Shanghai INT Medical Instruments Co., Ltd. - Proxy Solicitation & Information Statement 2020

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 your 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 Shanghai Kindly Medical Instruments Co., Ltd.* (上海康德萊醫療器械股份有限公司), 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.

==> picture [65 x 52] intentionally omitted <==

Shanghai Kindly Medical Instruments Co., Ltd.[*] 上海康德萊醫療器械股份有限公司 (A joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code：1501)

(1) PROPOSED ADOPTION OF THE SHARE INCENTIVE SCHEME; (2) CONNECTED TRANSACTIONS — ISSUE OF NEW AWARD SHARES UNDER THE SHARE INCENTIVE SCHEME; (3) PROPOSED AMENDMENTS TO THE ARTICLES; AND

(4) NOTICE OF 2020 SECOND EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser

to the Independent Board Committee and the Independent Shareholders

Capitalized terms used in this cover page shall have the same meanings as defined in this circular.

A letter from the Board is set out on pages 5 to 22 of this circular and a letter from the Independent Board Committee containing its recommendations to the Independent Shareholders is set out on pages 23 to 24 of this circular. A letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the proposed allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int is set out on pages 25 to 45 of this circular.

A notice convening the EGM to be held at Block 2, No. 925 Jin Yuan Yi Road, Jiading District, Shanghai, the PRC on Thursday, December 17, 2020 at 2:00 p.m. is set out on pages EGM-1 to EGM-3 of this circular. A form of proxy for the EGM for use by the Shareholders is enclosed with this circular. Whether or not you are able to attend the EGM in person, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it the Company’s H share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong (for H Shareholders) or the Company’s registered office at Block 2, No. 925 Jin Yuan Yi Road, Jiading District, Shanghai, the PRC (for Domestic Shareholders) as soon as possible but in any event not less than 24 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 Shareholders from attending and voting in person at the EGM or any adjourned meeting thereof (as the case may be) if they so wish and in such event, the form of proxy shall be deemed to be revoked.

For identification purposes only

November 6, 2020

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . .	23
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . .	25
APPENDIX I — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	46
NOTICE OF 2020 SECOND EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

– i –

DEFINITIONS

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

‘‘Articles’’
the articles of association of the Company, as amended, modified or otherwise supplemented from time to time
‘‘associate(s)’’ has the meaning ascribed to thereto under the Listing Rules
‘‘Award Share(s)’’ the 5,000,000 new Domestic Shares allotted to Dr. Liang Dongke and the Share Incentive Platforms for administration of the Share Incentive Scheme
‘‘Board’’ or ‘‘Board of the board of Directors Directors’’
‘‘Board Meeting’’ the meeting of the Board held on September 21, 2020
‘‘Company’’ Shanghai Kindly Medical Instruments Co., Ltd.* (上海康德萊醫療器械股份有限公司 ), a joint stock company incorporated in the PRC with limited liability, the H Shares of which are listed on the Stock Exchange (stock code: 1501)
‘‘connected person(s)’’ has the meaning ascribed to thereto under the Listing Rules
‘‘Director(s)’’ the director(s) of the Company
‘‘Domestic Share(s)’’ domestic ordinary share(s) with a nominal value of RMB1.00 each in the share capital of the Company
‘‘Domestic Shareholder(s)’’ holder(s) of Domestic Share(s)
‘‘EGM’’ the 2020 second extraordinary general meeting to be held by the Company to, among others, approve (1) the proposed adoption of the Share Incentive Scheme, (2) the proposed allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int, which constitute connected transactions under the Listing Rules, and (3) the proposed amendments to the Articles
‘‘General Partner’’ Dr. Liang Dongke, being the general partner of the Share Incentive Platforms
‘‘Grantee(s)’’ the person(s) to whom the Restricted Share Units are granted
‘‘Group’’ the Company and its subsidiaries

– 1 –

DEFINITIONS

‘‘H Share(s)’’
‘‘H Shareholder(s)’’
‘‘Hong Kong’’
‘‘Independent Board Committee’’
‘‘Independent Financial Adviser’’ or ‘‘Maxa Capital’’
‘‘Independent Shareholders’’
‘‘Latest Practicable Date’’
‘‘Listing Rules’’
‘‘Net Profit’’
‘‘Ningbo Int’’

overseas listed foreign invested ordinary share(s) in the share capital of the Company, with a nominal value of RMB1.00 each, listed on the Main Board of the Stock Exchange

holder(s) of H Share(s)

the Hong Kong Special Administrative Region of the People’s Republic of China
an independent committee of the Board comprising independent non-executive Directors being formed for the purpose of advising the Independent Shareholders in relation to the proposed allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int
Maxa Capital Limited, a corporation licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the proposed allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int
Shareholders other than Dr. Liang Dongke, Mr. Lin Sen, Mr. Wang Ruiqin, Ningbo Int and their respective associates
October 30, 2020, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular
the Rules Governing the Listing of Securities on the Stock Exchange
Net profit attributable to equity shareholders, net of nonrecurring gain/(loss) and amortized cost of the cost of the Share Incentive Scheme in the corresponding period, in the consolidated financial statements of the Group prepared by an accredited accountant. The Board retains its discretion to exclude other appropriate factors in the calculation of the Net Profit.
Ningbo Int Investment Partnership (Limited Partnership)* (寧波瑛泰投資合夥企業(有限合夥)), being an employee share incentive platform and Shareholder of the Company

– 2 –

DEFINITIONS

‘‘PRC’’
the People’s Republic of China, for the purpose of this circular, excluding Hong Kong, Macau Special Administrative Region of the PRC and Taiwan
‘‘Remuneration Committee’’
the remuneration committee established by the Board with terms of reference in compliance with paragraph B.1 of the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Listing Rules
‘‘Restricted Share Units’’
the restricted share units under the Share Incentive Scheme, which are in the form of Award Shares to be directly held by Dr. Liang Dongke and equity interest in the Share Incentive Platforms
‘‘RMB’’
Renminbi, the lawful currency of the PRC
‘‘SFO’’
the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong), as amended, supplemented or otherwise modified from time to time
‘‘Share(s)’’
share(s) in the share capital of the Company, with a nominal value of RMB1.00 each, including the Domestic Share(s) and H Share(s)
‘‘Shareholder(s)’’
Domestic Shareholders and H Shareholders
‘‘Share Incentive Platforms’’
Jingning Int Chuangyuan Partnership (Limited Partnership) (景寧瑛泰創源合夥企業(有限合夥)) and Jingning Int Chuangqi Partnership (Limited Partnership) (景寧瑛泰創啟合夥企業(有限合夥)), or such names as approved by the relevant PRC registration authority, limited partnerships to be established in the PRC whose general partner is Dr. Liang Dongke
‘‘Share Incentive Scheme’’
the share incentive scheme of the Company to be considered by the Shareholders at the EGM
‘‘Specific Mandate’’
the specific mandate to be obtained in the EGM for the allotment and issue of 5,000,000 new Domestic Shares
‘‘Stock Exchange’’

The Stock Exchange of Hong Kong Limited

‘‘Substantial Shareholder(s)’’ has the meaning ascribed thereto under the Listing Rules
‘‘Supervisor(s)’’ the supervisor(s) of the Company
‘‘Supervisory Committee’’

the supervisory committee of the Company

– 3 –

DEFINITIONS

‘‘Takeovers Code’’
‘‘Vesting Date’’
‘‘%’’

the Code on Takeovers and Mergers and Share Buy-backs

in respect of a Grantee, the date on which his/her entitlement to the Restricted Share Units is vested in such Grantee in accordance with the Share Incentive Scheme

per cent

For identification purposes only

– 4 –

LETTER FROM THE BOARD

==> picture [65 x 52] intentionally omitted <==

Shanghai Kindly Medical Instruments Co., Ltd.[*] 上海康德萊醫療器械股份有限公司 (A joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code：1501)

Executive Directors: Dr. Liang Dongke (Chairman and General Manager) Mr. Wang Cailiang

Non-executive Directors:

Mr. Zhang Weixin Ms. Chen Hongqin Mr. Fang Shengshi

Independent Non-executive Directors: Mr. Dai Kerong Mr. Jian Xigao Dr. Ge Junbo Mr. Hui Hung Kwan

Registered office, headquarters and principal place of business in the PRC: Block 2, No. 925 Jin Yuan Yi Road Jiading District, Shanghai the PRC

Principal place of business in Hong Kong: 31/F, Tower Two, Times Square 1 Matheson Street, Causeway Bay Hong Kong

November 6, 2020

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED ADOPTION OF THE SHARE INCENTIVE SCHEME; (2) CONNECTED TRANSACTIONS — ISSUE OF NEW AWARD SHARES UNDER THE SHARE INCENTIVE SCHEME;

(3) PROPOSED AMENDMENTS TO THE ARTICLES; AND

(4) NOTICE OF 2020 SECOND EXTRAORDINARY GENERAL MEETING

I. INTRODUCTION

Reference is made to the announcement of the Company dated September 21, 2020 in relation to (1) the proposed adoption of the Share Incentive Scheme, (2) the proposed allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int, and (3) the proposed amendments to the Articles.

For identification purposes only

– 5 –

LETTER FROM THE BOARD

The purposes of this circular are to provide:

(i) a letter from the Board containing further information regarding the matters to be proposed at the EGM;
(ii) the advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the proposed allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int;
(iii) notice of convening the EGM; and
(iv) other information as required under the Listing Rules.

II. THE SHARE INCENTIVE SCHEME

On September 21, 2020, the Board has resolved to propose the proposed adoption of the Share Incentive Scheme in the EGM. Pursuant to Article 60 (XV) of the Articles, the adoption of any equity incentive schemes shall be considered by the Shareholders in a general meeting. Therefore, the proposed adoption of the Share Incentive Scheme is subject to the Shareholders’ approval at the EGM. As Dr. Liang Dongke and Mr. Wang Cailiang are executive Directors and proposed Grantees under the Share Incentive Scheme, they have abstained from voting from such resolution at the Board Meeting.

(A) Administration of the Share Incentive Scheme

Saved for Dr. Liang Dongke who holds his own Award Shares, the Award Shares of other Grantees are held by Ningbo Int, in which the relevant Grantees will be indirectly interested through the Share Incentive Platforms, the limited partners of Ningbo Int. The limited partnership structure of the Share Incentive Platforms provides the following benefits:

To streamline the shareholding structure at the Company’s level by consolidating the equity awards to the Share Incentive Platforms, as compared to granting the Restricted Share Units to individuals; and
To streamline the management of the Share Incentive Platforms by vesting decision-making power with the general partner, as compared to granting the Restricted Share Units to corporations whose shareholders have voting right proportional to the respective shareholding.

As advised by the PRC legal adviser of the Company, using limited partnership structures as equity incentive platforms is not uncommon and not contrary to applicable laws and applications in the PRC.

– 6 –

LETTER FROM THE BOARD

The shareholding structure of the Company and the structure of the Share Incentive Platforms and shareholding information after the proposed allotment and issue of new Award Shares is set out below:

==> picture [451 x 188] intentionally omitted <==

----- Start of picture text -----

General Partner
Dr. Liang Dongke Grantees Grantees
limited partners limited partners
Jingning Int Jingning Int
Chuangyuan Chuangqi
General Partnership (Limited Partnership (Limited
Partner Partnership) Partnership)
(景寧瑛泰創源合夥 (景寧瑛泰創啟合夥 Other limited
Shanghai Kindly Ningbo Huaige Taiyi 企業 [(] 有限合夥 [)][)][#] 企業 [(] 有限合夥 [)][)][#] partners
Enterprise Equity Investment
Development Partnerhsip 25.28% 25.74% 45.80%
Group Co., Ltd. (Limited Partnership) limited partner limited partner
(上海康德萊企業發展 (寧波懷格泰益股權投 3.18%
集團股份有限公司 [)] 資合夥企業 [(] 有限合夥 [)][)] general partner Ningbo Int Other Shareholders
25.06% 14.74% 7.04% 2.87% 50.29%
The Company
----- End of picture text -----

Notes:

For identification purposes only
Limited partnerships to be established in the PRC, such names are subject to approval by the relevant PRC registration authority
(1) The above shareholding percentages are calculated based on the as-enlarged share capital of the Company after the proposed allotment and issue of new Award Shares to Dr. Liang Dongke and Ningbo Int.

