Luye Pharma Group Limited — AGM Information 2021

May 13, 2021

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Luye Pharma Group Ltd., you should at once hand this circular, together with the accompanying form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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LUYE PHARMA GROUP LTD.

綠 葉 製 藥 集 團 有 限 公 司

(incorporated in Bermuda with limited liability)

(Stock Code: 02186)

PROPOSALS FOR GENERAL MANDATES TO ISSUE SHARES AND REPURCHASE SHARES

AND

RE-ELECTION OF RETIRING DIRECTORS AND

NOTICE OF ANNUAL GENERAL MEETING

A notice convening the annual general meeting of Luye Pharma Group Ltd. to be held at 1/F, Building 12, Shanghai Business Park III, No. 1036 Tianlin Road, Shanghai, the PRC on Wednesday, 16 June 2021 at 3:00 p.m. is set out on pages 17 to 22 of this circular. A form of proxy for use at the annual general meeting is also enclosed. Such form of proxy is also published on the website of The Stock Exchange of Hong Kong Limited at www.hkexnews.hk and the website of Luye Pharma Group Ltd. at www.luye.cn.

Whether or not you intend to attend the annual general meeting, you are required to complete the form of proxy in accordance with the instructions printed thereon and return it to the Hong Kong share registrar of Luye Pharma Group Ltd., Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Center, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the annual general meeting or any adjournment thereof.

Completion and return of the form of proxy shall not preclude any shareholder from attending and voting in person at the annual general meeting if they so wish and in such event the form of proxy shall be deemed to be revoked.

14 May 2021

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
APPENDIX I — DETAILS OF THE DIRECTORS PROPOSED TO
BE RE-ELECTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
APPENDIX II — EXPLANATORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
NOTICE OF ANNUAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17

– i –

DEFINITIONS

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

• ‘‘Annual General Meeting’’

• the annual general meeting of the Company to be held at 1/F, Building 12, Shanghai Business Park III, No. 1036 Tianlin Road, Shanghai, the PRC on Wednesday, 16 June 2021 at 3:00 p.m., or any adjournment thereof and notice of which is set out on pages 17 to 22 of this circular

• ‘‘Bermuda Companies Act’’

• the Companies Act 1981 of Bermuda as amended, supplemented or otherwise modified from time to time

• ‘‘Board’’

• board of Directors

• ‘‘Bye-laws’’

• the bye-laws of the Company, as amended or supplemented from time to time

• ‘‘Company’’

• Luye Pharma Group Ltd., an exempted company with limited liability incorporated in Bermuda and the Shares of which are listed on the Stock Exchange with a stock code of 02186

• ‘‘Controlling Shareholders’’

• has the meaning ascribed thereto under the Listing Rules and, unless the context requires otherwise, refers to the controlling shareholders of the Company

• ‘‘Director(s)’’ the director(s) of the Company

• ‘‘Group’’ the Company and its subsidiaries

• ‘‘HK$’’

• Hong Kong dollar, the lawful currency of Hong Kong

• ‘‘Hong Kong’’

• the Hong Kong Special Administrative Region of the PRC

• ‘‘Issue Mandate’’

• a general mandate proposed to be granted to the Directors at the Annual General Meeting to allot, issue and/or deal in Shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the relevant resolution granting such mandate

• ‘‘Latest Practicable Date’’

• 10 May 2021, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular

• ‘‘Listing Rules’’

the Rules Governing the Listing of Securities on the Stock Exchange, as amended, supplemented or otherwise modified from time to time

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DEFINITIONS

• ‘‘Memorandum’’

• the memorandum of association of the Company, as amended or supplemented from time to time

• ‘‘PRC’’ or ‘‘China’’ the People’s Republic of China, and for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

• ‘‘Repurchase Mandate’’ a general mandate proposed to be granted to the Directors at the Annual General Meeting to repurchase Shares not exceeding 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the relevant resolution granting such mandate

• ‘‘SFO’’ Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) as amended, supplemented or otherwise modified from time to time

• ‘‘Share(s)’’ shares with a nominal value of USD0.02 each in the capital of the Company

• ‘‘Shareholder(s)’’ the holder(s) of the Share(s)

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

• ‘‘Takeovers Code’’ the Hong Kong Code on Takeovers and Mergers, as amended, supplemented or otherwise modified from time to time

• ‘‘USD’’ United States dollars, the lawful currency of the United States

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LETTER FROM THE BOARD

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LUYE PHARMA GROUP LTD.

綠 葉 製 藥 集 團 有 限 公 司

(incorporated in Bermuda with limited liability)

(Stock Code: 02186)

Executive Directors: Registered Office: Mr. LIU Dian Bo Clarendon House (Executive Chairman and 2 Church Street Chief Executive Officer) Hamilton HM 11 Mr. YANG Rong Bing Bermuda (Vice Executive Chairman) Mr. YUAN Hui Xian Head Office and Principal Place of Ms. ZHU Yuan Yuan Business in PRC: No. 15 Chuang Ye Road Non-executive Directors: High-tech Industrial Development Zone Mr. SONG Rui Lin Yantai, Shandong Mr. SUN Xin 264003 PRC Independent Non-executive Directors: Mr. ZHANG Hua Qiao Building 12, Shanghai Business Park III Professor LO Yuk Lam No. 1036 Tianlin Road Mr. LEUNG Man Kit Shanghai Mr. CHOY Sze Chung Jojo PRC

