Long Investment Corp - Proxy Solicitation & Information Statement 2017

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 stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China Financial Leasing Group Limited (the “ Company ”), you should at once hand this circular together with the form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the 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.

==> picture [72 x 49] intentionally omitted <==

**CHINA FINANCIAL LEASING GROUP LIMITED 中國金融租賃集團有限公司[*]**

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2312)

PROPOSED REFRESHMENT OF GENERAL MANDATE TO ALLOT AND ISSUE SHARES

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

==> picture [113 x 47] intentionally omitted <==

A letter from the independent board committee is set out on pages 23 to 24 of this circular. A letter from the independent financial adviser to the independent board committee and the independent shareholders of the Company, is set out on pages 25 to 38 of this circular.

A notice convening an extraordinary general meeting of the Company to be held at Room 2202, 22/F, 118 Connaught Road West, Hong Kong on Thursday, 11 January 2018 at 11:00 a.m. (the “ EGM ”), at which, among other things, the above proposals will be considered, is set out on pages 39 to 41 of this circular.

Whether or not you are able to attend the EGM, you are advised to read the notice and to complete and return the accompanying form of proxy, in accordance with the instructions printed thereon and deposit the same at the Hong Kong branch share registrar and transfer office of the Company, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time of the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the EGM or any adjourned meeting should you so wish.

22 December 2017

For identification purpose only

	Page
Responsibility Statement	ii
Definitions 1
Letter from the Board 4
Letter from the Independent Board Committee 23
Letter from the Independent Financial Adviser 25
Notice of EGM 39

— i —

RESPONSIBILITY STATEMENT

This circular, for which the Directors (as defined herein) of the Company collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules (as defined herein) for the purpose of giving information with regard to the Company. The Directors (as defined herein), having made all reasonable enquires, 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.

— ii —

DEFINITIONS

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

“AGM” the annual general meeting of the Company held on 26 May 2017 at which the Shareholders had approved, among other matters, the Existing General Mandate

“associate(s)” has the meaning ascribed to this term under the Listing Rules
“Board” the board of Directors
“Company” China Financial Leasing Group Limited, a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange
“controlling shareholder(s)” has the meaning ascribed to this term under the Listing Rules
“Director(s)” the director(s) of the Company
“EGM” the extraordinary general meeting of the Company to be convened and held at Room 2202, 22/F, 118 Connaught Road West, Hong Kong on Thursday, 11 January 2018 at 11:00 a.m. to consider and, if appropriate, to approve the refreshment of the Existing General Mandate
“Existing General Mandate”
the general mandate approved at the AGM to grant to the Directors to allot, issue and deal with Shares of up to 177,989,976 Shares, i.e. 20% of the total number of issued Shares of the Company on the date of the passing of the relevant ordinary resolution

“Group” the Company and its subsidiaries

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

“Independent Board Committee”
an independent committee of the Board, comprising all the independent non-executive Directors, to advise the Independent Shareholders as to the fairness and reasonableness of the grant of the New General Mandate

— 1 —

DEFINITIONS

“Independent Financial Adviser”
“Independent Shareholders”
“Latest Practicable Date”
“Listing Rules”
“New General Mandate”
“PRC”
“SFO”
“Share(s)”
“Shareholder(s)”
Akron Corporate Finance Limited, a corporation licensed to carry out business in type 6 (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in relation to the refreshment of the Existing General Mandate
any Shareholders other than controlling Shareholders and their associates or, which there are no controlling Shareholders, any Shareholders other than Directors (excluding independent non-executive Directors) and the chief executive of the Company and their respective associates
19 December 2017, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular
the Rules Governing the Listing of Securities on the Stock Exchange
the general mandate proposed to be granted to the Directors at the EGM to allot, issue and otherwise deal with additional Shares not exceeding 20% of the total number of issued Shares of the Company on the date of the passing of the relevant ordinary resolution
the People’s Republic of China (for the purpose of this circular, excluding Hong Kong, the Macau Special Administrative Region and Taiwan)
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
ordinary share(s) of HK$0.02 each in the share capital of the Company
holder(s) of the Share(s)

— 2 —

DEFINITIONS

“Stock Exchange” The Stock Exchange of Hong Kong Limited “HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent.

— 3 —

LETTER FROM THE BOARD

==> picture [72 x 50] intentionally omitted <==

**CHINA FINANCIAL LEASING GROUP LIMITED 中國金融租賃集團有限公司[*]**

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2312)

Executive Director Mr. JIM Ka Shun Independent Non-executive Directors Mr. YIP Ming Mr. LAU Siu Hang Mr. TSANG Chung Sing Edward

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

Head Office and Principal Place of Business in Hong Kong: Room 2202, 22/F 118 Connaught Road West Hong Kong

22 December 2017

To the Shareholders

Dear Sir or Madam,

PROPOSED REFRESHMENT OF GENERAL MANDATE TO ALLOT AND ISSUE SHARES

INTRODUCTION

The purpose of this circular is to provide you with information relating to (i) the proposed grant of the New General Mandate; (ii) the recommendation from the Independent Board Committee to the Independent Shareholders on the proposed grant of the New General Mandate; (iii) the recommendation from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, on the proposed grant of the New General Mandate; and (iv) the notice of EGM.

For identification purpose only

— 4 —

LETTER FROM THE BOARD

REFRESHMENT OF THE EXISTING GENERAL MANDATE

Pursuant to an ordinary resolution passed by the Shareholders at the AGM, the Directors were granted the Existing General Mandate to allot, issue and deal with up to 177,989,976 Shares, representing 20% of the total number of issued Shares as at the date of passing of the relevant resolution approving the Existing General Mandate until the revocation, variation or expiration of the Existing General Mandate.

During the period from the grant of the Existing General Mandate to the Latest Practicable Date, a total of 177,000,000 Shares were issued at HK$0.12 per Share by utilizing the Existing General Mandate on 28 September 2017 pursuant to the placing agreement entered into between the Company and Supreme China Securities Limited on 11 September 2017. The net amount of proceeds raised was approximately HK$20.71 million.

Since the AGM and except for the proposed grant of the New General Mandate herein, the Company has not refreshed its Existing General Mandate.

As at the Latest Practicable Date, the Company did not have any plan, arrangement, understanding, intention, negotiation (either concluded or in progress) on any potential transaction which would involve issue of securities of the Company that require disclosure under the Listing Rules. The Company will comply with the applicable disclosure requirements under the Listing Rules in respect of any actual or potential investment(s) and/or fund raising exercise(s) as and when appropriate.

However, the Company is exploring investment opportunities in relation to One Belt and One Road and information technology (the “ IT ”) specifying on FinTech, Artificial Intelligence (the “ AI ”) and Big Data related sectors.

In relation to One Belt One Road initiative, the PRC government aimed to develop integrated trade corridors across Asia, Europe, Africa and the Middle East. This will stimulate global economic development by connecting over 60 countries and create significant opportunities. This initiative will also encourage domestic and overseas investment especially on transportation, power and infrastructure sectors to strengthen trade links. The Company believes there will be great investment opportunities in financial, construction, transportation and power sectors.

Furthermore, there is a great opportunity in IT industry (such as software house, data centre, cloud computing and semiconductor sector) since a lot of traditional industries including financial and consuming make use of AI and Big Data analysis to enhance their business competitiveness. This will boost the investment in the related software and hardware development and create investment opportunities.

— 5 —

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Company had an aggregate of 1,092,149,882 Shares in issue. Subject to the passing of the ordinary resolution for the approval of the New General Mandate and on the basis that no further Shares are issued and/or repurchased by the Company between the Latest Practicable Date and the date of the EGM, the Company would be allowed under the New General Mandate to allot and issue 218,429,976 new Shares, being 20% of the total number of issued Shares of the Company as at the Latest Practicable Date. The New General Mandate is valid until whichever is the earliest of:

(i) the conclusion of the next annual general meeting of the Company;
(ii) 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, the Companies Law of the Cayman Islands or any other applicable laws of the Cayman Islands to be held; or
(iii) the passing of an ordinary resolution by the Shareholders in general meeting revoking or varying the authority given to the Directors under the New General Mandate.

REASONS FOR THE NEW GENERAL MANDATE

The Group is principally engaged in short to medium term capital appreciation by investing in a diversified portfolio of investments in listed and unlisted securities.

As at 31 October 2017, the Group’s cash and bank balances was approximately HK$1,315,000 and the Group did not had any borrowing or debt financing. As at 31 October 2017, the Group had diversified portfolio of investments in listed securities in Hong Kong of approximately HK$60,488,000 and it allows the Group to realize the investments in stock markets from time to time. Based on the projection of the Company, barring unforeseen circumstances, it is estimated that the working capital requirement for the Group for the next twelve months will be approximately HK$14.04 million, mainly comprises staff salaries of approximately HK$5.14 million, directors’ emoluments of approximately HK$1.2 million, rent and rates of approximately HK$3.04 million, investment management fee of approximately HK$400,000 and consultancy fee of approximately HK$360,000. Having considered the above working capital requirement, the Group will maintain a positive cash position and to meet the working capital requirement through the net proceeds from the realization of investments in listed securities. However, the realization of investments for supporting working capital requirement may not maximize Shareholders’ returns due to the realization may not grasp the right time and there may be additional funding requirement of the Company to cover any unexpected circumstances, such as changes in market conditions or opportunities, which may increase the working capital requirement of the Company. Therefore, the Directors consider that it will be a merit for the Group to have additional working capital for its ongoing investment activities and for coping with any business challenges.

— 6 —

LETTER FROM THE BOARD

As at the Latest Practicable Date, taking into account its existing cash and bank balances and other available resources, the Board estimates that the Group has sufficient working capital for its present requirements and for at least 12 months from the date of this circular in the absence of any unforeseen circumstances.

