Yip's Chemical Holdings Limited — Proxy Solicitation & Information Statement 2012

Jun 4, 2012

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold all your shares in Yip’s Chemical Holdings Limited, you should at once hand this circular to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

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.

No person in any jurisdiction outside Hong Kong receiving a copy of this circular or an Election Form may treat the same as an offer by the Company of a right to elect to receive Scrip Shares under the Scrip Dividend Scheme unless such offer could lawfully be made to such person without the Company being required to comply with any governmental or regulatory procedures or any similar formalities. It is the responsibility of any person outside Hong Kong who wishes to receive Scrip Shares to comply with the laws of the relevant jurisdiction(s), including the obtaining of any governmental or other necessary consents and compliance with all other formalities. It is also the responsibility of any person who receives Scrip Shares to comply with any restrictions under the laws of the relevant jurisdiction(s) on dealing with the Shares which may apply outside Hong Kong.

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SCRIP DIVIDEND SCHEME IN RELATION TO THE FINAL DIVIDEND FOR THE YEAR ENDED 31 DECEMBER 2011

If you wish to receive your Final Dividend wholly or partly in Scrip Shares, you should complete the Election Form in accordance with the instructions printed on it and return the completed Election Form as soon as possible to the Company’s branch registrar in Hong Kong, Tricor Secretaries Limited, 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 4:00 pm on Wednesday, 20 June 2012.

5 June 2012

Definitions

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

“Board”

the board of Directors (including non-executive Directors and independent non-executive Directors)

• “CCASS”

• the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited

• “Company” Yip’s Chemical Holdings Limited, an exempted company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange

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

• “Election Form” the form of election in relation to the Scrip Dividend Scheme

• “Final Dividend” the final dividend of HK12.0 cents per Share for the year ended 31 December 2011 payable to Shareholders whose names appeared on the Company’s register of members on the Record Date

• “HK$”

• Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

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

• “Market Value” the market value for each Scrip Share which is the average closing prices of the Shares on the Stock Exchange for the three consecutive trading days ending on (and including) the Record Date

• “Overseas Shareholders” the Shareholders whose registered addresses appearing on the register of members of the Company at the Record Date are outside Hong Kong

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Definitions

• “Qualifying Shareholders”

the Shareholders who are shown on the register of members of the Company on the Record Date, other than those whose address(es) appear(s) on the register of members on that date is/are outside Hong Kong (if any) to whom the Directors, based on legal advice provided by legal advisers and on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place, consider it necessary or expedient to exclude such Shareholder(s) from the Scrip Dividend Scheme

• “Record Date” 1 June 2012, being the record date for determining entitlements of the Shareholders to the final dividend for the year ended 31 December 2011

• “Scrip Dividend Scheme” the declaration of Final Dividend by way of cash with an option to elect to receive wholly or partly an allotment and issue of Shares credited as fully paid in lieu of cash payment

• “Scrip Share(s)” the new Share(s) to be allotted and issued pursuant to the Scrip Dividend Scheme

• “Share(s)” ordinary share(s) of HK$0.10 each (or of such other nominal amount as shall result from a sub-division, consolidation, re-classification or re-construction of such shares from time to time) of the Company

• “Shareholder(s)” holder(s) of the Share(s)

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

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LETTER FROM THE CHAIRMAN

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Chairman Mr. Ip Chi Shing (Non-Executive Director)

Executive Directors: Mr. Yip Tsz Hin (Deputy Chairman) Mr. Wong Kam Yim (Chief Executive Officer) Mr. Li Wai Man, Peter (Chief Operations Officer) Mr. Ho Sai Hou (Chief Financial Officer)

Non-Executive Directors:

Mr. Tong Wui Tung Mr. Ng Siu Ping

Independent Non-Executive Directors:

