PegBio Co., Ltd. — Proxy Solicitation & Information Statement 2018

Oct 31, 2018

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in CMBC Capital Holdings Limited, you should at once hand this circular to the purchaser or the 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 the transferee.

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

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CMBC CAPITAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

MAJOR TRANSACTION IN RELATION TO PROVISION OF FINANCIAL ASSISTANCE

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed “Definition” in this circular. A letter from the Board is set out on pages 4 to 12 of this circular.

31 October 2018

CONTENTS

Pages	Pages
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
APPENDIX I – FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . .	13
APPENDIX II – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .	17

– i –

DEFINITIONS

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

• “Announcements”

• the announcements dated 31 May 2018, 14 June 2018 and 14 September 2018 made by the Company

• “Board” the board of Directors

• “Chargor”

• Wuhan DDMC Culture Co. Ltd., a limited liability company incorporated in the PRC

• “China Minsheng”

• China Minsheng Banking Corp., Ltd. (中國民生銀行 股份有限公司), a joint stock limited company incorporated in the PRC with limited liability, the H shares of which are listed on the Stock Exchange (stock code: 1988) and the A shares of which are listed on the Shanghai Stock Exchange (stock code: 600016)

• “CMBC Investment”

• CMBC International Investment Limited (民銀國際 投資有限公司), a company incorporated in the British Virgin Islands, and a controlling shareholder of the Company

• “CMBCCF”

• CMBC Capital Finance Limited, a limited liability company incorporated in Hong Kong and a direct wholly-owned subsidiary of the Company

• “CMBCI”

• CMBC International Holdings Limited (民生商銀國 際控股有限公司), a company incorporated in Hong Kong with limited liability and a controlling shareholder of the Company

• “CMBCI Group”

• CMBCI and its subsidiaries, excluding the members of the Group

• “Company”

• CMBC Capital Holdings Limited (民銀資本控股有限 公司), a company incorporated in Bermuda with limited liability, the issued shares of which are listed on the Stock Exchange (stock code: 1141)

• “connected person(s)”

• has the meaning ascribed to it under the Listing Rules

– 1 –

DEFINITIONS

• “Corporate Guarantor” Wuhan Dangdai Science & Technology Industry (Group) Co., Ltd., a company incorporated in the PRC with limited liability whose principal business is pharmaceutical products manufacturing, real estate, media, culture and sports business

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

• “First Borrower” DDMC (Hong Kong) Limited (當代明誠（香港）有限公 司) a company incorporated in Hong Kong with limited liability, and an indirect subsidiary of the Chargor

• “First Loan” the loan granted by CMBCCF to the First Borrower in the principal amount of US$40,000,000 pursuant to a facility agreement dated 31 May 2018

• “Group” the Company and its subsidiaries

• “Guarantors” collectively, the Chargor, the Corporate Guarantor and the Personal Guarantor

• “HK$” Hong Kong Dollars(s), the lawful currency of Hong Kong

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “Independent Third Party(ies)” any entity(ies) or person(s) which or who is/are not a connected person of the Company within the meaning ascribed thereto under the Listing Rules

• “Latest Practicable Date” 26 October 2018 being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Loan Facilities” collectively, the First Loan and the Second Loan

• “Personal Guarantor”

• Mr. Ai Lu Ming, a PRC individual, who is the controlling shareholder and a director of the Corporate Guarantor

– 2 –

DEFINITIONS

• “PRC”

• the People’s Republic of China, for the purpose of this circular, does not include Hong Kong, Macau Special Administrative Region and Taiwan

• “Renewal Facility Agreement”

• the renewal facility agreement dated 14 September 2018 entered into between CMBCCF and the Second Borrower, pursuant to which CMBCCF has agreed to renew the Second Facility Agreement for one year

• “Second Borrower” DDMC Sports International Limited a company incorporated in Hong Kong with limited liability, and a direct subsidiary of the Chargor and is a fellow subsidiary of the First Borrower

• “Second Facility Agreement” the facility agreement dated 14 June 2018 entered into between CMBCCF and the Second Borrower, pursuant to which CMBCCF has agreed to make available to the Second Borrower the Second Loan

• “Second Loan”

• a loan to be provided by CMBCCF to the Second Borrower in the principal amount of US$50 million pursuant to the Second Facility Agreement

• “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Share(s)”

• ordinary share(s) of the Company with a nominal value of HK$0.01 each

• “Shareholders” holders of the shares of the Company

• “Stock Exchange”

• The Stock Exchange of Hong Kong Limited

• “US$”

• US dollars, the lawful currency of the United States

• “%”

• per cent.