Since the Company is an investment company, it is important to grasp potential opportunities in a timely and effective manner to take advantages of any material listed and unlisted investment opportunities for the benefit of the Company and its Shareholders as a whole. To grasp the investment opportunities, a refreshment of Existing General Mandate so as to provide sufficient resources and financing flexibility to enable the Company to capture investment opportunities in time and to maximize Shareholders’ returns.

The Company has raised approximately HK$111.53 million from the placings exercise from the past 24 months (the “ Previous Placings ”). The listed investments and unlisted investments from the Previous Placings was approximately HK$89.67 million and HK$15 million respectively. The remaining approximately HK$6.86 million has been allocated for supporting daily operating expenses.

The Company was able to capture realized and unrealized gain from the proceeds of Previous Placings on certain listed investments (please refer to the section headed “Investments analysis on the Previous Placings”). For the existing investments from the Previous Placings, the investment committee of the Company (the “ Investment Committee ”) has positive prospects on the Company’s listed investments. The market price of the listed investments and their performance are expected to be better in the future as it will be discussed below under the section headed “Investments analysis on the Previous Placings”.

In addition, the Group has invested in form of capital injection by taking up the equity interests in a PRC company in September 2017. The Company is able to response quickly to grasp this investment opportunity through placing exercise by utilizing the Existing General Mandate which only takes around half month from entering into placing agreement to the completion of the placing. In light of this, the Group will be able to response to the market and such opportunity promptly because such a fund raising exercise pursuant to a general mandate provides the Company a more simple, less lead time process and cost-saving than other types of fund raising exercises.

The Board considered that part of the proceeds from Previous Placings was allocated for supporting the Group’s working capital. Although the Company may choose to realize the listed investments for supporting the working capital requirement, the Board considered that the realization would limit the diversification of the portfolio and upside potential on those realized investments of the Company. Therefore, the Board is in the view that realization the investments may not maximize the Shareholders’ returns.

— 7 —

LETTER FROM THE BOARD

In addition, the Previous Placings had strengthened the Group’s financial position by diversifying the portfolio in listed and unlisted investments. Utilizing the general mandates allows the Company to have the source of fund to capture new investment opportunities and diversify the overall investment portfolio of the Group.

In order to provide sufficient financial resources and financing flexibility, it is essential for the Company to refresh the Existing General Mandate. The Board considered the refreshment of the Existing General Mandate (i) enable the Company to capture potential investment opportunities in a timely manner; (ii) avoid realization of listed investments to support the working capital which may not capture the best realization timing; and (iii) enable diversification of the potential listed and unlisted investments. The Board is in the view that the above benefits would outweigh the dilution effect on the Shareholders through fund raising exercise by utilizing the New General Mandate.

The Board considers that equity financing through the use of a general mandate is an important fund raising channel to the Group, as it (i) does not create any payment of interest obligations on the Group and does not require the provision of collaterals as compared with debt financing; (ii) is less costly than raising funds by way of rights issue or open offer; and (iii) provides the Company with the capability and flexibility to capture any fund raising or prospective investment opportunity as and when it arises. The Board considers that the ability to issue new Shares under the New General Mandate for equity financing purpose is crucial in a competitive and rapidly changing investment environment and in times of volatile market conditions.

In particular, given the Group is principally engaged in short to medium term capital appreciation by investing in a diversified portfolio of investments in listed and unlisted securities. The performance and business operation of the Group is directly related to the fluctuations of the equity markets and changes in the global economy. The Directors consider that funding requirement or appropriate investment opportunities may arise at any time prior to the next annual general meeting and decision may have to be made within a limited period of time in such event particularly due to the high volatility of the stock markets that the Company primarily invests in. In case the Group has identified suitable investment targets, it may utilize the New General Mandate to raise funding for settling the consideration for such investments. For prudence and flexibility, the Directors consider that it is in the interests of the Company and the Shareholders to refresh the Existing General Mandate so as to provide sufficient resources and financial flexibility to enable the Company to capture investment opportunities in time and to maximize Shareholders’ returns. In addition, if any potential investors offer attractive terms for investment in the Shares and subject to the market conditions, the New General Mandate will enable the Directors to conduct an equity fund raising exercise by issuing equity securities within a relatively short period of time, the net proceeds of which will support the Group’s business development. The Directors therefore believe that the refreshment of the Existing General Mandate will provide flexibility in the source of funding and allow the Company to grasp any potential opportunities in a timely manner.

— 8 —

LETTER FROM THE BOARD

As compared with the use of a general mandate, the use of a specific mandate for fund raising purpose will be cautiously considered by the Company, given that the Company will have to comply with the notice period requirement for convening a special general meeting in order to seek for such specific mandate from Shareholders and face uncertainties as the specific mandate may not be obtained in a timely manner, which may limit the Company’s ability to timely execute and fund its investment activities, such as stock market transactions.

In terms of bank and debt financing, not only that it may be subject to lengthy due diligence and documentation negotiations as compared to equity financing, the Company may also have to bear interest payment obligations coupled with such bank and debt financing. The Company had approached 3 banks for negotiating and obtaining the terms and conditions of the debt financing and bank borrowings. The Company had requested the terms of margin financing and it was noted that the margin interest rate will be around 7.5% per annum, subject to the availability of the listed securities on the margin list (such as blue chip and red chip stocks) as pledged securities. For the bank borrowings, in addition to it may need to go through a lengthy due diligence and documentation negotiation. The banks were also in the opinion that it is difficult for the Company to obtain the bank loans, since the Group is currently loss-making and does not have any suitable pledge assets and collaterals. The Directors are in the view that (i) the ability of the Group to obtain bank borrowings usually depends on the Group’s profitability, financial position and the then prevailing market condition; (ii) debt financing may require pledge of assets and/or other kind of securities which may possibly reduce the Group’s flexibility in managing its portfolio; (iii) debt financing will usually incur interest burden on the Group. Based on the information obtained from the market and the banks, the extra funding costs under debt financing as compared to equity financing will be interest expense derived from the debt financing. Since the interest rate of bank borrowings is highly depending on the Group’s profitability and availability of the pledge of assets, the estimated annual borrowing cost amounted to approximately HK$1.9 million; and (iv) since it is difficult for the Company to obtain the bank borrowings and the margin financing involved high interest cost and limit the choice of investment due to the pledge of securities will lower the flexibility of the investment portfolio. Based on the aforementioned reasons, the Board considers debt financing to be costly, time-consuming and more limitation on the investment portfolio of the Company as compared to equity financing for the Group to obtain additional funding. The Company will only be cautiously considered as and when appropriate to reduce possible liquidity issue.

In addition to bank and debt financing, the Company had also approached 3 underwriters for other potential means of equity fund raising such as rights issue and open offer which may not have an immediate dilution impact. Based on the preliminary discussions with the underwriters, the rights issue or open offer were discussed in the basis of (i) two existing Shares to subscribe for one new Share; (ii) estimated at a 50% discount on the Share price; and (iii) estimated underwriting commission from 3% to 5%. The costs for the Company to undergo such equity fund raising exercise will be relatively high as compared to equity financing through the use of a general mandate.

— 9 —

LETTER FROM THE BOARD

It is noted that it normally takes more than two months to raise funds by rights issue or open offer and it may not allow the Company to grasp potential opportunities in a timely manner. In addition, rights issue and open offer will incur higher underwriting commission and involve extra administrative work and additional cost for the trading arrangements. According to the information available on the market and from the professional financial advisors and underwriters, the Company estimated the extra cost in relation to the rights issue and open offer, including financial, legal and other professional advisory fees amounted to approximately HK$1.9 million. It is also estimated a 3% to 5% underwriting commission would be charged by the underwriters on the Shares raised under rights issue or open offer, which is higher than the 2.5% placing commission charged on the Shares raised under general mandate by the placing agents according to the past experience of the Company.

Although the Board considered rights issue or open offer could raised more funds than placing exercise under New General Mandate, the transaction cost would be higher in terms of (i) underwriting commission will be higher than placing commission; and (ii) extra cost including financial, legal and other professional advisory fees which is not necessary in fund raising under general mandate. The Board considered fund raising under general mandate is more cost-effective. Although rights issue and open offer would be offered to the Shareholders on a pro-rata entitlement basis, those qualifying shareholders who choose not to take up their assured entitlements in full would have dilution to their shareholding interests in the Company.

Given that (i) the lengthy due diligent and documentation negotiations in debt financing; and (ii) other means of equity fund raising such as rights issue or open offer takes more than two months in general while utilizing a general mandate through the placing exercise provide flexibility and just takes approximately half month to complete the funding procedures, fund raising under general mandate enables the Company to response to the investment opportunities in a timely manner.

In addition, the extra costs including (i) the interest expense on the debt financing; and (ii) higher underwriting commission compared with placing commission and extra costs in financial, legal and professional fees to the professional parties involved in the rights issue or open offer, would reduce the net proceeds from the fund raising activities which can be used for potential investment opportunities to maximize the Shareholders’ returns.

Should any future funding needs arise or attractive terms for investment in Shares become available from potential investors, the Board will be able to respond to the market and such investment opportunities promptly because such a fund raising exercise pursuant to a general mandate provides the Company a more simple and less lead time process than other types of fund raising exercises.