Principal Place of Business in Hong Kong: Unit 3207, 32/F Champion Tower 3 Garden Road Central, Hong Kong 14 May 2021

To the Shareholders

Dear Sir or Madam

PROPOSALS FOR

GENERAL MANDATES TO ISSUE SHARES AND REPURCHASE SHARES AND

RE-ELECTION OF RETIRING DIRECTORS AND

NOTICE OF ANNUAL GENERAL MEETING

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LETTER FROM THE BOARD

INTRODUCTION

The purpose of this circular is to provide you with the notice of Annual General Meeting and further information in relation to, amongst other matters, the following proposals to be put forward at the Annual General Meeting: (a) the grant to the Directors of the Issue Mandate, the Repurchase Mandate and to extend the Issue Mandate by an amount representing the aggregate nominal amount of any Shares repurchased by the Company; and (b) the re-election of the retiring Directors.

ISSUE MANDATE

At the Company’s annual general meeting held on 23 June 2020, a general unconditional mandate was granted to the Directors to issue Shares, and such mandate will lapse at the conclusion of the Annual General Meeting. In order to ensure flexibility and give discretion to the Directors in the event that it becomes desirable for the Company to issue any new Shares, an ordinary resolution 4(A) will be proposed at the Annual General Meeting to grant a general mandate to the Directors to exercise all powers of the Company to allot, issue and deal with additional Shares up to 20% of the total nominal amount of issued share capital of the Company as at the date of passing of the resolution in relation to the Issue Mandate.

As at the Latest Practicable Date, the issued share capital of the Company comprised 3,541,372,224 Shares. Subject to the passing of the ordinary resolution 4(A) and on the basis that no further Shares are issued or repurchased after the Latest Practicable Date and up to the Annual General Meeting, the Company will be allowed to issue a maximum of 708,274,444 Shares under the Issue Mandate.

In addition, subject to a separate approval of the ordinary resolutions 4(B) and 4(C), the number of Shares repurchased by the Company under ordinary resolution 4(B) will also be added to extend the 20% limit of the Issue Mandate as mentioned in the ordinary resolution 4(A) provided that such additional amount shall not exceed 10% of the total nominal amount of the issued share capital of the Company as at the date of passing the resolutions in relation to the Issue Mandate and the Repurchase Mandate.

The Directors wish to state that they have no immediate plans to issue any new Shares pursuant to the Issue Mandate as at the Latest Practicable Date.

The Issue Mandate, if approved, will continue to be in force from the passing of the said resolution until whichever the following first occurs: (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 any applicable laws or the Bye-laws to be held; or (iii) the revocation or variation of the authority given under such ordinary resolution by an ordinary resolution of the Shareholders in a general meeting of the Company.

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LETTER FROM THE BOARD

REPURCHASE MANDATE

At the Company’s annual general meeting held on 23 June 2020, a general unconditional mandate was granted to the Directors to repurchase Shares, and such mandate will lapse at the conclusion of the Annual General Meeting. An ordinary resolution will be proposed at the Annual General Meeting to approve the granting of the Repurchase Mandate to the Directors to exercise all powers of the Company to repurchase Shares representing up to 10% of the issued share capital of the Company as at the date of passing of the resolution in relation to the Repurchase Mandate.

The Repurchase Mandate, if approved, will continue in force from the passing of the said resolution until the following first occurs: (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 any applicable laws or the Bye-laws to be held; or (iii) the revocation or variation of the authority given under such resolution by an ordinary resolution of the Shareholders in a general meeting of the Company.

The Directors have no current intention of exercising the Repurchase Mandate as at the Latest Practicable Date.

An explanatory statement required by the Listing Rules to be sent to the Shareholders in connection with the proposed Repurchase Mandate is set out in Appendix II to this circular. This explanatory statement contains all information reasonably necessary to enable the Shareholders to make an informed decision on whether to vote for or against the relevant resolution at the Annual General Meeting.

RE-ELECTION OF RETIRING DIRECTORS

In accordance with bye-law 84(1) of the Bye-laws, one-third of the Directors for the time being (or if their number is not a multiple of three, the number nearest to but not less than onethird) will retire from office by rotation and will be eligible for re-election provided that every Director will be subject to retirement at least once every three years. Accordingly, Mr. YANG Rong Bing, Professor LO Yuk Lam and Mr. LEUNG Man Kit will retire by rotation and being eligible, will offer themselves for re-election as the Directors at the Annual General Meeting.

In accordance with bye-law 83(2) of the Bye-laws, any Director appointed by the Board as an addition to the existing Board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election. Accordingly, Mr. SUN Xin will retire and being eligible, will offer himself for re-election as a Director at the Annual General Meeting.

Details of the above retiring Directors, namely Mr. YANG Rong Bing, Professor LO Yuk Lam, Mr. LEUNG Man Kit and Mr. SUN Xin, who are standing for re-election at the Annual General Meeting, are set out in Appendix I to this circular in accordance with the Listing Rules.

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LETTER FROM THE BOARD

NOMINATION PROCEDURES AND PROCESS

The re-appointment of the abovenamed Directors has been reviewed by the nomination committee of the Company (the ‘‘Nomination Committee’’). The Nomination Committee is of the view that the retiring Directors have extensive experience in different fields and professions that are relevant to the business of the Company. In addition, their respective background, experience and knowledge allow them to provide valuable and relevant insights and contribute to the diversity of the Board. Accordingly, the Nomination Committee has recommended them to the Board for reelection and the Board has endorsed the recommendations of the Nomination Committee and recommended all retiring Directors to stand for re-election at the Annual General Meeting.

