TAI FOOK SECURITIES GROUP LIMITED (Incorporated in Bermuda with limited liability) (Stock Code: 00665)

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in doubt as to any aspect of this circular or as to the action you should take, 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 TAI FOOK SECURITIES GROUP LIMITED, you should at once hand this circular and the accompanying form of proxy to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser. The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. TAI FOOK SECURITIES GROUP LIMITED (Incorporated in Bermuda with limited liability) (Stock Code: 00665) PROPOSALS FOR GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES, INCREASE IN AUTHORIZED SHARE CAPITAL OF THE COMPANY, REFRESHMENT OF THE SCHEME MANDATE LIMIT OF THE EXISTING SHARE OPTION SCHEME, CHANGE OF NAME OF THE COMPANY, AMENDMENTS TO THE EXISTING BYE-LAWS AND RE-ELECTION OF RETIRING DIRECTORS, AND NOTICE OF ANNUAL GENERAL MEETING The notice convening the annual general meeting (the Annual General Meeting ) of Tai Fook Securities Group Limited (the Company ) to be held at Tai Fook Training Centre, Unit D, 14/F., On Hing Building, 1 On Hing Terrace, Central, Hong Kong on Monday, 29 May 2006 at 11:00 a.m. is set out on pages 20 to 25 of this circular. A form of proxy for use at the Annual General Meeting is enclosed with this circular. Whether or not you propose to attend the Annual General Meeting, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company s Branch Share Registrars and Transfer Office in Hong Kong, Tricor Investor Services Limited at 26th Floor, Tesbury Centre, 28 Queen s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the Annual General Meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Annual General Meeting or any adjourned meeting if you so wish. 28 April 2006

2 CONTENTS Page Definitions... 1 Letter from the Board 1. Introduction General mandate to issue Shares General mandate to repurchase Shares Increase in authorized share capital of the Company Refreshment of the Scheme Mandate Limit of the Share Option Scheme Change of name of the Company Amendments to the Bye-laws Re-election of retiring Directors Annual General Meeting Procedures by which a poll may be demanded Action to be taken Recommendation General Appendix I Explanatory statement Appendix II Biographical details of retiring Directors Notice of Annual General Meeting i

3 DEFINITIONS In this circular, the following expressions have the following meanings unless the context requires otherwise AGM Notice the notice for convening the Annual General Meeting set out on pages 20 to 25 of this circular Annual General Meeting the annual general meeting of the Company to be held at Tai Fook Training Centre, Unit D, 14/F., On Hing Building, 1 On Hing Terrace, Central, Hong Kong on Monday, 29 May 2006 at 11:00 a.m. Board the board of Directors Bye-laws the bye-laws of the Company, as amended, supplemented or modified from time to time Code the Code on Corporate Governance Practices as set out in Appendix 14 to the Listing Rules Companies Act the Companies Act 1981 of Bermuda Company Tai Fook Securities Group Limited, an exempted company incorporated in Bermuda with limited liability with its Shares listed on the Stock Exchange Director(s) the director(s) of the Company for the time being 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 Issue Proposal a proposed general unconditional mandate to the Directors to exercise the power of the Company to allot, issue and deal with Shares during the period as set out in Ordinary Resolution no. 6.1 in the AGM Notice up to 20% of the issued share capital of the Company as at the date of passing such Ordinary Resolution Latest Practicable Date 24 April 2006, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular 1

4 DEFINITIONS Listing Rules Ordinary Resolution(s) the Rules Governing the Listing of Securities on the Stock Exchange the proposed ordinary resolution(s) as referred to in the AGM Notice Repurchase Proposal a proposed general unconditional mandate to the Directors to exercise the power of the Company to repurchase Shares during the period as set out in Ordinary Resolution no. 6.2 in the AGM Notice up to 10% of the issued share capital of the Company as at the date of passing such Ordinary Resolution Scheme Mandate Limit SFO Share(s) Shareholder(s) Share Option Scheme Share Repurchase Rules Special Resolution(s) Stock Exchange Takeovers Code the maximum number of Shares that may be issued upon exercise of all options to be granted under the Share Option Scheme and any other share option schemes of the Company, which shall not in aggregate exceed 10% of the Shares in issue as at the date of approval of the Share Option Scheme the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) share(s) of nominal value of HK$0.10 each in the share capital of the Company holder(s) of Shares the existing share option scheme of the Company adopted by the Company on 23 August 2002 the relevant rules set out in the Listing Rules to regulate the repurchase by companies with primary listing of their own securities on the Stock Exchange the proposed special resolution(s) as referred to in the AGM Notice The Stock Exchange of Hong Kong Limited the Hong Kong Code on Takeovers and Mergers % per cent. 2

