Meitu, Inc. — Proxy Solicitation & Information Statement 2019

Mar 31, 2019

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult 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 Meitu, Inc., you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee, or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities.

Meitu, Inc. 美圖公司

( Incorporated in the Cayman Islands with limited liability and carrying on business in Hong Kong as “ 美圖之家 ” ) (Stock Code: 1357)

DISCLOSEABLE TRANSACTION ACQUISITION OF 31% EQUITY INTEREST IN THE TARGET COMPANY INVOLVING THE ISSUE OF CONSIDERATION SHARES UNDER SPECIFIC MANDATE

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Unless the context otherwise requires, all capitalized terms used in this cover page shall have the same meanings as those defined in the section headed “Definitions” of this circular.

A letter from the Board is set out on pages 4 to 19 of this circular.

A notice convening the EGM to be held at 11:00 a.m. on Thursday, April 18, 2019 at Jade, Level 3, The Ritz-Carlton, Hong Kong, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong is set out on pages 20 to 22 of this circular. A form of proxy for the EGM is enclosed. Whether or not you intend to attend and vote at the EGM or any adjourned meeting in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

April 1, 2019

CONTENTS

	Pages
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 to 3
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4 to 19
NOTICE OF EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20 to 22

— i —

DEFINITIONS

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

• “Acquisition” the acquisition of 31% equity interest in the Target Company by the Purchaser pursuant to the terms of the Share Purchase Agreement

• “Board” the board of Directors “Company" Meitu, Inc. (Stock Code: 1357), a company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on the Main Board of the Stock Exchange

• “Completion” completion of the Acquisition pursuant to the Share Purchase Agreement

• “connected person(s)” has the meaning ascribed thereto under the Listing Rules “Consideration” the total consideration for the Sale Shares in the amount of HK$2,686,577,470 pursuant to the Share Purchase Agreement

• “Consideration Shares” the new Shares which shall be allotted and issued by the Company to satisfy the Consideration in accordance with the Share Purchase Agreement

• “DE Canada” Digital Extremes Ltd., a company incorporated under the laws of the Province of Ontario, Canada, and is indirectly owned as to 97% by the Target Company

• “DE Group” DE Canada and its subsidiaries “Director(s)” the director(s) of the Company

• “EBITDA” in respect of any financial year, the consolidated profit of a company as recorded in the audited consolidated financial statements of the company before taxation (excluding the results from discontinued operations) and:

• a) before deducting any interest, commission, fees, discounts, prepayment fees, premiums or charges and other finance payments whether paid, payable, or capitalized by the company in respect of that relevant financial year;

• b) not including any accrued interest owing to the company;

• c) after adding back any amount attributable to the amortisation, depreciation or impairment of assets of the company (and taking no account of the reversal of any previous impairment charge made in that relevant financial year); and

• d) before taking into account any extraordinary or exceptional items

• “EGM”

the extraordinary general meeting of the Company to be convened to consider and, if thought fit, approve the grant of the Specific Mandate for the allotment and issue of the Consideration Shares

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DEFINITIONS

“Group”	the Company and its subsidiaries, together with Xiamen Meitu Networks
	Technology Co., Ltd. and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the People's Republic of
	China
“Latest Practicable Date”	March 27, 2019, being the latest practicable date for ascertaining certain
	information referred to in this circular prior to the bulk printing of this
	circular
“Leyou”	Leyou Technologies Holdings Limited (Stock Code: 1089), a company
	incorporated in the Cayman Islands with limited liability and the issued
	shares of which are listed on the Main Board of the Stock Exchange
“Leyou Group”	Leyou and its subsidiaries
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock Exchange of
	Hong Kong Limited
“PRC”	the People’s Republic of China excluding Hong Kong, Macau and Taiwan
“Purchaser”	Meitu Investment Ltd, a company incorporated under the laws of the British
	Virgin Islands with limited liability and a wholly-owned subsidiary of the
	Company
“Sale Shares”	31 issued ordinary shares of the Target Company, representing 31% of the total
	issued share capital of the Target Company as at the Latest Practicable Date
“Share Purchase Agreement”	the share purchase agreement dated February 19, 2019 entered into among
	the Vendor, the Purchaser, the Company and Leyou in respect of the
	Acquisition
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong) as amended from time to time
“Share(s)”	ordinary share(s) in the share capital of the Company with a par value of
	US$0.00001 each
“Shareholder(s)”	holder(s) of Share(s)
“Shareholders Agreement”	the shareholders agreement relating to the Target Group expected to be
	entered into by the Purchaser, the Vendor and the Target Company on or
	prior to Completion
“Specific Mandate”	the specific mandate proposed to be granted to the Directors in relation to the
	allotment and issue of the Consideration Shares at the EGM

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DEFINITIONS

“Stock Exchange” The Stock Exchange of Hong Kong Limited “Target Company” Dreamscape Horizon Limited, a company incorporated under the laws of the British Virgin Islands with limited liability and a direct wholly-owned subsidiary of the Vendor as at the Latest Practicable Date “Target Group” the Target Company and its subsidiaries “Transaction Documents” the Share Purchase Agreement, the Shareholders Agreement and any other documents contemplated in them “Vendor” Dream Beyond Holdings Limited, a company incorporated under the laws of the British Virgin Islands with limited liability, being the vendor to the Share Purchase Agreement which wholly owns the Target Company as at the date of the Share Purchase Agreement “US$” United States dollars, the lawful currency of the United States of America “%” Percent

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LETTER FROM THE BOARD

Meitu, Inc. 美圖公司

(Incorporated in the Cayman Islands with limited liability and carrying on business in Hong Kong as “ 美圖之家 ”)

(Stock Code: 1357)

Executive Directors: Cai Wensheng Wu Zeyuan

Non-executive Directors:

Guo Yihong Lee Kai-fu

Independent Non-executive Directors: Zhou Hao Lai Xiaoling Zhang Ming

Registered Office: The offices of Conyers Trust Company (Cayman) Limited Cricket Square, Hutchins Drive PO Box 2681 Grand Cayman, KY1-1111 Cayman Islands Headquarters: 1–3/F, Block 2 No. 6 Wanghai Road Siming District Xiamen, Fujian PRC

Principal Place of Business in Hong Kong: Room 8106B Level 81 International Commerce Centre 1 Austin Road West Kowloon Hong Kong

April 1, 2019

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION ACQUISITION OF 31% EQUITY INTEREST IN THE TARGET COMPANY INVOLVING THE ISSUE OF CONSIDERATION SHARES UNDER SPECIFIC MANDATE AND NOTICE OF EGM

INTRODUCTION

Reference is made to the announcement of the Company dated February 19, 2019 in relation to, inter alias, the Acquisition involving issue of the Consideration Shares.