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LETTER FROM THE BOARD

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CMBC CAPITAL HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 1141)

Executive Directors : Mr. Li Jinze Mr. Ding Zhisuo Mr. Ng Hoi Kam

Non-executive Directors : Mr. Ren Hailong Mr. Liao Zhaohui

Independent non-executive Directors : Mr. Lee, Cheuk Yin Dannis Mr. Wu Bin Mr. Wang Lihua

Registered Office : Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head Office and Principal Place of Business: Units 6601A and 6607-6608 Level 66 International Commerce Centre 1 Austin Road West Kowloon Hong Kong

31 October 2018

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION IN RELATION TO PROVISION OF FINANCIAL ASSISTANCE

I. INTRODUCTION

Reference is made to the Announcements in relation to among others, the grant of the First Loan and the Second Loan by CMBCCF to the First and Second Borrowers, respectively.

As disclosed in the Announcements, the Second Loan was for a term of 3 months from the utilisation date and would expire on 13 September 2018. On 14 September 2018, CMBCCF entered into the Renewal Facility Agreement with the Second Borrower and the Guarantors, pursuant to which CMBCCF has agreed to renew the Second Loan.

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LETTER FROM THE BOARD

As one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) in respect of the Loan Facilities (as aggregated pursuant to Rule 14.22 of the Listing Rules) exceed(s) 25% but are less than 100%, the entering into of the Renewal Facility Agreement and the transactions contemplated thereunder constitute a major transaction for the Company under Chapter 14 of the Listing Rules and are subject to the reporting, announcement, circular and shareholders’ approval requirements.

The Company has obtained written Shareholders’ approval for the Renewal Facility Agreement in accordance with Rule 14.44 of the Listing Rules from CMBC Investment, which is a controlling shareholder of the Company beneficially interested in approximately 60.62% of issued share capital of the Company as at the date of this circular (including the shares subscribed by CMBC Investment as disclosed in the Company’s announcement dated 15 October 2018). Pursuant to Rule 14.44 of the Listing Rules, the written approval from CMBC Investment is accepted in lieu of holding a general meeting for approval of the Renewal Facility Agreement and the transactions contemplated thereunder.

The purpose of this circular is to provide the Shareholders with the information in relation to the Renewal Facility Agreement and other information prescribed by the Listing Rules.

II. THE RENEWAL FACILITY AGREEMENT

Reference is made to the Announcements in relation to, among others, the grant of the First Loan and the Second Loan by CMBCCF to the First and Second Borrowers, respectively.

As disclosed in the Announcements, the Second Loan was for a term of 3 months from the utilisation date and would expire on 13 September 2018. On 14 September 2018, CMBCCF entered into the Renewal Facility Agreement with the Second Borrower and the Guarantors, pursuant to which CMBCCF has agreed to renew the Second Loan.

The principal terms of the Renewal Facility Agreement are as follows:

Date: 14 September 2018 Parties: i. CMBCCF; and ii. the Second Borrower. Principal Amount: US$50,000,000

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LETTER FROM THE BOARD

Conditions Precedent:

• The Second Loan will be renewed on the date of Renewal Facility Agreement upon satisfaction, among others, of the following conditions precedent:

• i. CMBCCF has received all documents as required under the Renewal Facility Agreement; and

• ii. no event of default is continuing or would result from the proposed loan under the Renewal Facility Agreement.

• All conditions precedent set out in the Renewal Facility Agreement have been satisfied or waived (if applicable) in accordance with the Renewal Facility Agreement.

• Purpose: to secure the media rights and sponsorship rights to certain sport competitions.

Interest rate:

• 9% per annum payable quarterly on the 20th date of the last month in each quarter, with the first interest payment date on 20 December 2018.

• Extension fee: 3% of the principal amount payable on the renewal date. No part of the extension fee so paid shall be refundable in any event.