5 LETTER FROM THE BOARD TAI FOOK SECURITIES GROUP LIMITED (Incorporated in Bermuda with limited liability) (Stock Code: 00665) Executive Directors: CHENG Kar Shun, Henry (Chairman) LO Lin Shing, Simon (Deputy Chairman) DOO Wai Hoi, William (Deputy Chairman) WONG Shiu Hoi, Peter (Managing Director) LEE Yiu Wing, William CHAN Chi On, Derek Non-executive Directors: WONG Kwok Kin, Andrew LAM Wai Hon, Patrick CHEUNG Wing Yui, Edward HO Hau Chong, Norman TO Hin Tsun, Gerald Independent Non-executive Directors: MAN Mo Leung TSUI Hing Chuen, William WEI Chi Kuan, Kenny Registered Office: Clarendon House Church Street Hamilton HM 11 Bermuda Principal Place of Business in Hong Kong: 25th Floor, New World Tower Queen s Road Central Hong Kong 28 April 2006 To the Shareholders Dear Sir or Madam PROPOSALS FOR GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES, INCREASE IN AUTHORIZED SHARE CAPITAL OF THE COMPANY, REFRESHMENT OF THE SCHEME MANDATE LIMIT OF THE EXISTING SHARE OPTION SCHEME, CHANGE OF NAME OF THE COMPANY, AMENDMENTS TO THE EXISTING BYE-LAWS AND RE-ELECTION OF RETIRING DIRECTORS 1. INTRODUCTION The purpose of this circular is to provide you with information and to seek your approval of the resolutions regarding the Issue Proposal, the Repurchase Proposal, the proposed increase in authorized share capital of the Company, the proposed refreshment of the Scheme Mandate Limit of the Share Option Scheme, the proposed change of name of the Company, the proposed amendments to the Bye-laws and the proposed re-election of retiring Directors, and to provide you with the AGM Notice. 3

6 LETTER FROM THE BOARD 2. GENERAL MANDATE TO ISSUE SHARES At the annual general meeting of the Company held on 1 June 2005, a general mandate was given by the Company to the Directors to exercise the powers of the Company to allot, issue and deal with Shares with a total nominal value not exceeding 20% of the total issued share capital of the Company as at the date of passing of the relevant ordinary resolution approving such general mandate. Such general mandate will lapse at the conclusion of the forthcoming Annual General Meeting. The Board proposes to put forward an ordinary resolution at the Annual General Meeting for the Shareholders to consider and, if thought fit, approve Ordinary Resolution no. 6.1 in relation to the Issue Proposal. In order to give flexibility for the Directors to issue any Shares in the event that it becomes desirable, approval is to be sought at the Annual General Meeting for passing Ordinary Resolutions for (i) granting to the Directors a general mandate to allot, issue and deal with Shares not exceeding 20% of the issued share capital of the Company as at the date of passing the Ordinary Resolution in relation to the Issue Proposal; and (ii) for adding to such general mandate so granted to the Directors any Shares representing the aggregate nominal amount of the Shares repurchased by the Company after the granting of the general mandate to repurchase up to a maximum of 10% of the issued share capital of the Company as at the date of passing the Ordinary Resolution in relation to the Repurchase Proposal. 3. GENERAL MANDATE TO REPURCHASE SHARES At the annual general meeting of the Company held on 1 June 2005, a general mandate was also given by the Company to the Directors to exercise the powers of the Company to repurchase Shares with a total nominal value not exceeding 10% of the total issued share capital of the Company as at the date of passing of the relevant ordinary resolution approving such general mandate. Such general mandate will lapse at the conclusion of the forthcoming Annual General Meeting. The Board proposes to put forward an ordinary resolution at the Annual General Meeting for the Shareholders to consider and, if thought fit, approve Ordinary Resolution no. 6.2 in relation to the Repurchase Proposal. An explanatory statement as required under the Share Repurchase Rules to provide the requisite information of the Repurchase Proposal is set out in the Appendix I hereto. 4. INCREASE IN AUTHORIZED SHARE CAPITAL OF THE COMPANY As at the Latest Practicable Date, the authorized share capital of the Company was HK$100,000,000 divided into 1,000,000,000 Shares, of which 576,667,699 Shares had already been issued and 423,332,301 Shares were left unissued and available for further allotment and issued by the Company. In order to provide the Company with greater flexibility to raise fund by allotting and issuing Shares in the future, as and when necessary, the Board proposes to put forward Ordinary Resolution no. 6.4 at the Annual General Meeting for the Shareholders to consider and, if thought fit, approve the proposed increase in the authorized share capital of the Company from HK$100,000,000 to HK$200,000,000 by the addition of HK$100,000,000 divided into 1,000,000,000 new Shares which will rank pari passu with all existing Shares. None of the Directors currently have any intention of issuing any part of the proposed increased authorized share capital of the Company. 4

