Planetree International Development Limited — AGM Information 2017

Apr 12, 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

YUGANG INTERNATIONAL LIMITED （渝港國際有限公司）[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00613)

PROPOSALS FOR RE-ELECTION OF DIRECTORS, GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES, AND NOTICE OF ANNUAL GENERAL MEETING

A notice convening the AGM of Yugang International Limited to be held at 11:15 a.m. on Thursday, 18 May, 2017 at Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong is set out on pages 12 to 15 of this circular.

Whether or not you intend to attend the AGM, you are advised to read this circular and complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s Share Registrar, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding of the AGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM or at any adjournment thereof should you so wish.

* For identification purposes only.

13 April 2017

TABLE OF CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
ANNUAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
BUSINESS OF THE MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Resolution 1 — Receiving 2016 Financial Statements . . . . . . . . . . . . . . . . . . . . . .	4
Resolution 2 — Declaration of Final Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Resolution 3 — Re-election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Resolution 4 — Re-appointment of Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Resolution 5-7 — General Mandates to Issue and Repurchase Shares . . . . . . . . . . . .	5
VOTING BY POLL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
RESPONSIBILITY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
BOARD RECOMMENDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
APPENDIX I — BIOGRAPHICAL DETAILS OF DIRECTORS PROPOSED
FOR RE-ELECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
APPENDIX II — EXPLANATORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
NOTICE OF ANNUAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12

— i —

DEFINITIONS

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

“AGM” or “Annual General the annual general meeting of the Company to be held at Meeting” or “Meeting” Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong at 11:15 a.m. on Thursday, 18 May 2017, or, where the context so admits, any adjournment thereof;

• “Board” the board of Directors of the Company;

• “Bye-Laws” the bye-laws adopted by the Company from time to time;

“Company” Yugang International Limited, a company incorporated in Bermuda with limited liability and the Shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 00613);

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

• “Extension Mandate” a general mandate proposed to be granted to Directors to the effect that any Shares repurchased under the Repurchase Mandate will be added to the total number of Shares which may be allotted and issued under the Issue Mandate;

• “Group” the Company and its Subsidiaries;

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

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong;

“Issue Mandate” a general and unconditional mandate proposed to be granted to Directors to exercise all the powers of the Company to allot or issue up to a maximum of 20% of the total number of issued Shares as at the date of passing of the relevant resolution at the AGM (subject to adjustment in case of any Share consolidation or subdivision after the mandate has been approved, provided that the maximum number of Shares that may be issued under the Issue Mandate as a percentage of the total number of issued Shares at the date immediately before and after such consolidation or subdivision shall be the same);

• “Latest Practicable Date” 7 April 2017, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular;

• “Listing Rules”

Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

— 1 —

DEFINITIONS

“Notice of AGM” the notice for convening the AGM as set out on pages 12 to 15 of this circular; “PRC” the People’s Republic of China, and for the purpose of this circular, excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan; “Repurchase Mandate” a general and unconditional mandate proposed to be granted to Directors to exercise all the powers of the Company to purchase Shares up to a maximum of 10% of the total number of issued Shares as at the date of passing of the relevant resolution at the AGM (subject to adjustment in case of any Share consolidation or subdivision after the mandate has been approved, provided that the maximum number of Shares that may be repurchased under the Repurchase Mandate as a percentage of the total number of issued Shares at the date immediately before and after such consolidation or subdivision shall be the same); “SFO” Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong; “Share(s)” the ordinary share(s) of the Company; “Share Registrar” the Company’s Hong Kong branch share registrar, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong; “Shareholder(s)” the holder(s) of Share(s); “Stock Exchange” The Stock Exchange of Hong Kong Limited; “Subsidiary(ies)” any entity which falls within the meaning of the term “Subsidiary” as defined in the Listing Rules and the term “Subsidiaries” shall be construed accordingly; “Takeovers Code” the Codes on Takeovers and Mergers and Share Buy-backs published by Securities and Futures Commission; and “%” per cent.