Renewal term:

• 1 year

Repayment:

subject as otherwise provided in the Renewal Facility Agreement, the Second Borrower shall repay the Second Loan in the following manner:

• i. US$10 million to be repaid on the date falling 90 days after the date of the Renewal Facility Agreement;

• ii. US$10 million to be repaid on the date falling 180 days after the date of the Renewal Facility Agreement; and

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LETTER FROM THE BOARD

• iii. the remaining principal (together with the accrued unpaid interest) to be repaid one year after the date of Renewal Facility Agreement.

Voluntary Prepayment:

• The Second Borrower may by not less than 7 business days’ (or such shorter period as CMBCCF agrees) prior notice prepay the whole or any part (but, if in part, being an amount that reduces the amount of the Second Loan by a minimum amount of US$5 million and thereafter in an integral multiple of US$1 million) of the outstanding loan under the Second Loan.

• The Second Loan may only be prepaid after 180 days from the date of the Renewal Facility Agreement.

Conversion Right:

• Where the Second Borrower initiates any capitalization plan, restructuring arrangement, capital injection, debt financing or corporate reorganization or similar arrangement which might change the shareholding structure (“Debt Capitalisation Plan”), CMBCCF will have the right (but is not obliged) to participate in the Debt Capitalisation Plan including by way of conversion of the Second Loan into equity or debt capital in the Second Borrower on terms that are equal or better than the other participating parties.

Event of Default:

• There shall be an event of default if, among others, any of the following events shall have occurred or is continuing:

• (i) the obligors do not pay on the due date any amount payable pursuant to the terms of the Renewal Facility Agreement;

• (ii) the obligors do not comply with any provision of the Renewal Facility Agreement;

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LETTER FROM THE BOARD

• (iii) any representation or statement made or deemed to be made by the obligors in the Renewal Facility Agreement or any other document delivered by or on behalf of the obligors under or in connection with the Renewal Facility Agreement and relevant documents are or prove to have been incorrect or misleading in any material respect when made or deemed to be made;

• (iv) (a) any of the obligors is or is presumed or deemed to be unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness;

• (b) the value of the assets of any of the obligors is less than its liabilities (taking into account contingent and prospective liabilities);

• (c) a moratorium is declared in respect of any indebtedness of any of the obligors;

• (v) any corporate action, legal proceedings or other procedure or step is taken in relation to:

• (a) the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, bankruptcy, administration, provisional supervision or reorganization (by way of voluntary arrangement, scheme of arrangement or otherwise) of the obligors;

• (b) a composition or arrangement with any creditor of the obligors, or an assignment for the benefit of creditors generally of the obligors or a class of such creditors;

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LETTER FROM THE BOARD

• (c) the appointment of a liquidator, receiver, administrator, administrative receiver, compulsory manager, provisional liquidator or supervisor or other similar officer in respect of any obligor or any of its assets; or

• (d) enforcement of any security over any assets of any obligor, or any analogous procedure or step is taken in any jurisdiction.

• (vi) (a) it is or becomes unlawful for any obligor to perform any of its obligations under the Renewal Facility Agreement or any finance documents;

• (b) any obligation or obligations of any obligor under the Renewal Facility Agreement or the finance documents are not or cease to be legal, valid, binding or enforceable;

• (c) the Renewal Facility Agreement or any guarantee or indemnity in or any subordination under the Renewal Facility Agreement is not or ceases to be in full force and effect or is alleged by a party to it to be ineffective.

• (vii) the Second Borrower suspends or ceases to carry on all or a material part of its business which might have a material adverse effect.

• (viii) any non-compliance or breach of the conditions subsequent.

Security: the Second Loan will be secured by, inter alia , the following:

• i. charge over 70% of the issued shares of the Second Borrower;

• ii. corporate guarantee provided by the Chargor;

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LETTER FROM THE BOARD

• iii. corporate guarantee provided by the Corporate Guarantor; and

• iv. personal guarantee provided by the Personal Guarantor.