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LETTER FROM THE BOARD

On February 19, 2019 (after trading hours), the Purchaser, the Vendor, the Company and Leyou entered into the Share Purchase Agreement pursuant to which the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to acquire, the Sale Shares, which represent 31% of the issued share capital of the Target Company, for a total consideration of HK$2,686,577,470. Pursuant to the Share Purchase Agreement, the Consideration will be satisfied by the allotment and issue of the Consideration Shares by the Company to Leyou under a specific mandate at the issue price of HK$2.71 per Consideration Share.

The purpose of this circular is to provide you with further details of the Acquisition and give you notice of the EGM to consider and, if thought fit, to approve the Share Purchase Agreement and the transactions contemplated thereunder and the granting of the Specific Mandate.

THE SHARE PURCHASE AGREEMENT

Date

February 19, 2019

Parties

Purchaser: Meitu Investment Ltd, a direct wholly-owned subsidiary of the Company Vendor: Dream Beyond Holdings Limited, a direct wholly-owned subsidiary of Leyou Purchaser’s guarantor: the Company Vendor’s guarantor: Leyou

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, as at the Latest Practicable Date, the Vendor and its ultimate beneficial owners are third parties independent of the Company and its connected persons (as defined under the Listing Rules).

Assets to be acquired

Pursuant to the Share Purchase Agreement, the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to acquire, the Sale Shares, which represent 31% of the issued share capital of the Target Company.

Consideration

The Consideration for the Sale Shares is HK$2,686,577,470, which shall be satisfied by the allotment and issue of 991,357,000 Consideration Shares, credited as fully paid, to Leyou at the issue price of HK$2.71 per Consideration Share.

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LETTER FROM THE BOARD

The Consideration was determined based on arm’s length negotiations between the Company and the Vendor, taking into account the following factors:

• a) the historical financial performance of the Target Group, including the increase in the consolidated net profit after tax of the Target Company from US$32,419,000 for the year ended December 31, 2016 to US$40,609,000 for the year ended December 31, 2017;

• b) the market research conducted by the Company’s management on the financial performance and price-earnings multiples of other globally recognized cross-platform game developers, including T2 Entertainment and Ubisoft Entertainment, the price-earnings multiples of which with respect to financial year 2017 were approximately 151.4 and 55.4, respectively. The Company has identified (on an exhaustive basis) T2 Entertainment and Ubisoft Entertainment as comparable companies of the Target Group after applying the following criteria, all of which are satisfied by T2 Entertainment and Ubisoft Entertainment: (a) develop non-casual games; (b) develop crossplatform games that are compatible in different platforms including PC, console and mobile devices; (c) generate revenues globally; and (d) listed. While the market capitalization of T2 Entertainment and Ubisoft Entertainment is different from the Target Group, their scope of business is highly comparable;

• c) the Purchaser’s right to receive dividends from the Target Group starting from 2019 as detailed in the section headed “Dividend Rights” below;

• d) the other protective rights in favor of the Purchaser included in the Shareholders Agreement as detailed in the section headed “The Shareholders Agreement” below;

• e) the Company’s assessment on the prospects of the international video game industry the growth trend of which is expected to accelerate in light of the increasing proportion of the young population engaging with video games globally. The Company has considered the market research conducted by Newzoo, a leading provider of games and e-sports analytics globally, which shows that the global video game industry is estimated to generate approximately US$137.9 billion in 2018, representing an year-on-year increase of approximately 13.3%;

• f) the future development of the Target Group, in particular the reputation and development capability as an “AAA studio” and the prospects of its existing self-developed title that employs a cross-platform strategy, as well as the success of Warframe, a video game developed by the Target Group which has experienced significant growth in terms of the number of players since its inception in 2013. In addition, Warframe has proven its ability to achieve continuous growth through its successful cross-platform strategy, first launching on PC and console platforms including PlayStation and Xbox, having recently launched on Nintendo Switch in 2018, and potentially launching on mobile devices in 2019; and

• g) the synergistic benefits that can be created between the Group and the Target Group from the Acquisition as described under the paragraph headed “Reasons for and benefits of the Acquisition” in this circular.

Having considered the above factors, the Directors are of the view that the Consideration is fair and reasonable, and in the interests of the Company and its Shareholders as a whole.

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LETTER FROM THE BOARD

Consideration Shares

The issue price of HK$2.71 per Consideration Share represents:

• a) a discount of approximately 12.30% to the closing price of HK$3.09 per Share as quoted on the Stock Exchange on February 19, 2019, being the date of the Share Purchase Agreement; and

• b) a discount of approximately 13.42% to the average closing price of HK$3.13 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the date of the Share Purchase Agreement.

The issue price per Consideration Share was arrived at upon arm’s length negotiation between the Purchaser and the Vendor with reference to the average closing price of HK$2.71 per Share as quoted on the Stock Exchange for the 30 consecutive trading days immediately prior to the date of the Share Purchase Agreement. The Consideration Shares will, upon issue, represent (i) approximately 23.57% of the issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 19.08% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares, subject to Completion and assuming that there will be no change in the issued share capital of the Company from the Latest Practicable Date and up to the date of Completion save for the allotment and issue of the Consideration Shares.