— 10 —

LETTER FROM THE BOARD

Although the Company does not have any immediate plans for any new issue of Shares under the New General Mandate as at the Latest Practicable Date, taking into account that (i) the Existing General Mandate has been utilized as to 177,000,000 new Shares under the placing. Such 177,000,000 new Shares were allotted and issued on 28 September 2017 by the Company and represented approximately 99.44% of the aggregate number of Shares which may be allotted and issued under the Existing General Mandate; (ii) net proceeds from the equity fund raising activities over the past 24 months immediately preceding the Latest Practicable Date were utilized for investments and allocated for supporting daily operating expenses, the Board believes that the proposed grant of the New General Mandate prior to the next annual general meeting (i.e. on or before late June 2018) is expected be around six months from the Latest Practicable Date which is in the best interests of the Company and the Shareholders as a whole by maintaining the flexibility for any future allotment and issue of Shares by the Board necessary for the Group’s future business development; (iii) the above flexibility outweigh the dilution effect of the existing Shareholders as the Company is able to respond in a timely and effective manner to take advantages of any material investment opportunities for the benefit of the Company and its Shareholders as a whole; and (iv) the shareholding interests of all the Shareholders will be diluted in proportion to their respective shareholdings upon any utilization of the New General Mandate as listed under the section headed “Potential dilution on shareholdings”, the Directors consider such potential dilution to shareholdings of the public Shareholders to be acceptable.

The Directors have exercised due and careful consideration when choosing the best financing method available to the Company. The grant of the New General Mandate will provide the Company with an additional alternative and it is reasonable for the Company to have the flexibility in deciding the financing methods for its future business development. In light of the extra costs and timing required in other means of equity fund raising and debt financing, the fund raising exercise through general mandate tends to be more cost-effective, efficient and less time consuming. Such flexibility in utilizing a general mandate outweigh the dilution effect and maximize the Shareholders’ returns. The Directors are in the view that the grant of the New General Mandate is in the interests of the Company and the Shareholders as a whole.

Based on the above, the Company considers that equity financing through the use of the New General Mandate is an appropriate way to raise funds for the Company.

— 11 —

LETTER FROM THE BOARD

EQUITY FUND RAISING ACTIVITIES IN THE PAST 24 MONTHS

The following are the equity fund raising activities conducted by the Group in the past 24 months immediately preceding the Latest Practicable Date:

Date of			Intended use of	Actual use of
announcement	Event	Net proceeds	proceeds as announced	proceeds
12 May 2016	Placing of 50,000,000	Approximately	General working	Used as intended_(1)_
	new Shares under	HK$28.13 million	capital and potential
	general mandate		investments to be
			identified
12 October 2016	Placing of 120,000,000	Approximately	General working	Used as intended_(2)_
	new Shares under	HK$33.88 million	capital and potential
	general mandate		investments to be
			identified
20 April 2017	Placing of 148,000,000	Approximately	General working	Used as intended_(3)_
	new Shares under	HK$28.81 million	capital and potential
	general mandate		investments to be
			identified
11 September 2017	Placing of 177,000,000	Approximately	General working	Used as intended_(4)_
	new Shares under	HK$20.71 million	capital and potential
	general mandate		investments to be
			identified

Note 1: a total of approximately HK$25.94 million has been utilised to invest in five investees, i.e., Huarong Investment Stock Corporation Limited (stock code: 2277) (“ Huarong ”) (invested approximately HK$3,809,000), Glory Flame Holdings Limited (stock code: 8059) (“ Glory Flame ”) (invested approximately HK$4,726,000), REXLot Holdings Limited (stock code: 555) (“ REXLot ”) (invested approximately HK$3,954,000), KSL Holdings Limited (stock code: 8170) (“ KSL ”) (invested approximately HK$3,908,000) and King Force Group Holdings Limited (stock code: 8315) (“ King Force ”) (invested approximately HK$9,545,000). The remaining approximately HK$2,188,000 has been allocated for supporting daily operating expenses.
Note 2: a total of approximately HK$32 million has been utilised to invest in five investees, i.e., KSL (invested approximately HK$5,200,000), China Internet Investment Finance Holdings Limited (stock code: 810) (“ China Internet Investment ”) (invested approximately HK$8,220,000), Grand Peace Group Holdings Limited (stock code: 8108) (“ Grand Peace ”) (invested approximately HK$11,015,000), REXLot (invested approximately HK$7,307,000) and Glory Flame (invested approximately HK$256,000). The remaining approximately HK$1,882,000 has been allocated for supporting daily operating expenses.

— 12 —

LETTER FROM THE BOARD

Note 3: a total of approximately HK$27.83 million has been utilized to invest in four investees, i.e., Zheng Li Holdings Limited (stock code: 8283) (“ Zheng Li ”) (invested approximately HK$5,439,000), REXLot (invested approximately HK$11,004,000), Newtree Group Holdings Limited (stock code: 1323) (“ Newtree Group ”) (invested approximately HK$4,562,000) and KSL (invested approximately HK$6,822,000). The remaining approximately HK$983,000 has been allocated for supporting daily operating expenses.
Note 4: a total of HK$15 million has been utilized to invest in the form of capital injection by taking up the equity interests in a PRC company and approximately HK$3,908,000 has been utilized to invest in Zheng Li. The remaining approximately HK$1,802,000 has been allocated for supporting daily operating expenses.

INVESTMENTS ANALYSIS ON THE PREVIOUS PLACINGS

								Adjusted
								closing
		Number of						Hang Seng
		shares of the						Index as
		investments						at the date
		from the						of the first
		proceeds						investment
		from the					Market	from the
		Previous		Sales	Realised	Unrealised	value as at	Previous
Name of investments	Principal activities	Placings	Cost	proceeds	profit/(loss)	profit/(loss)	31/10/2017	Placings	Prospects on the investments
Listed investments			HK$	HK$	HK$	HK$	HK$
Huarong	Provision of foundation	2,000,000	3,809,000	4,172,000	363,000	–	–	20,368	N/A
	substraction business
	in Hong Kong and also
	engaged in machinery
	leasing business
Glory Flame	Provision of concrete	5,325,000	4,982,000	2,036,000	(2,946,000)	–	–	20,397	N/A
	demolition services
	in Hong Kong as
	subcontractor
REXLot	Lottery system and games	176,050,000	22,265,000	8,044,000	(1,024,000)	(6,070,000)	7,127,000	20,397	The Company believes that REXLot will
	development business and								continue looking into the diversification
	distribution and marketing								opportunities and intend to introduce
	of lottery products in PRC								and establish strategic partnership to
									enhance REXLot’s human and finance
									capability and identify potential
									projects to set the stage for long term
									growth.
KSL	Provision of engineering	7,324,000	15,930,000	4,482,000	(5,019,000)	577,000	7,006,000	20,397	The Company believes that KSL will
	consulting, contracting								continue to seek for opportunities
	and project management								to obtain new projects and carefully
	services in Hong								evaluate the potential costs and the
	Kong with a focus on								engineering circumstances pertaining
	geotechnical engineering								to different potential projects with
	works								a view to increase KSL’s revenue
									and controlling overall costs to an
									acceptable and satisfactory level.
King Force	Provision of security	70,000,000	9,545,000	2,057,000	(7,488,000)	–	–	20,576	N/A
	guarding services in Hong
	Kong, and also engaged
	in mobile game business

— 13 —

LETTER FROM THE BOARD

Name of investments Principal activities Number of shares of the investments from the proceeds from the Previous Placings Listed investments (Continued) China Internet Investment Investment in equity securities and debt securities 19,998,000 Grand Peace Provision of funeral services, sales of funeral related products and loan financing business 4,910,000 Zheng Li Offer passenger car services including maintenance and repair services; and modification, tuning and grooming services, also sell passenger car spare parts and accessories in Singapore and export to other countries 1,575,000 Newtree Group Manufacture and trading of hygienic disposables; trading of coals; sales of household consumables, jewelries and watches; digital technology applications development, and provision of educational technology solutions 10,000,000 Unlisted investment in a PRC Company Total investments from the proceeds from the Previous Placings Proceeds from the Previous Placings allocated to daily operating expenses Total proceeds from the Previous Placings*	Cost HK$ 8,220,000 11,015,000 9,347,000 4,562,000 89,675,000 15,000,000 104,675,000 6,855,000 111,530,000	Sales proceeds HK$ 2,866,000 17,205,000 – – 40,862,000	Realised profit/(loss) HK$ (97,000) 6,190,000 – – (10,021,000)	Unrealised profit/(loss) HK$ (2,750,000) – (7,158,000) 438,000 (14,963,000)	Market value as at 31/10/2017 Adjusted closing Hang Seng Index as at the date of the first investment from the Previous Placings Prospects on the investments HK$ 2,507,000 23,132 The Company believes that China Internet Investment continues to seek potential investment opportunities in unlisted companies. China Internet Investment announced the intention for the possible investment to explore the PRC fund management and opportunities. China Internet Investment has also set up a wholly-owned investment company in Qianhai, the PRC, for private equity investments in China. China Internet Investment will continue studying the flexibility in investing in different regions in the A-share market and other Asian markets. – 22,954 N/A 2,189,000 25,015 The Company believes that Zheng Li will pursue the following key business strategies: (i) continue to strengthen the leading market position in Singapore and expand the servicing capacity and customer base; (ii) continue to increase the brands of car tuning parts that Zheng Li offers; (iii) further strengthen the brand, operational efficiency and sales and marketing efforts, and improve the customer service quality; and (iv) continue to attract, train and retain skilled employees to support the future growth and expansion. 5,000,000 25,156 The Company believes that Newtree Group has been actively seeking opportunities to diversify its current business portfolio (household consumables, coal business, digital technology business, education business and money lending business) by exploring various investments in different sectors, with a target to find new growth drivers to support the long term development of Newtree Group. 23,829,000

Share subdivision (each issued shares of Grand Peace being subdivided into two (2) subdivided shares) with effect from 18 April 2017.

— 14 —

LETTER FROM THE BOARD

The proceeds from Previous Placings were utilized to invest in nine listed investees and one unlisted investment. The sales proceeds from the trading of listed equity securities from the Previous Placings was approximately HK$40.86 million. It recorded a loss of approximately HK$24.98 million from the Previous Placings (net of realized loss of approximately HK$10.02 million and unrealized loss of approximately HK$14.96 million). As at 31 October 2017, the market value of the existing listed investments from the Previous Placings was approximately HK$23.83 million.

