Youzan Technology Limited — Proxy Solicitation & Information Statement 2018

Nov 1, 2018

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of The Stock Exchange of Hong Kong Limited 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.

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(Incorporated in Bermuda with limited liability) (Stock Code: 8083)

PROPOSED CHANGE OF AUDITOR AND NOTICE OF SPECIAL GENERAL MEETING

A notice convening the SGM to be held at Unit 2708, 27/F., The Center, 99 Queen’s Road Central, Central, Hong Kong on Monday, 26 November 2018 at 10:00 a.m. is set out on pages 4 to 5 of this circular. Capitalised terms used on this cover page have the same meanings as those defined in the section headed “Definitions” in this circular.

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

This circular will remain on the “Latest Company Announcements” section of the GEM website at www.hkgem.com for at least 7 days from the date of its posting and on the website of the Company at www.chinayouzan.com.

2 November 2018

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate companies to which a high investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

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CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	iii
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Proposed Change of Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Voting by Poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4

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DEFINITIONS

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

“Announcement”

the announcement of the Company dated 25 October 2018 relating to the Proposed Change of Auditor

“Appointment” the proposed appointment of Ernst & Young as the new auditor of the Company

“Audit Committee”

the audit committee of the Company

“Board”

the board of Directors

“Bye-law(s)” the bye-law(s) of the Company as may be amended from time to time

“Company” China Youzan Limited 中國有贊有限公司, a company incorporated in Bermuda with limited liability and the Shares of which are listed on GEM

“Directors(s)”

the director(s) of the Company

“GEM”

GEM operated by the Stock Exchange

“GEM Listing Rules” the Rules Governing the Listing of Securities on GEM

“Group” the Company and its subsidiaries

“HK$”

Hong Kong dollar(s), the lawful currency of Hong Kong

“Hong Kong” the Hong Kong Special Administrative Region of the PRC “PRC” the People’s Republic of China which, for the purposes of this circular, excluding the Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

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DEFINITIONS

“Proposed Change of Auditor” the Removal and the Appointment “Removal” the proposed removal of RSM as the auditor of the Company “RSM” RSM Hong Kong, the existing auditor of the Company “SGM” the special general meeting of the Company to be held at Unit 2708, 27/F, The Center, 99 Queen’s Road Central, Hong Kong on Monday, 26 November 2018 at 10:00 a.m. “SGM Notice” the notice of the SGM “Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company “Shareholder(s)” the holder(s) of the Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “subsidiaries” has the meaning ascribed to it under the GEM Listing Rules

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 8083)

Executive Directors: Mr. Guan Guisen Mr. Cao Chunmeng Mr. Yan Xiaotian Mr. Zhu Ning Mr. Cui Yusong Mr. Yu Tao Ms. Ying Hangyan Independent non-executive Directors: Dr. Fong Chi Wah Mr. Gu Jiawang Mr. Xu Yanqing Mr. Deng Tao

Registered office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda Head office and principal place of business in Hong Kong: Unit 2708, 27/F. The Center 99 Queen’s Road Central Hong Kong

2 November 2018

To the Shareholders

Dear Sir or Madam,

PROPOSED CHANGE OF AUDITOR

1. INTRODUCTION

Reference is made to the Announcement in relation to the Proposed Change of Auditor. The purpose of this circular is to provide you with information regarding the Proposed Change of Auditor to enable you to make a decision on whether to vote for or against the resolutions in connection with such matters to be proposed at the forthcoming SGM.

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LETTER FROM THE BOARD

2. PROPOSED CHANGE OF AUDITOR

RSM has been re-appointed as the auditor of the Company at the last annual general meeting of the Company held on 4 May 2018 to hold office until the conclusion of the next annual general meeting of the Company.

RSM was appointed as the auditor of the Company in 2010. Consistent with good corporate governance practice and with the recommendation of the Audit Committee, the Board considers that a rotation of auditor will enhance the independence of the auditor and help enhance the effectiveness of the Group’s internal control system and hold the Group accountable to a higher level of accounting scrutiny. As such, the Board and the Audit Committee take the view that the Proposed Change of Auditor would be in the best interests of the Company and its Shareholders as a whole.

Pursuant to Bye-law 163(C) of the Bye-laws and Section 89(5) of the Companies Act 1981 of Bermuda, the Shareholders may, by a resolution passed by at least two-thirds of the votes cast at any general meeting convened and held in accordance with the Bye-laws, remove the auditor of the Company before the expiration of its term of office. Hence, a special resolution will be proposed at the SGM to remove RSM as the auditor of the Company.

With the recommendation of the Audit Committee and subject to the approval of the Shareholders by way of an ordinary resolution, the Board resolved to appoint Ernst & Young as the new auditor of the Company to fill the casual vacancy arising from the departure of RSM and to hold office until the conclusion of the next annual general meeting of the Company. Pursuant to Section 89(5) of the Companies Act 1981 of Bermuda, the Shareholders may, by way of an ordinary resolution passed at the same general meeting at which RSM is removed, appoint another auditor in its stead for the remainder of its term at the general meeting. Hence, an ordinary resolution will be proposed at the SGM to appoint Ernst & Young as the new auditor of the Company and to authorise the Board to fix its remuneration.