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LETTER FROM THE BOARD

YUGANG INTERNATIONAL LIMITED （渝港國際有限公司）[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00613)

Executive Directors: Cheung Chung Kiu (Chairman) Yuen Wing Shing (Managing Director) Zhang Qing Xin Lam Hiu Lo Liang Kang

Non-Executive Director: Lee Ka Sze, Carmelo

Independent Non-Executive Directors:

Luk Yu King, James Leung Yu Ming, Steven Ng Kwok Fu

Registered Office: Clarendon House Church Street Hamilton HM 11 Bermuda

Head Office and Principal Place of Business in Hong Kong: Rooms 3301-3307 China Resources Building 26 Harbour Road Wanchai Hong Kong

13 April 2017

Dear Shareholders,

ANNUAL GENERAL MEETING

On behalf of the Board, we invite you to attend the Company’s AGM to be held at Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong at 11:15 a.m. on Thursday, 18 May 2017. The Notice of AGM is set out on pages 12 to 15 of this circular.

The purpose of this circular is to provide you with information in connection with convening of the AGM and explanation with matters to be dealt with at the AGM.

A form of proxy for use at the AGM is enclosed herewith. Whether or not you intend to attend the AGM, you are advised to read this circular and to complete the accompanying form of proxy and return the same to the Share Registrar, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time for holding the AGM or any adjournment thereof. Completion and delivery of the form of proxy will not preclude you from attending and voting at the AGM or any adjournment if you so wish.

* For identification purposes only

— 3 —

LETTER FROM THE BOARD

BUSINESS OF THE MEETING

Resolution 1 — Receiving 2016 Financial Statements

The audited consolidated financial statements of the Group for the year ended 31 December 2016 together with the Reports of Directors and Auditors thereon, are set out in the 2016 Annual Report which was sent together with this circular to the Shareholders. The audited consolidated financial statements have been reviewed by the audit committee of the Company (“ Audit Committee ”). Report of the Audit Committee is set out on pages 22 to 23 of the 2016 Annual Report.

Resolution 2 — Declaration of Final Dividend

The Board recommended to declare a final dividend of HK$0.002 per Share for the year ended 31 December 2016. Subject to passing of the Resolution 2 at the AGM, the proposed final dividend will be paid on or about Tuesday, 6 June 2017 to Shareholders whose names appear on the Company’s register of members on 29 May 2017.

Resolution 3 — Re-election of Directors

Pursuant to Bye-Law 87 of the Bye-Laws, at each annual general meeting, not less than one-third of the Directors for the time being shall retire from office by rotation and, under the Corporate Governance Code, every Director, including those appointed for a specific term, shall be subject to retirement by rotation at least once every three years. Accordingly, Mr. Yuen Wing Shing, Mr. Lam Hiu Lo and Mr. Liang Kang will retire by rotation at the conclusion of the AGM, and all of them being eligible, offer themselves for re-election at the AGM.

On 20 January 2017, the nomination committee of the Company (“ Nomination Committee ”) considered the current Board composition and resolved to nominate the re-election of Mr. Yuen Wing Shing, Mr. Lam Hiu Lo and Mr. Liang Kang as executive Directors. The nominations were made in accordance with the Nomination Policy and the Board Diversity Policy of the Company. The Board acknowledged the nominations and resolved to recommend Mr. Yuen Wing Shing, Mr. Lam Hiu Lo and Mr. Liang Kang to stand for re-election by Shareholders at the AGM. As a good corporate governance practice, each retiring Director abstained from voting on the respective propositions of their individual recommendation in the relevant Board meeting.

Biographical details of Directors who are subject to re-election at the AGM are set out in Appendix I to this circular.

Resolution 4 — Re-appointment of Auditors

The Audit Committee has reviewed the audit process of the external auditors, Messrs. Ernst & Young, and was satisfied with their independence and objectivity. The Audit Committee has recommended to the Board (which in turn endorsed the view) that, subject to Shareholders’ approval at the AGM, Messrs. Ernst & Young be re-appointed as external auditors of the Company for 2017; and authorise the Board to fix their remuneration.

— 4 —

LETTER FROM THE BOARD

Resolutions 5-7 — General Mandates to Issue and Repurchase Shares

An ordinary resolution ( Resolution 5 ) will be proposed at the AGM to grant to Directors the Issue Mandate. The aggregate number of Shares allotted or agreed to be allotted under the Issue Mandate must not exceed 20% of the total number of issued Shares as at the date of passing of the relevant resolution at the AGM.