Each of the Guarantors guarantees and undertakes, among other things, the followings:

• (i) guarantees to CMBCCF the due and punctual observance and performance by each obligor of all of the secured liabilities of, or expressed to be assumed by each obligor under or pursuant to any or all of the finance documents including the Renewal Facility Agreement; and

• (ii) undertakes to pay to CMBCCF from time to time, upon demand by CMBCCF, any and all sums of money which any obligor is at any time liable, or expressed to be liable, to pay to CMBCCF under or pursuant to any or all of the finance documents including the Renewal Facility Agreement and which have become, or are expressed to have become, due and payable but have not been paid at the time such demand is made as if he was the principal obligor in respect to that amount.

As disclosed in the Announcements, the Company financed the Second Loan with its internal resources.

III. REASONS FOR AND BENEFITS OF THE ENTERING INTO THE RENEWAL FACILITY AGREEMENT

The principal amount of the Second Loan was determined after arm’s length negotiation between the Second Borrower and CMBCCF after taking into account of, inter alia, the Group’s available financial resources, its business plan, the security and the financial strength of the Guarantors. The interest rate and the extension fee were agreed by the Company after arm’s length negotiation between CMBCCF and the Second Borrower, after considering the prevailing market rate for similar loans granted by the Group to other Independent Third Parties.

Taking into account the principal activities of the Group, the Directors consider that entering into the Renewal Facility Agreement and the renewal of the Second Loan thereunder are in the ordinary and usual course of business of the Group.

The Renewal Facility Agreement has been entered into based on the Company’s development strategy. Taking into account the return from the renewal of the Second Loan and based on the result of the credit assessments of the Second Borrower and the security, the Directors consider that the terms of the Renewal Facility Agreement are fair and reasonable, the entering into the Renewal Facility Agreement and the renewal of the Second Loan hereunder are in the interests of the Company and its Shareholders as a whole.

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LETTER FROM THE BOARD

When assessing the credibility of the Second Borrower and the security, CMBCCF has conducted a comprehensive due diligence which includes, among other things, reviewing the historical financial statements, the history, the background, the current assets, the structure and the shareholding of the Second Borrower and the Guarantors, the proposed use of the Second Loan and the proposed structure of the proposed transaction.

According to its audited financial statement as at 31 December 2017, the consolidated net asset and consolidated total asset of the Corporate Guarantor exceed HK$40 billion and HK$90 billion, respectively. As such, and taking into consideration the relatively short term of the Second Loan, the Company considers that the risks involved in the advance to the Second Borrower are relatively low and that the security provided to secure the repayment of the Second Loan was sufficient to mitigate the risk of default.

IV. INFORMATION OF THE GROUP

As at the date of this circular, the Group is principally engaged in the securities business, investment and financing and asset management and advisory business.

V. INFORMATION OF THE SECOND BORROWER AND THE GUARANTORS

To the best of the knowledge, information and belief of the Directors, as at the date of this circular, the Second Borrower is incorporated in Hong Kong, which is a direct subsidiary of the Chargor and principally engaged in media, culture and sports business.

To the best of the knowledge, information and belief of the Directors, as at the date of this circular, the Chargor is an indirect subsidiary of the Corporate Guarantor incorporated in the PRC with limited liability which is principally engaged in culture business.

To the best of the knowledge, information and belief of the Directors, as at the date of this circular, the Corporate Guarantor is a company incorporated in the PRC with limited liability whose principal business is pharmaceutical products manufacturing, real estate, media, culture and sports business.

To the best of the knowledge, information and belief of the Directors, as at the date of this circular, the Personal Guarantor is a PRC individual and is a controlling shareholder and a director of the Corporate Guarantor. The Personal Guarantor does not hold any office in the Second Borrower and the Chargor.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, each of the Second Borrower, the Guarantors, and their respective ultimate beneficial owners is an Independent Third Party as at the date of this circular.

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LETTER FROM THE BOARD

VI. LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) in respect of the Loan Facilities (as aggregated pursuant to Rule 14.22 of the Listing Rules) exceed(s) 25% but are less than 100%, the entering into of the Renewal Facility Agreement and the transactions contemplated thereunder constitute a major transaction for the Company under Chapter 14 of the Listing Rules and are subject to the reporting, announcement, circular and shareholders’ approval requirements.

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, no Shareholder has a material interest in the Renewal Facility Agreement and the transactions contemplated thereunder and accordingly, no Shareholder or its/his associate(s) is required to abstain from voting if the Company were to convene a general meeting for approving the Renewal Facility Agreement and the transactions contemplated thereunder.