For the existing listed investments from the Previous Placings, Investment Committee noted that the existing listed investments from the Previous Placings are with the target to (i) penetrate their business in order to strengthen the market position; (ii) expand their business by diversifying their portfolio/product into different target groups and regions; and (iii) improve their financial position by better controlling on their costs. The Investment Committee has positive prospects on the Company’s listed investment.

The Investment Committee considered that the Company manages the investment portfolio to achieve short to medium term capital appreciation from price momentum, potential industrial and company growth. However, the market flow and sentiment may not be in a favor to the Company’s listed investment portfolio which is currently suffering from underperformance. The Investment Committee would consider the past, current and future potential listed investments depending on the market condition to adjust the investment strategy accordingly.

Listed investments

Huarong

The Investment Committee considered that the foundation business revenue of Huarong would continuously increase due to the favorable government policy to the construction industry, and which resulting a better performance in Huarong’s stock price. Therefore, the Investment Committee decided to invest in Huarong.

The Investment Committee noted that in June 2016, the stock price of Huarong had reached the highest during the year. The Investment Committee decided to dispose the investment on Huarong and sought for other potential listed investment.

Glory Flame

The Investment Committee considered that Glory Flame would generate a continuous growth of revenue in the new segment. In January 2016, Glory Flame commenced the trading of lightemitting diodes (“ LED ”) light sources for decoration due to an expansion in LED market and an increasing in customer acceptance in LED products. The diversification of revenue will benefit to the performance of Glory Flame. The Investment Committee noted that the stock price of Glory Flame had an increasing trend in March 2016. Therefore, the Investment Committee decided to invest in Glory Flame.

— 15 —

LETTER FROM THE BOARD

The Investment Committee noted that the administrative and other operating expenses of Glory Flame had a significant increase. These were mainly due to the share option expenses and the fair value loss in financial assets at fair value through profit or loss, and which resulting a loss attributable to owners of Glory Flame. The Investment Committee considered that such loss resulted a decline in stock price performance of Glory Flame and create a realized loss for the Company.

The Investment Committee considered that the stock price of Glory Flame was hard to be recovered. The Investment Committee decided to avoid further loss and made the disposal decisions.

REXLot

The Investment Committee considered that REXLot’s development of new lottery products and distribution channels on the PRC lottery market demonstrated a growing potential. The Investment Committee decided to invest in REXLot due to the PRC lottery market growing potential.

Although the Investment Committee is confident in the PRC lottery market, the PRC lottery market put a halt on the internet lottery distribution channels and hindered the growth of REXLot’s business. This resulted the stock price continuous to drop.

It was noted that the Company disposed part of the investment in REXLot. The sales proceeds had been allocated to the other potential listed investments and support the daily operating expenses. The Investment Committee considered that the reducing position of REXLot could reduce market risks and allocating resources to invest other potential listed investments.

The Company still holds shares of REXLot. The Investment Committee still has a positive prospect since the lottery market in the PRC remains huge and has a continuous growth in the first half of 2017 which may have a positive impact on the stock price of REXLot.

KSL

Market condition in construction industry is favorable due to an increase in number of major infrastructure and construction projects in Hong Kong. The Investment Committee decided to invest in KSL because of the increasing demand in the construction market which would benefit KSL.

The Investment Committee noted that keen competition faced by KSL in obtaining new projects and increasing in the cost of construction. The Investment Committee considered this resulted underperformance on the stock price.

The Investment Committee decided to dispose part of the investment in KSL and seek for other potential listed investments. The sales proceeds had been allocated to support daily operating expenses and other potential listed investments.

— 16 —

LETTER FROM THE BOARD

The Company still holds shares of KSL. The Company recorded an unrealized profit from the investment in KSL as at 31 October 2017. The Investment Committee considered the demand of construction services would increase and benefit to KSL in a long run.

King Force

The Investment Committee considered that the acquisition of an IT company would provide a better quality of services in the fixed manned security guarding services and expected a growing revenue in long run. The Investment Committee decided to invest in King Force and expected the stock price of King Force would be benefited from the acquisition.

The Investment Committee noted that the acquisition in an IT company did not increase the revenue of King Force as expected and lead to an underperformance of the stock price. In addition, the increasing guard costs and the decreasing fixed manned security guarding services contracts had caused further losses. The stock price of King Force had been gradually declined since the second half of 2016 and it did not have any sign of recovery.

The Investment Committee decided to dispose the investment in King Force and seek for other potential listed investments. The sales proceeds had been allocated to other potential listed investments.

China Internet Investment

The Investment Committee considered that the intention of China Internet Investment to invest in the PRC market in August 2016 allow China Internet Investment to capture a potential return in the PRC market. The Investment Committee decided to invest in China Internet Investment and expected the stock price would be benefited from the investment portfolio of China Internet Investment.

The Investment Committee noted that China Internet Investment had suffered a loss from operations. The stock price of China Internet Investment had not performed well in 2017 which led to a realized and unrealized loss of investment in China Internet Investment for the Company.

The Investment Committee decided to dispose part of the investment in China Internet Investment and the sales proceeds had been allocated to the other potential listed investments.

— 17 —

LETTER FROM THE BOARD

The Company still holds shares of China Internet Investment. The Investment Committee considered that China Internet Investment would continue to look for potential investment opportunities in the PRC market. The Investment Committee believes that China Internet Investment’s flexibility in investing in different regions would capture a potential return in the future.

Grand Peace

The Investment Committee considered that Grand Peace’s expansion of its elderly home business and funeral services with the launch of the online platform could expand the market shares in the industry. Therefore, the Investment Committee decided to invest in Grand Peace.

The stock price of Grand Peace had an increasing trend since March 2017, and had reached the highest in May 2017. The Investment Committee decided to dispose the investment in Grand Peace and capture the realized profit. The sales proceeds had been allocated to support the daily operating expenses and other potential listed investment.

Zheng Li

The Investment Committee decided to invest in Zheng Li since Zheng Li is a leading passenger car service provider in Singapore. The Investment Committee is confident in its expansion plans and its profitability.

The Investment Committee noted that the stock price of Zheng Li had a substantial decline since September 2017. The Investment Committee did not aware any reasons on such decline, which resulted an unrealized loss in the investment in Zheng Li for the Company.

The Company still holds shares of Zheng Li. The Investment Committee noted that Zheng Li recorded a profit during the six months ended 30 June 2017. Since Zheng Li is still a leading passenger car service provider in Singapore and is also expanding its business by utilizing the proceeds from the listing of its shares, the Investment Committee is confidence to the future profitability of Zheng Li.

Newtree Group

The Investment Committee noted that Newtree Group had disposed the jewelries and watches business in 2017 to reallocate resources to the existing and other potential business segments. The Investment Committee decided to invest in Newtree Group because the new acquired business in provision of money lending services business would diversify its business and would increase sources of revenue.

— 18 —

LETTER FROM THE BOARD

The Company still holds shares of Newtree Group and recorded an unrealized profit from the investment in Newtree Group as at 31 October 2017. The Investment Committee considered Newtree Group’s revenue will continue to grow because Newtree Group has been actively seeking opportunities to diversify its current business portfolio. The Investment Committee expected the stock price of Newtree Group would perform better in the future.

Unlisted investment

For the unlisted investment, the Company had invested in form of capital injection by taking up 3% of the equity interests in a PRC company, which principally engaged in the business of providing consumer financial services to the owners of motor vehicle in the PRC, amounted to HK$15 million. The HK$15 million investment amount represented approximately 3% of the PRC company at its fair market value, with reference to the valuation report under market approach as at 30 June 2017 performed by an independent valuer. The Company had obtained a legal due diligent report from an independent PRC law firm. The legal due diligent on the PRC company included the PRC company’s backgrounds, management, assets, operation, laws and regulations compliances in August 2017. The Company had also obtained the audited financial statements of the PRC company for the two years ended 31 December 2015, 31 December 2016 and four months ended 30 April 2017 for assessing its financial performance. The Investment Committee had reviewed the abovementioned valuation report, legal due diligent report and audited financial statements for recommendation of the investment decision to the Board. The Investment Committee considered that this unlisted investment would bring future benefit to the Group as (i) the capital injection helps the PRC company to increase operation scale and strengthen its financial position in the growth stage to capture more market share; (ii) the innovative business idea to merge the consumer financial services with the motor vehicles market in the PRC; and (iii) a great market potential in terms of demand in the motor vehicles market in the PRC.

Based on the unaudited management accounts of the PRC company for the ten months ended 31 October 2017 obtained by the Company, it was noted that the net assets value of the PRC company as at 31 October 2017 was increased as compared with 30 June 2017. As compared with the unaudited financial results for the six months ended 30 June 2017, the profit before tax of the PRC company recorded an increase for the ten months ended 31 October 2017. The Directors are optimistic to the future returns for the investment in the PRC company and there is no material impairment indication brought into attention of the Directors.

— 19 —

LETTER FROM THE BOARD

POTENTIAL DILUTION ON SHAREHOLDINGS

The table below sets out the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) upon full utilization of the New General Mandate (assuming no other Shares are issued and/or repurchased by the Company from the Latest Practicable Date up to and including the date of the EGM), for illustrative and reference purpose:

Name of Director Jim Ka Shun Name of Shareholders Tan Ying Public Shareholders Shares to be issued under the New General Mandate Total	As at the Latest Practicable Date No of Shares Approximate % 8,800,000 0.81% 190,540,000 17.45% 892,809,882 81.75% – – 1,092,149,882 100.00%	Upon full utilization of the New General Mandate No of Shares Approximate % 8,800,000 0.67% 190,540,000 14.54% 892,809,882 68.12% 218,429,976 16.67% 1,310,579,858 100.00%	Upon full utilization of the New General Mandate No of Shares Approximate % 8,800,000 0.67% 190,540,000 14.54% 892,809,882 68.12% 218,429,976 16.67% 1,310,579,858 100.00%
			100.00%

Note: Certain percentage figures included in the above table have been subject to rounding adjustments . Accordingly, figures shown as totals may not be an arithmetic aggregation of the figures preceding them .