NOTICE OF ANNUAL GENERAL MEETING

Set out on pages 17 to 22 of this circular is the notice of the Annual General Meeting containing, inter alia, the ordinary resolutions in relation to granting the Directors the Issue Mandate, the Repurchase Mandate, the extension of the Issue Mandate and approving the reelection of the retiring Directors.

CLOSURE OF REGISTER OF SHAREHOLDERS AND ASCERTAINING OF ELIGIBILITY FOR ATTENDING THE ANNUAL GENERAL MEETING

For determining eligibility to attend and vote at the Annual General Meeting, the register of shareholders of the Company will be closed from Thursday, 10 June 2021 to Wednesday, 16 June 2021, both days inclusive, during which period no transfer of Shares will be registered. In order to be eligible to attend and vote at the Annual General Meeting, all transfer of Shares, accompanied by the relevant share certificates, must be lodged with the Company’s Hong Kong share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Center, 183 Queen’s Road East, Wanchai, Hong Kong, for registration not later than 4:30 p.m. on Wednesday, 9 June 2021.

FORM OF PROXY

A form of proxy is enclosed for use at the Annual General Meeting. Such form of proxy is also published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.luye.cn. Whether or not you intend to attend the Annual General Meeting, you are required to complete the form of proxy in accordance with the instructions printed thereon and return it to the Company’s Hong Kong share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Center, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time fixed for the holding of the Annual General Meeting or any adjournment thereof. Completion and delivery of the form of proxy shall not preclude a Shareholder from attending and voting in person at the Annual General Meeting if they so wish and in such event the form of proxy shall be deemed to be revoked.

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LETTER FROM THE BOARD

VOTING BY POLL

Pursuant to Rule 13.39(4) of the Listing Rules, any resolution put to the vote of the Shareholders at a general meeting must be taken by poll except where the chairman of the Annual General Meeting, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. Accordingly, each of the resolutions set out in the notice of Annual General Meeting will be taken by way of poll.

On a poll, every Shareholder present in person or by proxy or, in the case of a Shareholder being a corporation, by its duly authorised representative, shall have one vote for every fully paid Share of which he/she/it is the holder. A Shareholder entitled to more than one vote needs not use all his/her/its votes or cast all the votes he/she/it uses in the same way.

RECOMMENDATION

The Directors consider that the proposed resolutions for the granting to the Directors of the Issue Mandate, the Repurchase Mandate, the extension of the Issue Mandate and approving the reelection of the retiring Directors are in the best interests of the Company and the Shareholders as a whole. The Directors therefore recommend the Shareholders to vote in favour of all the resolutions to be proposed at the Annual General Meeting.

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters, the omission of which would make any statement herein or this circular misleading.

Yours faithfully By order of the Board LUYE PHARMA GROUP LTD. LIU Dian Bo

Chairman

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DETAILS OF THE DIRECTORS PROPOSED TO BE RE-ELECTED

APPENDIX I

The following are the particulars of the Directors (as required by the Listing Rules) proposed to be re-elected at the Annual General Meeting.

EXECUTIVE DIRECTOR

Mr. Yang Rong Bing, aged 55, holds the office of Vice Executive Chairman and is also a founding member of our Group. Mr. Yang was appointed as an Executive Director on 1 March 2007 and was previously a Non-Executive Director from July 2003. Mr. Yang was appointed as a vice executive chairman of the Board with effect from 30 March 2015. Mr. Yang has also been a non-executive director of Shandong Luye Pharmaceutical Co., Ltd. (‘‘Shandong Luye’’) since 2000. Prior to that, Mr. Yang was with Jiangsu Xuzhou Bio-Chemical Pharmaceutical Factory from 1988 to 1994 where he worked as an assistant factory head. In 1994, Mr. Yang joined Shandong Luye as a deputy general manager and from 1999 to 2000, he was the chief sales executive and executive director of Shandong Luye. Mr. Yang obtained a Bachelor’s degree in Science from Beijing Normal University in July 1988. Mr. Yang is the executive chairman of Nanjing Luye Pharmaceutical Co., Ltd.. (‘‘Nanjing Luye’’) and a director of the following main subsidiaries of our Company: Shandong Luye, Yantai Luye Drugs Trading Co., Ltd. and Nanjing Luye. Mr. Yang is a director of each of Luye Sciences Group Ltd. (formerly known as Luye Group Ltd) (‘‘Luye Group’’), Luye Pharma Holdings Ltd. (‘‘Luye Pharma Holdings’’), LuYe Pharmaceutical International Co., Ltd. (‘‘Luye Pharma Intl’’) and LuYe Pharmaceutical Investment Co., Ltd. (‘‘Luye Pharma Investment’’).

Mr. Yang has entered into an appointment letter with the Company for a term of three years with effect from 9 July 2020, subject to retirement and re-election in accordance with the Bye-laws. Mr. Yang did not receive any director’s fee other than salary, allowance and benefits in kind, performance bonus and retirement benefits. Such remuneration is determined by the Board with reference to his duties and responsibilities, workload, time commitment, contribution to the Group, salaries paid by comparable companies and prevailing market conditions. For details of his remuneration, please refer to the Company’s 2020 Annual Report.