Given that the issue price per Consideration Share represents less than 15% discount to the then prevailing closing market price of the Shares on the date of the Share Purchase Agreement, and having considered the Lock-up Period (as defined below) of 180 days as well as the subsequent period during which disposal of any of the Consideration Shares by Leyou will entitle the Purchaser to exercise the Put Option (as defined below), the Directors take the view that the issue price per Consideration Share of HK$2.71 is fair and reasonable.

The Consideration Shares will be allotted and issued pursuant to the Specific Mandate to be sought from the Shareholders at the EGM.

Lock-up of the Consideration Shares

Pursuant to the Share Purchase Agreement, Leyou shall not dispose of or otherwise create any encumbrance over the Consideration Shares in whole or in part during the period commencing from the date of Completion and ending on the date falling 180 days immediately after the date of Completion (both days inclusive) (the “ Lock-up Period ”).

If Leyou disposes of any of the Consideration Shares after the Lock-up Period but on or before the first anniversary of the last day of the Lock-up Period (the “ Trigger Event Date ”), the Vendor shall, within three (3) business days of the Trigger Event Date, notify the Purchaser by serving a written notice (the “ Notice ”), and the Purchaser may, within 20 business days of the Trigger Event Date, exercise the option (the “ Put Option ”) on only one occasion to request the Vendor to redeem all or any part of the Sale Shares from the Purchaser (the “ Redemption ”) at a redemption price per Sale Share to be calculated based on the following formula:

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LETTER FROM THE BOARD

where:

• (a) P = HK$86,663,789.35 per Sale Share; and

• (b) n = the number of calendar days elapsed between the date of Completion and the date of completion of the Redemption (both dates inclusive),

plus all declared but unpaid dividends thereon up to the date of Redemption, proportionally adjusted for share subdivisions, share dividends, reorganizations, reclassifications, consolidations, or mergers. The 10% interest is determined based on arm’s length negotiations between the Purchaser and the Vendor, and represents the reasonable amount of premium that the Purchaser is entitled to in the event that Leyou disposes of any of the Considerations Shares after the Lock-up Period.

If the Vendor fails to deliver the Notice to the Purchaser in a timely manner pursuant to the Share Purchase Agreement, the Put Option may be exercised by the Purchaser over one or multiple occasions at any time by serving a notice on the Vendor.

Given that the exercise of the Put Option is at the discretion of the Purchaser and the Purchaser did not pay any premium to acquire the Put Option from the Vendor, the acquisition of the Put Option by the Purchaser does not constitute a notifiable transaction for the Company. The highest possible monetary value of the Put Option upon exercise will be approximately HK$3,175,000,000. As the consideration ratio for the exercise of the Put Option (by reference to the average closing price of the Company’s shares as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of the Share Purchase Agreement) exceeds 5% but is less than 25%, the exercise of the Put Option by the Purchaser shall be classified as a discloseable transaction for the Company. The Company will seek the Shareholders’ approval at the EGM for the exercise of the Put Option. In the event that the Vendor is a connected person of the Company at the time of exercise of the Put Option, the Company will re-assess the size of the transaction and comply with the relevant connected transactions rules under the Listing Rules.

Guarantee

The Vendor’s guarantor, Leyou, has undertaken to irrevocably and unconditionally: (a) guarantee to the Purchaser as primary obligor the due and punctual performance and observance by the Vendor of all the agreements, obligations, commitments and undertakings contained in or implied under the Share Purchase Agreement and each of the Transaction Documents that shall be performed and observed by the Vendor (the “ Vendor’s Guaranteed Obligations ”); and (b) indemnify the Purchaser against all liabilities, losses, damages, costs and expenses which the Purchaser may now or in the future suffer or incur consequent on or arising directly or indirectly out of any breach or non-observance by the Vendor of any of the Vendor’s Guaranteed Obligations.

The Purchaser’s guarantor, the Company, has undertaken to irrevocably and unconditionally: (a) guarantee to the Vendor as primary obligor the due and punctual performance and observance by the Purchaser of all the agreements, obligations, commitments and undertakings contained in or implied under the Share Purchase Agreement and each of the Transaction Documents that shall be performed and observed by the Purchaser (the “ Purchaser’s Guaranteed Obligations ”); and (b) indemnify the Vendor against all liabilities, losses, damages, costs and expenses which the Vendor may now or in the future suffer or incur consequent on or arising directly or indirectly out of any breach or non-observance by the Purchaser of any of the Purchaser’s Guaranteed Obligations.

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LETTER FROM THE BOARD

Conditions precedent

Completion shall be conditional upon fulfillment of the following conditions precedent:

• a) trading in the Shares on the Stock Exchange not having been withdrawn from the Stock Exchange or being suspended for any period of more than fourteen (14) consecutive trading days (other than in relation to the Acquisition or circumstances under which the Company is required to make an announcement pursuant to Chapters 13, 14 or 14A of the Listing Rules) on or before Completion and no indication being received in writing on or before Completion from the Securities and Futures Commission or the Stock Exchange to the effect that the listing of the Shares on the Stock Exchange will or may be withdrawn or objected to as a result of the Completion or in connection with the terms of any Transaction Document;

• b) all necessary approvals, consents and authorizations from the shareholders of the Company and Leyou, as the case may be, for the Transaction Documents and transactions contemplated thereunder, including the transfer of the Sale Shares and the issue and allotment of the Consideration Shares, having been obtained and remaining in full force and effect;

• c) the granting by the Listing Committee of the Stock Exchange of the listing of, and permission to deal in, the Consideration Shares (the “ Listing Approval ”) and such Listing Approval not being revoked prior to Completion;

• d) all necessary approvals, consents, waivers and/or authorizations required under all applicable laws and regulations and relevant authorities (including without limitation, all applicable laws, regulations and authorities of Hong Kong and Canada), the Stock Exchange and the Listing Rules in connection with the Acquisition and/or implementation thereof and all other matters incidental thereto having been obtained and remaining in full force and effect;

• e) no governmental authority of competent jurisdiction having enacted, issued, promulgated, enforced or entered any law (whether temporary, preliminary or permanent) that has the effect of making the Acquisition illegal or other prohibiting consummation of the Acquisition;