The Share Incentive Scheme will be administered from 2020 to 2024. The proposed Grantees shall be subject to performance review from 2020 to 2022, details of which are set out in ‘‘(D) Granting of the Restricted Share Units — Vesting Conditions — (2) Performance review of the Grantees’’ below. After the granting of the Restricted Share Units, the Grantees shall remain in the Group from 2022 to 2024, failure of which shall lead to repurchase of the Grantee’s Restricted Share Units by the General Partner.

(B) Maximum Limit of the Restricted Share Units

The Restricted Share Units administered under the Share Incentive Scheme shall not exceed 5,000,000 Domestic Shares and shall be granted to no more than 100 employees of the Group.

– 7 –

LETTER FROM THE BOARD

Selection criteria of the Grantees

The selection of the Grantees shall be subject to compliance with the PRC Company Law, the Articles and all applicable laws, regulations and rules (including without limitation, the Listing Rules and the Takeovers Code) from time to time.

Subject to final approval by the Board and the Supervisory Committee, the Remuneration Committee may select the Grantees and determine the respective number of Restricted Share Units to be granted to each of the Grantees.

The Remuneration Committee may select the Grantees amongst the Directors, Supervisors, senior management of the Group, and employees who could meet the following criteria:

(a) Core or mid-level management personnel who has joined the Group for 3 years or more and has reached grade 30 or above; or
(b) Core technical personnel and other core personnel who has joined the Group for 5 years or more and has reached grade 16 or above.

The following persons shall not be eligible for the Share Incentive Scheme:

(a) Individuals who were subject to administrative penalty by the China Securities Regulatory Commission or censure by the Stock Exchange due to any violation of laws and regulations;
(b) Individuals whose conduct amount to serious breach of the Group’s internal disciplinary code; or
(c) Individuals who are deemed unsuitable to participate in the Share Incentive Scheme by the Remuneration Committee (together with (a) and (b), the ‘‘Disqualification Events’’).

– 8 –

LETTER FROM THE BOARD

The list of proposed Grantees prepared by Remuneration Committee is subject to review and approval by the Board and the Supervisory Committee. As at the Latest Practicable Date, based on the above selection criteria, the Remuneration Committee has identified 96 proposed Grantees, six of whom are connected persons of the Company, including:

Proposed	Relationship to
Grantee	the Group				Maximum entitlement
Dr. Liang Dongke	Executive Director				2,500,000 Award		Shares
(梁棟科)					(held	in personal capacity)
					and 83,400 Restricted			Share
					Units	(held as the	General
					Partner of each of the			Share
					Incentive Platforms)
Mr. Wang	Executive Director				141,600 Restricted			Share
Cailiang					Units
(王彩亮)
Mr. Xu Jianhai	Supervisor				28,700	Restricted Share		Units
(徐建海)
Ms. Chen Jie	Supervisor				26,700	Restricted Share		Units
(陳潔)
Dr. Song Yuan	Deputy general	manager,			141,600 Restricted			Share
(宋媛)	secretary to the		Board,		Units
	joint company	secretary
	and spouse of Dr.			Liang
	Dongke
Mr. Zhang	Manager of the	domestic			33,400	Restricted Share		Units
Zhendong	trade department			and
(張振東)	brother-in-law		of	Dr.
	Liang Dongke

The remaining proposed Grantees are employees of the Group, 20 of whom have a maximum entitlement of 30,000 to 141,600 Restricted Share Units and 70 of whom have a maximum entitlement of no more than 30,000 Restricted Share Units under the Share Incentive Scheme.

– 9 –

LETTER FROM THE BOARD

Determination of Number of Restricted Share Units

The Board takes into account various factors in determining the number of Restricted Share Units to be granted to each of the proposed Grantees. For employees below chief officers (總監), the employees’ entitlement is determined on a quantitative basis with the following formula:

’ Employee s score = (A+B) x C

Notes:

A: Number of years of joining the Group
B: Grade of the employee which reflects seniority of his/her job position
C: Internal index on the contribution of the employee’s job position

In addition to the formula above, the entitlement of directors, chief officers (總監) and vice-presidents are also determined with reference to the level of job responsibilities and working experience of the employee as a whole.

Based on the foregoing, the determined score will be expressed in monetary value (in RMB) and translated to the number of Restricted Share Units, based on the Grant Price of RMB12 per Award Share.

(D) Granting of the Restricted Share Units

The Restricted Share Units will be granted to the Grantees at a price equivalent to RMB12 per Award Share (the ‘‘Grant Price’’). The Grantees (other than Dr. Liang Dongke) will be admitted as limited partners of the Share Incentive Platforms thereupon. Pursuant to the partnership agreements of the Share Incentive Platforms, the management powers of the Share Incentive Platforms reside with the General Partner and the other Grantees abstain management of their respective Share Incentive Platforms.

Prior to the Vesting Date, the Restricted Share Units granted shall be personal to the Grantee to whom it is made and shall not be vested unless the following lock-up requirements and vesting conditions are fulfilled.

Lock-up Requirements

The Grantees shall be subject to a lock-up period of sixty months (the ‘‘Lockup Period’’) from (a) the date of allotment of Award Shares to Ningbo Int or (b) the date of grant of the Restricted Share Units to the Grantee, whichever is later. If the Domestic Shares become listed in any stock exchange during the Lock-up Period, the Lock-up Period shall be extended in accordance with the relevant regulatory rules of such stock exchange.

– 10 –

LETTER FROM THE BOARD

During the Lock-up Period, the Grantees shall not transfer, create encumbrance or otherwise dispose of the Restricted Share Units and any share capital as converted from capital reserve, dividends and allotted Shares.

Vesting Conditions

The number of Restricted Share Units to be vested will be adjusted according to performance review for the three financial years ending December 31, 2022 (the ‘‘Review Period’’) in the following mechanisms:

(1) Net Profit attributable to the Company

If the Group fails to meet the following performance targets in any financial year during the Review Period, upon approval by the general manager of the Company, the General Partner or other entities designated by the Company shall be entitled to repurchase the Reduced RSUs (as defined in the table below) from the Grantees at a repurchase price equivalent to the Grant Price:

		Corresponding
		portion of the
Financial		Restricted Share
year ending		Units (the
December 31,	Performance target	‘‘Reduced RSUs’’)
2020	Net Profit in the financial year ending	30%
	December 31, 2020 increased for more
	than 20% as compared to Net Profit in
	the financial year ended December 31,
	2019
2021	Net Profit in the financial year ending	30%
	December 31, 2021 increased for more
	than 40% as compared to Net Profit in
	the financial year ended December 31,
	2019
2022	Net Profit in the financial year ending	40%
	December 31, 2022 increased for more
	than 60% as compared to Net Profit in
	the financial year ended December 31,
	2019

– 11 –

LETTER FROM THE BOARD

(2) Performance review of the Grantees

The Grantees’ individual performance will be assessed by their respective performance targets in accordance with internal guidelines of the Group. The results of individual performance review will be reflected in one of the four bands below:

					Below
		Excellent	Good	Satisfactory	standard
Performance	target
realization	rate	100%	80%	60%	0%

Without prejudice and in addition to (1), the number of Restricted Share Units to be vested to the Grantees will be further adjusted based on the product of the above performance target realization rate multiplied by the Reduced RSUs of the corresponding financial year.

(E) Grant Price

The Grant Price was determined by the Board after taking into consideration, among others, (1) the net asset value per Share as of December 31, 2019 of RMB7.44, (2) the fact that the Restricted Share Units are Domestic Shares which are not freely transferrable, and (3) the equity incentive nature of the Restricted Share Units. Based on the foregoing factors, the Directors consider the Grant Price fair and reasonable and in the interest of the Shareholders as a whole.

Each Grantee will pay to their respective Share Incentive Platforms, and each of Dr. Liang Dongke and Ningbo Int will pay to the Company, the total consideration of the Grant Price multiplied by the respective Award Shares, which is an amount equivalent to RMB60 million (the ‘‘Consideration’’). The Consideration shall be settled annually in equal installments within the Lock-up Period, and shall be settled in full upon termination of the Lock-up Period or upon demand by the Company, whichever is earlier. Upon receipt of the Consideration, RMB5 million will be added to the registered capital of the Company and the premium of RMB55 million will be credited to the capital reserve of the Company, which will be used for general working capital purposes.

(F) Vesting of the Restricted Share Units

After 2,500,000 Award Shares are allotted and issued to each of Dr. Liang Dongke and Ningbo Int, Dr. Liang Dongke will personally hold the Award Shares in the form of Restricted Share Units, and Dr. Liang Dongke (as the General Partner) and the remaining Grantees (as the limited partners of the Share Incentive Platforms) will hold the Restricted Share Units in the form of equity interest in the Share Incentive Platforms.

– 12 –

LETTER FROM THE BOARD

Subject to the terms and conditions of the Share Incentive Scheme and the fulfillment of all relevant vesting conditions, upon expiry of the Lock-up Period, the respective Restricted Share Units shall be vested in the Grantees and such Grantees may freely sell, transfer or otherwise dispose of the underlying equity interest in the Share Incentive Platforms.

(G) Repurchase of the Restricted Share Units

Upon occurrence of any of the following events, the Company or the General Partner may repurchase any granted Restricted Share Units from the Grantees:

(a) Within two years of termination of a Grantee’s employment with the Group, the Grantee conducts business or is employed by another company with business similar to that of the Group;
(b) Change in job responsibilities or termination of employment with the Group, as a result of adverse impact on the Group’s interests or reputation caused by the Grantee’s fault, provided that such event(s) occurred during the Lock-up Period;
(c) Non-renewal of employment contract, resignation, retirement, termination of employment, death or incapacity of the Grantee during the Lock-up Period, regardless of whether the performance targets are satisfied;
(d) Occurrence of any of the Disqualification Events on the Grantee’s part during the Lock-up Period; or
(e) In respect of Grantees whose employment are with subsidiaries of the Company, change in control of such subsidiary during the Lock-up Period, such that the Company no longer controls the subsidiary.

Effect of repurchase

In the event that the Reduced RSUs are repurchased from Dr. Liang Dongke, such Reduced RSUs shall be cancelled. In the event that the Reduced RSUs are repurchased from Grantees other than Dr. Liang Dongke, the Reduced RSUs remain as equity interest of the Share Incentive Platforms and shall be held on escrow by the General Partner in his capacity as the General Partner. Upon recommendation by the Remuneration Committee and approval by the Board and the Supervisory Committee, such Reduced RSUs may be granted to other employees of the Group, such that the new Grantee(s) become limited partner(s) of the Share Incentive Platforms.

In the event that any of the Reduced RSUs are not granted to any employee of the Group, the General Partner shall continue to hold such Reduced RSUs on escrow, and the Company shall have the right to dividends and/or distribution of such Reduced RSUs.

– 13 –

LETTER FROM THE BOARD

As advised by the PRC legal adviser of the Company, the above repurchase arrangement is not uncommon in the PRC.

(H) Alteration of the Share Incentive Scheme

The Share Incentive Scheme may be altered by a Board resolution prior to the Shareholders’ ratification of the Share Incentive Scheme. After the Shareholders’ ratification of the Share Incentive Scheme, the Share Incentive Scheme may only be altered by a Shareholders’ resolution in a general meeting.

(I) Termination of the Share Incentive Scheme

The Share Incentive Scheme may be terminated by a Board resolution prior to the Shareholders’ ratification of the Share Incentive Scheme. After the Shareholders’ ratification of the Share Incentive Scheme, the Share Incentive Scheme may only be terminated by a Board resolution and a Shareholders’ resolution in a general meeting.