NON-EXECUTIVE DIRECTOR

Mr. Sun Xin, aged 40, is currently a Managing Director at Hillhouse Capital and has been a member of the healthcare private equity team since 2017. He has more than 10 years of experience in financial services and healthcare industries. Prior to joining Hillhouse Capital, he was a vice president of Affinity Equity Partners, an Asia-focused private equity fund based in Hong Kong. Prior to that, he worked at the Investment Banking Division of Goldman Sachs in New York, focusing on healthcare M&A and financing. He started his career in pharmaceutical and biotech industry as a research scientist at Boehringer Ingelheim and Genentech, respectively. Mr. Sun obtained his Master of Business Administration from Columbia Business School, his Master of Science from Duke University and Bachelor of Science from Peking University.

Mr. Sun has entered into an appointment letter with the Company for a term of two years with effect from 8 February 2021, subject to retirement and re-election in accordance with the Bye-laws. Under the appointment letter, Mr. Sun, as Non-Executive Director, is not entitled to any director’s fee.

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DETAILS OF THE DIRECTORS PROPOSED TO BE RE-ELECTED

APPENDIX I

INDEPENDENT NON-EXECUTIVE DIRECTORS

Professor Lo Yuk Lam, aged 72, has been our Independent Non-executive Director since June 2014. Professor Lo has extensive experience in biotechnology industry, corporate management, academic research and community service.

Currently Professor Lo is serving as the Founding President of HK Bio-Med Innotech Association, and the Honorary Founding Chairman of Hong Kong Biotechnology Organization. In the educational area, Professor Lo has been elected an Honorary Fellow of the Hong Kong University of Science and Technology. He is also the Honorary Professor of several universities in China.

Professor Lo was heavily involved in several committees of the HKSAR Government. He had been served as the Chairman of the Advisory Council for Food Safety of the Food and Health Bureau HKSAR, Director of the Hong Kong Applied R&D Fund Co. Ltd., Chairman of the Biotechnology Committee of the Hong Kong Industry & Technology Development Council, and Chairman of Biotechnology Projects Vetting Committee of the Innovation and Technology Fund, HKSAR.

In Mainland China, Professor Lo is a member of Chinese People’s Political Consultative Conference in Jilin Province. He was also a consultant of the Centre for Disease Control and Prevention of China. In recognition of his leadership in the community and dedication to his field, Prof. Lo has received many awards, such as the ‘‘Pericles International Prize’’ in 2019. He is the second Asian and the first person from Hong Kong to be awarded the Prize since it was founded in 1986. In 2020, Professor Lo was awarded the Bronze Bauhinia Star by the HKSAR government for his outstanding services over the past decades.

In the business sector, Professor Lo is the Chairman of GT Healthcare Capital Partners, and Partner & Investment Committee Member of Hongsen Investment Management Limited. As at the Latest Practicable Date, Professor Lo holds or has held directorships in the following listed companies in the past three years:

Name of the listed company	Term	Position
Sinovac Biotech Ltd. (SVA: NASDAQ)	March 2006 to present	Independent Director
CSPC Pharmaceutical Group Limited, a	June 2014 to August 2020	Independent non-
company listed on the Main Board of		executive director
the Stock Exchange (stock code: 1093)
Zhaoke Ophthalmology Limited, a	April 2021 to present	Independent non-
Company listed on the Main Board of		executive director
the Stock Exchange (stoke code: 6622)

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DETAILS OF THE DIRECTORS PROPOSED TO BE RE-ELECTED

APPENDIX I

Professor Lo has entered into an appointment letter with the Company for an initial term of two years with effect from 9 July 2020, subject to retirement and re-election in accordance with the Bye-laws. Under the appointment letter, Professor Lo, as Independent Non-executive Director, is entitled to receive director’s fee of HK$300,000 per annum as determined by the Board with reference to the prevailing market conditions and his responsibility in the Company.

As at the Latest Practicable Date, Professor Lo has an interest in 250,000 underlying Shares in respect of the awarded shares granted by the Company under Luye Pharma Share Award Scheme.

Mr. Leung Man Kit, aged 67, has been the Independent Non-executive Director since June 2014. Mr. Leung has over 41 years of experience in project finance and corporate finance. Currently, he is a Responsible Officer of Grand Moore Capital Limited. Previously, he was a director of Emerging Markets Partnership (Hong Kong) Limited (the principal adviser to the AIG Infrastructure Fund L.P.) in 1999. He also held senior positions in the Hong Kong Branch of the Swiss Bank Corporation, SG Securities (HK) Limited (formerly known as Crosby Securities (Hong Kong) Limited) and Peregrine Capital Limited.

As at the Latest Practicable Date, Mr. Leung holds or held directorships in the following listed companies in the past three years:

Name of the listed company	Term	Position
China Electronics Optics Valley Union	March 2014 to	Independent non-
Holding Company Limited, a company	May 2020	executive director
listed on the Main Board of the Stock
Exchange (stock code: 798)*
China Huiyuan Juice Group Limited, a	June 2012 to	Independent non-
company listed on the Main Board of	January 2019	executive director
the Stock Exchange
(stock code: 1886)*
Unitas Holdings Limited, a company	October 2011 to	Executive Director
listed on the Growth Enterprise Market	November 2018
of the Stock Exchange
(stock code: 8020)
Orange Sky Golden Harvest	February 2008 to present	Independent non-
Entertainment (Holdings) Limited, a		executive director
company listed on the Main Board of
the Stock Exchange
(stock code: 1132)*

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DETAILS OF THE DIRECTORS PROPOSED TO BE RE-ELECTED

APPENDIX I

Name of the listed company Term Position China Ting Group Holdings Limited, November 2005 to present Independent nona company listed on the Main Board of executive director the Stock Exchange (stock code: 3398) Netease, Inc., a company listed on July 2002 to present Independent nonNASDAQ and Main Board of the Stock executive director Exchange (stock code: NTES, 9999)*

• Mr. Leung is also the chairman of the audit committee of these companies.