• f) the Vendor, Leyou and the Target Group having obtained all consents from the relevant third parties that are necessary for the execution and performance of the Transaction Documents;

• g) each of the representations and warranties made by the Vendor and Leyou remaining true and accurate in all material respects and not misleading, in each case as at Completion by referring to the facts and circumstances subsisting;

• h) each of the representations and warranties made by the Purchaser and the Company remaining true and accurate in all material respects and not misleading, in each case as at Completion by referring to the facts and circumstances subsisting;

• i) there not having occurred any material adverse change in respect of the Target Group after signing of the Share Purchase Agreement or at any time up to and including the date of Completion (for the avoidance of doubt, material adverse change in respect of the Target Group includes but is not limited to certain key employees leaving employment with the Target Group);

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LETTER FROM THE BOARD

• j) there not having occurred any material adverse change in respect of the Company after signing of the Share Purchase Agreement or at any time up to and including the date of Completion (for the avoidance of doubt, material adverse change in respect of the Company includes but is not limited to certain key employees leaving employment with the Company, and does not include (i) any fluctuation of the price of the Shares traded on the Stock Exchange and (ii) the occurrence of any facts or circumstances fairly and accurately disclosed by the Company on the website of the Stock Exchange prior to the execution of the Share Purchase Agreement);

• k) the Vendor and Leyou having performed and complied with all agreements, obligations and conditions contained in the Share Purchase Agreement and any of the Transaction Documents that are required to be performed or complied with by them on or before Completion;

• l) the Purchaser and the Company having performed and complied with all agreements, obligations and conditions contained in the Share Purchase Agreement and any of the Transaction Documents that are required to be performed or complied with by them on or before Completion;

• m) the execution and delivery of the Shareholders Agreement by the Vendor and the Target Company;

• n) the execution and delivery of the employment, non-competition and confidentiality agreements of certain key employees of the Target Group to be dated and effective commencing from the date of Completion in such form satisfactory to the Purchaser;

• o) there having been delivered to the Purchaser a Completion certificate from the Vendor confirming that all the conditions precedent (except for paragraphs (a), (b) (on the part of the Purchaser and / or the Company), (c), (d) (on the part of the Purchaser and / or the Company), (e) (on the part of the Purchaser and / or the Company), (h), (j), (l), (o) and (p)) have been fulfilled; and

• p) there having been delivered to the Vendor a Completion certificate from the Purchaser confirming that all the conditions precedents (except for paragraphs (b) (on the part of the Vendor and / or Leyou), (d) (on the part of the Vendor and / or Leyou), (e) (on the part of the Vendor and / or Leyou), (f), (g), (i), (k), (m), (n), (o) and (p)) have been fulfilled.

Notwithstanding anything to the contrary, the Purchaser may in its sole and absolute discretion at any time before Completion waive any of the conditions precedent stated in paragraphs (f), (g), (i), (k), (m), (n) and (o) above by notice in writing to the Vendor. As at the Latest Practicable Date, the Purchaser has no intention to, and the Company has no intention to procure the Purchaser to, waive any of the conditions precedent.

Notwithstanding anything to the contrary, the Vendor may in its sole and absolute discretion at any time before Completion waive any of the conditions precedent stated in paragraphs (a), (h), (j), (l) and (p) above by notice in writing to the Purchaser.

In the event that any of the above conditions precedent (except for those being waived in accordance with the Share Purchase Agreement, if any) is not fulfilled on or before June 30, 2019 (or such other date as agreed between the Vendor and the Purchaser), the Share Purchase Agreement shall lapse and be of no further effect. As of the Latest Practicable Date, none of the conditions precedent that require action(s) to be taken by either the Group or the Leyou Group has been satisfied.

— 10 —

LETTER FROM THE BOARD

Nomination of director

Pursuant to the Share Purchase Agreement, if so required by the Vendor, the Company agrees to, by procuring the necessary board resolutions, cause one person as the Vendor may nominate to be validly appointed as a non-executive director of the Company, with effect from the fifth (5th) business day falling immediately after the date of Completion, subject to the requirements of the Listing Rules, the articles of association of the Company and the terms of reference of the nomination committee of the Company. As at the Latest Practicable Date, to the best knowledge, information and belief of the Directors, the Vendor has not identified any potential candidate to be appointed as a non-executive director of the Company.

Completion

Completion of the Acquisition shall take place on the fifth (5th) business day after the date on which all the conditions precedent have been fulfilled (or waived, as the case may be), or such other date as agreed between the Vendor and the Purchaser in writing.

Immediately after Completion, the Target Company will be owned as to 69% by the Vendor and 31% by the Purchaser. The 31% equity interest in the Target Company will be treated as the Group’s “investments in associates”, which are accounted for using the equity method in accordance with IAS28. Under the equity method of accounting, the investments in associates are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates are recognized as a reduction in the carrying amount of the investment.

Application for Listing

The Consideration Shares, when issued and fully paid, will rank pari passu among themselves and with the Shares in issue at the time of allotment and issue of the Consideration Shares. The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares.

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LETTER FROM THE BOARD

THE SHAREHOLDERS AGREEMENT

Pursuant to the Share Purchase Agreement, the execution and delivery of the Shareholders Agreement is a condition precedent to Completion. The Shareholders Agreement will contain various customary rights for protection of the Company’s minority interest in the Target Company.