Upon full utilization of the New General Mandate, 218,429,976 Shares will be issued, representing 20% of the total number of issued Shares of the Company as at the Latest Practicable Date and approximately 16.67% of the total number of issued Shares of the Company as enlarged by the Shares issued under the New General Mandate. Assuming that the Company does not issue and/ or repurchase any Shares from the Latest Practicable Date up to and including the date of the EGM, the aggregate shareholding of the public Shareholders will decrease from approximately 81.75% as at the Latest Practicable Date to approximately 68.12% upon full utilization of the New General Mandate, representing a potential maximum dilution in public shareholding by approximately 16.67%. If the New General Mandate is granted and fully utilized, it may result in a cumulative dilution effect of approximately 56.36% in the shareholding of the public Shareholders as enlarged by the issue of new Shares under the New General Mandate, the exercise of share options and the fund raising activities conducted by the Company in the past 24 months immediately prior to the Latest Practicable Date. Although the grant of the New General Mandate and the fund raising activities of the Company in the past twenty-four month period as listed under the section headed “Equity fund raising activities in the past 24 months” will cause/have caused dilution in the Shares, the Board will be able to respond to the market and investment opportunities promptly because such a fund raising exercise pursuant to a general mandate provides the Company a more simple and less lead time process than other types of fund raising exercises and avoid the uncertainties and circumstances where a specific mandate may not be obtained in a timely manner.

— 20 —

LETTER FROM THE BOARD

EGM

Pursuant to Rule 13.36 (4) of the Listing Rules, the New General Mandate requires the approval of the Independent Shareholders at the EGM at which any of the controlling Shareholders and their associates or, where there are no controlling Shareholders, the Directors and the chief executive of the Company and their respective associates shall abstain from voting in favour of the relevant resolution. As at the Latest Practicable Date, since the Company has no controlling Shareholders, the Directors (excluding independent non-executive Directors) and the chief executive of the Company and their respective associates shall abstain from voting in favour of the relevant ordinary resolution.

As at the Latest Practicable Date, to the best of the knowledge, belief and information of the Directors, having made all reasonable enquiries, (i) the Company has no controlling shareholders; (ii) Mr. Jim Ka Shun, an executive Director, holds 8,800,000 Shares, representing approximately 0.81% of the total number of issued Shares; and (iii) the Company has no chief executive who holds any Shares.

As such, Mr. Jim Ka Shun, representing approximately 0.81% of the total number of issued Shares, together with his respective associates who shall hold any Shares as at the date of the EGM, are required to abstain from voting in favour of the proposed resolution approving the New General Mandate at the EGM pursuant to the Listing Rules and/or the Bye-laws.

The resolution proposed to be approved at the EGM will be taken by way of poll pursuant to the Listing Rules and an announcement on the results of the EGM will be made by the Company after the EGM in the manner prescribed under Rule 13.39 (4) of the Listing Rules.

The notice convening the EGM is set out on pages 39 to 41 of this circular. At the EGM, an ordinary resolution will be proposed to approve the proposed grant of the New General Mandate. A form of proxy for use at the EGM is also enclosed with this circular. Whether or not you are able to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it, together with the power of attorney or other authority (if any) under which it is signed or a certified copy of the power of attorney or authority, to the Hong Kong share registrar and transfer office of the Company, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjourned meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting if you so wish and in such event, the proxy form shall be deemed to be revoked.

— 21 —

LETTER FROM THE BOARD

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprises Mr. Yip Ming, Mr. Lau Siu Hang and Mr. Tsang Chung Sing Edward, all being independent non-executive Directors. It has been established to advise the Independent Shareholders on the grant of the New General Mandate.

Akron Corporate Finance Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the grant of the New General Mandate.

RECOMMENDATIONS

The Directors consider the granting of the New General Mandate are in the interest of the Company and the Shareholders as a whole and accordingly recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM.

The Independent Board Committee, having taken into account the advice of Independent Financial Adviser, considers that the granting of the New General Mandate is fair and reasonable so far as the Independent Shareholders are concerned and accordingly recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at the EGM for approving the grant of the New General Mandate.

GENERAL INFORMATION

Your attention is drawn to the Letter from the Independent Financial Adviser set out on pages 25 to 38 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders in connection with the grant of the New General Mandate and the Letter from the Independent Board Committee set out on pages 23 to 24 of this circular which contains its recommendation to the Independent Shareholders in relation to the grant of the New General Mandate.

By Order of the Board China Financial Leasing Group Limited Jim Ka Shun

Executive Director

— 22 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter from the Independent Board Committee setting out its recommendation to the Independent Shareholders in relation to the proposed refreshment of the Existing General Mandate:

==> picture [72 x 49] intentionally omitted <==

**CHINA FINANCIAL LEASING GROUP LIMITED 中國金融租賃集團有限公司[*]**

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2312)

22 December 2017

To the Independent Shareholders

Dear Sir or Madam,

PROPOSED REFRESHMENT OF GENERAL MANDATE TO ALLOT AND ISSUE SHARES

We have been appointed as the Independent Board Committee to consider and advise you in connection with the proposed refreshment of the Existing General Mandate, details of which are set out in the circular dated 22 December 2017 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Terms defined in the Circular will have the same meanings when used herein unless the context otherwise requires.

We wish to draw your attention to the Letter from the Board and the Letter from the Independent Financial Adviser set out on pages 4 to 22 and pages 25 to 38 of the Circular respectively.

The business nature of the Company is investment making which needs prompt reaction to the fast paced capital markets in order to seize any investment opportunities when they arise, and given the current stock market sentiment, the Company should be able to seize such investment opportunities with sufficient internal resources. Therefore, refreshment of Existing General Mandate is in the interest of the Company and the Shareholders as a whole.

For identification purpose only

— 23 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the principal factors and reasons considered by the Independent Financial Adviser, as well as its conclusion and advice, we concur with the view of the Independent Financial Adviser and consider the terms of the refreshment of the Existing General Mandate fair and reasonable so far as the Independent Shareholders are concerned and the New General Mandate is in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend you to vote in favour of the ordinary resolution to be proposed at the EGM to approve the refreshment of the Existing General Mandate and the transactions contemplated thereunder.

Yours faithfully,

For and on behalf of the Independent Board Committee Mr. Yip Ming Mr. Lau Siu Hang Mr. Tsang Chung Sing Edward Independent non-executive Directors

— 24 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter from the Independent Financial Adviser which sets out its advice to the Independent Board Committee and the Independent Shareholders in respect of the grant of the New General Mandate for inclusion in this Circular .

==> picture [113 x 47] intentionally omitted <==

22 December 2017

To The Independent Board Committee and the Independent Shareholders of China Financial Leasing Group Limited

Dear Sirs,

PROPOSED REFRESHMENT OF GENERAL MANDATE TO ALLOT AND ISSUE SHARES

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the grant of the New General Mandate, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular issued by the Company to its Shareholders dated 22 December 2017 (the “ Circular ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

Pursuant to the Listing Rules, the grant of the New General Mandate is subject to the approval of the Independent Shareholders at the EGM by way of poll. Any controlling Shareholders and their associates, or where there is no controlling Shareholder, the Directors (excluding independent nonexecutive Directors) and the chief executive of the Company and their respective associates shall abstain from voting in favour of the relevant resolution to approve the grant of the New General Mandate.

As at the Latest Practicable Date, to the best knowledge, information and belief of the Directors, (i) the Company has no controlling Shareholders; (ii) Mr. Jim Ka Shun, an executive Director, holds 8,800,000 Shares, representing approximately 0.81% of the total number of issued Shares; and (iii) the Company has no chief executive who holds any Shares. To the extent that any of the Directors and their respective associates controlled or are entitled to exercise control over the voting rights in respect of his/her/their Shares at the date of EGM, they are required to abstain from voting in favour of the ordinary resolution to approve the grant of the New General Mandate at the EGM. As such, Mr. Jim Ka Shun and his respective associates are required to abstain from voting in favour of the proposed resolution approving the New General Mandate at the EGM.

— 25 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee, comprising Mr. Yip Ming, Mr. Lau Siu Hang and Mr. Tsang Chung Sing Edward, all being independent non-executive Directors, has been established to advise the Independent Shareholders on the proposed grant of the New General Mandate. We, Akron Corporate Finance Limited, have been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

OUR INDEPENDENCE

We are not connected with the directors, chief executive and substantial shareholders of the Company or any of their respective subsidiaries or their respective associates and do not have any shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group as at the Latest Practicable Date. During the last two years, we were engaged as the independent financial adviser to the Company (the “ Previous Engagement ”) in respect of the proposed refreshment of general mandate to allot and issue shares, details of which are set out in the circular of the Company dated 17 February 2017. Under the Previous Engagement, we were required to express our opinion and give recommendation to the independent board committee and independent shareholders in respect of the relevant refreshment of general mandate. Apart from normal professional fees paid or payable to us in connection with the Previous Engagement and this appointment as the Independent Financial Adviser, no arrangements exist whereby we had received or will receive any fees or benefits from the Company or any other parties that could reasonably be regarded as relevant to our independence. Accordingly, we consider that we are independent pursuant to the Listing Rules.

BASIS OF OUR ADVICE

In formulating our advice and recommendation to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinion and representations contained or referred to in the Circular and the statements, information, opinion and representations provided to us by the management of the Company (the “ Management ”) and the Directors. We have assumed that all information and representations contained or referred to in the Circular and all information and representations which have been provided by the Management and the Directors, for which they are solely and wholly responsible, were true, accurate and complete at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors as set out in the Circular were reasonably made after due and careful inquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and representations contained in the Circular.

