 2021, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular “Listing Committee” has the meaning ascribed thereto in the Listing Rules “Listing Rules” the Rules Governing the Listing of Securities on Stock Exchange

– 2 –

DEFINITIONS

“Outstanding Bondholder(s)”	the holders of the Outstanding Convertible Bonds
“Outstanding	the Convertible Bonds outstanding in the total amount of
Convertible Bond(s)”	HK$64,670,833 as at the Latest Practicable Date
“Outstanding	the conversion shares to be issued upon exercise of the
Conversion Share(s)”	conversion rights attached to the Outstanding Convertible
	Bonds by the Outstanding Bondholders
“PRC”	the People’s Republic of China, which for the purpose
	of this circular, excludes Hong Kong, the Macau Special
	Administrative Region and Taiwan
“RMB”	Renminbi, the lawful currency of the PRC
“SFC”	the Securities and Futures Commission of Hong Kong
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Share(s)”	ordinary share(s) of the Company
“Shareholder(s)”	holder(s) of the Shares
“Specific Mandate”	the specific mandate to be sought from Shareholders at the
	EGM to approve the Extension and the allotment and issue
	of the Outstanding Conversion Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscriber(s)”	eight (8) subscribers of the Convertible Bonds and each of
	them is an Independent Third Party
“Subscription”	the subscription of the Convertible Bonds by the
	Subscribers pursuant to the terms and conditions of the
	Subscription Agreements

– 3 –

DEFINITIONS “Subscription Agreement(s)” the subscription agreements all dated 22 April 2019 and entered into between the Company on one side and each of the Subscribers on the other side in relation to the subscription of the Convertible Bonds “Takeovers Code” the Hong Kong Code on Takeovers and Mergers “%” per cent

The English text of this circular, the notice of the EGM and accompanying form of proxy shall prevail over their respective Chinese text in case of inconsistency.

– 4 –

LETTER FROM THE BOARD

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Jiyi Holdings Limited 集一控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1495)

Executive Directors: Registered Office: Ms. Hou Wei (Chairlady) Windward 3 Mr. Liu Xianxiu Regatta Office Park Mr. Yang Baikang P.O. Box 1350 Grand Cayman Non-executive Director: KY1-1108 Mr. Hou Bo Cayman Islands Independent non-executive Directors: Head office and principal place of Mr. Ye Yihui business in Hong Kong: Mr. Ho Hin Yip Room 1405, 14/F. Mr. Hou Lianchang Jubilee Centre 18 Fenwick Street Wanchai, 26 January 2021

To the Shareholders

Dear Sir/Madam

(1) PROPOSED EXTENSION OF THE OUTSTANDING CONVERTIBLE BONDS

(2) ISSUE OF NEW SHARES UNDER SPECIFIC MANDATE AND

(3) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

References are made to (1) the CB Circular and the announcement of the Company dated 25 June 2019 in relation to, among others, the issue of the Convertible Bonds by the Company on 25 June 2019, and (2) the Announcement in respect of, among others, the Extension.

– 5 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with (1) further information regarding the Extension and issue of the Outstanding Conversion Shares under the Specific Mandate, and (2) the notice of EGM for the purpose of considering and, if thought fit, approving the resolution(s) relating to the Extension and issue of the Outstanding Conversion Shares under the Specific Mandate.

THE EXTENSION OF THE OUTSTANDING CONVERTIBLE BONDS

As at the Latest Practicable Date, the Convertible Bonds in the amount of HK$37,429,167 have been converted into 37,429,167 Conversion Shares by the relevant bondholders, and the remaining Convertible Bonds in the total amount of HK$64,670,833 were still outstanding without any conversion of Shares or the redemption by the Company.

As at the Latest Practicable Date, the Outstanding Bondholders include (1) a company named 青島榮世開元商貿有限公司 (Qingdao Rongshikaiyuan Trading Company Limited*) as to the amount of HK$62,333,333, such company was principally engaged in wholesales and retails of metal fittings and electronic equipments, of which the ultimate beneficial owner was an individual named Zhang Zongai（張宗愛）, and (2) an individual with the occupation as a merchant as to the amount of HK$2,337,500. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, all the Outstanding Bondholders and their respective ultimate beneficial owner(s) are Independent Third Parties of the Group.