Mr. Wong Kong Chi Mr. Au-Yeung Tsan Pong, Davie Mr. Li Chak Man Mr. Ku Yuen Fun

Registered office: PO Box 309GT Ugland House South Church Street George Town Grand Cayman Cayman Islands

Head Office and Principal Place of Business in Hong Kong: Yip’s Chemical Building 13 Yip Cheong Street On Lok Tsuen Fanling, New Territories Hong Kong

5 June 2012

To: The Shareholders

Dear Sir or Madam,

SCRIP DIVIDEND SCHEME

1. INTRODUCTION

At the annual general meeting of the Company held on 25 May 2012, Shareholders approved the payment of the Final Dividend, as recommended by the Board, to Shareholders whose names appeared on the Company’s register of members on the Record Date. The register of members of the Company was closed from 31 May 2012 to 1 June 2012 (both dates inclusive). To rank for the Final Dividend, all completed transfer forms, accompanied by the relevant share certificates, had to be lodged with the Company’s branch registrar for registration not later than 4:00 pm on 30 May 2012.

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LETTER FROM THE CHAIRMAN

2. SCRIP DIVIDEND SCHEME

Pursuant to the Scrip Dividend Scheme and subject to the terms set out in this circular, Qualifying Shareholders have the right to elect to receive the Final Dividend in Scrip Shares instead of in cash, or partly in Scrip Shares and partly in cash.

Shareholders who elect to receive some or all of their Final Dividend in Scrip Shares will be able to increase their further equity investment in the Company at market value without incurring brokerage fees, stamp duty and related dealing costs. To the extent that Shareholders elect to receive Scrip Shares, the Company will benefit by retaining for use as working capital of the Company.

For the purpose of calculating the number of Scrip Shares to be allotted, the market value for each Scrip Share is the average closing prices of the Shares on the Stock Exchange for the three consecutive trading days ending on (and including) the Record Date, which is HK$5.963.

The number of Scrip Shares which a Shareholder will receive in respect of the Final Dividend will be calculated as follows:

Number of Scrip Shares Number of existing to be received (rounded Shares held on Record Final Dividend per Share down to the nearest = Date for which election X Market Value per Scrip Share whole number) for Scrip Shares is made

No Shareholder is entitled to be issued any fraction of a Share under the Scrip Dividend Scheme. Fractional entitlements to Shares will not be issued and will be aggregated and sold for the benefit of the Company.

Example:

For illustration purpose, the Market Value is HK$5.963 and if you have 200,000 Shares at the Record Date, your maximum entitlement will be calculated as follows:

Maximum dividend entitled = 200,000 X HK$0.12 = HK$24,000.00

Option 1 – If you elect to receive your entire Final Dividend in cash, you will receive HK$24,000.00 cash.

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LETTER FROM THE CHAIRMAN

Option 2 – If you elect to receive your entire Final Dividend in Scrip Shares, you will receive 4,024 Scrip Shares. If you do not want to receive part of the Scrip Shares in odd lots, you may consider to elect Option 3 below to receive Scrip Shares in multiple of board lot of 2,000 Shares and the balance in cash.

Number of Scrip Shares to be received (rounded HK$0.12 down to the nearest = 200,000 X HK$5.963 whole number) = 4,024 Scrip Shares

Option 3 – If you elect to receive your Final Dividend in 4,000 Scrip Shares, you need to offer 198,767 Shares, (i.e. 4,000 Scrip Shares X HK$5.963 / HK$0.12) to exchange 4,000 Scrip Shares and you will receive the balance in HK$147.96 cash.

Number of Scrip Shares to be received (rounded HK$0.12 = 198,767 X down to the nearest HK$5.963 whole number) = 4,000 Scrip Shares Residual dividend = (200,000-198,767) X HK$0.12 entitlement in cash = HK$147.96

Based on 555,825,121 Shares in issue on the Record Date, if all Shareholders choose to receive Scrip Shares instead of cash in respect of the Final Dividend, the Company will issue approximately 11,185,479 Scrip Shares.