Mr. Leung obtained a Bachelor’s degree in Social Sciences from University of Hong Kong in October 1977.

Mr. Leung has entered into an appointment letter with the Company for a term of two years with effect from 9 July 2020 subject to retirement and re-election in accordance with the Bye-laws. Under the appointment letter, Mr. Leung, as Independent Non-Executive Director, is entitled to receive director’s fee of HK$360,000 per annum as determined by the Board with reference to the prevailing market conditions and his responsibility in the Company.

As at the Latest Practicable Date, Mr. Leung has an interest in 250,000 underlying Shares in respect of the awarded shares granted by the Company under Luye Pharma Share Award Scheme.

Save as disclosed herein, as at the Latest Practicable Date, each of the retiring Directors mentioned above did not have any interest in the Shares within the meaning of Part XV of the Securities and Futures Ordinance.

Save as disclosed herein, none of the above retiring Directors holds any position with the Company or any other members of the Group, nor have any directorships in other listed public companies in the last three years.

In addition, save as disclosed herein, none of the above retiring Directors has any relationship with any Directors, senior management, substantial Shareholders or Controlling Shareholders (as defined in the Listing Rules).

Save as disclosed herein, there is no other matter in relation to the above retiring Directors that needs to be brought to the attention of the Shareholders and there is no information relating to them which is required to be disclosed pursuant to any of the requirements of Rule 13.51(2) of the Listing Rules.

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EXPLANATORY STATEMENT

APPENDIX II

The following is an explanatory statement required to be sent to the Shareholders under the Listing Rules in connection with the proposed Repurchase Mandate.

PROVISION OF THE LISTING RULES

The Listing Rules permit companies with a primary listing on the Stock Exchange to repurchase their own securities on the Stock Exchange subject to certain restrictions, the most important of which are summarised below:

(i) Shareholders’ Approval

All proposed repurchases of securities (which must be fully paid up in the case of shares) by a company with a primary listing on the Stock Exchange must be approved in advance by an ordinary resolution of the shareholders in general meeting, either by way of general mandate or by specific approval of a particular transaction.

Such authority may only continue in force during the period from the passing of the resolution until the earlier of: (i) the conclusion of the next annual general meeting of the Company (unless renewed by an ordinary resolution of the Shareholders in a general meeting, either unconditionally or subject to conditions); (ii) the expiration of the period within which the Company’s next annual general meeting is required by the Bye-laws or any other applicable laws to be held; or (iii) the date when it is varied or revoked by an ordinary resolution of the Shareholders in general meeting.

(ii) Source of Funds

Repurchases must be funded out of funds legally available for such purpose in accordance with the Memorandum and the Bye-laws, the Listing Rules and the applicable laws of Bermuda. A listed company may not repurchase its own securities on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the Listing Rules. Subject to the foregoing, any repurchases by the Company may be made out of the capital paid up on Shares to be repurchased, funds of the Company otherwise available for dividend or distribution or out of a fresh issue of Shares made for the purpose of the repurchase or out of capital and, in the case of any premium payable on the purchase, out of the funds of the Company otherwise available for dividend or distribution or from sums standing to the credit of the share premium account of the Company.

(iii) Trading Restrictions

The total number of shares which a listed company may repurchase on the Stock Exchange is the number of shares representing up to a maximum of 10% of the aggregate number of shares in issue. A company may not issue or announce a proposed issue of new securities for a period of 30 days immediately following a repurchase (other than an issue of securities pursuant to an exercise of warrants, share options or similar instruments requiring the company to issue securities which were outstanding prior to such repurchase) without the

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EXPLANATORY STATEMENT

APPENDIX II

prior approval of the Stock Exchange. In addition, a listed company is prohibited from repurchasing its shares on the Stock Exchange if the purchase price is higher by 5% or more than the average closing market price for the five preceding trading days on which its shares were traded on the Stock Exchange. The Listing Rules also prohibit a listed company from repurchasing its securities if the repurchase would result in the number of listed securities which are in the hands of the public falling below the relevant prescribed minimum percentage as required by the Stock Exchange. A company is required to procure that the broker appointed by it to effect a repurchase of securities discloses to the Stock Exchange such information with respect to the repurchase as the Stock Exchange may require.

(iv) Status of Repurchased Shares

All repurchased securities (whether effected on the Stock Exchange or otherwise) will be automatically delisted and the certificates for those securities must be cancelled and destroyed. Under the Bermuda Companies Act, a company’s repurchased shares may be treated as cancelled or held as treasury shares and, if so cancelled the amount of the company’s issued share capital shall be reduced by the aggregate value of the repurchased shares accordingly although the authorised share capital of the company will not be reduced.