Based on the total number of 9,305,276,756 issued Shares as at the Latest Practicable Date, subject to passing of the Resolution 5 and on the basis that no further Shares will be allotted and issued or repurchased from the Latest Practicable Date up to the date of the AGM, exercise in full of the Issue Mandate will result in the Directors being authorised to issue, allot and deal with a maximum of 1,861,055,351 Shares (subject to adjustment in case of Share consolidation or subdivision after the passing of such resolution as prescribed under the Listing Rules). There is no present intention for any issuance of Shares pursuant to the Issue Mandate.

An ordinary resolution ( Resolution 6 ) will be proposed at the AGM to give Directors the Repurchase Mandate. The total number of Shares which are authorized to purchase on the Stock Exchange may not exceed 10% of the total number of issued Shares as at the date of passing of the relevant resolution at the AGM.

Subject to passing of the Resolution 6 and on the basis that there were 9,305,276,756 issued Shares as at the Latest Practicable Date and no Shares will be issued or repurchased by the Company from the Latest Practicable Date up to the date of AGM, the Company will be allowed under the Repurchase Mandate to purchase a maximum of 930,527,675 Shares (subject to adjustment in case of Share consolidation or subdivision after the passing of such resolution as prescribed under the Listing Rules). There is no present intention for any purchase of Shares pursuant to the Repurchase Mandate.

The authority conferred on Directors by the Issue Mandate and the Repurchase Mandate would continue in force until the earlier of (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required by law or the Bye-Laws to be held; and (iii) its revocation or variation by an ordinary resolution of the Shareholders in a general meeting.

An ordinary resolution ( Resolution 7 ) will be proposed at the AGM to grant to Directors the Extension Mandate that any Shares repurchased under the Repurchase Mandate will be added to the total number of Shares which may be allotted and issued under the Issue Mandate.

The full text of the resolutions 5-7 is set out in the Notice of AGM. An Explanatory Statement containing all the information reasonably necessary to enable Shareholders to make an informed decision in relation to these proposed resolutions as required by Rule 10.06(1)(b) of the Listing Rules concerning the regulation of repurchases by companies of their own securities on the Stock Exchange is set out in Appendix II to this circular.

— 5 —

LETTER FROM THE BOARD

VOTING BY POLL

Pursuant to Rule 13.39(4) of the Listing Rules, all resolutions set out in the Notice of AGM will be decided by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matters to be voted on by a show of hands. On a poll, pursuant to Bye-Law 66 of the Bye-Laws, every Shareholder present in person or by proxy or, in the case of a Shareholder being a corporation, by its duly authorised representative, shall have one vote for every fully paid share of which he/she/it is the holder. Shareholders present in person or by proxy or by authorized representative who are entitled to more than one vote do not have to vote all of their shares nor do they have to cast all of their votes in the same way.

After closing the poll, the Share Registrar will count the votes and the poll results will be subject to scrutiny by an independent scrutineer. The Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

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 Group. 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.

BOARD RECOMMENDATION

The Directors consider that the proposed resolutions as set out in the Notice of AGM including, among other things, the proposed resolutions in relation to the granting of the Issue Mandate and the Repurchase Mandate are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors recommend you to vote in favour of all resolutions at the AGM.

Yours faithfully, On behalf of the Board YUEN WING SHING Managing Director

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BIOGRAPHICAL DETAILS OF DIRECTORS PROPOSED FOR RE-ELECTION

APPENDIX I

The biographical details of Directors proposed to be re-elected at the AGM are set out as follows:

YUEN WING SHING

Yuen Wing Sing , aged 70, was appointed an executive Director in 1993 and Managing Director of the Company in January 2005. He is the authorised representative of the Company under the Listing Rules and also serves as a director of several subsidiaries of the Company. Mr. Yuen is responsible for the Group’s administration and business operations. Mr. Yuen holds a diploma in management studies from The Hong Kong Polytechnic University. Prior to joining the Company, he held senior management position with a major bank in Hong Kong for over 20 years. He is also an executive director of Y. T. Realty Group Limited and The Cross-Harbour (Holdings) Limited, all are public companies listed on the Stock Exchange. Save as disclosed above, Mr. Yuen has not held any directorship in other public listed companies or any other position with the Company or any other members of the Group during the past three years.

As at the Latest Practicable Date, Mr. Yuen was not interested in any Shares within the meaning of Part XV of the SFO.