Dividend rights

The Shareholders Agreement will provide that:

• a) no dividends shall be declared by any member of the Target Group in respect of its consolidated net profits for the 12 months ended December 31, 2018;

• b) if the consolidated net profits of DE Group for the 12 months ending December 31, 2019 exceed US$40 million (before taking into account any employee bonus other than payment under the existing bonus scheme of DE Canada, if any), the Target Company and each member of the Target Group shall declare and pay a dividend in the amount of all such net profits of the DE Group in excess of US$40 million (before taking into account any employee bonus other than payment under the existing bonus scheme of DE Canada, if any) to its respective shareholders such that the Purchaser shall receive its pro rata share of all such net profits of the DE Group in the form of dividend payout from the Target Company; if the annual net profits of the DE Group are US$40 million or less (before taking into account any employee bonus other than payment under the existing bonus scheme of DE Canada, if any), the Vendor and the Purchaser shall discuss in good faith to determine the amount of dividend to be declared with reference of the business situation of the DE Group; and

• c) for any financial year subsequent to the 12 months ending December 31, 2019, the Target Company and each member of the Target Group shall declare and pay a dividend of no less than 50% of the consolidated annual net profits of the DE Group (before taking into account any employee bonus other than payment under the existing bonus scheme of DE Canada, if any) for such financial year to its respective shareholders such that the Purchaser shall receive its pro rata share of all such net profits of the DE Group in the form of dividend payout from the Target Company; provided that if the consolidated net profits of the DE Group for any financial year are less than US$20 million (before taking into account any employee bonus other than payment under the existing bonus scheme of DE Canada, if any), none of the Target Company or members of the Target Group shall declare or pay any dividend for that financial year (unless otherwise agreed between the Vendor and the Purchaser in writing).

Board of directors

The Shareholders Agreement will provide that the Target Company shall have a board of directors consisting of three directors. The Purchaser shall be entitled to appoint one director (the “ Purchaser’s Director ”) of the total number of directors to the board of the Target Company and each of its subsidiaries. A quorum for a meeting of the board of the Target Company shall consist of two (2) directors, including the Purchaser’s Director.

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LETTER FROM THE BOARD

Reserved matters

The Shareholder Agreement will provide that, so long as the Purchaser holds any interest in the share capital of the Target Company, the Target Company shall not, and shall procure that no member of the Target Group shall, without approval of the Purchaser or the Purchaser’s Director (as the case may be depending on whether such matter is subject to shareholder or board approval of the Target Company), engage in certain reserved matters, including but not limited to: (i) dealing with any shares or other securities of any member of the Target Group (other than any shares issued pursuant to an employee stock option plan approved by the Purchaser); (ii) changing the dividend policy of any member of the Target Group; (iii) making a material change in the existing business of the Target Company as at the date of the Shareholders Agreement; (iv) creating, amending or terminating any related-party transactions and/or connected transactions where the annual transaction amount in aggregate exceeds US$3 million or is other than on normal commercial terms; (v) making a significant acquisition, disposal, sale, merger, consolidation, or establishing a joint venture or partnership (which requires a capital commitment of 25% or more of the total assets of the Target Company) by any member of the Target Group; and (vi) other than certain exceptions, making any loans, providing any guarantees, incurring any indebtedness or creating any liability for borrowed money in an amount more than US$10 million in aggregate over twelve (12) months or 30% of the Target Company’s consolidated net asset (whichever is smaller).

Pre-emptive rights and anti-dilution

The Shareholders Agreement will provide that, unless otherwise prohibited by any laws, rules or regulations (including the Listing Rules and any guidance issued thereunder), if the Target Company proposes to obtain any new investment in the capital of the Target Company (except for (i) securities issued in connection with a bona fide acquisition of another business; (ii) securities issued in connection with any share split, share dividend, combination, recapitalization or similar transaction of the Target Company; or (iii) stock or share options granted to or to be granted to employees of any member of the Target Group) (the “ New Investment ”), the Target Company shall first offer each of the Purchaser, the Vendor and any shareholder of the Target Company who becomes a party to the Shareholders Agreement (each a “ Target Shareholder ”) on a pro-rata basis a right to invest up to its pro-rata shareholding of such New Investment in accordance with the Shareholders Agreement.

Right of first refusal

The Shareholders Agreement will provide that if any shareholder of the Target Company (the “ Selling Target Shareholder ”) proposes to sell or otherwise deal with or dispose of any shares or other equity interest of any member of the Target Group (the “ Offered Shares ”) to any third party (other than a competitor) (the “ Transferee ”), then all other Target Shareholders shall have a right of first refusal to purchase such Offered Shares in accordance with the Shareholders Agreement. The Selling Target Shareholder may sell or otherwise deal with or dispose of any of such Offered Shares that the other Target Shareholders do not elect to purchase to the Transferee, provided that such transaction is bona fide and at a price not less than the price offered to the other Target Shareholders and the sale is otherwise on terms and conditions no more favorable that those offered by the Selling Target Shareholder to the other Target Shareholders.

In the event that the Purchaser exercises its Put Option (as defined above) in accordance with the Share Purchase Agreement, the right of first refusal provisions in the Shareholders Agreement shall not apply.

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LETTER FROM THE BOARD

Co-sale right

The Shareholders Agreement will provide that, subject to the drag-along right as described below, if the Purchaser does not exercise its right of first refusal to acquire any of the Offered Shares, the Purchaser shall have the right, but not the obligation, to participate in the sale of such Offered Shares to the Transferee for the same price and on the same terms as the Selling Target Shareholder in accordance with the Shareholders Agreement. If the Purchaser elects to exercise its right of co-sale, it shall be entitled to sell to the Transferee such proportion of the total equity interests in the Target Company it holds as is equal to the proportion of the total equity interests held by the Selling Target Shareholder that the Selling Target Shareholder proposes to transfer to the Transferee.

Drag-along right

The Shareholders Agreement will contain a drag-along right whereby if the Vendor proposes to sell to a third party 50% or more of the shares of the Target Company, the Vendor shall have the right but not the obligation to require the Purchaser (by way of a drag along notice to the Purchaser) to sell the same proportion of its shareholding in the Target Company as the Vendor proposes to sell on the same terms and conditions, provided that the Target Company is valued at US$1,366,020,500 (being 130% of the valuation of the Target Company at the time of entering into of the Share Purchase Agreement) or 10 times the EBITDA of the Target Company on a trailing 12 months basis before the date of the drag-along notice, whose calculation shall be based on the consolidated audited financial figures for such period (whichever is higher). However, if the Vendor’s exercise of its drag-along right would constitute a transaction requiring approval from the Company’s shareholders pursuant to the Listing Rules or any other securities laws or rules applicable to it (collectively, the “ Applicable Securities Law ”), the Vendor is not entitled to exercise its drag-along right until the Company has obtained all necessary shareholders’ and/or regulatory approval as may be required under the Applicable Securities Laws.