The Extension of Maturity Date

As disclosed in the Announcement, after arm’s length negotiations, the Company and the Outstanding Bondholders have reached consensus on the Extension, pursuant to which the maturity date of the Outstanding Convertible Bonds is extended by six (6) months from 24 December 2020 to the date falling the second (2nd) anniversary of the date of issue thereof (i.e. 24 June 2021). Save for the above, all other terms and conditions of the Outstanding Convertible Bonds (including the terms of conversion price) shall remain unchanged and are in full force and effect.

The Extension will enable the Company to pour more financial resources into its operation and/or business development rather than the immediate repayment of the Outstanding Convertible Bonds, and the Directors consider that the period of six (6) months under the Extension may allow the Company to have relatively sufficient time to generate satisfactory returns to the Company and its Shareholders.

– 6 –

LETTER FROM THE BOARD

Conditions Precedent

The Extension shall be subject to the fulfillment of the following conditions precedent on or before 30 April 2021:

• (1) all necessary consents and approvals in respect of the Extension (including but not limited to the necessary approvals to be obtained under the Listing Rules) having been obtained;

• (2) the passing by the Shareholders of all necessary resolution(s) at the EGM of the Company to approve the Extension and the transactions contemplated thereunder (including but not limited to the allotment and issue of Outstanding Conversion Shares under the Specific Mandate); and

• (3) the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Outstanding Conversion Shares.

The necessary consents and approvals of the Extension to be obtained under the condition (1) above refers to the approval of the Extension by the Stock Exchange pursuant to Rule 28.05 of the Listing Rules.

As at the Latest Practicable Date, none of the conditions above has been fulfilled. The Company shall use its best endeavours to procure the fulfilment of the conditions above. None of the conditions above can be waived. If any of the conditions set out above have not been fulfilled on or before 30 April 2021, the Extension shall cease and lapse and no parties shall have any obligations and liabilities thereunder save for any antecedent breaches of the terms thereof.

PRINCIPAL TERMS OF THE OUTSTANDING CONVERTIBLE BONDS AS AMENDED BY THE EXTENSION

The principal terms of the Outstanding Convertible Bonds as amended under the Extension are summarised as follows:

Issuer: the Company Principal amount: HK$64,670,833 Maturity date: The Outstanding Convertible Bonds shall mature on the falling the second (2nd) anniversary of the date of issue thereof (i.e. 24 June 2021)

– 7 –

LETTER FROM THE BOARD

Interest:

Conversion Price:

The Outstanding Convertible Bonds shall bear interest at rate of 6% per annum from the date of issue (inclusive of such date) until the maturity date, payable quarterly

The initial Conversion Price of the Convertible Bonds shall be HK$1.0 (subject to any adjustment to the Conversion Price), the Company may appoint its auditors in obtaining professional advice on the adjustment of the Conversion Price and the basis of the conversion in order to ensure the Outstanding Bondholders are entitled to an equal proportion of the conversion rights.

The Conversion Price of HK$1.0 per Outstanding Conversion Share represents:

• (i) a premium of 1% over the closing price of HK$0.99 per Share as quoted on the Stock Exchange on 18 April 2019, being the latest trading date prior to the date of the Subscription Agreements;

• (ii) a premium of 1.8% over the average of the closing prices of the Shares as quoted on the Stock Exchange for the last five (5) consecutive trading days up to and including 18 April 2019 of HK$0.982 per Share;

• (iii) a premium of approximately 42.86% over the closing price of HK$0.70 per Share as quoted on the Stock Exchange on 24 December 2020, being the date when the Company and the Outstanding Bondholders reached consensus on the Extension (the “ Consensus Day ”); and

• (iv) a premium of approximately 43.27% over the average of the closing prices of the Shares as quoted on the Stock Exchange for the last five (5) consecutive trading days up to and including the Consensus Day of HK$0.698 per Share.