The founders of the Company, namely, Mr. Ip Chi Shing (also the chairman of the Board, a non-executive director of the Company and a substantial Shareholder), Ms. Ip Fung Kuen and Mr. Yip Tsz Hin (also an executive director of the Company) have shown their intention that they will elect to receive their entire Final Dividend in Scrip Shares, other than any balance in odd lots which will be received in cash. As at the Record Date, all of them in aggregate hold a total of 286,848,532 Shares, representing 51.61% of the issued share capital of the Company.

The Scrip Shares, when allotted and issued, will rank pari passu in all respect with the then existing Shares in issue save that they will not be entitled to the Final Dividend.

The allotment of Scrip Shares is subject to the granting by the Listing Committee of the Stock Exchange of a listing of and permission to deal in the Scrip Shares to be issued.

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LETTER FROM THE CHAIRMAN

3. ELECTION FORM

No action is required if you wish the Final Dividend, which you are entitled to receive, be wholly satisfied by cash. Otherwise, if you elect to receive Scrip Shares, in whole or in part, instead of cash in respect of the Final Dividend, you must complete the Election Form in accordance with the instructions printed thereon and lodge it to the Company’s branch registrar in Hong Kong, Tricor Secretaries Limited, 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not later than 4:00 pm on Wednesday, 20 June 2012. No acknowledgement of receipt of the Election Form will be issued.

4. OVERSEAS SHAREHOLDERS

This circular will not be registered under any securities legislation of any jurisdiction. All Shareholders resident outside Hong Kong should consult their brokers or other professional advisers as to whether any governmental or other consents in their jurisdictions are required or other formalities need to be observed to enable them to participate in the Scrip Dividend Scheme and the taxation consequences of their decision.

No person in any jurisdiction outside Hong Kong receiving a copy of this circular or an Election Form may treat the same as an offer by the Company of a right to elect to receive Scrip Shares under the Scrip Dividend Scheme unless such offer could lawfully be made to such person without the Company being required to comply with any governmental or regulatory procedures or any similar formalities. It is the responsibility of any person outside Hong Kong who wishes to receive Scrip Shares to comply with the laws of the relevant jurisdiction(s), including the obtaining of any governmental or other necessary consents and compliance with all other formalities. It is also the responsibility of any person who receives Scrip Shares to comply with any restrictions under the laws of the relevant jurisdiction(s) on dealing with the Shares which may apply outside Hong Kong.

As at the Record Date, there were 12 Overseas Shareholders residing in 6 countries, namely Canada, Macau, New Zealand, Sweden, Taiwan and the United States of America (the “USA”). Shareholders in the USA reside in two jurisdictions, namely California and Massachusetts.

The Company has made enquiries regarding the legal restrictions under the laws of relevant place and the requirements of the relevant regulatory bodies or stock exchange of extending the Scrip Dividend Scheme to Shareholders with registered addresses outside Hong Kong. The Company has been advised by its legal advisers on the laws of Canada, Macau, New Zealand, Sweden, Taiwan and Massachusetts of the USA that either there is no legal restriction or there are exemptions available to the Company under the applicable legislation of Canada, Macau, New Zealand, Sweden, Taiwan and Massachusetts of the USA or requirement of any relevant regulatory body or stock exchange in these 6 jurisdictions with respect to the offer of the Scrip Shares to the Overseas Shareholders with registered addresses in these 6 jurisdictions as at the Record Date.

The Company has also been advised that Shareholders with registered addresses in Canada may be lawfully allowed to participate in the Scrip Dividend Scheme without registration and/or formalities under Canadian securities legislation. However, unless certain conditions are satisfied, trade

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LETTER FROM THE CHAIRMAN

of securities obtained by way of scrip dividend will be subject to resale restrictions in Canada. While Shareholders in Canada will not be excluded from the Scrip Dividend Scheme, such Shareholders are advised to consult their own professional advisers with regard to the relevant legal requirements for trading in the Scrip Shares.