(v) Suspension of Repurchase

A listed company may not make any repurchase of securities after a price sensitive development has occurred or has been the subject of a decision until such time as the inside information has been made publicly available. In particular, during the period of one month immediately preceding the earlier of: (a) the date of the board meeting (as such date is first notified to the Stock Exchange in accordance with the Listing Rules) for the approval of a listed company’s results for any year, half-year, quarterly or any other interim period (whether or not required under the Listing Rules); and (b) the deadline for publication of an announcement of a listed company’s results for any year or half-year under the Listing Rules, or quarterly or any other interim period (whether or not required under the Listing Rules), the listed company may not repurchase its shares on the Stock Exchange other than in exceptional circumstances. In addition, the Stock Exchange may prohibit a repurchase of securities on the Stock Exchange if a listed company has breached the Listing Rules.

(vi) Reporting Requirements

Certain information relating to repurchases of securities on the Stock Exchange or otherwise must be reported to the Stock Exchange not later than 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session on the following business day. In addition, a listed company’s annual report is required to disclose details regarding repurchases of securities made during the year, including a monthly analysis of the number of securities repurchased, the purchase price per share or the highest and lowest price paid for all such repurchases, where relevant, and the aggregate prices paid.

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EXPLANATORY STATEMENT

APPENDIX II

(vii) Connected Persons

A listed company is prohibited from knowingly repurchasing securities on the Stock Exchange from a ‘‘connected person’’, that is, a director, chief executive or substantial shareholder of the company or any of its subsidiaries or their associates and a connected person is prohibited from knowingly selling his securities to the company.

SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 3,541,372,224 Shares with nominal value of USD0.02 each. Subject to the passing of the resolution granting the Repurchase Mandate and on the basis that no further Shares are issued or repurchased before the Annual General Meeting, the Company will be allowed to repurchase a maximum of 354,137,222 Shares which represent 10% of the issued share capital of the Company during the period ending on the earlier of (i) the conclusion of the next annual general meeting of the Company; or (ii) the expiration of the period within which the next annual general meeting of the Company is required by any applicable laws or the Bye-laws to be held; or (iii) the date on which such authority is revoked or varied by a resolution of the Shareholders in general meeting.

REASONS FOR REPURCHASES

The Directors believe that the ability to repurchase Shares is in the interests of the Company and the Shareholders. Repurchases may, depending on the circumstances, result in an increase in the net asset value and/or earnings per Share. The Directors sought the grant of a general authority from the Shareholder to give the Company the flexibility to repurchase Shares if and when appropriate. The number of Shares to be repurchased on any occasion and the price and other terms upon which the same are repurchased will be decided by the Directors at the relevant time having regard to the circumstances then pertaining and any repurchases will only be made when the Directors believe that such repurchases will benefit the Company and the Shareholders.

FUNDING OF REPURCHASES

Repurchases of Shares will be financed out of funds legally available for the purpose and in accordance with the Memorandum and Bye-laws, the Listing Rules, and any other applicable laws of Bermuda. Under Bermuda law, any repurchases by the Company may be made out of capital paid up on the Shares to be repurchased, or out of funds of the Company which would otherwise be available for dividend or distribution or out of the proceeds of a fresh issue of Shares made for the purpose and, in the case of premiums payable on repurchases, funds of the Company which would otherwise be available for dividend or distribution or out of the share premium account of the Company.

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EXPLANATORY STATEMENT

APPENDIX II

As at the Latest Practicable Date, the Directors have no present intention to repurchase any Shares and they would only exercise the power to repurchase in circumstances where they consider that the repurchase would be in the best interests of the Company and the Shareholders as a whole. The Directors consider that if the Repurchase Mandate was to be exercised in full, it may not have a material adverse impact on the working capital or the gearing position of the Company, as compared with the positions disclosed in the audited consolidated financial statements of the Company as at 31 December 2020, being the date on which the latest published audited consolidated financial statements of the Company were made up. The Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or on the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

UNDERTAKING OF THE DIRECTORS

To the best of their knowledge, having made all reasonable enquiries, none of the Directors or any of their close associates, as defined in the Listing Rules, currently intends to sell any Shares to the Company or its subsidiaries, if the Repurchase Mandate is approved by the Shareholders.

The Directors have undertaken to the Stock Exchange that, they will exercise the Repurchase Mandate in accordance with the Listing Rules, the Memorandum and the Bye-laws and applicable laws of Bermuda.

No core connected person (as defined in the Listing Rules) has notified the Company that he/ she/it has any present intention to sell any Shares to the Company, and none of them have undertaken not to do so, if the proposed Repurchase Mandate is approved by the Shareholders.

EFFECT OF TAKEOVERS CODE

If as a result of a repurchase of Shares pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code. Accordingly, a Shareholder, or a group of Shareholders acting in concert (within the meaning of the Takeovers Code), depending on the level of increase of the Shareholder’s interest, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

As at the Latest Practicable Date, to the best knowledge and belief of the Directors, Mr. Liu Dian Bo had deemed interests in 1,257,196,703 Shares and 72,701,950 Shares in short position under Part XV of the SFO, representing an approximate total of 35.50% and 2.05% of the existing issued share capital of the Company respectively. The 1,257,196,703 Shares and 72,701,950 Shares in short position were held through his controlled corporations, namely Shorea LBG, Ginkgo (PTC) Limited, Nelumbo Investments Limited, Luye Group, Luye Pharma Holdings, Luye Pharma Intl and Luye Pharma Investment.