– 8 –

LETTER FROM THE BOARD

The Conversion Price was arrived at after arm’s length negotiations between the Company and the Subscribers (including the Outstanding Bondholders), taking into account of, among others, the recent trading performance of the Shares. The Directors consider that the Conversion Price and the terms and conditions of the Subscription Agreements and the Outstanding Convertible Bonds are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

As at the Latest Practicable Date, the Convertible Bonds in the amount of HK$37,429,167 have been converted into 37,429,167 Conversion Shares by the relevant bondholders.

Adjustment to the Conversion Price:

The Conversion Price will be subject to adjustments upon the occurrence of the following events:

• (a) If and whenever the Shares by reason of any consolidation, subdivision or reclassification become of a different nominal amount, the Conversion Price shall be adjusted by multiplying the initial Conversion Price in force immediately before such alteration by the following fraction:

A B

where:

A = the nominal amount of one Share immediately after such alteration; and

B = the nominal amount of one Share immediately before such alteration.

Such adjustment shall become effective on the date the alteration takes effect. Reclassification hereby means the alteration of share class to the effect that the nominal amount of the Shares is changed.

– 9 –

LETTER FROM THE BOARD

(b) If and whenever the Company shall issue any Shares credited as fully paid to the Shareholders by way of capitalisation of profits or reserves (except any Shares issued in lieu of the whole or any part of any cash dividend being a dividend which the Shareholders concerned would or could otherwise have received) and which would not have constituted a capital distribution, the Conversion Price shall be adjusted by multiplying the initial Conversion Price in force immediately before such issue by the following fraction:

A

B

where:

A = the aggregate nominal amount of the issued Shares immediately before such issue; and

B = the aggregate nominal amount of the issued Shares immediately after such issue.

Such adjustment shall become effective on the date of issue of such Shares or if a record date is fixed therefor, immediately after such record date.

– 10 –

LETTER FROM THE BOARD

In the case of an issue of Shares by way of a scrip dividend where the current market price of such Shares exceeds 120% of the amount of the cash dividend or the relevant part thereof and which would not have constituted a capital distribution, the Conversion Price shall be adjusted by multiplying the initial Conversion Price in force immediately before the issue of such Shares by the following fraction:

A

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where:

A = the aggregate nominal amount of the issued Shares immediately before such issue of Shares by way of scrip dividend; and

B = the aggregate nominal amount of the issued Shares immediately after such issue of Shares by way of scrip dividend.

• (c) If and whenever the Company shall pay or make any capital distribution to the Shareholders, the Conversion Price shall be adjusted by multiplying the initial Conversion Price in force immediately before such capital distribution by the following fraction:

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where:

A = the current market price of one Share on the date on which the capital distribution is publicly announced; and

– 11 –

LETTER FROM THE BOARD

B = the fair market value on the date of such announcement of the portion of the capital distribution attributable to one Share.

Such adjustment shall become effective on the date that such capital distribution is actually made or if a record date is fixed therefor, immediately after such record date.

(d) If and whenever the Company shall issue Shares to all Shareholders as a class by way of rights, or issue or grant to all Shareholders as a class by way of rights, options, warrants or other rights to subscribe for, purchase or otherwise acquire any Shares, in each case at less than 95% of the current market price per Share on the date of the announcement of the terms of the issue or grant, the Conversion Price shall be adjusted by multiplying the initial Conversion Price in force immediately before such issue or grant by the following fraction:

A + B A + C

where:

A = the number of Shares in issue immediately before such announcement;

B = the number of Shares which the aggregate amount (if any) payable for the Shares issued by way of rights or for the options or warrants or other rights issued or granted by way of rights and for the total number of Shares comprised therein would subscribe for, purchase or otherwise acquire at such current market price per Share; and

C = the aggregate number of Shares issued or, as the case may be, comprised in the issue or grant.

– 12 –

LETTER FROM THE BOARD

Such adjustment shall become effective on the date of issue of such Shares or issue or grant of such options, warrants or other rights (as the case may be) or where a record date is set, the first date on which the Shares are traded ex-rights, ex-options or exwarrants, as the case may be.