Termination

The Shareholders Agreement terminates automatically if: (i) all the parties to the Shareholders Agreement agree in writing; or (ii) the Target Company is wound up by court order; or (iii) in relation to a Target Shareholder, if such Target Shareholder stops holding, directly or indirectly, any shares or other equity interest in the Target Company.

INFORMATION ABOUT THE VENDOR

The Vendor is a company incorporated under the laws of the British Virgin Islands with limited liability and a direct wholly-owned subsidiary of Leyou. Leyou is a company incorporated under the laws of the Cayman Islands with limited liability whose issued shares are listed on the Main Board of the Stock Exchange (Stock Code: 1089). Leyou and its subsidiaries are principally engaged in the development and publishing of online multiplayer video games for both PC and console platforms.

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LETTER FROM THE BOARD

INFORMATION ABOUT THE PURCHASER

The Purchaser is a company incorporated in the British Virgin Islands with limited liability and is a direct wholly-owned subsidiary of the Company. The Group comprises mobile Internet companies that offer a portfolio of innovative photo and community apps that enjoys popularity in the PRC and overseas, and are principally engaged in the provision of online advertising and other Internet value-added services.

INFORMATION ABOUT THE TARGET GROUP

The Target Company is a company incorporated under the laws of the British Virgin Islands, and is an indirect wholly-owned subsidiary of Leyou. DE Canada is a company incorporated under the laws of the Province of Ontario, Canada, and is indirectly owned as to 97% by the Target Company and 3% by Perfect Online Holding Limited, a company incorporated with limited liability under the laws of Hong Kong. Perfect Online Holding Limited and its ultimate beneficial owners are third parties independent of the Company and its connected persons. DE Canada and its direct wholly-owned subsidiary, Digital Extremes US, Inc., are principally engaged in the development of video games for both PC and console platforms such as PS4, Xbox One and Nintendo Switch. Warframe, a game developed and published by DE Canada, is one of the 100 top-selling games of 2018 on Steam, the largest digital marketplace for PC games.

Set out below is a summary of the audited consolidated financial information of the Target Company for the two years ending December 31, 2016 and 2017:

	For the year	For the year
	ending	ending
	December 31, 2016	December 31, 2017
	(US$’000)	(US$’000)
Revenue	111,802	144,080
Net profit (loss) before tax	41,968	55,793
Net profit (loss) after tax	32,419	40,609

As at December 31, 2017, the Target Company had audited consolidated net assets of approximately US$38,089,000. As at June 30, 2018, the Target Company had unaudited consolidated total assets of approximately US$137,869,000 and unaudited consolidated net assets of approximately US$64,359,000. For the six months ended June 30, 2018, the Target Company has unaudited consolidated total revenue of approximately US$87,056,000, unaudited consolidated gross profit of approximately US$59,060,000, unaudited consolidated net profit before tax of approximately US$46,173,000 and unaudited consolidated net profit after tax of approximately US$33,916,000.

Currently, the DE Group operates an employee bonus pool, the size of which for a given year depends on a number of factors including the quality and popularity of the video games developed by employees of the DE Group and the financial performance of the DE Group. The total amount of bonus given to employees of the DE Group from 2015 to 2017 was approximately 14,000,000 Canadian Dollars.

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LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is principally engaged in the provision of online advertising and other Internet value-added services by offering a portfolio of innovative photo and community apps that enjoys popularity in the PRC and overseas. The Leyou Group is principally engaged in the development and publishing of online multiplayer video games for PC and console platforms.

Through this Acquisition, the Group aims to expand its business lines and diversify its income streams geographically in order to maximize the interests of the Group and the Shareholders as a whole. Specifically, the Group will be able to appoint one director to the Target Company and each of its subsidiaries upon Completion, hence participating in the formulation of business strategies and the decision-making process of the Target Group. It is expected that video games designed and produced by the Target Group could be effectively marketed to the numerous existing users of the Group’s apps and potentially attract new users. The Acquisition will also enable the Group to enjoy the economic benefits of the future upward performance of the Target Group by receiving dividends.

The Group is also leveraging its large user base both in the PRC and overseas to explore potential areas of strategic cooperation with the Leyou Group, which has extensive experience in gaming, to strategically design, market and distribute games by reference to the age, gender and preference of the Group’s large base of loyal users. In light of the experience and network of Leyou’s management team in the global entertainment industry, gaming will be a potential area of strategic cooperation between the Group and the Leyou Group. The exact form of cooperation will be further discussed in the future between the Group and the Leyou Group by reference to the market trends and regulatory environment in the gaming industry.

For the reasons stated above, the Directors consider that the Acquisition is on normal commercial terms that are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

CHANGE OF SHAREHOLDING STRUCTURE OF THE COMPANY UPON COMPLETION

The shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately upon Completion and the allotment and issue of the Consideration Shares (assuming that there is no change in the issued share capital of the Company from the Latest Practicable Date and up to the date of the Completion and the allotment and issue of the Consideration Shares as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO), are as follows:

Longlink Capital Ltd (1) Baolink Capital Ltd (1) Xinhong Capital Limited (1) Mr. Wu Zeyuan Dr. Lee Kai-Fu Kingkey Enterprise Holdings Limited (2)(5) Eastern Sun Enterprise Limited (3) Mr. Chen Jiarong (4)(5) Ms. Liu Chenchen (4)(5) Leyou Other public shareholders Total