The emoluments of Mr. Yuen are recommended by the Remuneration Committee and determined by the Board with authorization from time to time given by Shareholders in general meeting according to the Remuneration Policy of the Company and by reference to his time commitment, duties and responsibilities undertaken, employment conditions elsewhere in the Group and salaries paid by comparable companies. Mr. Yuen’s emoluments for the year ended 31 December 2016 were HK$7,238,000. Mr. Yuen has not entered into a service contract with the Company and has no fixed term of service but is subject to retirement by rotation and re-election once every three years, removal, vacation or termination of such office is pursuant to the Bye-Laws and the Listing Rules.

LAM HIU LO

Lam Hiu Lo , aged 55, was appointed an executive Director in 1993. He also serves as a director of several subsidiaries of the Company. He is mainly responsible for the sales and marketing of the Group’s trading business in the PRC. He has over 30 years of experience in trading with PRC parties. He is an independent non-executive director of EVA Precision Industrial Holdings Limited, a public company listed on the Stock Exchange. Previously, Mr. Lam was an executive director of China Touyun Tech Group Limited (formerly known as China Opto Holdings Limited), a public company listed on the Stock Exchange but resigned on 26 November 2014. Save as disclosed above, Mr. Lam has not held any directorship in other public listed companies or any other position with the Company or any other members of the Group during the last three years.

As at the Latest Practicable Date, Mr. Lam was interested in 41,800,000 Shares within the meaning of Part XV of the SFO. Save as disclosed herein, Mr. Lam does not have any interests in the Shares within the meaning of Part XV of the SFO.

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APPENDIX I

BIOGRAPHICAL DETAILS OF DIRECTORS PROPOSED FOR RE-ELECTION

The emoluments of Mr. Lam are recommended by the Remuneration Committee and determined by the Board with authorization from time to time given by Shareholders in general meeting according to the Remuneration Policy of the Company and by reference to his time commitment, duties and responsibilities undertaken, employment conditions elsewhere in the Group and salaries paid by comparable companies. Mr. Lam’s emoluments for the year ended 31 December 2016 were HK$3,215,000. Mr. Lam has not entered into a service contract with the Company and has no fixed term of service but is subject to retirement by rotation and re-election once every three years, removal, vacation or termination of such office is pursuant to the Bye-Laws and the Listing Rules.

LIANG KANG

Liang Kang, aged 74, was appointed an executive Director in 1995. He is mainly responsible for the sales and marketing of the Group’s trading business in the PRC. Prior to joining the Company, he engaged in trading business in the PRC for over 16 years. Save as disclosed above, Mr. Liang has not held any directorship in other public listed companies or any other position with the Company or any other members of the Group during the last three years.

As at the Latest Practicable Date, Mr. Liang was interested in 30,000,000 Shares within the meaning of Part XV of the SFO. Save as disclosed herein, Mr. Liang does not have any interests in the Shares within the meaning of Part XV of the SFO.

The emoluments of Mr. Liang are recommended by the Remuneration Committee and determined by the Board with authorization from time to time given by Shareholders in general meeting according to the Remuneration Policy of the Company and by reference to his time commitment, duties and responsibilities undertaken, employment conditions elsewhere in the Group and salaries paid by comparable companies. Mr. Liang’s emoluments for the year ended 31 December 2016 were HK$2,176,200. Mr. Liang has not entered into a service contract with the Company and has no fixed term of service but is subject to retirement by rotation and re-election once every three years, removal, vacation or termination of such office is pursuant to the Bye-Laws and the Listing Rules.

OTHER INFORMATION

Save as disclosed herein, none of the above Directors to be re-elected have any relationship with any other Directors, senior management or substantial or controlling Shareholders, and there is no information which is required to be disclosed pursuant to Rules 13.51(2) of the Listing Rules, and the Board is not aware of any other matters which need to be brought to the attention of the Shareholders.

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EXPLANATORY STATEMENT

APPENDIX II

This Appendix serves as an explanatory statement required to be sent to Shareholders under the Listing Rules in connection with the resolutions authorising the proposed Repurchase Mandate.