(e) If and whenever the Company shall issue any securities (other than Shares or options, warrants or other rights to subscribe for, purchase or otherwise acquire Shares) to all Shareholders as a class by way of rights or grant to all Shareholders as a class by way of rights, options, warrants or other rights to subscribe for, purchase or otherwise acquire any securities (other than Shares or options, warrants or other rights to subscribe for, purchase or otherwise acquire Shares), the Conversion Price shall be adjusted by multiplying the initial Conversion Price in force immediately before such issue or grant by the following fraction:

A – B

A

where:

A = the current market price of one Share on the date on which such issue or grant is publicly announced; and

B = the fair market value on the date of such announcement of the portion of the rights attributable to one Share.

Such adjustment shall become effective on the date of issue of the securities or grant of such rights, options or warrants (as the case may be) or where a record date is set, the first date on which the Shares are traded ex– rights, ex-options or ex-warrants, as the case may be.

– 13 –

LETTER FROM THE BOARD

(f) If and whenever the Company shall issue any securities (which carry rights of conversion into, or exchange or subscription for, new Shares upon conversion) is made to any person at a consideration per Share which is less 95% of the current market price, the Conversion Price shall be adjusted by multiplying the initial Conversion Price in force immediately before such issue or grant by the following fraction:

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A = the number of Shares in issue immediately before such issue;

B = the number of Shares which the aggregate consideration receivable by the Company for the Shares to be issued would purchase at the current market price; and

C = the maximum number of Shares to be issued on the exercise of such rights of subscription at the initial Conversion Price.

Such adjustment shall become effective on the date of issue of such Shares or issue or grant of such options, warrants or other rights (as the case may be).

– 14 –

LETTER FROM THE BOARD

(g) If and whenever there shall be any modification of the rights of conversion, exchange or subscription attaching to any such securities so that the consideration per Share is less than 95% of the current market price on the date of announcement of the proposals for such modification, the Conversion Price shall be adjusted by multiplying the initial Conversion Price in force immediately before such modification by the following fraction:

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A = the number of Shares in issue immediately before such modification;

B = the number of Shares which the aggregate consideration receivable by the Company for the Shares to be issued on conversion or exchange or on exercise of the right of subscription attached to the securities so modified would purchase at such current market price or, if lower, the existing conversion, exchange or subscription price of such securities; and

C = the maximum number of Shares to be issued on conversion or exchange of such securities or on the exercise of such rights of subscription attached thereto at the modified conversion, exchange or subscription price or rate.

Such adjustment shall become effective on the date of modification of the rights of conversion, exchange or subscription attaching to such securities.

– 15 –

LETTER FROM THE BOARD

• (h) If and whenever the Company or any of its subsidiaries or any other person issues, sells or distributes any securities in connection with an offer pursuant to which the Shareholders generally are entitled to participate in arrangements whereby such securities may be acquired by them, the Conversion Price shall be adjusted by multiplying the initial Conversion Price in force immediately before such issue by the following fraction:

A – B

A

where:

A = the current market price of one Share on the date on which such issue is publicly announced; and

B = the fair market value on the date of such announcement of the portion of the rights attributable to one Share.

Such adjustment shall become effective on the date of issue of the securities.

(i) If the Company or the Outstanding Bondholders determines that an adjustment should be made to the Conversion Price as a result of one or more events or circumstances not referred to in the precedent paragraphs, the Company or the Outstanding Bondholders shall, at the Company’s expense, consult an independent investment bank, to determine as soon as practicable what adjustment (if any) to the Conversion Price is fair and reasonable to take account thereof, if the adjustment would result in a reduction in the Conversion Price, and the date on which such adjustment should take effect and upon such determination by the independent investment bank such adjustment (if any) shall be made and shall take effect in accordance with such determination.

– 16 –

LETTER FROM THE BOARD

No adjustment shall be made to the Conversion Price where such adjustment would be less than one percent (1%) of the Conversion Price then in effect.