(J) Ongoing disclosure of the Share Incentive Scheme

The Company shall disclose, among others, the following details of the Share Incentive Scheme in its future annual reports:

(a) the total number of Award Shares granted under the Share Incentive Scheme as at the respective year end;
(b) summary of terms of the Share Incentive Scheme;
(c) where applicable, the financial implications in connection with the Share Incentive Scheme; and
(d) where applicable, any material facts or circumstances in connection with the Share Incentive Scheme which the Directors consider necessary to report to the Shareholders.

– 14 –

LETTER FROM THE BOARD

III. CONNECTED TRANSACTIONS — ISSUE OF NEW AWARD SHARES UNDER THE SHARE INCENTIVE SCHEME

Subject to the Shareholders’ approval, 5,000,000 new Award Shares will be allotted and issued pursuant to a Specific Mandate to be obtained in the EGM. Further details of the award of the 5,000,000 Award Shares is set out below:

Securities to be issued:

5,000,000 Domestic Shares, which are to be issued pursuant to the Specific Mandate and represent approximately 3.01% and 2.92% of the total number of Shares in issue as of the Latest Practicable Date and as enlarged by the proposed allotment and issue of the Award Shares, respectively.

Funds to be raised:

Other than the Consideration, no funds will be raised by the Company for the allotment and issue of the Award Shares.

Identity of the allottees: (1) Dr. Liang Dongke

Dr. Liang Dongke is the chairman of the Board, an executive Director and the general manager of the Company, who will be allotted 2,500,000 Award Shares.

Dr. Liang Dongke shall be entitled to exercise the voting right of the 2,500,000 Award Shares before the relevant vesting conditions are satisfied.

(2) Ningbo Int

Ningbo Int Investment Partnership (Limited Partnership)* ( 寧波瑛泰投資合夥企業 ( 有限合夥 ) ) i s a l i m i t e d partnership established in the PRC which is primarily an investment holding entity. It is owned by Dr. Liang Dongke as the general partner and employees of the Group as limited partners, none of whom holds more than onethird equity interest in Ningbo Int. Ningbo Int will be allotted 2,500,000 Award Shares. The voting right of the 2,500,000 Award Shares resides with Dr. Liang Dongke in the capacity as the general partner of Ningbo Int.

– 15 –

LETTER FROM THE BOARD

IV. PROPOSED AMENDMENTS TO THE ARTICLES

As the registered capital of the Company will be increased due to the Award Shares allotted and issued under the Share Incentive Scheme, in response to the development demand of the business of the Company, the Board has proposed at the Board meeting to seek the Shareholders’ approval at the EGM on the amendments to the relevant provisions in the Articles as follows:

Before Amendment Upon Amendment Chapter 2 Article 11 Chapter 2 Article 11 The business scope of the Company is: The business scope of the Company is: engaged in production and sales of Class II Permitted items: manufacturing of Class and Class III medical devices (see the license III medical devices; manufacturing of for details) and instruments and apparatuses, Class II medical devices; operation of sales of a class of medical devices, Class III medical devices (for projects manufacturing and sale of civil protective subject to the administrative approval, gear, consulting services for sterilization approvals from the relevant authorities technology of daily necessities and medical must be obtained prior to commencement devices, sterilization service, import and of operation. Specific operating projects export of goods and technology, sales of shall be subject to the approvals or electronic products, metal materials, permits from the relevant authorities) chemical products (excluding dangerous chemicals, restricted chemicals, fireworks, General items: sales of Class II medical civil explosives and drug-making chemicals) devices, production and sa les of and plastic products, design and sales of instruments and apparatuses, sales of molds, and technology development in the Class I medical devices, manufacturing field of mold technology. For projects and sales of civil protective gear, subject to the administrative approval, consulting services for sterilization approvals from the relevant authorities must technology of daily necessities and medical be obtained prior to commencement of devices, sterilization service, inspection operation. and testing service, housing lease, import and export of goods and technology, sales The business scope referred to in the of electronic products, metal materials, preceding paragraph shall be such items as chemical products (excluding dangerous audited by the relevant company registration chemicals, restricted chemicals, fireworks, authority. civil explosives and drug-making chemicals) and plastic products, design and sales of molds, and technology development in the field of mold technology. (Apart from projects subject to the administrative approval, we shall carry out our own operations under the business license in accordance with laws)

– 16 –

LETTER FROM THE BOARD

Before Amendment Upon Amendment The Company may, based on any changes in The business scope referred to in the domestic and international markets, business preceding paragraph shall be such items as development and its own capability, adjust audited by the relevant company registration its business scope and complete relevant authority. formalities of industry and commerce administration registration for such an The Company may, based on any changes in adjustment according to relevant provisions. domestic and international markets, business development and its own capability, adjust its business scope and complete relevant formalities of industry and commerce administration registration for such an adjustment according to relevant provisions. Chapter 3 Article 19 Chapter 3 Article 19 The number of the overseas listed foreign The Company has a total of 171,000,000 shares listed and initially issued by the shares. The Company’s equity structure is Company on the Hong Kong Stock Exchange as follow: was 40,000,000, accounting for 25% of the total share capital after issuance (before 125,000,000 domestic shares, representing exercise of over-allotment option). If 15% of approximately 73.0994% of the Company’s the over-allotment option is fully exercised, total number of shares, among which, the number of the overseas listed foreign 42,857,142 shares held by Shanghai Kindly shares listed and initially issued by the Enterprise Development Group Co., Ltd., Company on the Hong Kong Stock Exchange accounting for 25.0627%; 25,200,000 is 46,000,000, accounting for about shares held by Ningbo Huaige Taiyi 27.7108% of the total share capital after Equity Investment Partnership (Limited issuance. Partnership), accounting for 14.7368%; 12,042,854 shares held by Liang Dongke, accounting for 7.0426%; 7,142,858 shares held by Lin Sen, accounting for 4.1771%; 7,142,858 shares held by Wang Ruiqin, accounting for 4.1771%; 7,071,430 shares held by Chen Xing, accounting for 4.1353%; 7,071,430 shares held by Huang Chubin, accounting for 4.1353%; 6,000,000 shares held by Ningbo Tongchuang Suwei I n v e s t m e n t P a r t n e r s h i p ( L i m i t e d Partnership), accounting for 3.5088%; 5,571,428 shares held by Wang Kai, accounting for 3.2581%; and 4,900,000 shares held by Ningbo Int Investment Partnership (Limited Partnership), accounting for 2.8655%;

– 17 –

LETTER FROM THE BOARD

Before Amendment

Upon Amendment

If 25% of the total share capital after 46,000,000 H shares, representing issuance is used for issuance of overseas approximately 26.9006% of the Company’s listed foreign shares, the Company’s equity total number of shares. structure after that is: 42,857,142 shares held by Shanghai Kindly Enterprise Development Group Co., Ltd., accounting for 26.7857%; 25,200,000 shares held by Ningbo Huaige Taiyi Equity Investment Partnership (Limited Partnership), accounting for 15.7500%; 9,542,854 shares held by Liang Dongke, accounting for 5.9643%; 7,142,858 shares held by Lin Sen, accounting for 4.4643%; 7,142,858 shares held by Wang Ruiqin, accounting for 4.4643%; 7,071,430 shares held by Chen Xing, accounting for 4.4196%; 7,071,430 shares held by Huang Chubin, accounting for 4.4196%; 6,000,000 shares held by Ningbo Tongchuang Suwei I n v e s t m e n t P a r t n e r s h i p ( L i m i t e d Partnership), accounting for 3.7500%; 5,571,428 shares held by Wang Kai, accounting for 3.4821%; 2,400,000 shares held by Ningbo Int Investment Partnership (Limited Partnership), accounting for 1.5000%; and 40,000,000 shares held by holders of overseas listed foreign shares, accounting for 25%.

– 18 –

LETTER FROM THE BOARD

Before Amendment

Upon Amendment

If 27.7108% of the total share capital after issuance is used for issuance of overseas listed foreign shares, the Company’s equity structure after that is: 42,857,142 shares held by Shanghai Kindly Enterprise Development Group Co., Ltd., accounting for 25.8176%; 25,200,000 shares held by Ningbo Huaige Taiyi Equity Investment Partnership (Limited Partnership), accounting for 15.1807%; 9,542,854 shares held by Liang Dongke, accounting for 5.7487%; 7,142,858 shares held by Lin Sen, accounting for 4.3029%; 7,142,858 shares held by Wang Ruiqin, accounting for 4.3029%; 7,071,430 shares held by Chen Xing, accounting for 4.2599%; 7,071,430 shares held by Huang Chubin, accounting for 4.2599%; 6,000,000 shares held by Ningbo Tongchuang Suwei I n v e s t m e n t P a r t n e r s h i p ( L i m i t e d Partnership), accounting for 3.6145%; 5,571,428 shares held by Wang Kai, accounting for 3.3563%; 2,400,000 shares held by Ningbo Int Investment Partnership (Limited Partnership), accounting for 1.4458%; and 46,000,000 shares held by holders of overseas listed foreign shares, accounting for 27.7108%. Chapter 3 Article 22 Chapter 3 Article 22 The existing registered capital of the The registered capital of the Company is Company is RMB120,000,000. If 25% of the RMB171,000,000. total share capital after issuance is used for issuance of overseas listed foreign shares, the Company ’s registered capital will be RMB160,000,000. If 27.7108% of the total share capital after issuance is used for issuance of overseas listed foreign shares, the Company’s registered capital will be RMB166,000,000.

– 19 –

LETTER FROM THE BOARD

The revised operating Articles shall be subject to the satisfaction of the following conditions:

The Shareholders approve the relevant amendments at the EGM; and
All necessary approval, authorization, filing and/or registration shall be obtained from the relevant authorities in the PRC with respect to the revised Articles.

The revised Articles shall be effective only after the satisfaction of the conditions above.

V. REASONS FOR AND BENEFIT OF THE SHARE INCENTIVE SCHEME AND THE ALLOTMENT AND ISSUE OF NEW AWARD SHARES THEREUNDER

The purpose of the Share Incentive Scheme is to recognize and further encourage devotion of management staff at all levels and core personnel of the Group. As the selection criteria of participants of the Share Incentive Scheme as set out in ‘‘II. Share Incentive Scheme — (C) Selection Criteria of the Grantees’’ are linked with both financial performance of the Group and performance review of the potential Grantees, the Directors believe the Share Incentive Scheme would safeguard the Group’s interests and incentivize outstanding employees of the Group.

The Board also considers granting the Award Shares to outstanding individuals in the Group would effectively promote employees’ morale and loyalty to the Group, and align the interest of the Grantees with that of the Shareholders. The Directors believe the Share Incentive Scheme is beneficial to improving the Group’s competitiveness in attracting and retaining high-caliber employees in the future.

Based on the foregoing, the Board is of the view that the terms of the allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int are fair and reasonable, on normal commercial terms, and the proposed allotment and issue of new Award Shares is, while not conducted in the usual and ordinary course of business of the Group, in the interests of the Company and the Shareholders as a whole.

VI. IMPLICATIONS UNDER THE LISTING RULES

Proposed Adoption of the Share Incentive Scheme

The Share Incentive Scheme does not constitute a share option scheme nor an arrangement analogous to share option scheme for the purpose of Chapter 17 of the Listing Rules. Pursuant to the Articles, Shareholders’ approval is required for the adoption or implementation of any equity incentive scheme. Therefore, the proposed adoption of the Share Incentive Scheme is subject to the Shareholders’ approval at the EGM.

– 20 –

LETTER FROM THE BOARD

Issue of New Award Shares Under the Share Incentive Scheme

The Award Shares will be issued to Dr. Liang Dongke and Ningbo Int. Dr. Liang Dongke is the chairman of the Board, an executive Director and the general manager of the Company, and the general partner of Ningbo Int. As such, each of Dr. Liang Dongke and Ningbo Int is a connected person under Chapter 14A of the Listing Rules and the proposed allotment and issue of the Award Shares to them constitute connected transactions of the Company under Chapter 14A of the Listing Rules and are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The EGM will be convened and held by the Company to consider and, if thought fit, approve the allotment and issue of the Award Shares. The voting at the EGM will be taken by poll. To the best knowledge of the Directors and as of the date of this circular, save for Dr. Liang Dongke, Mr. Lin Sen, Mr. Wang Ruiqin and Ningbo Int who hold 5.75%, 4.30%, 4.30% and 1.45% equity interest of the Company, respectively and are each a proposed Grantee under the Share Incentive Scheme, no Shareholder of the Company is required to abstain from voting on the relevant resolutions at the EGM to approve the allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int.