THE LISTING RULES

The Listing Rules permit a company with a primary listing on the Stock Exchange to purchase its shares on the Stock Exchange subject to certain restrictions, the most important of which are summarised below:

• (a) the shares proposed to be purchased by the company are fully-paid up;

• (b) the company has previously sent to its shareholders an Explanatory Statement complying with the provisions of Rule 10.06(1)(b) of the Listing Rules; and

• (c) the shareholders have given a specific approval or a general mandate to its directors to make the purchase, by way of an ordinary resolution which complies with Rule 10.06(1)(c) of the Listing Rules and which has been passed at a general meeting of the company duly convened and held.

SHARE CAPITAL

As at the Latest Practicable Date, the number of issued Shares of the Company was 9,305,276,756 fully-paid up Shares. Subject to the passing of the Resolution 6 approving the Repurchase Mandate and on the basis that no further Shares are issued or repurchased following the Latest Practicable Date and up to the date of the AGM, exercise in full of the Repurchase Mandate could accordingly result in up to 930,527,675 Shares being repurchased by the Company, representing 10% of the total number of issued Shares as at the Latest Practicable Date.

REASONS FOR REPURCHASES

The Directors believe that it is in the best interests of the Company and the Shareholders to have a general authority from Shareholders to enable the Company to purchase Shares in the market. Such purchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the Company’s net asset value and/or earnings per Share and will only be made when the Directors believe that such purchases will benefit the Company and its Shareholders as a whole.

FUNDING OF REPURCHASES

In repurchasing its Shares, the Company may only apply funds legally available for such purpose in accordance with the Bye-Laws and all the applicable laws of Bermuda. Under Bermuda law, purchases may only be effected out of the capital paid up on the purchased shares or out of funds of the company otherwise available for dividend or distribution or out of the proceeds of a fresh issue of shares made for such purpose. Any premium payable on a purchase over the par value of the shares to be purchased must be provided for out of funds of the company otherwise available for dividend or distribution or out of the Company’s share premium account.

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EXPLANATORY STATEMENT

APPENDIX II

Based on the position disclosed in the Company’s most recent published audited accounts for the year ended 31 December 2016 and taking into account the current financial position of the Company, the Directors consider that there would be no material adverse effect on the financial and gearing position of the Company in the event that the Repurchase Mandate is to be exercised in full in the period before the Repurchase Mandate expires. However, the Directors do not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which, in the opinion of the Directors, are from time to time appropriate for the Company.

EFFECT OF TAKEOVERS CODE

If, as a result of a Share repurchase, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of the Takeovers Code. In certain circumstances, a Shareholder or a group of Shareholders acting in concert, as a result of increase of its or their interests in the voting rights of the Company, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

Assuming that no further Shares will be allotted and issued or repurchased from the Latest Practicable Date to the date of the AGM, on exercise in full of the Repurchase Mandate, the number of issued Shares will decrease from 9,305,276,756 to 8,374,749,081.

As at the Latest Practicable Date, the following persons held the following percentage of the Shares of the Company:

		Percentage of
	Number of	the number of
Name	shares held	issued shares
Palin Holdings Limited (Note 1)	3,194,434,684	34.33%
Chongqing Industrial Limited (Note 2)	3,194,434,684	34.33%
Timmex Investment Limited (Note 3)	851,955,056	9.16%
Cheung Chung Kiu (Note 4)	4,099,709,740	44.06%

Notes:

• (1) Under Part XV of the SFO, Palin Holdings Limited (“ Palin ”) is deemed to be interested in the 3,194,434,684 Shares held by Chongqing Industrial Limited (“ Chongqing ”) since Palin is entitled to control the exercise of 65% of the voting power at general meetings of Chongqing. Such interest in Chongqing is also held by Palin in the capacity as the trustee of Palin Discretionary Trust, a family discretionary trust, the objects include Mr. Cheung Chung Kiu and his family.

• (2) The voting rights of these Shares are exercisable by Chongqing which is controlled by Mr. Cheung Chung Kiu.

• (3) Timmex Investment Limited is 100% beneficially owned by Mr. Cheung Chung Kiu.

• (4) Out of 4,099,709,740 Shares, 3,194,434,684 Shares are held by Chongqing, 851,955,056 Shares are held by Timmex Investment Limited and 53,320,000 Shares are held by Mr. Cheung Chung Kiu personally.