No adjustment will be made to the Conversion Price when Shares or other securities are issued, offered or granted to employees of the Company pursuant to any share option scheme or when Shares are issued pursuant to the outstanding convertible bonds issued by the Company prior to the date of the Subscription Agreement.

Outstanding Conversion Shares:

Based on the initial Conversion Price of HK$1.0 per Share and assuming full conversion of the Outstanding Convertible Bonds at the Conversion Price, the Outstanding Convertible Bonds will be convertible into 64,670,833 Outstanding Conversion Shares, which represents (i) approximately 7.93% of the totally issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 7.35% of the totally issued share capital of the Company as to be enlarged by the allotment and issue of the Outstanding Conversion Shares upon full conversion of the Outstanding Convertible Bonds, assuming there is no further issue or repurchase of the Shares before the exercise of the conversion rights in full.

The allotment and issuance of the Outstanding Conversion Shares are subject to the granting of the Specific Mandate by the Shareholders at the EGM and the Stock Exchange’s granting the listing of and permission to deal in the same.

Form and denomination:

The Outstanding Convertible Bonds were in registered form in the denomination of the amount subscribed by each of the Subscribers (including the Outstanding Bondholders) in Hong Kong dollars.

– 17 –

LETTER FROM THE BOARD

Transferability:

Subject to the terms and conditions of the Outstanding Convertible Bonds, the Outstanding Convertible Bonds can be transferred by the Outstanding Bondholders. Any transfer of the Outstanding Convertible Bonds shall be made in compliance with all applicable requirements under the Listing Rules, Takeovers Code and all applicable laws and regulations.

• Conversion period and restrictions:

Subject to the terms and conditions of the Outstanding Convertible Bonds, the Outstanding Bondholders shall have the right to convert the whole or part of the principal amount of the Outstanding Convertible Bonds into Outstanding Conversion Shares at any time during the conversion period. The conversion period of the Outstanding Convertible Bonds are as follows:

• (a) a maximum of not more than one-third of the principal amount of the Outstanding Convertible Bonds held by such bondholder may be converted into Outstanding Conversion Shares from the twelfth (12th) month after the issue of the Outstanding Convertible Bonds;

• (b) a maximum of not more than one-third of the principal amount of the Outstanding Convertible Bonds held by such bondholder may be converted into Outstanding Conversion Shares from the fourteenth (14th) month after the issue of the Outstanding Convertible Bonds;

• (c) all the remaining of the principal amount of the Outstanding Convertible Bonds held by such bondholder may be converted into Outstanding Conversion Shares from the sixteenth (16th) month after the issue of the Outstanding Convertible Bonds.

– 18 –

LETTER FROM THE BOARD

If any conversion of the Outstanding Convertible Bonds would result in:

• (a) triggering a mandatory offer under the Takeovers Code on the part of the holder and/or any party(ies) acting in concert (as defined in the Takeovers Code) with it; or

• (b) the Company not being able to satisfy the public shareholding requirement (i.e. 25% public float, or any other percentages as may be specified by the Listing Rules from time to time) under the Listing Rules;

The number of Outstanding Conversion Shares to be issued under such conversion shall be subject to the maximum number of Shares that can be issued by the Company to the extent that the Company reasonably believes that the allotment and issue of such number of Outstanding Conversion Shares will not (i) trigger a mandatory offer under the Takeovers Code; and/or (ii) result in the Company not being able to satisfy the public shareholding requirement. The remaining conversion rights attached to the Outstanding Bondholders will be suspended until the Company is able to allot and issue additional new Shares to satisfy such remaining conversion rights of the Outstanding Bondholders without triggering the mandatory offer under the Takeovers Code or in compliance with the public float requirement (as the case may be).

Redemption:

The Company may, at any time prior to the maturity date, redeem all or part of the Outstanding Convertible Bonds at the price of 100% of the outstanding principal amount of the Outstanding Convertible Bonds together with the interest for the period from the redemption date to the maturity date at the rate of 6% per annum, by giving a prior notice of not less than thirty (30) days to the holder(s) of such Outstanding Convertible Bonds subject to the terms and conditions thereof.