VII. RECOMMENDATION

Based on its views set out above, the Board (other than the independent non-executive Directors whose opinions and recommendations are contained in the letter from the Independent Board Committee below) recommends that the Independent Shareholders vote in favor of the resolutions concerning the proposed allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int.

Your attention is drawn to the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out on pages 23 to 24 of this circular. Your attention is also drawn to the letter from the Independent Financial Adviser which contains its advice to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 25 to 45 of this circular.

Having considered, among other matters, the principal factors and reasons considered by, and the advice of the Independent Financial Adviser as set out in its letter of advice, the Independent Board Committee considers that the terms of the allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int are fair and reasonable, on normal commercial terms, and the proposed allotment and issue of new Award Shares is, while not conducted in the usual and ordinary course of business of the Group, in the interests of the Company and the Shareholders as a whole.

– 21 –

LETTER FROM THE BOARD

VIII. THE EGM AND INDEPENDENT SHAREHOLDERS’ APPROVAL

The EGM will be held at Block 2, No. 925 Jin Yuan Yi Road, Jiading District, Shanghai, the PRC on Thursday, December 17, 2020 at 2:00 p.m.. A notice to convene the EGM is set out on pages EGM-1 to EGM-3 of this circular. At the EGM, an ordinary resolution will be proposed in relation to the adoption of the Share Incentive Scheme, and special resolutions will be proposed in relation to the proposed allotment and issue of the Award Shares pursuant to the Specific Mandate and the proposed amendments to the Articles.

An Independent Board Committee comprising all the independent non-executive Directors has been formed to recommend the Independent Shareholders in connection with the proposed allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders on the same.

Yours faithfully By order of the Board

Shanghai Kindly Medical Instruments Co., Ltd.* 上海康德萊醫療器械股份有限公司 Dr. Liang Dongke

Chairman

For identification purposes only

– 22 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter from the Independent Board Committee setting out its recommendation to the Independent Shareholders in relation to the proposed allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int.

==> picture [65 x 52] intentionally omitted <==

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTIONS — ISSUE OF NEW AWARD SHARES UNDER THE SHARE INCENTIVE SCHEME

We refer to the circular of the Company dated November 6, 2020 (the ‘‘Circular’’) of which this letter forms a part. Unless the context specifies otherwise, capitalized terms used herein have the same meanings as defined in the Circular.

We have been appointed to form the Independent Board Committee to recommend the Independent Shareholders in respect of the proposed allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int, details of which are set out in the section headed ‘‘Letter from the Board’’ in the Circular. Maxa Capital has been appointed to advise the Independent Shareholders and the Independent Board Committee in this regard.

We wish to draw your attention to the letter from the Board set out on pages 5 to 22 of the Circular and the letter of advice from the Independent Financial Adviser set out on pages 25 to 45 of the Circular.

For identification purposes only

– 23 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Accordingly, we recommend the Independent Shareholders to vote in favor of the resolutions to approve the proposed allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int, particulars of which are set out in the Notice of EGM on pages EGM-1 to EGM-3 of the Circular.

Yours faithfully Independent Board Committee Mr. Dai Kerong Mr. Jian Xigao Dr. Ge Junbo Mr. Hui Hung Kwan Independent non-executive Directors

– 24 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the letter of advice from Maxa Capital, the Independent Financial Adviser, to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

==> picture [151 x 38] intentionally omitted <==

Unit 1908, Harbour Center 25 Harbour Road Wan Chai Hong Kong

6 November 2020

To the Independent Board Committee and the Independent Shareholders

Dear Sirs,

CONNECTED TRANSACTIONS — ISSUE OF NEW AWARD SHARES UNDER THE SHARE INCENTIVE SCHEME

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int pursuant to the Specific Mandate. Details of which are set out in the letter from the Board (the ‘‘Letter from the Board’’) contained in the circular dated 6 November 2020 issued by the Company (the ‘‘Circular’’) of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires otherwise.

Reference is made to the announcement (the ‘‘Announcement’’) dated 21 September 2020 of the Company in relation to, among other things, an aggregate of 5,000,000 Award Shares will be issued by the Company pursuant to the Share Incentive Scheme, including 2,500,000 Award Shares to Dr. Liang Dongke and 2,500,000 Award Shares to Ningbo Int. As Dr. Liang Dongke is the chairman of the Board, an executive Director and the general manager of the Company, and the general partner of Ningbo Int, each of Dr. Liang Dongke and Ningbo Int is a connected person of the Company under Chapter 14A of the Listing Rules and the allotment and issue of the Award Shares to them constitute connected transactions of the Company under Chapter 14A of the Listing Rules and are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee comprising all independent non-executive Directors has been established to advise the Independent Shareholders in relation to the allotment and issue of Award Shares to Dr. Liang Dongke and Ningbo Int. We, Maxa Capital, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

– 25 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

OUR INDEPENDENCE

As at the Latest Practicable Date, we did not have any relationship with or interest in the Company, its subsidiaries and any other parties that could reasonably be regarded as relevant to our independence. We are not associated or connected with the Company and its respective substantial shareholders or associates and, accordingly, are considered eligible to give independent advice on the allotment and issue of Award Shares to Dr. Liang Dongke and Ningbo Int. Save for this appointment as the Independent Financial Adviser in respect of the allotment and issue of Award Shares to Dr. Liang Dongke and Ningbo Int, there was no other engagement between the Company and us in the last two years. Apart from normal professional fees payable to us in connection with this appointment, no arrangement exists whereby we will receive any fees or benefits from the Company and its substantial shareholders or associates.

BASIS OF OUR OPINION

In formulating our opinion and recommendation, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the date of this letter. We consider that we have reviewed sufficient and relevant information and documents and have taken reasonable steps as required under Rule 13.80 of the Hong Kong Listing Rules to reach an informed view and to provide a reasonable basis for our recommendation. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. Our opinion is based on the Directors’ representation and confirmation that no material facts have been omitted from the information provided and referred to in the Circular.

The Company confirmed that they have, at our request, provided us with all currently available information and documents which are available under present circumstances to enable us to reach an informed view and we have relied on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our opinion. We have no reason to suspect that any material facts or information, which is known to the Company, have been omitted or withheld from the information supplied or opinions expressed in the Circular nor do doubt the truth and accuracy of the information and facts, or the reasonableness of the opinions expressed by the Company and the Directors which have been provided to us. We have not, however, conducted any independent verification on the information provided to us by the Company and the Directors, nor have we conducted any form of independent in-depth investigation into the business and affairs of the Company, Dr. Liang Dongke, Ningbo Int, and each of their respective subsidiaries or associates.

– 26 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the allotment and issue of Award Shares to Dr. Liang Dongke and Ningbo Int, we have taken into consideration the following principal factors and reasons:

1. Information on the Group

The Group is a leading Chinese cardiovascular interventional device manufacturer as well as one of the few medical device groups that cover the entire industry chain from design and development of mold and equipment, product injection, product assembly, product packaging to sterilisation in the PRC. Its major products are primarily used for cardiovascular surgeries, in particular percutaneous coronary intervention (‘‘PCI’’) procedures.

Set out below is the financial information of the Group for the years ended 31 December 2018 and 2019 and for the six months ended 30 June 2019 and 2020 prepared in accordance with International Financial Reporting Standards and extracted from the Company’s 2019 Annual Report and the Company’s 2020 Interim Report:

	For the six	months ended	For the year ended	For the year ended
	30	June	31 December
	2020	2019	2019	2018
	(unaudited)	(unaudited)	(audited)	(audited)
	RMB’000	RMB’000	RMB’000	RMB’000
Revenue	171,844	135,069	286,457	203,059
— Sales of interventional
medical devices	116,701	123,166	257,626	176,774
— Sales of medical
accessories	6,184	7,490	19,822	20,589
— Sales of masks	43,676	—	—	—
— Others	5,283	4,413	9,009	5,696
Gross profit	113,822	82,971	174,442	118,397
Profit for the year/period	64,701	46,352	96,535	58,236
		As at
		30 June	As at 31 December
		2020	2019	2018
		(unaudited)	(audited)	(audited)
		RMB’000	RMB’000	RMB’000
Total assets		1,349,208	1,298,580	482,040
Total liabilities		73,842	64,293	100,730
Total equity		1,275,366	1,234,287	381,310

– 27 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As illustrated in the above table, the Group’s revenue was mainly derived from the sales of interventional medical devices and sales of medical accessories and amounted to approximately RMB286.5 million for the year ended 31 December 2019 (‘‘FY2019’’), representing an increase of approximately 41.1% as compared to approximately RMB203.1 million for the year ended 31 December 2018 (‘‘FY2018’’), which was primarily due to growth in sales volume of interventional medical devices as a result of proactively expanding the Group’s distribution network as well as continuing developing and commercialising the Group’s pipeline products to the hospitals and medical device manufacture customers. With respect to revenue categorised by different products, the Group’s revenue generated from sales of interventional medical devices for FY2019 was approximately RMB257.6 million, representing approximately 89.9% of the total revenue as compared to 87.1% for FY2018. The Group’s revenue generated from sales of medical accessories was approximately RMB19.8 million for FY2019, representing approximately 6.9% of the total revenue. The profit for the year increased significantly by approximately 65.8% to approximately RMB96.5 million for FY2019 from approximately RMB58.2 million for FY2018, which was primarily driven by the increase in gross profit as a result of the revenue increase and higher gross profit margin contributed by the optimisation of products structure, partially offset by the increase in operating expenses.

The Group’s total assets amounted to approximately RMB1,298.6 million as at 31 December 2019, representing an increase of approximately 169.4% as compared to approximately RMB482.0 million as at 31 December 2018, which is mainly due to the total net proceeds from the listing of the Company’s H Shares on the Main Board of the Stock Exchange of approximately RMB797.6 million. The Group’s total liability decreased by approximately 36.1% to approximately RMB64.3 million as at 31 December 2019 from approximately RMB100.7 million as at 31 December 2018. The Group’s total equity increased by approximately 223.7% to approximately RMB1,234.3 million as at 31 December 2019 from approximately RMB381.3 million as at 31 December 2018.

For the six months ended 30 June 2020, the Group’s revenue increased by approximately 27.2% comparing with the corresponding financial period last year to approximately RMB171.8 million, primarily due to the contribution from the manufacturing and sales of masks. With respect to revenue categorised by different products, the Group’s revenue generated from sales of interventional medical devices for six months ended 30 June 2020 was approximately RMB116.7 million, representing a decrease of approximately 5.2% as compared to those of the six-month period ended June 30, 2019. The Group’s revenue generated from sales of masks and medical accessories for six months ended 30 June 2020 was approximately RMB43.7 million and RMB6.2 million respectively. The masks business which launched in early 2020 to respond COVID-19 outbreak contributed approximately 25.4% revenue for the six months ended 30 June 2020. Profit of the Group for the six months ended 30 June 2020 amounted approximately RMB64.7 million, increased by approximately 39.6% as compared with the corresponding financial period last year, which was due to the manufacturing and sales of masks with higher profit margin.

– 28 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Group’s total assets and total equity as at 30 June 2020 maintained at a level similar with that as at 31 December 2019 while the Group’s total liabilities as at 30 June 2020 increased by approximately 14.9% to RMB73.8 million as compared to the corresponding financial period last year.

2. Principal terms of the Share Incentive Scheme

On 21 September 2020, the Board has resolved to propose the proposed adoption of the Share Incentive Scheme at the EGM. The purpose of the Share Incentive Scheme is to recognise and further encourage devotion of management staff at all levels and core personnel of the Group. Pursuant to Article 60 (XV) of the Articles, the adoption of any equity incentive schemes shall be considered by the Shareholders in a general meeting. Therefore, the proposed adoption of the Share Incentive Scheme is subject to the Shareholders’ approval at the EGM. As Dr. Liang Dongke and Mr. Wang Cailiang are executive Directors and proposed Grantees under the Share Incentive Scheme, they have abstained from voting from such resolution at the Board Meeting.