As at the Latest Practicable Date Immediately upon Completion and the allotment and issue of the Consideration Shares No. of Shares Approximate % of issued Shares No. of Shares Approximate % of issued Shares 620,000,000 14.7423% 620,000,000 11.9301% 506,600,000 12.0459% 506,600,000 9.7480% 566,666,670 13.4741% 566,666,670 10.9038% 1,280,000 0.0304% 1,280,000 0.0246% 32,994,151 0.7845% 32,994,151 0.6349% 417,120,680 9.9182% 417,120,680 8.0263% 79,731,500 1.8958% 79,731,500 1.5342% 4,818,000 0.1146% 4,818,000 0.0927% 130,000 0.0031% 130,000 0.0025% — 991,357,000 19.0758% 1,976,250,943 46.9910% 1,976,250,943 38.0271% 4,205,591,944 100% 5,196,948,944 100%

Notes:

• (1) Pursuant to the concert party agreement entered into by, among others, Mr. Cai Wensheng and Mr. Wu Zeyuan (including, where applicable any entities directly or indirectly controlled by them that directly holds the Shares) on August 17, 2016, the entire interest of Xinhong Capital Limited is held by Easy Prestige Limited, which is in turn held by Lion Trust (Singapore) Limited as the trustee for the benefit of Mr. Wu Zeyuan. The entire interest of Baolink Capital Limited is held by Mr. Cai Wensheng and the entire interest of Longlink Capital Limited is held by Longlink Limited, which is in turn held by Lion Trust (Singapore) Limited as the trustee for the benefit of Mr. Cai Wensheng.

• (2) Kingkey Enterprise Holdings Limited is owned as to 50% by Mr. Chen Jiarong and 50% by Mr. Chen Jiajun. Kingkey Enterprise Holdings Limited, being a close associate (as defined under the Listing Rules) of Mr. Chen Jiarong, is not a public shareholder prior to Completion and will become a public shareholder after Completion (please refer to note (4) below).

• (3) Eastern Sun Enterprise Limited is wholly-owned by Jubilee Prestige Investments Limited, which is in turn wholly-owned by Mr. Chen Jiarong. Eastern Sun Enterprise Limited, being a close associate (as defined under the Listing Rules) of Mr. Chen Jiarong, is not a public shareholder prior to Completion and will become a public shareholder after Completion (please refer to note (4) below).

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LETTER FROM THE BOARD

• (4) Upon Completion, Mr. Chen Jiarong’s shareholding interest in the Company will decrease to 9.6557% and will therefore cease to be a core connected person (as defined under the Listing Rules) of the Company and will become a public shareholder; Ms. Liu Chenchen, being the spouse of Mr. Chen Jiarong, will cease to be a close associate (as defined under the Listing Rules) of Mr. Chen Jiarong and will also become a public shareholder.

• (5) Prior to completion, Mr. Chen Jiarong, Mr. Chen Jiajun and Ms. Liu Chenchen are connected persons of the Company by virtue of Mr. Chen Jiarong’s 11.9317% shareholding interest in the Company. Upon Completion, Mr. Chen Jiarong, Mr. Chen Jiajun and Ms. Liu Chenchen will cease to be connected persons of the Company and, save for their shareholding interest in the Company, will be third parties independent of the Company and its connected persons and will have no business relationship with the Company (based on the facts and circumstances subsisting as at the Latest Practicable Date).

IMPLICATIONS UNDER THE LISTING RULES

As the highest of the applicable percentage ratios (as defined in the Listing Rules) in respect of the Acquisition is more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction for the Company and is subject to the announcement and reporting requirements under Chapter 14 of the Listing Rules.

The Company will seek the Shareholders’ approval at the EGM for, inter alias, the Specific Mandate to allot and issue the Consideration Shares by the Company and the exercise of the Put Option by the Purchaser as and when the Board sees fit. Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares.

EGM

The Consideration Shares will be allotted and issued pursuant to the Specific Mandate to be sought from the Shareholders at the EGM. A notice convening the EGM of Meitu, Inc. to be held at Jade, Level 3, The Ritz-Carlton, Hong Kong, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong at 11:00 a.m. on Thursday, April 18, 2019 is set out on pages 20 to 22 of this circular.

To the best knowledge, information and belief of the Directors, and having made all reasonable enquiries, no Shareholder has material interest in the Share Purchase Agreement and therefore, no Shareholder would be required to abstain from voting at the EGM. The resolution(s) proposed to be approved at the EGM will be taken by poll and an announcement will be made by the Company on the results of the EGM.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend the meeting, you are requested to complete the endorsed form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time fixed for holding the EGM. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM should you so desire.

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LETTER FROM THE BOARD

CLOSURE OF REGISTER OF MEMBERS

The transfer books and register of members of the Company will be closed from Monday, April 15, 2019 to Thursday, April 18, 2019, both dates inclusive, for the purpose of determining shareholders’ entitlements to attend and vote at the EGM. In order to qualify for the right to attend and vote at the meeting, all transfers, accompanied by the relevant share certificates, must be lodged with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Friday, April 12, 2019.

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.

RECOMMENDATION

On the basis of the information set out in this circular, the Directors consider that the Share Purchase Agreement and the transactions contemplated thereunder (including but not limited to the issue of the Consideration Shares, the entering into of the Shareholders Agreement and the Put Option, and the exercise of the Put Option as and when the Board sees fit) are in the best interests of the Company and the Shareholders as a whole and therefore recommend you to vote at the EGM in favor of the resolutions for approving the Share Purchase Agreements and transactions contemplated thereunder and the granting of the Specific Mandate and the exercise of the Put Option as and when the Board sees fit.