— 26 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries, which to the best of their knowledge and belief, that the information contained in the 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 in the Circular or the Circular as a whole misleading.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, or its subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the grant of the New General Mandate. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. In addition, nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, we are not obligated to conduct any independent in-depth investigation into the accuracy and completeness of those information.

PRINCIPAL FACTORS CONSIDERED

In giving our recommendation to the Independent Board Committee and the Independent Shareholders in respect of the grant of the New General Mandate, we have taken into consideration the following factors and reasons:

1. Background of the proposed grant of the New General Mandate

— 27 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

On 11 September 2017, the Company entered into a placing agreement in relation to the placing of 177,000,000 new Shares (the “ Placing ”). The Placing was completed on 28 September 2017 and 177,000,000 new Shares were successfully placed under the Existing General Mandate, representing utilization of approximately 99.44% of the Existing General Mandate. The net proceeds from the Placing is approximately HK$20.71 million. As confirmed by the Management, the net proceeds from the Placing had been utilized for (i) investing in the form of capital injection by taking up the equity interests in a PRC company; (ii) investing in listed securities in Hong Kong; and (iii) allocated for supporting daily operating expenses of the Group.

As there has not been any refreshment of the Existing General Mandate since the AGM, only 989,976 Shares may be further allotted, issued and dealt with by the Directors under the Existing General Mandate as at the Latest Practicable Date. Given that (i) the Existing General Mandate has almost been fully utilized; and (ii) the next annual general meeting of the Company is estimated to be held on or before late June 2018 (the “ Next AGM ”), which is around six months from the Latest Practicable Date, the Board proposed to seek approval from the Independent Shareholders for the grant of the New General Mandate at the EGM so as to allow the Directors to allot, issue and deal with new Shares not exceeding 20% of the total number of issued Shares as at the date of the EGM.

As at the Latest Practicable Date, the Company has 1,092,149,882 Shares in issue. Assuming that the Company does not issue or repurchase any Shares from the Latest Practicable Date up to and including the date of the EGM, the grant of the New General Mandate will allow the Directors to allot and issue up to 218,429,976 new Shares, representing 20% of the aforesaid total number of issued Shares.

The New General Mandate is valid until whichever the earliest of (i) the conclusion of the next annual general meeting of the Company; (ii) 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, the Companies Law of the Cayman Islands or any other applicable laws of the Cayman Islands to be held; or (iii) the passing of an ordinary resolution by the Shareholders in general meeting revoking or varying the authority given to the Directors under the New General Mandate.

2. Reasons for the grant of the New General Mandate

The Group, as an investment company under Chapter 21 of the Listing Rules, is principally engaged in short to medium term capital appreciation by investing in a diversified portfolio of investments in listed and unlisted securities. As such, the performance and business operation of the Group is directly related to the fluctuations of the equity markets and changes in the global economy.

— 28 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As disclosed in the interim report of the Group for the six months ended 30 June 2017 (the “ Interim Report 2017 ”), the total fair value of the Group’s investments as at 30 June 2017 was approximately HK$85.6 million (as at 31 December 2016: approximately HK$66.24 million). The Group recorded a negative net cash flows from operating activities of approximately HK$28.84 million for the six months ended 30 June 2017. The cash and bank balances maintained at approximately HK$851,000 as at 30 June 2017, accounted for approximately 0.9% of the total assets of the Group as at 30 June 2017 which as at 31 December 2016, the cash and bank balances was approximately HK$751,000, accounted to approximately 0.8% of the total assets of the Group as at 31 December 2016.

As advised by the Management, we understand that as at 31 October 2017 (i) the Group’s cash and bank balances was approximately HK$1,315,000 and the Group did not have any borrowing or debt financing; and (ii) the Group had diversified portfolio of investments in listed securities in Hong Kong of approximately HK$60,488,000 and it allows the Group to realize the investments in stock markets from time to time.

We have obtained and reviewed the working capital forecast of the Group for the next twelve months as from December 2017 (the “ Forecast ”) provided by the Management. As indicated in the Forecast, in the absence of any unforeseen circumstances, it is estimated that the working capital requirement for the Group (principally related to operating expenditure for the Group’s daily operation) for the next twelve months as from December 2017 will be approximately HK$14.04 million, which mainly comprises of staff salaries and directors’ emoluments of approximately HK$6.34 million, rent and rates of approximately HK$3.04 million and investment management, consultancy and other legal and professional fee of approximately HK$1.3 million.

As advised by the Management, the Forecast is prepared by the Management based on the assumptions that the business scale of the Group remains as its current level and taking into account the above working capital requirement and net proceeds from the realization of investments in listed securities for supporting the Group’s working capital requirements for its operational needs and daily operation. We are also made known that in preparing the Forecast, the estimated working capital requirement of the Group merely relates to operating expenditure of the Group and the Management does not include any funding requirement associated with possible investment opportunities in such estimation. Upon our review of the Forecast, we note that the average monthly operating expenditure of the Group will be approximately HK$1.2 million and the Company will maintain a positive cash position by the end of next 12 months, yet only at a level of less than HK$2 million, representing less than two months of operating expenditure of the Group.

As disclosed in the Interim Report 2017, the Board will continue pursuing any possible investment opportunities for the Group in response to market condition. Based on information as disclosed in the section headed “Investments Analysis on the Previous Placings” as stated in the Board Letter, we note that the average size of investments made by the Group from proceeds of the Previous Placings was approximately HK$10.5 million. In the event that any business opportunity or unexpected circumstances occur prior to the Next AGM, the projected level of liquidity and the cash

— 29 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

position of the Group of less than HK$2 million may be insufficient to cover such circumstances and additional working capital may be required. Therefore, we consider and concur with the Directors that it will be a merit for the Group to have additional working capital for its ongoing investment activities, potential business and/or investment opportunities and for coping with any business challenges.

As stated in the Board Letter, the Group intends to explore new investment opportunities in (i) construction, transport/infrastructure and utilities sectors in view of expanding domestic and overseas investment in these industries are required to strengthen trade links following the One Belt One Road Initiative; and (ii) information technology (such as software house, data centre, cloud computing and semiconductor sector) industry since a lot of traditional industries including financial and consuming make use of artificial intelligence and Big Data analysis to enhance their business which will in turn boost investment on related software and hardware development (item (i) and (ii) as stated above are collectively referred to as the “ Possible Sectors ”). Notwithstanding that no specific target in the Possible Sectors has been identified by the Group as at the Latest Practicable Date, investment opportunities may arise at any time. If the Group does not have sufficient cash or financial resources on hand, the Group may not be able to capture possible investment opportunities for its future development.

Despite that the Group can realize its investment portfolio for supporting working capital requirement of the Group, it may not maximize Shareholders’ returns, especially when realization of such investments are forced to be made due to lack of available financing alternatives. As such, it is essential for the Group to have access to readily available financial resources and this is in line with its prudent financial management strategy. In this connection, it will be a merit of the Group to maintain its financial flexibility of raising funds and/or issuing Shares expeditiously by utilizing the New General Mandate for its working capital requirement and to capture potential business development and/or investment opportunities which may arise at any time.

As set out in the Board Letter, the Company does not have any immediate plans for new issue of Shares under the New General Mandate or any concrete investment opportunity as at the Latest Practicable Date. However, the Directors consider that funding requirement or appropriate investment opportunities may arise at any time prior to the Next AGM (i.e. on or before late June 2018) which is expected to be around six months from the Latest Practicable Date and a decision may have to be made promptly or within a limited period of time particularly due to high volatility of the stock markets that the Company primarily invests in. The interests of the Company and the Shareholders may be adversely impacted if the Company may not be able to capture any prospective investment opportunities in a timely manner. As such, it is important for the Group to maintain a necessary flexible and readily available fund raising capability of the Company to make prompt decisions and to solicit funding in a relatively short period of time so as to grasp the business opportunities which may arise at any time.

— 30 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As advised by the Management, they consider that grant of the New General Mandate would provide the Group with the necessary flexibility to (i) fulfill any possible funding needs for future business development and/or investment opportunities which may arise at any time; and (ii) strengthen the capital base of the Company to have additional working capital for its existing business operations, capturing possible opportunities in the Possible Sectors and for coping with any business challenges.

In view of the nature of the principal business of the Group, certain investment opportunities require a timely response in order to secure such opportunities before other investors and cannot always be planned ahead. The Group is required to have sufficient financial resources on hand and readily available financing alternatives in order to seize suitable opportunities which may arise from time to time to maximize Shareholders’ returns. As and when such kind of investment opportunities arises, the Company will be equipped with an alternative to raise funds for such investment under the grant of the New General Mandate. If the Existing General Mandate is not being refreshed prior to the Next AGM, the Company may only conduct equity fund raising exercise by seeking specific mandate from the Shareholders in each occasion and extra time and costs (such as for preparing, printing and dispatching circular and notice of general meeting to the Shareholders) will be involved for convening a Shareholders’ meeting as compared to raising fund under general mandate. In addition, there will be uncertainty on whether approval for specific mandate will be obtained in each occasion. The inability of the Company to issue new Shares under the Existing General Mandate will also impair the flexibility of the Company to participate in any potential transactions which may require a relatively short response time.