(A) Administration of the Share Incentive Scheme

To streamline the shareholding structure at the Company’s level by consolidating the equity awards to the Share Incentive Platforms, as compared to granting the Restricted Share Units to individuals; and
To streamline the management of the Share Incentive Platforms by vesting decisionmaking power with the general partner, as compared to granting the Restricted Share Units to corporations whose shareholders have voting right proportional to the respective shareholding.

The Company has been advised by its PRC legal adviser that using limited partnership structures as equity incentive platforms is not uncommon and not contrary to applicable laws and applications in the PRC.

– 29 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The shareholding structure of the Company and the structure of the Share Incentive Platforms and shareholding information after the proposed allotment and issue of new Award Shares is set out below:

==> picture [451 x 188] intentionally omitted <==

Notes:

For identification purposes only
Limited partnerships to be established in the PRC, such names are subject to approval by the relevant PRC registration authority
(1) The above shareholding percentages are calculated based on the as-enlarged share capital of the Company after the proposed allotment and issue of new Award Shares to Dr. Liang Dongke and Ningbo Int.

We have discussed with the Company and its PRC legal adviser and understood that the using the limited partnership platform is mainly because (i) it would be more convenient to administrate the Share Incentive Scheme which may involve up to 100 employees of the Group; and (ii) such structure of granting the award shares to the grantees is not uncommon among companies incorporated in the PRC. We have interviewed the Company’s PRC legal adviser as to its expertise and independence, reviewed its licenses, qualifications, experience and terms of engagement. We have also conducted a research into the A share market in relation to the using of limited partnership platforms in granting award shares under share incentive schemes on a best effort basis, and have identified 8 A share companies which announced such arrangement for their respective subsidiaries during the period from 1 January

– 30 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2020 to 21 September 2020. Based on the above, we concur with the Company and its PRC legal adviser that using the limited partnership platform in granting the award shares to the grantees is not uncommon among companies incorporated in the PRC.

(B) Maximum Limit of the Restricted Share Units

The Restricted Share Units administered under the Share Incentive Scheme shall not exceed 5,000,000 Domestic Shares and shall be granted to no more than 100 employees of the Group.

(C) Selection of the Grantees and Determination of Number of Restricted Share Units

Selection criteria of the Grantees

The Remuneration Committee may select the Grantees amongst the Directors, Supervisors, senior management of the Group, and employees who could meet the following criteria:

(a) Core or mid-level management personnel who has joined the Group for 3 years or more and has reached grade 30 or above; or
(b) Core technical personnel and other core personnel who has joined the Group for 5 years or more and has reached grade 16 or above.

The following persons shall not be eligible for the Share Incentive Scheme:

(a) Individuals who were subject to administrative penalty by the China Securities Regulatory Commission or censure by the Stock Exchange due to any violation of laws and regulations;
(b) Individuals whose conduct amount to serious breach of the Group’s internal disciplinary code; or
(c) Individuals who are deemed unsuitable to participate in the Share Incentive Scheme by the Remuneration Committee (together with (a) and (b), the ‘‘Disqualification Events’’).

– 31 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Proposed Grantee Relationship to the Group Maximum entitlement

Dr. Liang Dongke Executive Director (梁棟科)

2,500,000 Award Shares (held in personal capacity) and 83,400 Restricted Share Units (held as the General Partner of each of the Share Incentive Platforms)

Mr. Wang Cailiang	Executive Director	141,600 Restricted Share
(王彩亮)		Units
Mr. Xu Jianhai	Supervisor	28,700 Restricted Share Units
(徐建海)
Ms. Chen Jie (陳潔)	Supervisor	26,700 Restricted Share Units
Dr. Song Yuan	Deputy general manager,	141,600 Restricted Share
(宋媛)	secretary to the Board, joint	Units
	company secretary and
	spouse of Dr. Liang Dongke
Mr. Zhang Zhendong	Manager of the domestic	33,400 Restricted Share Units
(張振東)	trade department and
	brother-in-law of Dr. Liang
	Dongke

Determination of Number of Restricted Share Units

’ Employee s score = (A+B) x C

– 32 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Notes:

A: Number of years of joining the Group
B: Grade of the employee which reflects seniority of his/her job position
C: Internal index on the contribution of the employee’s job position

In addition to the formula above, the entitlement of directors, chief officers (總監) and vice-presidents are determined with reference to the level of job responsibilities and working experience of the employee as a whole.

Based on the foregoing, the determined score will be expressed in monetary value (in RMB) and translated to the number of Restricted Share Units, based on the Grant Price of RMB12 per Award Share.

Since the basis of determining the number of Restricted Share Units proposed to be granted to each of the proposed Grantees is a quantitative basis with a specific formula taking into account level of job responsibilities and working experience of each of the proposed Grantees, we are of the view that such basis and the number of Restricted Share Units to be granted to each of the proposed Grantees is fair and reasonable.

(D) Granting of the Restricted Share Units

Lock-up Requirements

The Grantees shall be subject to a lock-up period of sixty months (the ‘‘Lock-up Period’’) from (a) the date of allotment of Award Shares to Ningbo Int or (b) the date of grant of the Restricted Share Units to the Grantee, whichever is later. If the Domestic Shares become listed in any stock exchange during the Lock-up Period, the Lock-up Period shall be extended in accordance with the relevant regulatory rules of such stock exchange.

– 33 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Vesting Conditions

The number of Restricted Share Units to be vested will be adjusted according to performance review for the three financial years ending 31 December 2022 (the ‘‘Review Period’’) in the following mechanisms:

(1) Net Profit attributable to the Company

		Corresponding
		portion of the
Financial		Restricted Share
year ending		Units (the
December 31,	Performance target	‘‘Reduced RSUs’’)
2020	Net Profit in the financial year ending	30%
	31 December 2020 increased for more than
	20% as compared to Net Profit in the
	financial year ended 31 December 2019
2021	Net Profit in the financial year ending	30%
	31 December 2021 increased for more than
	40% as compared to Net Profit in the
	financial year ended 31 December 2019
2022	Net Profit in the financial year ending	40%
	31 December 2022 increased for more than
	60% as compared to Net Profit in the
	financial year ended 31 December 2019

(2) Performance review of the Grantees

					Below
		Excellent	Good	Satisfactory	standard
Performance	target
realisation	rate	100%	80%	60%	0%

– 34 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(E) Grant Price

The Grant Price was determined by the Board after taking into consideration, among others, (1) the net asset value per Share as of 31 December 2019 of RMB7.44, (2) the fact that the Restricted Share Units are Domestic Shares which are not freely transferrable, and (3) the equity incentive nature of the Restricted Share Units. Based on the foregoing factors, the Directors consider the Grant Price fair and reasonable and in the interest of the Shareholders as a whole.

(F) Vesting of the Restricted Share Units

– 35 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(G) Repurchase of the Restricted Share Units

Upon occurrence of any of the following events, the Company or the General Partner may repurchase any granted Restricted Share Units from the Grantees:

(a) Within two years of termination of a Grantee’s employment with the Group, the Grantee conducts business or is employed by another company with business similar to that of the Group;
(b) Change in job responsibilities or termination of employment with the Group, as a result of adverse impact on the Group’s interests or reputation caused by the Grantee’s fault, provided that such event(s) occurred during the Lock-up Period;
(c) Non-renewal of employment contract, resignation, retirement, termination of employment, death or incapacity of the Grantee during the Lock-up Period, regardless of whether the performance targets are satisfied;
(d) Occurrence of any of the Disqualification Events on the Grantee’s part during the Lock-up Period; or
(e) In respect of Grantees whose employment are with subsidiaries of the Company, change in control of such subsidiary during the Lock-up Period, such that the Company no longer controls the subsidiary.

Effect of repurchase

The Company has been advised by its PRC legal adviser that the above repurchase arrangement is not uncommon in the PRC.

– 36 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(H) Alteration of the Share Incentive Scheme

(I) Termination of the Share Incentive Scheme

(J) Ongoing disclosure of the Share Incentive Scheme

The Company shall disclose, among others, the following details of the Share Incentive Scheme in its future annual reports:

(a) the total number of Award Shares granted under the Share Incentive Scheme as at the respective year end;
(b) summary of terms of the Share Incentive Scheme;
(c) where applicable, the financial implications in connection with the Share Incentive Scheme; and
(d) where applicable, any material facts or circumstances in connection with the Share Incentive Scheme which the Directors consider necessary to report to the Shareholders.

3. Issue of new Award Shares under the Share Incentive Scheme

Securities to be issued:

Funds to be raised:

Other than the Consideration, no funds will be raised by the Company for the allotment and issue of the Award Shares.

– 37 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Identity of the allottees: (1) Dr. Liang Dongke

Dr. Liang Dongke is the chairman of the Board, an executive Director and the general manager of the Company, who will be allotted 2,500,000 Award Shares. Dr. Liang Dongke shall be entitled to exercise the voting right of the 2,500,000 Award Shares before the relevant vesting conditions are satisfied. We have discussed with the Company and its PRC legal adviser and understood that the voting right is one of shareholder’s rights which Dr. Liang Dongke will be entitled to after such Award Shares are granted to him and even before the relevant vesting conditions are satisfied. We have also conducted a research into the A share market in relation to the voting right of the award shares under share incentive schemes on a best effort basis, and have identified 12 A share companies which announced similar voting right arrangement during the period from 21 August 2020 to 21 September 2020, being one month before the date of the Announcement. Based on the above, we concur with the Company and its PRC legal adviser that this is a normal commercial term and is not uncommon among companies incorporated in the PRC.

(2) Ningbo Int

Ningbo Int Investment Partnership (Limited Partnership)* (寧波瑛泰投資合夥企業(有限合夥)) is a limited partnership established in the PRC which is primarily an investment holding entity. It is owned by Dr. Liang Dongke as the general partner and employees of the Group as limited partners, none of whom holds more than one-third equity interest in Ningbo Int. Ningbo Int will be allotted 2,500,000 Award Shares. The voting right of the 2,500,000 Award Shares resides with Dr. Liang Dongke in the capacity as the general partner of Ningbo Int.

4. Further information of the Grantees

Dr. Liang Dongke

Dr. Liang Dongke is the founder of the business of the Group and he has over 14 years of experience in the medical devices industry. He was appointed as a Director on 7 June 2006, as the general manager of the Company on 30 June 2010 and as the Chairman of the Board on 26 April 2016 and designated as an executive Director on 8 December 2018. Dr. Liang Dongke is primarily in charge of the overall management, business, strategic development, and scientific research and development of the Group. Dr. Liang Dongke is also the general partner of Ningbo Int.

– 38 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Ningbo Int

Ningbo Int Investment Partnership (Limited Partnership) is a limited partnership established in the PRC on 29 November 2018 which is a special purpose vehicle established for the employee participate to hold indirect equity interest in the Company. According to the partnership agreement of Ningbo Int dated 29 November 2018, Dr. Liang Dongke is the general partner and 45 other employees of the Group are limited partners. Two new limited partnerships will be established as the Share Incentive Platforms, which will also be the limited partners of Ningbo Int. Saved for Dr. Liang Dongke who will hold his own Award Shares, other Grantees will hold their Award Shares by Ningbo Int through the Share Incentive Platforms.

We have discussed with the Company and understood that each of the Grantees plays an important role to the management, operation and development of the Group, and the role and responsibility of the Grantees are directly affecting the performance of the Group. The Company is of the view and we concur that each of the Grantees have made significant contributions to the Group and played a critical role in achieving the Group’s success in the past years, including, among other things, (a) increase in revenue; (b) successful development and enhancement of cardiovascular interventional devices and various medical accessories; (c) increase in profits of the Group, especially in the midst of the COVID-19 crisis. Besides, the Company is of the view and we also concur that it is crucial to retain the Grantees and the potential Grantees of the Share Incentive Scheme to cater for the uncertainties and changes in the business and economic environment.