The Company has obtained written Shareholders’ approval for the Loan Facilities in accordance with Rule 14.44 of the Listing Rules from CMBC Investment, which is a controlling shareholder of the Company beneficially interested in approximately 60.62% of issued share capital of the Company as at the date of this circular (including the shares subscribed by CMBC Investment as disclosed in the Company’s announcement dated 15 October 2018). Pursuant to Rule 14.44 of the Listing Rules, the written approval from CMBC Investment is accepted in lieu of holding a general meeting for approval of the Renewal Facility Agreement and the transactions contemplated thereunder.

VII. RECOMMENDATION

Although no general meeting will be convened, the Board considers that the Renewal Facility Agreement was entered into on normal commercial terms and the terms of the Renewal Facility Agreement are fair and reasonable and are in the best interests of the Company and the Shareholders as a whole. Accordingly, if a general meeting were convened for approving the Renewal Facility Agreement thereunder, the Board would have recommended the Shareholders to vote in favour of the Renewal Facility Agreement.

VIII. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices I and II to this circular.

Yours faithfully, By order of the Board CMBC Capital Holdings Limited Li Jinze Chairman

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FINANCIAL INFORMATION

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

Financial information of the Group for the years ended 31 March 2016 and 2017, and the nine months ended 31 December 2017 respectively have been set out in the following documents which have been published on the Stock Exchange’s website (www.hkexnews.hk) and the Company’s website (http://www.cmbccap.com):

• (i) Annual report of the Company for the year ended 31 March 2016 published on 21 July 2016 (pages 37 to 119)

• (ii) Annual report of the Company for the year ended 31 March 2017 published on 28 June 2017 (pages 54 to 145)

• (iii) Annual report of the Company for the nine months ended 31 December 2017 published on 27 April 2018 (pages 68 to 179)

2. INDEBTEDNESS

As at the close of business on 31 August 2018 being the latest practicable date for the purpose of ascertaining the indebtedness of the Group prior to the printing of this circular, the Group had outstanding credit borrowings of approximately HK$7,705.6 million, details of which are as follows:

Borrowings:

Notes payable with nominal value of HK$150.0 million, unsecured and unguaranteed Bank loan from a branch of the ultimate holding company, unsecured and unguaranteed Loan from intermediate holding company, unsecured and unguaranteed Financial assets sold under repurchase agreements, secured and guaranteed Total	At 31 August 2018 HK$ million 148.9 494.5 6,157.3 904.9
	7,705.6

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FINANCIAL INFORMATION

APPENDIX I

Pledged Assets

As at 31 August 2018, borrowings under financial assets sold under repurchase agreements are fully guaranteed by the Company and secured by the underlying assets that consist of certain of the Group’s financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income with total carrying amounts of HK$1,542.7 million.

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, as at the close of business on 31 August 2018, the Group did not have any issued and outstanding, or committed, loan capital, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptable credits, debentures, mortgages, charges, hire purchase commitments, guarantees or other material contingent liabilities.

3. WORKING CAPITAL

Taking into account the effect of the entering into the Renewal Facility Agreement by the Company and the financial resources available to the Group, the Directors are of the opinion that the working capital available to the Group is sufficient for the Group’s requirements for at least twelve months from the date of this circular.

4. FINANCIAL AND TRADING PROSPECTS

The Company intends to continuously enhance profitability by offering a one-stop securities and investment banking solution encompassing cross-border and innovative financial products and services. In particular, the Group intends to, inter alia :

• (1) further expand its loan and financing business by offering more diversified structured finance services mainly targeting on high-profile private enterprise customers in the comprehensive health, mass consumption, emerging technology and featured manufacturing industry (the “Target Clients”) thereby generating stable revenue stream, as well as facilitating the rapid development of the Group’s merger and acquisition advisory and sponsor services, debt and equity underwriting business as well as asset management business;

• (2) commence and expand the corporate finance advisory business. In particular, the Group intends to establish its own client base for its sponsor business by assisting the Target Clients to go listing on the Stock Exchange. In addition, surrounding “One Belt and One Road Initiatives”, the Group also intends to provide the all-round investment banking services to those PRC domestic enterprises which plan to expand its business into those “One Belt and One Road” countries or jurisdictions;