Taking into account that (i) the Existing General Mandate has almost been fully utilized; (ii) the net proceeds from the Placing had been utilized for investing in listed securities in Hong Kong and unlisted companies in the PRC and allocated for supporting daily operating expenses; (iii) the business nature of the Group is investment making which requires readily available fund for its operations and development; (iv) the Group’s strategy in exploring opportunities in the Possible Sectors and suitable opportunities may arise at any time before the Next AGM which will be held until late June 2018, which is around six months from the Latest Practicable Date; (v) the grant of the New General Mandate will strengthen the capital base of the Company and would also empower the Company with flexibility to allot and issue new Shares within the refreshed limit speedily for the funding requirements or appropriate investment opportunities of the Group when necessary; (vi) allotting and issuing new Shares under specific mandate for each occasion involves additional cost and requires a relatively longer time for convening Shareholders’ meeting than under the general mandate in which the Company may not be able to capture any prospective investment opportunities in a timely manner; and (vii) as discussed below under the section headed “4. Other financing alternatives”, the grant of the New General Mandate will provide the Group a relatively more cost effective, efficient and less time consuming than alternative financing methods and will enhance the Company’s financial flexibility (without restricting its ability to conduct rights issue, open offer, issue of shares under specific mandate or debt financing), we concur with Directors’ view that the

— 31 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

grant of the New General Mandate is fair and reasonable, and in the interest of the Company and its Shareholders as a whole as it is conducive and reasonable for the Company to maintain its financial flexibility in the selection of the best method(s) of financing for its future funding needs.

3. Equity fund raising activities of the Company in the past 24 months

The following table summarizes the equity fund raising activities carried out by the Company in the past 24 months immediately prior to the Latest Practicable Date:

Date of Net proceeds Intended use of announcement Event (approximately) proceeds Actual use of proceeds 12 May 2016 Placing of 50,000,000 HK$28.13 million General working (i) approximately new Shares under capital and potential HK$25.94 million general mandate investments to be has been utilized for identified investment in listed securities; and (ii) the remaining balance of approximately HK$2.19 million has been allocated for supporting daily operating expenses.

12 October 2016 Placing of 120,000,000 HK$33.88 million General working (i) approximately new Shares under capital and potential HK$32 million has general mandate investments to be been utilized for identified investment in listed securities; and

(ii) the remaining balance of approximately HK$1.88 million has been allocated for supporting daily operating expenses.

— 32 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Date of Net proceeds Intended use of announcement Event (approximately) proceeds Actual use of proceeds 20 April 2017 Placing of 148,000,000 HK$28.81 million General working (i) approximately new Shares under capital and potential HK$27.83 million general mandate investments to be has been utilized for identified investment in listed securities; and (ii) the remaining balance of approximately HK$0.98 million has been allocated for supporting daily operating expenses. 11 September 2017 Placing of 177,000,000 HK$20.71 million General working (i) HK$15 million has new Shares under capital and potential been utilized to general mandate investments to be invest in the form of identified capital injection by taking up the equity interests in a PRC company; (ii) approximately HK$3.91 million has been utilized for investment in listed securities in Hong Kong; and (iii) approximately HK$1.8 million has been allocated for supporting daily operating expenses.

Save as disclosed above, the Company has not conducted any other equity fund raising activities in the past 24 months immediately preceding the Latest Practicable Date.

— 33 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4. Other financing alternatives

We are given to understand that apart from equity financing, the Company will also consider other financing methods such as rights issue, open offer and debt financing so as to cater its future financing requirements.

As noted from the Board Letter, the Board considers equity financing through the use of general mandate to be an important fund raising channel to the Group, as it (i) will be quicker than seeking a specific mandate to issue Shares; (ii) does not create any payment of interest obligations on the Group and does not require the provision of collaterals as compared with debt financing; and (iii) is less costly than raising funds by way of rights issue and open offer. It is noted that it normally takes more than two months to raise funds by rights issue or open offer and it may not allow the Company to grasp potential opportunities in a timely manner. It is crucial to secure underwriter to provide underwriting services on a fully-underwritten basis for conducting rights issue or open offer. The identification and negotiation with underwriter(s) at terms acceptable to both the Group and the underwriter(s) is essential for rights issue or open offer and it may involve a lengthy process. Even if an underwriter is secured, there is no guarantee that the Group will be able to procure commercial underwriting for rights issue or open offer at more favourable terms in a timely manner as compared with placing activities given that it will be subject to the then prevailing market condition, financial condition of the Group and proposed fund raising scale of the rights issue or open offer.

Based on our review of the information available from the website of the Stock Exchange for those listed issuers which have conducted and completed rights issue or open offer exercises in October and November 2017, we note that extra cost (including financial, legal and related professional advisory fees) in relation to rights issue or open offer amounted to approximately HK$2.7 million. As advised by the Management, the Group has approached three underwriters (the “ Possible Underwriters ”) in discussing the possibility of providing underwriting services for rights issue or open offer exercises of the Group. It was indicated by the Possible Underwriters to the Management that an estimated underwriting commission of 3% to 5% would be charged by the Possible Underwriters to the Company in a rights issue or open offer, which will be higher than the placing commission of 2.5% charged by the placing agents to the Group in previous placing exercises under general mandate conducted by the Group. Furthermore, we have enquired and are given to understand that the Management has also discussed with the Potential Underwriters regarding the possibility of providing placing services under general mandate. The Possible Underwriters indicated to the Management that given that placing exercises under general mandate can be conducted on best-effort basis while rights issue/open offer needs to be conducted on fullyunderwritten basis, placing commission to be charged to the Group for placing exercises under general mandate will be lower than underwriting commission for rights issue/open offer exercises.

— 34 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In addition, rights issue and open offer will inevitably be more time consuming and costly than placing exercises under general mandate as additional fees/costs and time and extra administrative work will be incurred for, including but not limited to, (i) preparing relevant documents including underwriting agreement(s), announcement(s), prospectus and application forms for acceptance; (ii) time and costs associated with trading arrangements; (iii) obtaining legal advice regarding the feasibility of extending the rights issue and open offer to overseas Shareholders; (iv) engagement of reporting accountants to report on unaudited pro forma financial information to be included in the prospectus; (v) printing charges in connection with the dispatch of the prospectus and related documents and application forms, which are otherwise not required for the allotment and issuance of new Shares under general mandate.

Rights issue and open offer would be offered to the Shareholders on a pro-rata entitlement basis, which the qualifying shareholders are given a choice to take up or give up or sell their entitlements, there is uncertainty of the existence of a market to trade the nil-paid rights. It is also uncertain whether the qualifying shareholders would reserve funding for further investment in the Shares in rights issue or open offer and whether such further investment in the Shares would be in line with the then investment objectives of those qualifying shareholders. As such, those qualifying shareholders who choose not to take up their assured entitlements in full would have dilution to their shareholding interests in the Company.

Debt financing will usually incur interest burden on the Group and may be subject to, including but not limited to, lengthy due diligence and negotiations with the banks which involve providing documents for credit evaluation procedures by the banks before entering into any debt financing agreement. The Directors are of the view that (i) the ability of the Group to obtain bank borrowings usually depends on the Group’s profitability, financial position and the then prevailing market condition; and (ii) debt financing may require pledge of assets and/or other kind of securities which may possibly reduce the Group’s flexibility in managing its portfolio and is possible to impair the financial position of the Group. While commercial terms of corporate loans are not publicly available, we are made known by the Management that the Group has approached three principal banks for preliminary discussion for obtaining bank borrowings and/or margin financing. Those banks indicated to the Group that given (i) the loss-making position of the Group; (ii) lack of acceptable collateral to the banks (such as blue-chip and red-chip stocks), the Group may encounter difficulties in obtaining debt financing. Furthermore, pledge of listed securities as collateral for debt financing will limit flexibility of the Group in its management of the investment portfolio. We are also given to understand that even if debt financing is granted to the Group, the indicative annual interest rate for debt financing provided by those banks will be higher than both the indicative underwriting commission rate (being 3% – 5%) quoted by underwriters as discussed previously and historical placing commission rate (being 2.5%) of the Group. Based on the aforementioned reasons, the Directors consider debt financing to be relatively uncertain and time-consuming as compared to equity financing for the Group to obtain additional funding.

— 35 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We are given to understand that the Directors would exercise due and careful consideration when choosing the best financing method available to the Company. Considering that the grant of the New General Mandate will provide the Company with an additional alternative and it is reasonable for the Company to have the flexibility in deciding the financing methods for its future business development, the Directors are of the view that the grant of the New General Mandate is in the interests of the Company and the Shareholders as a whole.

Having considered that (i) debt financing such as bank borrowing will inevitably incur interest cost; and (ii) the fund raising exercise through general mandate tends to be more cost-effective, efficient and less time consuming as compared to other means of fund raising methods (such as rights issue, open offer and debt financing) and will enhance the Company’s flexibility to raise capital to satisfy the financial needs as and when it arises, we are of the view and concur with the view of the Directors that the grant of the New General Mandate is in the interests of the Company and the Shareholders as a whole.

5. Potential dilution on shareholdings

Name of Director Jim Ka Shun_(Note 1)_ Name of Shareholders Tan Ying Public Shareholders Shares to be issued under the New General Mandate Total	As at the Latest Practicable Date No of Shares Approximate % 8,800,000 0.81% 190,540,000 17.45% 892,809,882 81.75% – – 1,092,149,882 100.00%	Upon full utilization of the New General Mandate No of Shares Approximate % 8,800,000 0.67% 190,540,000 14.54% 892,809,882 68.12% 218,429,976 16.67% 1,310,579,858 100.00%	Upon full utilization of the New General Mandate No of Shares Approximate % 8,800,000 0.67% 190,540,000 14.54% 892,809,882 68.12% 218,429,976 16.67% 1,310,579,858 100.00%
			100.00%

Note:

1 . Jim Ka Shun is an executive Director .
2 . Certain percentage figures included in the above table have been subject to rounding adjustments . Accordingly, figures shown as totals may not be an arithmetic aggregation of the figures preceding them .