The Company has also been advised by legal counsel in the United States of America that the exemption from registration under the California Corporate Securities Law of 1968 is not available for the Scrip Dividend Scheme. Further, the process for applying a permit for the transaction with the California Department of Corporations is fairly time consuming and costly. The Company based on results of such enquiries made, considers that it is expedient to exclude Shareholders with registered addresses in California of the USA (“the “Excluded Shareholders”) from the Scrip Dividend Scheme. This circular is sent to the Excluded Shareholders for information only and no Election Form has been sent to them. The Excluded Shareholders will only receive the Final Dividend in cash.

Notwithstanding the above, any Excluded Shareholder who is able to prove to the satisfaction of the Company that he/she may legally participate in the Scrip Dividend Scheme without the Company being required to comply with any governmental or regulatory procedures or similar formalities will be entitled to participate in the Scrip Dividend Scheme. Election Forms will be sent to such Shareholders and the procedure set out in the section headed “Election Form” above shall apply. In this regard, Excluded Shareholders should contact the Company at its head office as soon as practicable after receipt of this circular.

5. LISTING AND DEALING

Application has been made to the Listing Committee of the Stock Exchange for listing of, and permission to deal in, the Scrip Shares.

Subject to the granting of the listing of, and permission to deal in, the Scrip Shares on the Stock Exchange, the Scrip Shares will be accepted as eligible securities by Hong Kong Securities Clearing Company Limited for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Scrip Shares on the Stock Exchange or such other date as determined by Hong Kong Securities Clearing Company Limited. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. Shareholders should seek the advice of their licensed securities dealers or other professional advisers for details of these settlement arrangements and how such arrangements will affect their rights and interests.

Subject to the proper receipt of definitive certificates for Scrip Shares by the relevant Shareholders, dealings of the Scrip Shares on the Stock Exchange are expected to commence on or about 4 July 2012.

The Shares are listed, and dealt in, on the Stock Exchange. There is no other stock exchange on which the Company’s securities are listed or dealt in or on which listing or permission to deal is being or proposed to be sought.

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LETTER FROM THE CHAIRMAN

6. GENERAL

Scrip Shares issued to a Qualifying Shareholder pursuant to an election to receive some or all of their Final Dividend in Scrip Shares may be allocated in odd lots (of fewer than a board lot of 2,000 Shares). No special dealing arrangements will be put in place by the Company to facilitate the trading or disposal of Scrip Shares issued in odd lots. Qualifying Shareholders should be aware that odd lots usually trade at a discount to the price of board lots.

Whether or not it is to your advantage to elect to receive Scrip Shares instead of cash, in whole or in part, in respect of the Final Dividend will depend upon your own individual circumstances and the decision in this regard, and all effects resulting therefrom must be solely your own responsibility. If you are in any doubt as to what to do, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

7. TIMETABLE

Set out below is a summary of the events in relation to the Scrip Dividend Scheme in the form of a timetable.

Event	Date/Time
Record Date	1 June 2012
Latest time for return of Election Form	20 June 2012, 4:00 pm
Despatch of cheques for cash dividends and	29 June 2012
definitive certificates for Scrip Shares

Yours faithfully,

Ip Chi Shing Chairman

As at the date of this circular, the Board comprises the following:–

Non-executive Directors:

Mr. Ip Chi Shing (Chairman) Mr. Wong Kong Chi Mr. Au-Yeung Tsan Pong, Davie

Mr. Li Chak Man*

Executive Directors: Mr. Yip Tsz Hin (Deputy Chairman) Mr. Wong Kam Yim Mr. Li Wai Man, Peter Mr. Ho Sai Hou

Mr. Ku Yuen Fun*

• Mr. Tong Wui Tung Mr. Ng Siu Ping

• Independent non-executive Directors

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