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APPENDIX I

FINANCIAL INFORMATION

• (3) further develop its asset management business. Leveraging on the extensive client base of the Group and China Minsheng, the Group intends to enrich its asset management product portfolio by offering diversified asset management services, as well as to attract higher net worth clients including listed companies and their senior management creating more returns for clients; and

• (4) consider to further develop the Group’s business through investment in or acquisition of suitable companies and business, when opportunities arise. As at the date of this circular, the Group did not have any concrete plan to make any acquisition. The Group intends to strengthen its profitability and optimise its asset structure, through pre-IPO investments in high profile enterprises in the sectors of finance, health and new technology in Great China area. The Company also considers to acquire the companies and business which may create synergy with the Group and China Minsheng’s business. Although the Group currently does not have any specific acquisition plan, the Group will closely monitor the development trend in different markets such as Hong Kong, Europe and North-East Asia for its future globalised development. The Group will also look for potential acquisition targets with team advantage, profitability and sustainable growth.

On the whole, the Group will continue to implement the “one-body two-wings” strategy. “One-body” refers to the structural financing services provided by the Group. Benefiting from its bank-owned background, the Group is able to provide full-spectrum services (such as corporate advisory and consultation services) and one-stop solutions to clients with different funding requirements. “Two-wings” refers to the Group’s traditional investment banking business and asset management services. Leveraging on the development of “one-body” structural financing services, the Group is expected to achieve mutual growth in its "two wing" business-securities business and asset management business.

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FINANCIAL INFORMATION

APPENDIX I

5. EFFECT OF ENTERING INTO THE RENEWAL FACILITY AGREEMENT BY THE COMPANY ON THE EARNINGS AND ASSETS AND LIABILITIES OF THE GROUP

Assets and liabilities

As a result of entering into the Renewal Facility Agreement by the Company, it is expected that the “Loans and advances” will continue to be recognised as assets in the Group’s statement of financial position and the corresponding “Borrowings” will continue to be recognized as liabilities. Given these financial effects, the Directors are of the view that entering into the Renewal Facility Agreement by the Company will not have any material financial effects on the net asset value of the Group.

Earnings

Since the interest income will be received by the Company under the Renewal Facility Agreement, the earnings of the Group will increase by an amount equivalent to such income arising from the Renewal Facility Agreement in the relevant period. On the other hand, interest expenses and other fees are to be paid by the Company for entering into the Renewal Facility Agreement, which will decrease the earnings of the Group by an amount equivalent to such expenses. Given these financial effects, the Directors expect that there will be no significant adverse impact on the Group’s consolidated profit or loss.

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GENERAL INFORMATION

APPENDIX II

1. 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.

2. INTERESTS AND SHORT POSITIONS OF DIRECTORS AND CHIEF EXECUTIVE

As at the Latest Practicable Date, none of the Directors or chief executive of the Company (and their respective associate(s)) had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are deemed or taken to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO to be entered into the register referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules, to be notified to the Company and the Stock Exchange.

3. COMPETING INTERESTS

China Minsheng is principally engaged in commercial and retail banking business providing corporate and personal banking, treasury business, finance leasing, asset management and other financial services but holds licenses to carry out type 1 (dealing in securities) and type 4 (advising on securities) regulated activities through its Hong Kong Branch. Neither the Company nor its subsidiaries are licensed to carry out commercial banking activities and hence China Minsheng does not compete with the Company in respect of commercial banking activities. As such, the Directors expect immaterial competition from China Minsheng Hong Kong Branch, and even if there is competition, it will be normal market competition and will not affect the interest of the Shareholders as a whole, as (i) the Company will be the principal platform for China Minsheng to conduct securities and investment banking businesses in Hong Kong; (ii) the principal business of China Minsheng Hong Kong Branch is commercial banking; (iii) the management of China Minsheng Hong Kong Branch is not involved in the management of the Company or its subsidiaries, nor is it involved in the management of CMBCI Group; (iv) the Company will have an independent and separate team conducting its type 1 (dealing in securities) and type 4 (advising on securities) regulated activities; and (v) China Minsheng Hong Kong Branch has no securities brokerage, futures or asset management businesses.