— 36 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Upon full utilization of the New General Mandate, 218,429,976 Shares will be issued, representing 20% of the issued share capital of the Company as at the Latest Practicable Date and approximately 16.67% of the issued share capital of the Company as enlarged by the Shares issued under the New General Mandate. Assuming that the Company does not issue and/or repurchase any Shares from the Latest Practicable Date up to and including the date of the EGM, the aggregate shareholding of the public Shareholders will decrease from approximately 81.75% as at the Latest Practicable Date to approximately 68.12% upon full utilization of the New General Mandate, representing a potential maximum dilution in public shareholding by approximately 16.67%. If the New General Mandate is granted and fully utilized, it may result in a cumulative dilution effect of approximately 56.36% in the shareholding of the public Shareholders as enlarged by the issue of new Shares under the New General Mandate, the exercise of share options and the fund raising activities conducted by the Company in the past 24 months immediately prior to the Latest Practicable Date.

Although the grant of the New General Mandate and the fund raising activities of the Company in the past twenty-four months as set out under the section headed “3. Equity fund raising activities of the Company in the past 24 months” of this letter will cause/have caused dilution in the public shareholding, the Board will be able to respond to the market and investment opportunities promptly because such a fund raising exercise pursuant to a general mandate provides the Company a more simple and less lead time process than other types of fund raising exercises and avoid the uncertainties and circumstances where a specific mandate may not be obtained in a timely manner.

We are aware of the potential cumulative dilution effect as a result of the utilization of the New General Mandate and those arising from the equity fund raising activities in the past 24 months immediately preceding the Latest Practicable Date. However, it should be noted that (i) the grant of the New General Mandate (a) will allow the Company to raise capital to satisfy its working capital or other financing requirements which may arise at any time by allotment and issuance of new Shares before the Next AGM which is expected to be held around six months from the Latest Practicable Date; (b) will provide more flexibility as the Company is able to respond in a timely and effective manner and take advantages of any investment opportunities for the benefit of the Company and its Shareholders as a whole, given that the business nature of the Company is investment making which needs prompt reaction to the fast paced capital markets in order to seize any investment opportunities when they arise; (c) will enable the Group to have the flexibility to introduce potential investor(s) or strategic investor(s) whose interests are aligned with the Group’s business objectives within a controllable timeframe at reasonable cost; and (d) does not incur any interest expenses on the Group and requires a relatively short period of time to complete; (ii) the shareholding interests of all the Shareholders will be diluted in proportion to their respective shareholdings upon any utilization of the New General Mandate; and (iii) the new Shares cannot be issued at more than 20% discount under the New General Mandate. Based on the foregoing, we consider such flexibility arising the grant of the New General Mandate is beneficial to the Group such that it can respond in a timely and efficient manner (which is crucial in view of the nature of business of the Group) to take advantage of any investment opportunities for the benefit of the Company and the Shareholders as a whole and we are of the opinion that such potential dilution to shareholdings of the public Shareholders is acceptable.

— 37 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having considered the factors and reasons as stated above, we are of the opinion that the grant of the New General Mandate is fair and reasonable so far as the Company and the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the grant of the New General Mandate.

Yours faithfully, For and on behalf of Akron Corporate Finance Limited Ross Cheung Managing Director

— 38 —

NOTICE OF EGM

==> picture [72 x 50] intentionally omitted <==

**CHINA FINANCIAL LEASING GROUP LIMITED 中國金融租賃集團有限公司[*]**

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2312)

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting of China Financial Leasing Group Limited (the “ Company ”) will be held at Room 2202, 22/F, 118 Connaught Road West, Hong Kong on Thursday, 11 January 2018 at 11:00 a.m. for the following purposes:

“ THAT , to the extent not already exercised, the mandate to allot, issue and deal with shares of the Company given to the Directors at the annual general meeting of the Company held on 26 May 2017 be and is hereby revoked and replaced by the mandate THAT :
(a) subject to paragraph (c) below, pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, the exercise by the directors of the Company (the “ Directors ”) during the Relevant Period (as defined below) of all the powers of the Company to allot, issue and deal with new shares in the capital of the Company (the “ Shares ”) and to make or grant offers, agreements and options, including warrants to subscribe for Shares, which might require the exercise of such powers be and the same is hereby generally and unconditionally approved;
(b) the approval in paragraph (a) above shall authorise the Directors during the Relevant Period (as defined below) to make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period (as defined below);
(c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to options or otherwise) by the Directors pursuant to the approval in paragraph (a) above, otherwise than pursuant to (i) a Rights Issue (as defined below); or (ii) the exercise of any options granted under the existing share option scheme of the Company; or (iii) any scrip dividend or similar arrangements providing for the allotment and issue of Shares in lieu of the whole or part of a dividend on Shares in accordance with the articles of association (the “ Articles ”) of the Company in force from time

For identification purpose only

— 39 —

NOTICE OF EGM

to time; or (iv) any issue of Shares upon the exercise of rights of subscription or conversion under the terms of any warrants of the Company or any securities which are convertible into Shares, shall not exceed the aggregate of: 20% of the aggregate nominal amount of the share capital of the Company in issue on the date of the passing of this resolution;

(d) for the purposes of this resolution:

“ Relevant Period ” means the period from the date of 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 expiration of the period within which the next annual general meeting of the Company is required by the Articles, the Companies Law of the Cayman Islands or any other applicable laws of the Cayman Islands to be held; or
(iii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the Directors by this resolution;

“ Rights Issue ” means an offer of Shares, or offer or issue of warrants, options or other securities giving rights to subscribe for Shares open for a period fixed by the Directors to holders of Shares on the register on a fixed record date in proportion to their then holdings of Shares (subject to such exclusion 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, or the expense or delay which may be involved in determining the existence or extent of any restrictions or obligations under the laws of, or the requirements of, any jurisdiction outside Hong Kong or any recognised regulatory body or any stock exchange outside Hong Kong).”

For and on behalf of the Board China Financial Leasing Group Limited Wong Ka Shing Company Secretary

Hong Kong, 22 December 2017

— 40 —

NOTICE OF EGM

Notes:

A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one or, if he is the holder of two or more shares, more proxies to attend and vote instead of him. A proxy need not be a member of the Company.
In the case of joint holders of shares in the Company, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the vote(s) of the other joint holder(s), seniority being determined by the order in which names stand in the register of members.
In order to be valid, the form of proxy must be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under seal, or under the hand of an officer or attorney or other person duly authorised, and must be deposited with the Hong Kong share registrar of the Company, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong (together with the power of attorney or other authority, if any, under which it is signed or a certified copy thereof) not less than 48 hours before the time fixed for holding of the Meeting.
As at the date of this notice, the board of Directors of the Company comprises Mr. Jim Ka Shun as executive Director, Mr. Yip Ming, Mr. Lau Siu Hang and Mr. Tsang Chung Sing Edward as independent non-executive Directors.

— 41 —

AI assistant

Long Investment Corp — Proxy Solicitation & Information Statement 2017

50512_rns_2017-12-21_cc5662a3-7b9a-4ad1-9d64-9a662e78b7db.pdf

CHINA FINANCIAL LEASING GROUP LIMITED 中國金融租賃集團有限公司[*]

PROPOSED REFRESHMENT OF GENERAL MANDATE TO ALLOT AND ISSUE SHARES

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

CONTENTS

RESPONSIBILITY STATEMENT

DEFINITIONS

DEFINITIONS

DEFINITIONS

CHINA FINANCIAL LEASING GROUP LIMITED 中國金融租賃集團有限公司[*]

PROPOSED REFRESHMENT OF GENERAL MANDATE TO ALLOT AND ISSUE SHARES

INTRODUCTION

REFRESHMENT OF THE EXISTING GENERAL MANDATE

LETTER FROM THE BOARD

REASONS FOR THE NEW GENERAL MANDATE

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

EQUITY FUND RAISING ACTIVITIES IN THE PAST 24 MONTHS

INVESTMENTS ANALYSIS ON THE PREVIOUS PLACINGS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Listed investments

Huarong

Glory Flame

LETTER FROM THE BOARD

REXLot

KSL

King Force

China Internet Investment

LETTER FROM THE BOARD

Grand Peace

Zheng Li

Newtree Group

LETTER FROM THE BOARD

Unlisted investment

POTENTIAL DILUTION ON SHAREHOLDINGS

EGM

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

RECOMMENDATIONS

GENERAL INFORMATION

CHINA FINANCIAL LEASING GROUP LIMITED 中國金融租賃集團有限公司[*]

PROPOSED REFRESHMENT OF GENERAL MANDATE TO ALLOT AND ISSUE SHARES

PROPOSED REFRESHMENT OF GENERAL MANDATE TO ALLOT AND ISSUE SHARES

INTRODUCTION

THE INDEPENDENT BOARD COMMITTEE

OUR INDEPENDENCE

BASIS OF OUR ADVICE

PRINCIPAL FACTORS CONSIDERED

1. Background of the proposed grant of the New General Mandate

2. Reasons for the grant of the New General Mandate

3. Equity fund raising activities of the Company in the past 24 months

4. Other financing alternatives

5. Potential dilution on shareholdings

RECOMMENDATION

NOTICE OF EGM

CHINA FINANCIAL LEASING GROUP LIMITED 中國金融租賃集團有限公司[*]

(Stock Code: 2312)

NOTICE OF EGM

NOTICE OF EGM

More from Long Investment Corp

Long Investment Corp Proxy Solicitation & Information Statement 2017

**CHINA FINANCIAL LEASING GROUP LIMITED 中國金融租賃集團有限公司[*]**

**CHINA FINANCIAL LEASING GROUP LIMITED 中國金融租賃集團有限公司[*]**

**CHINA FINANCIAL LEASING GROUP LIMITED 中國金融租賃集團有限公司[*]**

**CHINA FINANCIAL LEASING GROUP LIMITED 中國金融租賃集團有限公司[*]**