5. Reasons for and benefit of the Share Incentive Scheme and the allotment and issue of new Award Shares thereunder

The purpose of the Share Incentive Scheme is to recognise and further encourage devotion of management staff at all levels and core personnel of the Group. As the selection criteria of participants of the Share Incentive Scheme are linked with both financial performance of the Group and performance review of the potential Grantees, the Directors believe the Share Incentive Scheme would safeguard the Group’s interests and incentivize outstanding employees of the Group.

Based on the foregoing, the Board is of the view that the terms of the Share Incentive Scheme and the proposed allotment and issue of new Award Shares to Dr. Liang Dongke and Ningbo Int are fair and reasonable, on normal commercial terms or better, and the proposed allotment and issue of new Award Shares is, while not conducted in the usual and ordinary course of business of the Group, in the interests of the Company and the Shareholders as a whole.

– 39 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Due to the complexity in enhancing, modifying and programming the interventional medical devices, the industry that the Group is in is considered as human capital intensive. We have discussed with the Company and concurred that it is crucial to retain its employees, especially the key management, to continue its business operation and development, in particular, to implement necessary modification to the operation and development strategies to cater for the uncertainties and changes in the business and economic environment. In consideration the Group was able to obtain growth in both revenue and net profit in the midst of COVID-19, the Company is optimistic regarding the future growth in China’s economy, nevertheless, the fierce competition in the market and the COVID-19 epidemic have added uncertainties in the Group’s future operations. Having considered the past contributions made by the Grantees of the Share Incentive Schemes, the Company is of the view that the issue of Award Shares will help to retain the key employees of the Company with extensive experience in the Group’s business, and it is believed that the Grantees and the potential beneficiary of the Share Incentive Scheme will continue to contribute to the Group’s future development.

Considering that all Grantees are considered as key employees in the Group, the Company considers that granting of the Award Shares will provide an additional incentive for the Grantees to achieve performance goals to enhance the value of the Company and align the interests of the Grantees directly to the Shareholders through ownership of Shares. In addition, the Award Shares involves issuing of domestic shares without incurring a cash outflow for the Group, which the Company considers to be more prudent given it will incentivize the performance of the Group without incurring a substantial operating cost.

In view of the above, in particular, (i) the contribution from the Grantees and the potential Grantees; (ii) the importance of retaining key staff and management for continuing operation and development of the Group, especially in view of the human capital intensive nature industry the Group is in; (iii) the expected benefits of enhancing the value of the Company through aligning the interests of the Grantees, potential Grantees and the Shareholders; and (iv) no cash outflow is expected through the granting of the Award Shares, we consider it is in the interests of the Company to grant the Award Shares to Dr. Liang Dongke and Ningbo Int.

6. Assessment on the issue of Award Shares under the Share Incentive Scheme

6.1 Award Shares

(a) Selection Criteria of the Grantees

We have obtained and reviewed the Share Incentive Scheme, and noted the selection of Grantees is subject to compliance with the PRC Company Law, the Articles and all applicable laws, regulations and rules (including without limitation, the Listing Rules and the Takeovers Code) from time to time. The Grantees are also selected if they meet various requirements cited under the section ‘‘Selection Criteria of the Grantees’’ under section headed ‘‘2. Principal terms of the Share Incentive Scheme’’ above and will be subject to final approval by the Board, the Supervisory Committee and the Remuneration Committee.

– 40 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As per the 2020 Interim Report and the 2019 Annual Report published by the Company, it was noted that the Supervisory Committee of the Company was in compliance with the relevant requirements of the Company Law of the PRC and the Articles, had conducted its work in accordance with the fiduciary principle and has taken up an active role to work seriously and with diligence to protect the interests of the Company and the Shareholders. As of the relevant periods, it stated that none of the Directors and senior management of the Company had been found to have abused their authority, damaged the interests of the Company or infringed upon the interests of the Shareholders and employees. It was also stated that none of them was found to be in breach and regulations or the Articles.

In consideration that (i) the potential Grantees of the Share Incentive Scheme will be selected according to a set of requirements and approvals subject to compliance with the PRC Company Law, the Articles and all applicable laws, regulations and rules; (ii) the Supervisory Committee has indicated the Company has had a sound internal control system that has been complied by both its senior management and employees, we consider the terms under the ‘‘Selection Criteria of the Grantees’’ are fair and reasonable.

(b) Vesting Conditions and Lock-up Requirements

We also noted from the Share Incentive Scheme that the granting of Award Shares will be based on several key performance indicators relating to both the Group itself and the employees. It is stated that if the Group fails to meet various performance targets in any financial year during the Review Period, upon approval by the general manager of the Company, the General Partner or other entities designated by the Company shall be entitled to repurchase the Reduced RSUs at a repurchase price equivalent to the Grant Price. After the repurchase, the Reduced RSUs shall be held on escrow by the General Partner in his capacity as the General Partner of the respective Share Incentive Platforms, and upon recommendation by the Remuneration Committee and approval by the Board and the Supervisory Committee, such Reduced RSUs may be granted to other employees of the Group. In the event that any of the Reduced RSUs are not granted to any employee of the Group, the Company shall have the right to proceeds of the future vesting and exercise of such Reduced RSUs. The Lock-up Requirements also states the Grantees shall be subject to a Lock-up Period of sixty months from various dates cited in the section headed ‘‘Lock-up Requirements’’.

We have discussed with the Company and its PRC legal adviser and understood that the arrangement to repurchase the reduced RSUs at the Grant Price is a normal commercial term and not uncommon among A share companies. We have also conducted a research into the A share market in relation to the repurchase arrangement of the award shares under share incentive schemes on a best effort basis, and have identified 12 A share companies which announced share incentive schemes with similar repurchase arrangement during the period from 21 August 2020 to 21 September 2020, being one month before the date of the Announcement.

– 41 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the above, we concur with the Company and its PRC legal adviser that this is a normal commercial term and is not uncommon among A share companies, which are mostly companies incorporated in the PRC.

It is considered the interests of independent shareholders will be safeguarded as the Award Shares under the Share Incentive Scheme would not be given out unless the financial performance of both the Group and the Grantees reach a certain level during the Review Period. Vice versa, when the Grantees are granted the Award Shares, Grantees may only freely sell, transfer or otherwise dispose of the underlying equity interest in the Share Incentive Platforms in accordance with the applicable laws and regulations after holding the Restricted Share Units after a minimum holding period of sixty months, this can ensure Grantees who are given the Award Shares will continue to align their interest with the Group’s business.

5.2 Comparable grants by other companies

In order to assess the fairness and reasonableness on the terms of the Award Shares, we have identified grants (the ‘‘Comparable Grants’’) of newly issued awarded shares to connected persons as announced by companies listed on the Main Board of the Stock Exchange during the period from 21 March 2020 (approximately six months prior to the date of the Announcement) up to the date of the Announcement, which we consider to be a reasonable period to identify sufficient recent Comparable Grants for the purpose of our analysis. The Comparable Grants set out below represent an exhaustive list of grants on a best effort basis satisfying the above selection criteria. Shareholders should note that the business nature, financial performance and operation scale of and the regulatory framework applied to the companies involved in the Comparable Grants may be different from that of the Company, and the background to the grants may be specific to the company and industry. The below analysis, in our view, demonstrates the recent market practice in relation to similar type of transactions. We consider the Comparable Grants form an appropriate basis in assessing the fairness and reasonableness of the terms of the allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int.

							Number of
					Relationship with the		award shares/
	Company Name	Date of	Grant Price		connected persons		number of
No	(stock code)	Announcement	per share	Grantee(s)	for the companies	Vesting date/period	issued shares
1	Powerlong	10/9/2020	Nil	Undisclosed	Executive director and	50% of the awarded shares shall	1.75%
	Commercial			number of	the chief executive	be vested on the third
	Management			grantees,	officer	anniversary of the
	Holdings Limited			including 1		commencement date, i.e. 1 June
	(9909)			connected		2023
				person
						50% of the awarded Shares shall
						be vested on the fifth
						anniversary of the
						commencement date, i.e. 1 June
						2025

– 42 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

							Number of
					Relationship with the		award shares/
	Company Name	Date of	Grant Price		connected persons		number of
No	(stock code)	Announcement	per share	Grantee(s)	for the companies	Vesting date/period	issued shares
2	China ZhengTong	14/6/2020	Nil	40 grantees,	Executive directors	Ranged from the 1st to the 4th	2.00%
	Auto Services			including 3		anniversary of the grant date
	Holdings Limited			connected
	(1728)			persons
3	TOT BIOPHARM	29/5/2020	US0.28634	87 grantees,	Executive directors	Vested at the date of the	5.22%
	International		(Note 1)	including 2		compensatory grant, ranged from
	Company Limited			connected		30 May 2020 to 31 December
	(1875)			persons		2025, the date of the R&D
						targets fulfillment and the 2nd
						to 5th anniversary of the 1st
						R&D targets fulfillment
4	Hao Tian	24/4/2020	Nil	4 connected	Executive director and	1/3 of the connected award	1.28%
	International			grantees	co-chief executive	shares under the award shall be
	Construction				officer of the	vested in the first calendar year
	Investment Group				company, directors of	after the offer date during a
	Limited (1341)				subsidiaries of the	period of continuous service
					company	with the group
						1/3 of the connected award
						shares under the Award shall be
						vested in the second calendar
						year of continuous service with
						the group after the offer date
						1/3 of the connected award
						Shares under the award shall be
						vested in the third calendar year
						of continuous service with the
						group after the offer date
5	Fosun	1/4/2020	Nil	83 grantees,	Directors of the	33% on 1 April 2021	0.09%
	International			including 8	company, directors of	33% on 1 April 2022
	Limited (656)			connected	subsidiaries of the	34% on 1 April 2023
				persons	company
						Average	2.07%
						Median	1.75%
						Minimum	0.09%
						Maximum	5.22%
	The Company	21/9/2020	RMB12	96 grantees,	Executive Directors,	30% on 31 December 2020;	2.92%
				including 6	Supervisors, and	30% on 31 December 2021;
				connected	associates of	40% on 31 December 2022
				grantees	Executive Director

Source: Announcements of the relevant companies involved in the Comparable Grants on the website of the Stock Exchange

– 43 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Note 1: The compensatory shares will be allotted and issued to the trustees at a subscription price of zero, and the award shares granted to a compensatory grantee shall vest in such compensatory grantee upon, among other things, the receipt of the full amount of the grant consideration by the company in respect of such award shares.

Based on the information in the table above, we noted the proposed grantees in all of the five Comparable Grants could obtain the Award Shares at nil consideration. As per discussion with the Company, it is believed the issue and allotment of Award Shares with a Grant Price payable by the Grantees would better align the interest of the Grantees with that of the Shareholders. Given (i) the Grant Price is higher than the net asset value per Share as of 31 December 2019; (ii) the market price of the H Shares is not a good reference to determine the Grant Price since the Restricted Share Units are Domestic Shares which are not freely transferrable; and (iii) the Restricted Share Units are part of the employees’ compensation and the proposed grantees in all of the five Comparable Grants could receive the award shares at nil consideration, we concur with the Directors that the Grant Price is fair and reasonable and in the interest of the Shareholders as a whole. We also note that the Award Shares to each of the Grantees and potential Grantees is generally in line with the market practice, in particular (1) the percentage of Award Shares to be issued out of total number of issued Shares is within the range of the Comparable Grants’; and (2) the vesting schedule for the Award Shares lines within the range of the Comparable Grants. Accordingly, we consider the amount of Award Shares to be allotted and the vesting schedule for the Award Shares to be fair and reasonable so far as the Independent Shareholders are concerned.

6. Effect of the issue of new Award Shares under the Share Incentive Scheme

6.1 Financial effects

We have discussed with the Company and understand that the Award Shares will be accounted for as share-based payment transactions in the financial statements of the Company. We understand from the Company that such share-based compensation expense relating to awards granted to employees will be recognised on a graded acceleration vesting amortisation method over the applicable service period, such that the value of the Award Shares will be recognised based on their fair value on the date of grant and charged as expenses of the Group for the relevant financial year during the vesting period.