— 10 —

EXPLANATORY STATEMENT

APPENDIX II

If, which is not presently contemplated, the Directors exercise in full the power to repurchase Shares under the Repurchase Mandate, the shareholding of Palin Holdings Limited, Chongqing Industrial Limited, Timmex Investment Limited and Mr. Cheung Chung Kiu in aggregate would be increased from 44.06% to 48.95% and such increase will give rise to an obligation to make a mandatory offer under Rule 26 of the Takeovers Code. However, the Directors have no present intention to exercise the Repurchase Mandate to such an extent as would, in the circumstances, result in possible mandatory offer being made under the Takeovers Code, or result in the public float to fall below 25% or such other minimum percentage prescribed by the Listing Rules from time to time.

UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the power of the Company conferred to them under the Repurchase Mandate in accordance with the Listing Rules and all the applicable laws of Bermuda.

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

No core connected person (as defined in the Listing Rules) has notified the Company that he/she has a present intention to sell Shares to the Company, or has undertaken not to do so, if the Repurchase Mandate is approved by the Shareholders.

SHARE REPURCHASE MADE BY THE COMPANY

The Company had not repurchased any of its Shares, whether on the Stock Exchange or otherwise, in the six months preceding the date of this circular.

SHARE PRICES

The highest and lowest prices at which the Shares were traded on the Stock Exchange during the previous twelve months prior to the Latest Practicable Date were as follows:

	Price per share	Price per share
	Highest	Lowest
	HK$	HK$
April 2016	0.155	0.139
May 2016	0.146	0.129
June 2016	0.132	0.117
July 2016	0.135	0.124
August 2016	0.134	0.122
September 2016	0.144	0.123
October 2016	0.148	0.126
November 2016	0.149	0.134
December 2016	0.154	0.136
January 2017	0.161	0.147
February 2017	0.154	0.147
March 2017	0.175	0.146
April 2017 (up to the Latest Practicable Date)	0.195	0.166

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NOTICE OF ANNUAL GENERAL MEETING

YUGANG INTERNATIONAL LIMITED （渝港國際有限公司）[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00613)

NOTICE IS HEREBY GIVEN THAT the annual general meeting (“ AGM ”) of Yugang International Limited (the “ Company ”) will be held at 11:15 a.m. on Thursday, 18 May 2017 at Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Wanchai, Hong Kong to transact the following ordinary businesses:

1. To receive and adopt the audited consolidated financial statements of the Company and its subsidiaries for the year ended 31 December 2016 together with the Reports of Directors and Auditors thereon.

2. To declare a final dividend for the year ended 31 December 2016.

3. 3.a. To re-elect the following retiring directors of the Company (the “ Director(s) ”);

4. (i) Mr. Yuen Wing Shing as an executive Director;

5. (ii) Mr. Lam Hiu Lo as an executive Director;

6. (iii) Mr. Liang Kang as an executive Director ;

7. 3.b. To authorise the board of Directors (the “ Board ”) to fix the remuneration of Directors.

8. To re-appoint Messrs. Ernst & Young as auditors of the Company; and authorise the Board to fix their remuneration.

By way of special business, to consider, and if thought fit, pass with or without modifications, the following resolutions as ordinary resolutions:

ORDINARY RESOLUTIONS

Resolution 5 — Issue Mandate

1. “ THAT :

2. (a) subject to paragraph (b) of the Resolution 5, a general mandate (the “ Issue Mandate ”) be and is hereby unconditionally granted to Directors to exercise during the Relevant Period (as hereinafter defined) all the powers of the Company to allot, issue and deal with

3. For identification purposes only

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NOTICE OF ANNUAL GENERAL MEETING

additional shares of the Company (“ Shares ”) or securities convertible into Shares, and to make or grant offers, agreements, options which would or might require exercise of such powers either during or after the Relevant Period;

• (b) the total number of Shares allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors pursuant to the Issue Mandate, otherwise than pursuant to (i) Rights Issue (as hereinafter defined); or (ii) the exercise of rights of subscription, conversion or exchange under the terms of any existing warrants, bonds, debentures, notes or other securities issued by the Company which carry rights to subscribe for or are convertible or exchangeable into Shares; or (iii) the exercise of options granted under any option scheme or similar arrangement for the time being adopted for the grant or issue of Shares or rights to acquire Shares; or (iv) any scrip dividend or similar arrangement providing for the allotment of Shares in lieu of the whole or part of a dividend on Shares in accordance with the bye-laws of the Company (“ Bye-Laws ”), shall not exceed twenty per cent (20%) of the total number of issued Shares as at the date of passing of the Resolution 5 (subject to adjustment in case of Share consolidation or sub-division after the mandate has been approved, provided that the maximum number of Shares that may be issued under the Issue Mandate as a percentage of the total number of issued Shares at the date immediately before and after such consolidation or subdivision shall be the same); and

“Rights Issue” means an offer of shares open for a period fixed by Directors to holders of Shares on the register of members of the Company on a fixed record date in proportion to their then holdings of such Shares (subject to such exclusions or other arrangements as Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of any relevant jurisdiction, or of the requirements of any recognised regulatory body or any stock exchange applicable to the Company).”