– 19 –

LETTER FROM THE BOARD

Any Outstanding Convertible Bonds which are still outstanding on the maturity date shall be redeemed by the Company subject to the terms and conditions thereof.

Any or all of the Outstanding Convertible Bonds being redeemed or converted shall be cancelled immediately. Certificates of all cancelled Outstanding Convertible Bonds should be delivered to the Company or other parties designated by the Company.

Ranking:

Voting:

Listing:

The payment obligations of the Company under the Outstanding Convertible Bonds shall, save for such exceptions as may be provided by applicable legislation, at all times rank at least equally with all its other present and future unsecured and unsubordinated obligations. The Outstanding Conversion Shares issued upon conversion of the Outstanding Convertible Bonds will in all respects rank pari passu with other Shares in issue on the date of allotment and issue of such Outstanding Conversion Shares.

The Outstanding Bondholders will not be entitled to attend or vote at any meetings of the Company by reason only of being the holders of the Outstanding Convertible Bonds.

As at the Latest Practicable Date the Company has applied to the Stock Exchange for the listing of, and permission to deal in, the Outstanding Conversion Shares. No application will be made for listing of, or permission to deal in, the Outstanding Convertible Bonds on the Stock Exchange or any other stock exchange.

– 20 –

LETTER FROM THE BOARD

REASONS FOR THE EXTENSION

The Extension has been arrived at after arm’s length negotiations between the Company and the Outstanding Bondholders. The Extension of the maturity date of the Outstanding Convertible Bonds will allow the Company to enjoy more flexibility when planning its financial resources, as it enables the Company to apply its financial resources to fund its operation and/or business development instead of repayment of the Outstanding Convertible Bonds by 24 December 2020. As such, the Directors consider that the Extension and the terms and conditions thereof are fair and reasonable and is in the interests of the Company and the Shareholders as a whole. As at the Latest Practicable Date, there was no alteration of and the Company had no intention to alter the plan of use of proceeds from the issue of the Convertible Bonds as disclosed in the CB Circular.

According to the interim report of the Company for the six months ended 30 June 2020, the Group had a total cash and bank balances of approximately RMB15.5 million as at 30 June 2020. The Directors are of the view that the Extension will enable the Group to alleviate its pressure over the cash flow from the immediate repayment of the Outstanding Convertible Bonds in the total amount of HK$64,670,833 and to maintain a healthy financial status to deal with possible economic downturn due to COVID-19 or any other unpredictable event, which is for the interests of the Company and its Shareholders as a whole.

Compared to other fund-raising activities such as placement of shares, rights issue and open offer, the Extension will not incur substantial expenses or any dilution in the shareholdings of the Company. In addition, considering that the interest rate of 6% per annum under the Outstanding Convertible Bonds is close to the prime rate of around 5% per annum as quoted on the websites of several banks in Hong Kong, the Directors deem that the current interest rate of the unsecured and unguaranteed Outstanding Convertible Bonds is fair and reasonable.

As at the Latest Practicable Date, unless the Outstanding Bondholders exercise their rights of conversion thereunder, the Company intended to repay the Outstanding Convertible Bonds in full when the Extension expires.

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LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

According to Rule 28.05 of the Listing Rules, any alterations in the terms of convertible equity securities after issue must be approved by the Stock Exchange, except where the alterations take effect automatically under the existing terms of such convertible equity securities. Therefore, the Company was given the understanding that the Extension shall be regarded as the alternation of the Outstanding Convertible Bonds that must be approved by the Stock Exchange. As at the Latest Practicable Date, an application for the said approval has been made by the Company to the Stock Exchange.

In addition, as at the Latest Practicable Date, an application has also been made to the Stock Exchange for granting the listing of and permission to deal in the Outstanding Conversion Shares pursuant to the terms and conditions of the Outstanding Convertible Bonds (as amended by the Extension).

SPECIFIC MANDATE TO ISSUE THE OUTSTANDING CONVERSION SHARES

The Outstanding Conversion Shares will be issued under the Specific Mandate and is subject to the approval of the Shareholders at the EGM.