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EXPLANATORY STATEMENT

APPENDIX II

In the event that the Repurchase Mandate should be exercised in full, the aggregate interests of Mr. Liu Dian Bo (through his controlled corporations) will be increased to approximately 39.44% (long position) and 2.28% (short position) of the issued share capital of the Company respectively. Such exercise of the Repurchase Mandate may give rise to an obligation on Mr. Liu Dian Bo (through his controlled corporations) to make a mandatory offer under Rule 26 of the Takeovers Code, as a result of which the number of Shares held by the public may be reduced to less than the minimum public float requirement.

However, the Directors currently have no intention to repurchase Shares which would trigger a mandatory general offer obligation on the part of the above persons or otherwise would result in the number of Shares held by the public being reduced to less than the minimum public float requirement. Save as disclosed above, the Directors are not aware of any consequences which will arise under the Takeovers Code as a result of any purchases to be made under the Repurchase Mandate.

SHARE REPURCHASE MADE BY THE COMPANY

In the six months immediately prior to the Latest Practicable Date, the Company had not repurchased any shares on the Stock Exchange.

SHARE PRICES

The highest and lowest prices at which the Shares have been traded on the Stock Exchange in each of the previous twelve months were as follows:

Month	Highest prices	Lowest prices
	HK$	HK$
2020
May	4.31	3.50
June	5.40	3.89
July	5.27	4.60
August	5.17	4.19
September	4.82	4.21
October	4.87	4.42
November	4.60	4.23
December	4.80	3.50
2021
January	4.08	3.55
February	7.00	4.47
March	5.70	4.66
April	5.08	4.46
May (up to the Latest Practicable Date)	4.96	4.55

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NOTICE OF ANNUAL GENERAL MEETING

==> picture [170 x 76] intentionally omitted <==

LUYE PHARMA GROUP LTD.

綠 葉 製 藥 集 團 有 限 公 司

(incorporated in Bermuda with limited liability)

(Stock Code: 02186)

NOTICE IS HEREBY GIVEN THAT the annual general meeting (the ‘‘Annual General Meeting’’) of Luye Pharma Group Ltd. (the ‘‘Company’’) will be held at 1/F, Building 12, Shanghai Business Park III, No. 1036 Tianlin Road, Shanghai, the PRC on 16 June 2021, Wednesday at 3:00 p.m. for the following purposes:

1. To receive and adopt the audited consolidated financial statements of the Company and the reports of the directors of the Company (the ‘‘Directors’’) and of the auditor of the Company (the ‘‘Auditor’’) for the year ended 31 December 2020.

2. (a) To re-elect Mr. YANG Rong Bing as an executive Director;

3. (b) To re-elect Mr. SUN Xin as a non-executive Director;

4. (c) To re-elect Professor LO Yuk Lam as an independent non-executive Director;

5. (d) To re-elect Mr. LEUNG Man Kit as an independent non-executive Director; and

6. (e) To authorise the board of directors of the Company (the ‘‘Board’’) to fix the remuneration of the Directors.

7. To re-appoint Ernst & Young as the Auditor to hold office until the conclusion of the next annual general meeting of the Company and to authorise the Board to fix their remuneration for the year ending 31 December 2021.

8. To consider and, if thought fit, pass the following resolutions as ordinary resolutions:

9. (A) ‘‘That:

   • (a) subject to paragraph (c) below, and pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’), the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with any unissued ordinary shares in the share capital of the Company (the ‘‘Shares’’) and to make or grant offers, agreements and options (including but

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NOTICE OF ANNUAL GENERAL MEETING

not limited to warrants, bonds and debentures convertible into Shares) which might require the exercise of such power be and is hereby generally and unconditionally approved;

• (b) the approval in paragraph (a) above shall authorise the Directors during the Relevant Period (as hereinafter defined) to make or grant offers, agreements and options (including warrants, bonds and debentures convertible into Shares) which might require the shares in the capital of the Company to be issued either during or after the end of the Relevant Period (as hereinafter defined);

• (c) the aggregate nominal value of the Shares so allotted or issued or agreed conditionally or unconditionally to be allotted or issued (whether pursuant to an option or otherwise) by the Directors pursuant to the approval in paragraph (a) above, otherwise than pursuant to:

• (i) a Rights Issue (as hereinafter defined);

• (ii) an issue of Shares upon the exercise of options which may be granted under any share option schemes or similar arrangement;

• (iii) any scrip dividend scheme or other 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 bye-laws of the Company from time to time in effect (the ‘‘Bye-laws’’);

• (iv) exercise of any subscription or conversion rights attaching to any warrants or any securities which are convertible into Shares in issue prior to the date of passing of this resolution 4(A); or

• (v) any issue of Shares upon the exercise of rights of subscription or conversion under the terms of any existing convertible notes issued by the Company or any existing securities of the Company which carry rights to subscribe for or are convertible into Shares, shall not exceed the aggregate of:

  • (a) 20% of the issued share capital of the Company as at the date of passing this resolution 4; and

  • (b) (if the Board is so authorised by resolution 4(C)) the aggregate nominal amount of share capital of the Company repurchased by the Company subsequent to the passing of resolution 4(B) (up to a maximum equivalent to 10% of the issued share capital of the Company as at the date of passing resolution 4(B)),

and the approval shall be limited accordingly; and

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NOTICE OF ANNUAL GENERAL MEETING

• (d) for the purpose of this resolution 4(A):

• (a) ‘‘Relevant Period’’ means the period from the passing of this resolution until whichever is the earliest of:

  • (1) the conclusion of the next annual general meeting of the Company unless renewed by an ordinary resolution of the shareholders of the Company in a general meeting, either unconditionally or subject to conditions;

  • (2) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws or any other applicable laws to be held; or

  • (3) the date when it is varied or revoked by an ordinary resolution of the shareholders of the Company in a general meeting; and

• (b) ‘‘Rights Issue’’ means an offer of Shares or issue of options, warrants or other securities giving the right to subscribe for Shares, open for a period fixed by the Directors to holders of Shares whose names appear on the register of members of the Company (and, where appropriate, to the holders of other securities of the Company entitled to the offer) on a fixed record date in proportion to their then holdings of such Shares (or, where appropriate, such other securities), subject in all cases to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory applicable to the Company.’’