The Board confirms that there is no matter in respect of the Proposed Change of Auditor that needs to be brought to the attention of the Shareholders.

The Board will publish further announcement(s) when the Proposed Change of Auditor has become effective and when the confirmation of RSM as required under the note to Rule 17.50(4) of the GEM Listing Rules is received.

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LETTER FROM THE BOARD

3. SGM

Notice convening the SGM is set out on pages 4 to 5 of this circular. A form of proxy for use by the Shareholders at the SGM is also enclosed.

Whether or not you intend to attend the SGM in person, you are requested to complete the proxy form in accordance with the instructions printed thereon and return the same to Computershare Hong Kong Investor Services Limited, the branch share registrar of the Company in Hong Kong, at 17M/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding of the SGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder is required to abstain from voting on the resolutions to be proposed at the SGM.

4. VOTING BY POLL

Pursuant to Rule 17.47(4) of the GEM Listing Rules, any vote of Shareholders at a general meeting must be taken by poll. Therefore, all resolutions proposed at the SGM shall be voted by poll.

An announcement on the poll results will be made by the Company after the SGM in the manner prescribed and Rule 17.47(5) of the GEM Listing Rules.

5. RECOMMENDATION

The Directors consider that the Proposed Change of Auditor is in the best interests of the Company, the Group and the Shareholders as a whole and so recommend the Shareholders to vote in favour of the resolutions to be proposed at the SGM.

Yours faithfully, For and on behalf of

China Youzan Limited Guan Guisen

Chairman

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NOTICE OF SGM

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(Incorporated in Bermuda with limited liability)

(Stock Code: 8083)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the “ SGM ”) of China Youzan Limited (the “ Company ”) will be held at Unit 2708, 27/F., The Center, 99 Queen’s Road Central, Central, Hong Kong on Monday, 26 November 2018 at 10:00 a.m. for the following purposes:–

SPECIAL RESOLUTION

“ THAT RSM Hong Kong be and is hereby removed as the auditor of the Company with immediate effect.”

ORDINARY RESOLUTION

“ THAT subject to the passing of the special resolution as contained in the notice convening this meeting, Ernst & Young be and is hereby appointed as the auditor of the Company and its subsidiaries to fill the casual vacancy arising from the departure of RSM Hong Kong and to hold office until the conclusion of the next annual general meeting of the Company, and that the board of directors of the Company be and is hereby authorised to fix their remuneration.”

Yours faithfully, For and on behalf of China Youzan Limited Guan Guisen Chairman

Hong Kong, 2 November 2018

Head Office and Principal Place of Business: Unit 2708, 27/F. The Center 99 Queen’s Road Central Hong Kong

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NOTICE OF SGM

Notes:

1. A member entitled to attend and vote at the SGM is entitled to appoint one or, if he/she is the holder of two or more shares of the Company, more than one proxy to attend and, subject to the provisions of the Bye-laws, to vote on his behalf. A proxy needs not be a member of the Company but must be present in person at the SGM to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.

2. A form of proxy for use at the SGM is enclosed. Whether or not you intend to attend the SGM in person, you are encouraged to complete and return the form of proxy in accordance with the instructions printed thereon. Completion and return of the form of proxy will not preclude a member from attending in person and voting at the SGM or any adjournment thereof, should he so wish and in such event, the form of proxy shall be deemed to be revoked.

3. In order to be valid, the form of proxy together with a 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 at the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 48 hours before the time scheduled for holding the SGM or any adjournment thereof.

4. In the case of joint holders of shares of the Company, any one of such holders may attend and vote at the SGM, either personally or by proxy, in respect of such shares as if he was solely entitled thereto, but if more than one of such joint holders are present at the SGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such shares shall alone be entitled to vote in respect thereof.

5. The register of members of the Company will be closed from 21 November 2018 to 26 November 2018 both days inclusive, during which no transfer of shares will be registered. In order to be entitled to attend and vote at the SGM to be held on Monday, 26 November 2018, all properly completed transfer forms accompanied by the relevant share certificates must be lodged with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at 17M/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m. (Hong Kong Time) on 20 November 2018.

6. As at the date of this notice, the Board comprises seven executive Directors, namely Mr. Guan Guisen, Mr. Cao Chunmeng, Mr. Yan Xiaotian, Mr. Zhu Ning, Mr. Cui Yusong, Mr. Yu Tao and Ms. Ying Hangyan; and four independent non-executive Directors, namely Dr. Fong Chi Wah, Mr. Gu Jiawang, Mr. Xu Yanqing and Mr. Deng Tao.

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