GENERAL

The Extension and the allotment and issue of the Outstanding Conversion Shares upon exercise of the conversion rights attached to the Outstanding Convertible Bonds and the grant of the Specific Mandate are subject to, inter alia, the approval of the Shareholders at the EGM. The Specific Mandate for the allotment and issue of the Outstanding Conversion Shares will be sought in the EGM.

CHANGES IN THE SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is the shareholding structure of the Company (i) as at the date of the Latest Practicable Date; and (ii) immediately after the allotment and issue of the Outstanding Conversion Shares upon the exercise of the conversion rights under the Outstanding Convertible Bonds in full (assuming that the Conversion Price is HK$1.0 per Share and there is no further issue or repurchase of Shares before the exercise of such conversion rights).

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LETTER FROM THE BOARD

Hou Wei (Note) Outstanding Bondholders Other public Shareholders Total	As at the Latest Practicable Date Number of shares % 449,198,363 55.10 – – 366,076,958 44.90 815,275,321 100	Immediately after the allotment and issue of the Outstanding Conversion Shares in full upon exercise of the conversion rights under the Outstanding Convertible Bonds (for illustration purpose only) Number of shares % 449,198,363 51.05 64,670,833 7.35 366,076,958 41.60 879,946,154 100

Note: Ms. Hou Wei (“ Ms. Hou ”), the chairlady and an executive Director of the Company, is interested in 449,198,363 Shares through her controlled corporation Xin Ling Limited. In addition, Ms. Hou also owned 200,000 share options granted to her by the Company as at the Latest Practicable Date.

FUND RAISING EXERCISE OF THE COMPANY IN THE PAST TWELVE (12) MONTHS

The Company has not conducted any equity fund raising activities in the past twelve (12) months immediately preceding the date of this circular.

EGM

A notice convening the EGM at 14th Floor, China Railway South Headquarters Building, No. 3333 Zhongxin Road (Shenzhen Bay Section), Nanshan District, Shenzhen, PRC at 11:00 a.m. on Monday, 22 February 2021 is set out on pages EGM-1 to EGM-3 of this circular. Whether or not you are able 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 share registrar, Computershare Hong Kong Investor Services Limited of 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as practicable but in any event not later than 48 hours before the time appointed for holding the EGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting at the EGM or any adjournment thereof (as the case may be) should you so wish.

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LETTER FROM THE BOARD

To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, no Shareholder has an interest in the Extension which is materially different from the other Shareholders. Therefore, no Shareholder is required to abstain from voting on the resolution to be proposed at the EGM.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Wednesday, 17 February 2021 to Monday, 22 February 2021 (both dates inclusive) for determining the identity of the Shareholders who are entitled to attend and vote at the EGM. No transfer of Shares and/or the conversion of the outstanding convertible bonds will be registered during this period. Shareholders whose name appear on the register of members of the Company on Monday, 22 February 2021 shall be entitled to attend and vote at the EGM. In order to be eligible to attend and vote at the EGM, unregistered holders of the Shares should ensure that all transfer forms 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 of Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration no later than 4:30 p.m. on Tuesday, 16 February 2021.

RECOMMENDATIONS

The Directors are of the opinion that the Extension and the terms and conditions thereof are in the interest of the Company and the Shareholders as a whole and so recommend you to vote in favour of the resolution(s) to be proposed 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 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.

By Order of the Board of JIYI HOLDINGS LIMITED Hou Wei Chairlady

• For identification purposes

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NOTICE OF EGM

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Jiyi Holdings Limited 集一控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1495)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“ EGM ”) of Jiyi Holdings Limited (the “ Company ”) will be held at 14th Floor, China Railway South Headquarters Building, No. 3333 Zhongxin Road (Shenzhen Bay Section), Nanshan District, Shenzhen, PRC at 11:00 a.m. on Monday, 22 February 2021, for the purposes of considering and, if thought fit, passing with or without modifications, the following resolution which will be proposed as ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT

• (a) the Extension as defined in the circular dated 26 January 2021 despatched to the shareholders of the Company (the “ Circular ”), a copy of the deeds in respect of the Extension entered into by the Company on one side and each of the Outstanding Bondholders (as defined in the Circular) on the other side has been produced to this meeting marked “A” and signed by the chairlady hereof for the purpose of identification, and all the transactions contemplated thereby be and are hereby approved, confirmed and ratified;

• (b) the issue and allotment of ordinary shares of the Company which may fall to be issued upon the exercise of the conversion rights attached to the Outstanding Convertible Bonds (as defined in the Circular) be and are hereby approved; and

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NOTICE OF EGM

• (c) any one director of the Company be and is hereby authorised to do all such acts and things as he/she in his/her sole and absolute discretion deems necessary, desirable or expedient to implement, give effect to the Extension and the transactions contemplated thereunder and, where required, any amendment of the terms of the Extension as required by, or for the purposes of obtaining the approval of, relevant authorities or to comply with all applicable laws, rules and regulations.”

By Order of the Board of JIYI HOLDINGS LIMITED Hou Wei Chairlady

Hong Kong, 26 January 2021

Registered Office: Head office and principal place of Windward 3 business in Hong Kong: Regatta Office Park Room 1405, 14/F. P.O. Box 1350 Jubilee Centre Grand Cayman 18 Fenwick Street KY1-1108 Wanchai Cayman Islands Hong Kong

Notes:

1. A member of the Company entitled to attend and vote at the EGM convened by the above notice is entitled to appoint one or more proxy to attend and, subject to the provisions of the memorandum and articles of association of the Company, to vote on his/her/its behalf. A proxy need not be a member of the Company but must be present in person at the EGM to represent the member. 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.

2. Where there are joint registered holders of any Share, any one of such persons may vote at the EGM, either personally or by proxy, in respect of such Share as if he/she/it were solely entitled thereto; but if more than one of such joint holders be present at the EGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such Shares shall alone be entitled to vote in respect thereof.

3. The transfer books and register of members of the Company will be closed from Wednesday, 17 February 2021 to Monday, 22 February 2021, both days inclusive, to determine the entitlement of shareholders to attend and vote at the EGM, during which period no share transfers can be registered. All transfers accompanied by the relevant share certificates must be lodged with the Hong Kong branch share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited on 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 Tuesday, 16 February 2021.

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NOTICE OF EGM

1. In order to be valid, the form of proxy must be deposited together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority, at the Hong Kong branch share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited on 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time for holding the EGM or any adjournment thereof.

2. Completion and return of a form of proxy will not preclude a shareholder of the Company from attending in person and voting at the EGM or any adjournment thereof, should he/she/it so wish.

3. If Typhoon Signal no. 8 or above, or a “black” rainstorm warning is in effect any time after 7:00 a.m. on the date of the EGM, the meeting will be postponed. The Company will post an announcement on the website of Company at http://www.jiyihousehold.com and on the HKExnews website of the Stock Exchange at www.hkexnews.hk to notify Shareholders of the date, time and place of the rescheduled meeting.

4. In view of the ongoing development of coronavirus epidemic and recent requirements for prevention and control of its spread by the Hong Kong Government, the Company will implement the following preventive measures at the EGM to protect attending Shareholders from the risk of infection: (1) compulsory body temperature check at the entrance of the venue; (2) mandatory usage of surgical face masks during the attendance of the EGM; and (3) no distribution of corporate gifts and no refreshments. Shareholders are reminded that physical attendance at the EGM is not necessary for the purpose of exercising the voting rights. The Company strongly encourages Shareholders not to attend the EGM in person and strongly recommends Shareholders to exercise their voting rights by appointing the Chairman of the EGM as their proxy to vote on the relevant resolution(s) at the EGM as an alternative to attending the EGM in person.

As at the date of this notice, Ms. Hou Wei, Mr. Liu Xianxiu and Mr. Yang Baikang are the executive directors of the Company, Mr. Hou Bo is the non-executive director of the Company, and Mr. Ye Yihui, Mr. Ho Hin Yip and Mr. Hou Lianchang are the independent non-executive directors of the Company.

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