It is expected that the Award Shares will not have any material impact on the net assets value of the Company on the date of grant of such Award Shares. The Company will receive cash of RMB60 million in aggregation as a result of the issue of the Award Shares. Based on the consolidated net assets value attributable to equity shareholders of the Company and the number of total issued Shares as at 31 December 2019, the consolidated net assets value attributable to equity shareholders of the Company was approximately RMB7.44 per share, which is lower than the Grant Price of RMB12 per Award Share. It is expected that the proposed grant of Award Shares will not have material impact on the consolidated net assets value per share attributable to equity shareholders of the Company on the date of grant of such Award Shares.

– 44 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

6.2 Dilution of interest of the existing Shareholders

Assuming full vesting of all the Award Shares and there is no change in the number of issued Shares of the Company other than the allotment, issue and full vesting of the Award Shares, the number of total issued Domestic Shares of the Company will increase from 120,000,000 to 125,000,000, and the total issued Shares of the Company will increase from 166,000,000 to 171,000,000. Given the percentage of Award Shares to be issued out of total number of issued Shares is approximately 2.92% and within the range of the Comparable Grants, we are of the view that the dilution effect on the shareholding of existing Shareholdings as a result of the proposed allotment and issue of the Award Shares acceptable.

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that the terms of the allotment and issue of the Award Shares under the Share Incentive Scheme to Dr. Liang Dongke and Ningbo Int are on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned, and the allotment and issue of the Award Shares is, while not conducted in the ordinary and usual course of business of the Group, in the interests of the Company and Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend and we also recommend the Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM in respect to the allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int pursuant to the Specific Mandate.

Yours faithfully, For and on behalf of Maxa Capital Limited Dian Deng Managing Director

Ms. Dian Deng is a licensed person registered with the Securities and Future Commission of Hong Kong and a responsible officer of Maxa Capital to carry out type 6 (advising on corporate finance) regulated activities under the SFO and has over 12 years of experience in corporate finance industry.

– 45 –

GENERAL INFORMATION

APPENDIX I

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. DISCLOSURE OF INTERESTS

(a) Interests and short positions of the Directors, Supervisors and chief executive of the Company in the Shares, underlying shares and debentures of the Company and its associated corporations

As at the Latest Practicable Date, save for Dr. Liang Dongke who holds 9,542,854 Domestic Shares (approximately 7.95% of the Domestic Shares and 5.75% of the Shares), none of the Directors, Supervisors and chief executive of the Company had any interests or short positions in the Shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which are required (a) 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 he is taken or deemed to have under such provisions of the SFO); (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers to be notified to the Company and the Stock Exchange.

(b) Interests and short positions of Substantial Shareholders in Shares and underlying shares of the Company

As at the Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of the SFO, so far as is known to, or can be ascertained after reasonable enquiry by the Directors, the following person/entity had an interests or short position in the Shares and underlying Shares which would fall to be disclosed to the Company and the Stock Exchange pursuant to Divisions 2 and 3 of Part XV of the SFO, or be directly and indirectly interested in 5% or more of the nominal value of any class of share capital carrying rights to vote on all circumstances at general meetings of the Company (the interests in Shares and/or short positions, if any, disclosed herein are in addition to those disclosed in respect of the Directors, Supervisors and chief executive):

– 46 –

APPENDIX I

GENERAL INFORMATION

Interests in the Shares of the Company

				Approximate
				percentage in the	Percentage in
			Number of	respective class	total number
Name	Class of Shares	Nature of Interest	Shares	of Shares (6)	of Shares (6)
Shanghai Kindly Enterprise	Domestic Shares	Beneficial owner	42,857,142 (L)	35.71%	25.82%
Development Group Co., Ltd.
(上海康德萊企業發展集團股份
有限公司) (‘‘KDL’’) (2)
Shanghai Kindly Holding Group	Domestic Shares	Interest in a controlled	42,857,142 (L)	35.71%	25.82%
Co., Ltd.		corporation
(上海康德萊控股集團有限公司)
(‘‘KDL Holding’’) (2)
Kindly Holding Co., Ltd.	Domestic Shares	Interest in a controlled	42,857,142 (L)	35.71%	25.82%
(康德萊控股有限公司) (2)		corporation
Shanghai Gongye Investment Co.,	Domestic Shares	Interest in a controlled	42,857,142 (L)	35.71%	25.82%
Ltd. (上海共業投資有限公司)		corporation
(‘‘Gongye’’) (2)
Mr. Zhang Xianmiao	Domestic Shares	Interest in a controlled	42,857,142 (L)	35.71%	25.82%
(張憲淼) (2)		corporation; interest
		jointly held with
		another person
Ms. Zheng Aiping (鄭愛平) (2)	Domestic Shares	Interest in a controlled	42,857,142 (L)	35.71%	25.82%
		corporation; interest
		jointly held with
		another person
Mr. Zhang Wei (張偉) (2)	Domestic Shares	Interest in a controlled	42,857,142 (L)	35.71%	25.82%
		corporation; interest
		jointly held with
		another person
Ningbo Huaige Taiyi Equity	Domestic Shares	Beneficial owner	25,200,000 (L)	21.00%	15.18%
Investment Partnership
(Limited Partnership)
(寧波懷格泰益股權投資
合夥企業(有限合夥))
(‘‘Ningbo Huaige Taiyi’’) (3)
Ningbo Huaige Gongxin Equity	Domestic Shares	Interest in a controlled	25,200,000 (L)	21.00%	15.18%
Investment Partnership		corporation
(Limited Partnership)
(寧波懷格共信股權投資
合夥企業(有限合夥))
(‘‘Ningbo Huaige
Gongxin’’) (3)

– 47 –

APPENDIX I

GENERAL INFORMATION

				Approximate
				percentage in the	Percentage in
			Number of	respective class	total number
Name	Class of Shares	Nature of Interest	Shares	of Shares (6)	of Shares (6)
Ningbo Huaige Health Investment	Domestic Shares	Interest in a controlled	25,200,000 (L)	21.00%	15.18%
Management Partnership		corporation
(Limited Partnership)
(寧波懷格健康投資管理
合夥企業(有限合夥))
(‘‘Ningbo Huaige Health’’) (3)
Mr. Wang Kai (王鍇) (3)	Domestic Shares	Beneficial owner	5,571,428 (L)	4.64%	3.36%
		Interest in a controlled	25,200,000 (L)	21.00%	15.18%
		corporation
Ms. Zhao Wei (趙威) (3)	Domestic Shares	Interest of spouse	5,571,428 (L)	4.64%	3.36%
		Interest in a controlled	25,200,000 (L)	21.00%	15.18%
		corporation
Dr. Song Yuan (宋媛) (4)	Domestic Shares	Interest of spouse	9,542,854 (L)	7.95%	5.75%
OrbiMed Capital LLC (5)	H Shares	Investment manager	11,312,800 (L)	24.59%	6.81%
Worldwide Healthcare Trust	H Shares	Beneficial owner	7,412,800 (L)	16.11%	4.47%
PLC (5)
Mr. Ke Wei (柯偉)	H Shares	Beneficial owner	6,070,000 (L)	13.20%	3.66%
OrbiMed Partners Master	H Shares	Beneficial owner	3,900,000 (L)	8.48%	2.35%
Fund Limited (5)
Wasatch Advisor, Inc.	H Shares	Investment manager	3,728,727 (L)	8.11%	2.25%
Allianz SE	H Shares	Interest of controlled	2,645,600 (L)	5.75%	1.59%
		corporation
UBS Group AG	H Shares	Interest of controlled	3,336,600 (L)	7.25%	2.01%
		corporation

Notes:

(1) The letter ‘‘L’’ stands for long position.
(2) To the best of the Directors’ knowledge, KDL Holding controls KDL as it owns more than onethird of the voting power at general meetings of KDL. KDL Holding is in turn controlled by each of Gongye and Kindly Holding Co., Ltd. as each of Gongye and Kindly Holding Co., Ltd. owns more than one-third of the voting power at general meetings of KDL Holding. Gongye is held as to 56.43% and Kindly Holding Co., Ltd. is wholly-owned by the Zhang Family as concert parties. As such, under the SFO, each of KDL Holding, Gongye, Kindly Holding Co., Ltd., Mr. Zhang Xianmiao, Ms. Zheng Aiping and Mr. Zhang Wei is deemed to be interested in the equity interests held by KDL.

– 48 –

GENERAL INFORMATION

APPENDIX I

(3) To the best of the Directors’ knowledge, Ningbo Huaige Taiyi is a limited partnership established in the PRC and is owned as to 53.13% by Ningbo Huaige Gongxin as limited partner. Huaige Health is the general partner of Ningbo Huaige Taiyi and Ningbo Huaige Gongxin. Mr. Wang Kai is the general partner of Huaige Health. Ms. Zhao Wei, the spouse of Mr. Wang Kai, has 85% interest in Huaige Health as a limited partner. As such, under the SFO, each of Ningbo Huaige Gongxin, Huaige Health, Mr. Wang Kai and Ms. Zhao Wei is deemed to be interested in the equity interests held by Ningbo Huaige Taiyi.
(4) Dr. Song Yuan is the spouse of Dr. Liang Dongke. Under section 316(1)(a) of the SFO, Dr. Song Yuan is deemed to be interested in the equity interests held by Dr. Liang Dongke.
(5) Taking into account the 3,900,000 H Shares and 7,412,800 H Shares to be held by OrbiMed Partners Master Fund Limited and Worldwide Healthcare Trust PLC, respectively, pursuant to the cornerstone investment agreement as described under the section headed ‘‘Cornerstone Investors’’ in the Company’s prospectus dated October 28, 2019, OrbiMed Capital LLC is deemed to be interested in the above H Shares.
(6) The calculation is based on the percentage of shareholding in a total of 166,000,000 Shares, which consist of 120,000,000 Domestic Shares and 46,000,000 H Shares as at the Latest Practicable Date.

Substantial shareholders of other members of the Group

			Approximate
			percentage
			held by the
		Nature of	substantial
Name	Member of the Group	Interest	shareholder
Jiang Xiannan	Shanghai Pukon Medical	Beneficial owner	35.0%
(姜賢男)	Instruments Co., Ltd.
	(上海璞康醫療器械有限公司)
Chen Linling	Shanghai Healing Medical	Beneficial owner	30.0%
(陳臨淩)	Instruments Co., Ltd.
	(上海翰凌醫療器械有限公司)
	(‘‘Shanghai Healing’’)
Chen Caizheng	Shanghai Puhui Medical	Beneficial owner	26.33%
(陳才正)	Instruments Co., Ltd.
	(上海璞慧醫療器械有限公司)
	(‘‘Shanghai Puhui’’)
Sun Peng	Shanghai Qimu Medical	Beneficial owner	10.0%
(孫鵬)	Instruments Co., Ltd.
	(上海七木醫療器械有限公司)
	(‘‘Shanghai Qimu’’)

– 49 –

GENERAL INFORMATION

APPENDIX I

Save as disclosed above, as of the Latest Practicable Date, to the knowledge of the Directors, no other person had, or were deemed or taken to have interests or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the registry kept by the Company pursuant to section 336 of the SFO.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, save for Dr. Liang Dongke who holds the following positions in the subsidiaries of the Group, none of the Directors had entered or proposed to enter into a service contract with any member of the Group other than contracts expiring or determinable by the relevant employer within one year without payment of compensation (except statutory compensation):

Name of subsidiary

Position

Zhuhai Derui Medical Instruments Co., Executive director and general manager Ltd. (珠海德瑞醫療器械有限公司)

Shanghai Qimu

Director and chairman of the board of directors

Shanghai Puhui Executive director Shanghai Healing Executive director and general manager

Hongkong INT Medical Instruments Executive director Company Limited (香港瑛泰醫療器械有限公司)

Shanghai Kindly Medical Instruments Executive director Automation Research Center Co., Ltd. (上海康德萊醫療器械自動化研究所有限公司)

4. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or their respective close associates was:

(a) considered by the Company to have interests in businesses which compete with, or might compete with, either directly or indirectly, the businesses of the Group;
(b) was materially interested in any subsisting contract or arrangement which was significant in relation to the business of the Group; or
(c) was interested in any assets which had been acquired or disposed of by or leased to (or are proposed to be acquired or disposed of by or leased to) any member of the Group since the date of the latest published audited accounts of the Company.