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APPENDIX II

GENERAL INFORMATION

CMBCI Group is principally engaged in investments and investment holding. It is expected that CMBCI Group will not principally engage in securities and investment banking businesses with Independent Third Party which will be the principal businesses of the Group. Therefore, all businesses involving regulated activities will principally be undertaken by the Group.

As such, the Directors are of the view that there is immaterial competition from CMBCI Group, and even if there is competition, it will be on normal market competition and will not affect the interest of the Shareholders.

4. DIRECTORS’ COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors nor his close associates is and was interested in any business which competes or may compete, either directly or indirectly, with the business of the Group.

5. INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors had any interest in any assets which have been, since 31 December 2017 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement, subsisting at the date of this circular, which is significant in relation to the business of the Group.

6. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

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GENERAL INFORMATION

APPENDIX II

7. MATERIAL ADVERSE CHANGE

As the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2017, the date to which the latest published audited consolidated financial statements of the Group were made up.

8. MATERIAL CONTRACTS

The following contracts, not being contracts entered into in ordinary course of business of the Group, have been entered into by the members of the Group within two years preceding the date of the this circular which are, or maybe, material:

• (a) the conditional agreement dated 28 November 2016 and entered into between Celestial Lodge Limited and Gold Mission Limited in respect of the disposal of the entire equity interests of Sky Eagle Global Limited by Gold Mission Limited to Celestial Lodge Limited, together with the supplemental agreement dated 7 March 2017.

• (b) the conditional subscription agreement dated 7 March 2017 and entered into between the Company as issuer and CMBC Investment and Brilliant Decent Limited as subscribers in relation to the subscription for a total of 26,950,000,000 new Shares issued by the Company.

• (c) the acquisition agreement dated 27 July 2017 entered into between the Company and CMBCI for the entire issued share capital of CMBCCF.

• (d) the acquisition agreement dated 27 July 2017 entered into between the Company and CMBCI for the entire issued share capital of CMBC International Capital Limited.

• (e) a conditional placing agreement entered into between the Company and certain placing agents (CCB International Capital Limited, Haitong International Securities Company Limited, Zhongtai International Securities Limited and CMBC Securities Company Limited) dated 3 July 2018 in relation to the placing of up to 830,000,000 Shares; and

• (f) the conditional subscription agreement dated 3 July 2018 entered into between the Company and CMBC Investment in respect of the subscription of 1,350,000,000 new Shares to be allotted by the Company.

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GENERAL INFORMATION

APPENDIX II

9. LITIGATION

As at the Latest Practicable Date, none of the members of the Group was engaged in any litigation, or claim of material importance, and no litigation or claim of material importance was known to the Directors to be pending or threatened against any member of the Group.

10. MISCELLANEOUS

• (a) The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

• (b) The head office and principal place of business of the Company is located at Units 6601A and 6607-6608, Level 66, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong.

• (c) The company secretary of the Company is Ms. Yang Na, a solicitor qualified in Hong Kong.

• (d) The principal share registrar of the Company and transfer office is MUFG Fund Services (Bermuda) Limited, which is located at 26 Burnaby Street, Hamilton HM11, Bermuda.

• (e) The branch share registrar of the Company in Hong Kong is Tricor Tengis Limited situated at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (f) The English text of this circular shall prevail over the Chinese text for the purpose of interpretation.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours from 9:00 a.m. to 5:00 p.m., at the Company’s principal place of business in Hong Kong at Units 6601A and 6607-6608, Level 66, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong for a period of 14 days (other than Saturdays, Sundays and public holidays) from the date of this circular:

• (a) the memorandum of association and bye-laws of the Company;

• (b) the material contracts referred to under the paragraph headed “Material Contracts” in this Appendix;

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GENERAL INFORMATION

APPENDIX II

• (c) the annual reports of the Company for the years ended 31 March 2016 and 2017, and the nine months ended 31 December 2017 together with all notes, certificates or information required by the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as amended from time to time;

• (d) this circular;

• (e) a circular of the Company dated 25 May 2018;

• (f) a circular of the Company dated 29 May 2018;

• (g) a circular of the Company dated 24 August 2018;

• (h) a circular of the Company dated 28 August 2018; and

• (i) a circular of the Company dated 3 September 2018.

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