For and on behalf of the Board of Meitu, Inc. Cai Wensheng Chairman of the Board

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NOTICE OF EGM

Meitu, Inc. 美圖公司

(Incorporated in the Cayman Islands with limited liability and carrying on business in Hong Kong as “ 美圖之家 ”) (Stock Code: 1357)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (the “ EGM ”) of Meitu, Inc. (the “ Company ”) will be held at Jade, Level 3, The Ritz-Carlton, Hong Kong, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong at 11:00 a.m. on Thursday, April 18, 2019 for the purpose of considering and, if thought fit, passing with or without modifications the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

“THAT

• (a) the share purchase agreement entered into between (i) Meitu Investment Ltd (the “ Purchaser ”); (ii) the Company (as the Purchaser’s guarantor); (iii) Dream Beyond Holdings Limited (the “ Vendor ”); and (iv) Leyou Technologies Holdings Limited (“ Leyou ”) (as the Vendor’s guarantor) dated February 19, 2019 (the “ Share Purchase Agreement ”), pursuant to which the Purchaser has conditionally agreed to acquire 31 issued ordinary shares of Dreamscape Horizon Limited (the “ Sale Shares ”) (representing 31% of the total issued share capital of the Dreamscape Horizon Limited) for a total consideration of HK$2,686,577,470, which will be satisfied by the allotment and issue of 991,357,000 new ordinary shares of the Company (“ Consideration Shares ” and each a “ Consideration Share ”) by the Company to Leyou under a specific mandate at the issue price of HK$2.71 per Consideration Share (the “ Acquisition ”), and the transactions contemplated thereunder, be and are hereby approved, confirmed and ratified;

• (b) the directors of the Company (the “ Directors ”) be and are hereby granted a specific mandate (the “ Specific Mandate ”) to exercise the powers of the Company to allot and issue 991,357,000 Consideration Shares to Leyou in accordance with the terms and conditions of the Share Purchase Agreement, where such Consideration Shares shall rank equally in all respects among themselves and with all fully paid ordinary shares of the Company in issue as at the date of allotment and issue and the Specific Mandate is in addition to, and shall not prejudice nor revoke, any general or specific mandate(s) which has/have been granted or may from time to time be granted to the Directors prior to the passing of this resolution;

• (c) in the event that Leyou disposes of any of the Consideration Shares after the Lock-up Period (defined in the Share Purchase Agreement as the period commencing from the date of completion of the Acquisition and ending on the date falling 180 days immediately after the date of completion of the Acquisition) on or before the first anniversary of the last day of the Lock-up Period, the exercise of the put option by the Purchaser (to be determined and decided by the board of Directors in its sole and absolute discretion) to request the Vendor to redeem all or any part of the Sale Shares from the Purchaser (the “ Redemption ”) at a redemption price per Sale Share to be calculated based on the following formula:

P x (1 +[10% x n] ) 360

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NOTICE OF EGM

where:

• (a) P = HK$86,663,789.35 per Sale Share; and

• (b) n = the number of calendar days elapsed between the date of completion of the Acquisition and the date of completion of the Redemption (both dates inclusive),

plus all declared but unpaid dividends thereon up to the date of Redemption, proportionally adjusted for share subdivisions, share dividends, reorganizations, reclassifications, consolidations, or mergers; and

• (d) all other transactions contemplated under the Share Purchase Agreement be and are hereby approved and any one Director or the chief financial officer of the Company (the “ CFO ”) be and is authorized to do all such acts and things, to sign and execute, and where required, to affix the common seal of the Company to, such documents or agreements or deeds on behalf of the Company and to do such other things and to take all such actions as he/she considers necessary, appropriate, desirable or expedient for the purposes of giving effect to or in connection with the implementation of the transactions contemplated under the Share Purchase Agreement and to agree to such variation, amendments or waiver of matters relating thereto which are, in the opinion of such Director or the CFO, in the interests of the Company and its shareholders as a whole.”

For and on behalf of Meitu, Inc. Cai Wensheng Chairman of the Board

Hong Kong, April 1, 2019

Registered office:

The offices of Conyers Trust Company (Cayman) Limited Cricket Square, Hutchins Drive PO Box 2681 Grand Cayman, KY1-1111 Cayman Islands

Principal place of business in Hong Kong: Room 8106B, Level 81 International Commerce Centre 1 Austin Road West Kowloon Hong Kong

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NOTICE OF EGM

Notes:

1. The record date for the purpose of determining eligibility of the shareholders of the Company to attend and vote at the EGM is Friday, April 12, 2019. In order to qualify for attending and voting at the EGM, all transfers of shares accompanied by the relevant share certificates must be lodged at the Company's branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Friday, April 12, 2019.

2. Any shareholder entitled to attend and vote at the EGM shall be entitled to appoint another person as his/her/its proxy to attend and vote instead of him/her/it. A shareholder who is the holder of two or more shares may appoint more than one proxy to represent him/her/it and vote on his/her/its behalf at the EGM. A proxy need not be a shareholder of the Company. In addition, a proxy or proxies representing either a shareholder who is an individual or a shareholder which is a corporation shall be entitled to exercise the same powers on behalf of the shareholder which he/she or they represent as such shareholder could exercise.

3. To be valid, a form of proxy must be deposited at the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof.

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

5. Delivery of an instrument appointing a proxy shall not preclude a shareholder of the Company from attending and voting in person at the EGM and in such event, the instrument appointing a proxy shall be deemed to be revoked.

6. Votes on the ordinary resolutions set out herein which are to be passed at the EGM will be taken by way of poll.

7. If Typhoon Signal No.8 or above, or a “black” rainstorm warning, is in effect any time after 8:00 a.m . on the date of the EGM, the EGM will be adjourned. The Company will post an announcement on the website of the Company at corp.meitu.com and on the Stock Exchange news website of the Stock Exchange at www.hkexnews.hk to notify the shareholders of the date, time and place of the rescheduled meeting.

8. The transfer books and register of members of the Company will be closed from Monday, April 15, 2019 to Thursday, April 18, 2019, both dates inclusive, for the purpose of determining shareholders' entitlements to attend and vote at the EGM. In order to qualify for the right to attend and vote at the meeting, all transfers, accompanied by the relevant share certificates, must be lodged with the Company's branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Friday, April 12, 2019.

9. A circular containing further details concerning the resolutions set out in this notice will be sent to all shareholders of the Company together with this notice.

10. As at the date hereof, the executive directors of the Company are Mr. Cai Wensheng and Mr. Wu Zeyuan (also known as Mr. Wu Xinhong); the non-executive directors of the Company are Dr. Guo Yihong and Dr. Lee Kai-fu; the independent non-executive directors of the Company are Mr. Zhou Hao, Mr. Lai Xiaoling and Mr. Zhang Ming (also known as Mr. Wen Chu).

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