• (c) for the purposes of the Resolution 5, “ Relevant Period ” means the period from the passing of the Resolution 5 until the earlier of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by law or the Bye-Laws to be held; or

• (iii) the date on which the authority set out in the Resolution 5 is revoked or varied by an ordinary resolution of the shareholders of the Company (“ Shareholders ”) in general meeting.

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NOTICE OF ANNUAL GENERAL MEETING

Resolution 6 — Repurchase Mandate

1. “ THAT :

2. (a) a general mandate (the “ Repurchase Mandate ”) be and is hereby unconditionally granted to Directors to exercise during the Relevant Period (as hereinafter defined) all the powers of the Company to purchase Shares in accordance with all applicable laws and requirements of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, subject to the following conditions:

   • i. such mandate shall not be extended beyond the Relevant Period (as hereinafter defined);

   • ii. such mandate shall authorize Directors to procure the Company to purchase Shares at such price as Directors may at their discretion determine;

   • iii. the total number of Shares to be purchased by the Company pursuant to the Resolution 6 during the Relevant Period shall not exceed ten percent (10%) of the total number of issued Shares as at the date of passing of the Resolution 6 (subject to adjustment in case of any Share consolidation or sub-division after the mandate has been approved, provided that the maximum number of Shares that may be repurchased under the Repurchase Mandate as a percentage of the total number of issued Shares at the date immediately before and after such consolidation or subdivision shall be the same); and

3. (b) for the purpose of the Resolution 6, “ Relevant Period ” means the period from the passing of the Resolution 6 until the earlier of:

   • i. the conclusion of the next annual general meeting of the Company;

   • ii. the expiration of the period within which the next annual general meeting of the Company is required by law or Bye-Laws to be held; or

   • iii. the date on which the authority set out in the Resolution 6 is revoked or varied by an ordinary resolution of the Shareholders in general meeting.”

Resolution 7 — Extension Mandate

1. “ THAT subject to the availability of unissued share capital and conditional upon the passing of the Resolution 5 and Resolution 6, the total number of Shares which can be repurchased by the Company pursuant to and in accordance with Resolution 6 shall be added to the total number of Shares that may be allotted or agreed conditionally or unconditionally to be allotted by Directors pursuant to and in accordance with Resolution 5.”

On behalf of the Board Yugang International Limited Yuen Wing Shing Managing Director

Hong Kong, 13 April 2017

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NOTICE OF ANNUAL GENERAL MEETING

Notes:

1. The register of members of the Company will be closed from Monday, 15 May 2017 to Thursday, 18 May 2017, both days inclusive. In order to qualify for attending and voting at the AGM, all transfer documents accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong Branch Share Registrar (the “ Share Registrar ”), Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration not later than 4:30 p.m. on Friday, 12 May 2017.

2. A member entitled to attend and vote at the AGM is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

3. An original of the duly completed form of proxy must be returned to the Share Registrar, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time for holding the AGM or any adjournment thereof.

4. With regard to resolution 3 and resolutions 5 to 7 set out in this notice, a circular giving details of re-election of Directors and granting of general mandates to issue and repurchase Shares will be despatched to Shareholders on 13 April 2017.

5. Each of the resolutions set out in this notice will be voted by poll.

6. As at the date of this circular, the Board comprises nine Directors, namely Mr. Cheung Chung Kiu (Chairman), Mr. Yuen Wing Shing (Managing Director), Mr. Zhang Qing Xin, Mr. Lam Hiu Lo and Mr. Liang Kang as executive Directors; Mr. Lee Ka Sze, Carmelo as non-executive Director; and Mr. Luk Yu King, James, Mr. Leung Yu Ming, Steven and Mr. Ng Kwok Fu as independent non-executive Directors.

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