(B) ‘‘That:

• (a) having considered an explanatory statement set out in the circular, subject to paragraph (b) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all powers for and on behalf of the Company to repurchase Shares on The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’) or on any other stock exchange on which the securities may be listed and which is recognised by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and/or the requirements of the Listing Rules or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved; the aggregate nominal amount of the Shares, which may be repurchased pursuant to the approval in

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NOTICE OF ANNUAL GENERAL MEETING

paragraph (i) above of this resolution 4(B) shall not exceed 10% of the issued share capital of the Company as at the date of passing of this resolution 4(B), and the said approval shall be limited accordingly;

• (b) for the purposes of this resolution 4(B):

‘‘Relevant Period’’ means the period from the passing of this resolution until whichever is the earliest of:

• (1) the conclusion of the next annual general meeting of the Company unless renewed by an ordinary resolution of the shareholders of the Company in a general meeting, either unconditionally or subject to conditions;

• (2) the expiration of the period within which the Company’s next annual general meeting is required by the Bye-laws or any other applicable laws to be held; or

• (3) the date when it is varied or revoked by an ordinary resolution of the shareholders of the Company in a general meeting;’’ and

• (C) ‘‘That conditional upon resolutions 4(A) and 4(B) set out in this notice being passed, the aggregate nominal amount of Shares which are repurchased by the Company after the date of passing of resolution 4(B) (up to a maximum of 10% of the issued share capital of the Company as at the date of passing of resolution 4(B)), shall be added to the aggregate nominal amount of share capital that may be (or agreed conditionally or unconditionally to be) allotted, issued and otherwise dealt with by the Directors pursuant to resolution 4(A).’’

By order of the Board LUYE PHARMA GROUP LTD. LIU Dian Bo Chairman

Hong Kong, 14 May 2021

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NOTICE OF ANNUAL GENERAL MEETING

Registered Office:

Head Office and Principal Place of Principal Place of Business Business in the People’s Republic of in Hong Kong: China:

Clarendon House No. 15 Chuang Ye Road Unit 3207, 32/F 2 Church Street High-tech Industrial Development Zone Champion Tower Hamilton HM 11 Yantai, Shandong 3 Garden Road Bermuda 264003 Central People’s Republic of China Hong Kong

Building 12 Shanghai Business Park III No. 1036 Tianlin Road Shanghai People’s Republic of China

Notes:

• (i) A shareholder entitled to attend and vote at the above Annual General Meeting is entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A proxy need not be a shareholder.

• (ii) In the case of joint holders of any Share, any one of such persons may vote at the above Annual General Meeting, either personally or by proxy, in respect of such Share as if he/she were solely entitled thereto. However, if more than one of such joint holders be present at the above Annual General Meeting personally or by proxy, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the vote(s) of the other joint holder(s) and for this purpose seniority shall be determined as that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

• (iii) In order to be valid, a form of proxy must be completed, signed and returned to the Hong Kong share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Center, 183 Queen’s Road East, Wanchai, Hong Kong together with the power of attorney or other authority (if any) under which it is signed (or a notarially certified copy thereof) not less than 48 hours before the time appointed for the holding of the Annual General Meeting or any adjournment thereof. The completion and delivery of the form of proxy shall not preclude the shareholders from attending and voting in person at the Annual General Meeting (or any adjourned meeting thereof) if they so wish.

• (iv) The transfer books and register of members of the Company will be closed from 10 June 2021 to 16 June 2021, both days inclusive, to determine the entitlement of shareholders to attend and vote at the Annual General Meeting, during which period no share transfers can be registered. All transfers accompanied by the relevant share certificates must be lodged with the Hong Kong share registrar of the Company, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on 9 June 2021.

• (v) In respect of the ordinary resolution 2 above, Mr. YANG Rong Bing, Professor LO Yuk Lam, Mr. LEUNG Man Kit and Mr. SUN Xin will retire and be eligible to stand for re-election at the Annual General Meeting. Details of the above retiring Directors standing for re-election are set out in Appendix I to the circular dated 14 May 2021 containing this notice.

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NOTICE OF ANNUAL GENERAL MEETING

• (vi) In respect of the ordinary resolution 4(A) above, the Directors wish to state that they have no immediate plans to issue any new shares of the Company. Approval is being sought from shareholders of the Company as a general mandate for the purposes of the Listing Rules.

• (vii) In respect of the ordinary resolution 4(B) above, the Directors wish to state that they will exercise the powers conferred by the general mandate to repurchase shares of the Company in circumstances which they deem appropriate for the benefits of shareholders of the Company. The explanatory statement containing the information necessary to enable shareholders of the Company to make an informed decision on whether to vote for or against the resolution to approve the repurchase by the Company of its own shares, as required by the Listing Rules, is set out in Appendix II to the circular dated 14 May 2021 containing this notice.

– 22 –