– 50 –

GENERAL INFORMATION

APPENDIX I

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since December 31, 2019, being the date to which the latest published audited consolidated financial statements of the Company were made up.

6. QUALIFICATION AND CONSENT OF EXPERT

The following is the qualification of the expert who has given its opinions or advices which are contained in this circular:

Name Qualification Maxa Capital a corporation licensed to carry out Type 1 (dealing in securities) Type 6 (advising on corporate finance) regulated activity under the SFO

As at the Latest Practicable Date, Maxa Capital did not have any direct or indirect interest in any asset which had been acquired, or disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Group, since December 31, 2019, being the date to which the latest published audited consolidated financial statements of the Group was made up; and was not beneficially interested in the share capital of any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

Maxa Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and reference to its name in the form and context in which they respectively appear.

The letter and recommendation given by Maxa Capital is given as of the date of this circular for incorporation herein.

7. GENERAL

The English text of this circular shall prevail over its Chinese text in the case of inconsistency.

– 51 –

GENERAL INFORMATION

APPENDIX I

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during the normal business hours from 9:00 a.m. to 5:30 p.m. (save for Saturdays and public holidays) at the principal place of business in Hong Kong of the Company in Hong Kong at 31/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong (for H Shareholders) or the Company’s registered office at Block 2, No. 925 Jin Yuan Yi Road, Jiading District, Shanghai, the PRC (for Domestic Shareholders), from the date of this circular up to and including the date which is 14 days from the date of this circular:

(a) The Articles;
(b) The letter from the Independent Board Committee as set out in this circular;
(c) The letter from the Independent Financial Adviser as set out in this circular;
(d) The letter of consent referred to under ‘‘Qualification and Consent of Expert’’ in this appendix; and
(e) This circular.

– 52 –

NOTICE OF 2020 SECOND EGM

==> picture [65 x 52] intentionally omitted <==

NOTICE OF 2020 SECOND EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the 2020 second extraordinary general meeting (the ‘‘EGM’’) of Shanghai Kindly Medical Instruments Co., Ltd.* (上海康德萊醫療器械股份有限公司) (the ‘‘Company’’) will be held at Block 2, No. 925 Jin Yuan Yi Road, Jiading District, Shanghai, the PRC on Thursday, December 17, 2020 at 2:00 p.m. for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolutions:

ORDINARY RESOLUTION

‘‘THAT
(a) the Share Incentive Scheme be and are hereby approved, confirmed and ratified; and
(b) the Board be and is hereby authorized to do all acts, deeds and things as they consider necessary, desirable or expedient to give effect to the Share Incentive Scheme.’’

SPECIAL RESOLUTIONS

‘‘THAT
(a) a specific mandate be and is hereby given to the Directors until the next annual general meeting of the Company to allot, issue and deal with 5,000,000 new Domestic Shares; and
(b) any one of the Directors be and is hereby authorized to do all acts, deeds and things and to sign and execute all documents as he considers necessary, desirable or expedient to carry out or give effect to or otherwise in connection with or incidental to the mandate in paragraph (a) above.’’

For identification purposes only

– EGM-1 –

NOTICE OF 2020 SECOND EGM

3. ‘‘THAT

(a) the allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int be and are hereby approved, confirmed and ratified; and
(b) any one of the Directors be and is hereby authorized to do all acts, deeds and things and to sign and execute all documents as he considers necessary, desirable or expedient to carry out or give effect to or otherwise in connection with or incidental to the allotment and issue of the Award Shares to Dr. Liang Dongke and Ningbo Int.’’
‘‘THAT
(a) the registered capital of the Company be and is hereby increased to RMB171,000,000, representing 125,000,000 Domestic Shares and 46,000,000 H Shares;
(b) the proposed amendments to the Articles be and are hereby approved; and
(c) any one of the Directors be and is hereby authorized to revise the wording of such amendments as appropriate (no approval from the Shareholders is required for such amendments), and execute relevant documents and/or take all relevant actions as it considers necessary or appropriate and in the interest of the Company to effect to proposed amendments, comply with the PRC laws and regulations and meeting the requirements of the relevant regulatory authorities of the PRC (if any), and deal with other relevant matters arising from the amendments to the Articles.’’

By order of the Board

Shanghai Kindly Medical Instruments Co., Ltd.* 上海康德萊醫療器械股份有限公司 Dr. Liang Dongke Chairman

Shanghai, the PRC, November 2, 2020

Registered office in the PRC: Block 2, No. 925 Jin Yuan Yi Road Jiading District, Shanghai the PRC

Principal place of business in Hong Kong: 31/F, Tower Two, Times Square 1 Matheson Street, Causeway Bay Hong Kong

Headquarters and principal place of business in the PRC:

Block 2, No. 925 Jin Yuan Yi Road Jiading District, Shanghai the PRC

For identification purposes only

– EGM-2 –

NOTICE OF 2020 SECOND EGM

Notes:

(i) Any Shareholder of the Company entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him/her. A proxy need not be a member of the Company.
(ii) The instrument appointing a proxy shall be in writing under the hand of the appointer or of his/her attorney duly authorized in writing or, if the appointer is a corporation, either under its seal or under the hand of any officer or attorney duly authorized.
(iii) In order to be valid, the form of proxy together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or authority, must be deposited with 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong (for holders of H Shares) or the Company’s registered office at Block 2, No. 925 Jin Yuan Yi Road, Jiading District, Shanghai, the PRC (for holders of Domestic Shares) as soon as practicable but in any event not less than 24 hours before the time appointed for holding the EGM (i.e., at or before 2:00 p.m. on Wednesday, December 16, 2020 (Hong Kong Time)), or any adjourned meeting thereof (as the case may be).
(iv) Completion and return of the form of proxy shall not preclude the Shareholders of the Company from attending and voting in person at the EGM or at any adjourned meeting thereof (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoked.
(v) Where there are joint registered 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 was solely entitled thereto, but if more than one of such joint holders are present at the EGM, whether in person or by proxy, the joint registered holder present whose name stands first on the register of members of the Company in respect of the shares shall alone be entitled to vote in respect thereof.
(vi) In order to determine the entitlement of the Shareholders to attend and vote at the EGM, the register of members of the Company will be closed from Tuesday, November 17, 2020 to Thursday, December 17, 2020, both days inclusive, during which period no transfer of shares of the Company will be effected. All transfers accompanied by the relevant share certificates must be lodged with the Company’s H 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 H Shareholders), or the Company’s registered office at Block 2, No. 925 Jin Yuan Yi Road, Jiading District, Shanghai, the PRC (for Domestic Shareholders), by no later than 4:30 p.m. on Monday, November 16, 2020.
(vii) The EGM is expected to take less than half a day. Shareholders who attend the EGM shall be responsible for their own travel and accommodation expenses.

As at the date of this notice, the Board comprises Dr. Liang Dongke and Mr. Wang Cailiang as executive Directors, Mr. Zhang Weixin, Ms. Chen Hongqin and Mr. Fang Shengshi as non-executive Directors, and Mr. Dai Kerong, Mr. Jian Xigao, Dr. Ge Junbo and Mr. Hui Hung Kwan as independent non-executive Directors.

– EGM-3 –

AI assistant

Shanghai INT Medical Instruments Co., Ltd. — Proxy Solicitation & Information Statement 2020

49964_rns_2020-11-05_c7a381e2-9bba-4b64-8acd-3e0b16ef6d65.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

(1) PROPOSED ADOPTION OF THE SHARE INCENTIVE SCHEME; (2) CONNECTED TRANSACTIONS — ISSUE OF NEW AWARD SHARES UNDER THE SHARE INCENTIVE SCHEME; (3) PROPOSED AMENDMENTS TO THE ARTICLES; AND

(4) NOTICE OF 2020 SECOND EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

Shanghai Kindly Medical Instruments Co., Ltd.[*] 上 海 康 德 萊 醫 療 器 械 股 份 有 限 公 司 (A joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code：1501)

(1) PROPOSED ADOPTION OF THE SHARE INCENTIVE SCHEME; (2) CONNECTED TRANSACTIONS — ISSUE OF NEW AWARD SHARES UNDER THE SHARE INCENTIVE SCHEME;

(3) PROPOSED AMENDMENTS TO THE ARTICLES; AND

(4) NOTICE OF 2020 SECOND EXTRAORDINARY GENERAL MEETING

I. INTRODUCTION

II. THE SHARE INCENTIVE SCHEME

(A) Administration of the Share Incentive Scheme

Limited partnerships to be established in the PRC, such names are subject to approval by the relevant PRC registration authority

(B) Maximum Limit of the Restricted Share Units

Determination of Number of Restricted Share Units

(D) Granting of the Restricted Share Units

Lock-up Requirements

Vesting Conditions

(1) Net Profit attributable to the Company

(2) Performance review of the Grantees

(E) Grant Price

(F) Vesting of the Restricted Share Units

(G) Repurchase of the Restricted Share Units

Effect of repurchase

(H) Alteration of the Share Incentive Scheme

(I) Termination of the Share Incentive Scheme

(J) Ongoing disclosure of the Share Incentive Scheme

III. CONNECTED TRANSACTIONS — ISSUE OF NEW AWARD SHARES UNDER THE SHARE INCENTIVE SCHEME

(2) Ningbo Int

IV. PROPOSED AMENDMENTS TO THE ARTICLES

Upon Amendment

V. REASONS FOR AND BENEFIT OF THE SHARE INCENTIVE SCHEME AND THE ALLOTMENT AND ISSUE OF NEW AWARD SHARES THEREUNDER

VI. IMPLICATIONS UNDER THE LISTING RULES

Proposed Adoption of the Share Incentive Scheme

Issue of New Award Shares Under the Share Incentive Scheme

VII. RECOMMENDATION

VIII. THE EGM AND INDEPENDENT SHAREHOLDERS’ APPROVAL

CONNECTED TRANSACTIONS — ISSUE OF NEW AWARD SHARES UNDER THE SHARE INCENTIVE SCHEME

CONNECTED TRANSACTIONS — ISSUE OF NEW AWARD SHARES UNDER THE SHARE INCENTIVE SCHEME

INTRODUCTION

OUR INDEPENDENCE

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Information on the Group

2. Principal terms of the Share Incentive Scheme

(A) Administration of the Share Incentive Scheme

Limited partnerships to be established in the PRC, such names are subject to approval by the relevant PRC registration authority

(B) Maximum Limit of the Restricted Share Units

(C) Selection of the Grantees and Determination of Number of Restricted Share Units

Selection criteria of the Grantees

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Proposed Grantee Relationship to the Group Maximum entitlement

Determination of Number of Restricted Share Units

(D) Granting of the Restricted Share Units

Lock-up Requirements

Vesting Conditions

(1) Net Profit attributable to the Company

(2) Performance review of the Grantees

(E) Grant Price

(F) Vesting of the Restricted Share Units

(G) Repurchase of the Restricted Share Units

Effect of repurchase

(H) Alteration of the Share Incentive Scheme

(I) Termination of the Share Incentive Scheme

(J) Ongoing disclosure of the Share Incentive Scheme

3. Issue of new Award Shares under the Share Incentive Scheme

Identity of the allottees: (1) Dr. Liang Dongke

(2) Ningbo Int

4. Further information of the Grantees

Dr. Liang Dongke

Ningbo Int

5. Reasons for and benefit of the Share Incentive Scheme and the allotment and issue of new Award Shares thereunder

6. Assessment on the issue of Award Shares under the Share Incentive Scheme

6.1 Award Shares

Shanghai INT Medical Instruments Co., Ltd. Proxy Solicitation & Information Statement 2020

Shanghai Kindly Medical Instruments Co., Ltd.[*] 上海康德萊醫療器械股份有限公司 (A joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code：1501)