7 LETTER FROM THE BOARD 5. REFRESHMENT OF THE SCHEME MANDATE LIMIT OF THE SHARE OPTION SCHEME The Company adopted the Share Option Scheme pursuant to an ordinary resolution passed on 23 August Pursuant to the Listing Rules and the rules of the Share Option Scheme, the maximum number of Shares which may be issued upon the exercise of all options available to be granted under the Share Option Scheme and any other share option schemes of the Company may not exceed the Scheme Mandate Limit. The Scheme Mandate Limit may be refreshed by approval of the Shareholders in general meetings from time to time, provided that the total number of Shares which may be issued upon exercise of all options to be granted under the Share Option Scheme and any other share option schemes of the Company as refreshed must not exceed 10% of the Shares in issue as at such date of approval. Options previously granted, outstanding, cancelled, lapsed or exercised in accordance with the terms of the Share Option Scheme and any other share option schemes of the Company are not counted for the purpose of calculating the Scheme Mandate Limit as refreshed. Notwithstanding the above, the total number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option schemes of the Company must not exceed 30% of the Shares in issue from time to time. Based on the total number of 476,241,699 Shares in issue as at the date of adoption of the Share Option Scheme, the Scheme Mandate Limit was 47,624,169 Shares. As at the Latest Practicable Date, options carrying rights to subscribe for 49,900,000 Shares were granted under the Share Option Scheme since its adoption on 23 August 2002, of which options carrying rights to subscribe for 650,000 Shares had been exercised and options carrying rights to subscribe for 5,000,000 Shares were lapsed. Therefore unless the Scheme Mandate Limit is refreshed, only a balance of options carrying rights to subscribe for 2,724,169 Shares may be granted under the Share Option Scheme, representing approximately 5.72% of the Scheme Mandate Limit. As at the Latest Practicable Date, the Company had an issued share capital of 576,667,699 Shares. Therefore, the total amount of 49,900,000 Shares granted under the Share Option Scheme represents approximately 8.65% of the issued share capital of the Company as at the Latest Practicable Date. The Board proposes to put forward Ordinary Resolution no. 6.5 at the Annual General Meeting for the Shareholders to consider and, if thought fit, approve the refreshment of the Scheme Mandate Limit. Assuming that (i) no Shares are issued or repurchased by the Company from the Latest Practical Date up to the Annual General Meeting; and (ii) the refreshment of the Scheme Mandate Limit is approved by the Shareholders at the Annual General Meeting, the Company will have an issued share capital of 576,667,699 Shares as at the date of the Annual General Meeting, the refreshed Scheme Mandate Limit will allow the Company to issue under the Share Option Scheme a maximum of 57,666,769 Shares, representing 10% of the total issued share capital of the Company as at the date of the approval of such refreshment of the Scheme Mandate Limit. Accordingly, the Board believes that it is in the interest of the Company to refresh the Scheme Mandate Limit to permit the Company to have the right to grant more options under the Share Option Scheme, which will increase the flexibility of the Company to reward eligible participants in recognition of their contributions to the Company. 5

8 LETTER FROM THE BOARD The refreshment of the Scheme Mandate Limit is conditional upon: (i) the passing of an ordinary resolution to approve the refreshment of the Scheme Mandate Limit at the Annual General Meeting; and (ii) the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Shares to be issued pursuant to the exercise of the options to be granted under the refreshed Scheme Mandate Limit. Application will be made to the Stock Exchange for the listing of and permission to deal in any Shares, representing 10% of the issued share capital as at the date of the Annual General Meeting which may fall to be issued upon the exercise of any options that may be granted under the refreshed Scheme Mandate Limit. 6. CHANGE OF NAME OF THE COMPANY The Group has adopted and launched a new corporate identity in June The Company s new corporate identity comes in the form of two hands joined together, receiving an ancient Chinese coin, with the words taifook incorporated at the right-hand side. This symbolizes how the Group embracing investment opportunities and turning them into wealth. This new corporate identity accurately reflects the Group s philosophy close to the market, close to you and the Group s new image. To synchronize the name and the new corporate identity of the Company, the Board proposes to change the existing name of the Company into Taifook Securities Group Limited. The Board proposes to put forward Special Resolution no. 7.1 at the Annual General Meeting for the Shareholders to consider and, if thought fit, approve the proposed change of name. The proposed change of name of the Company will be subject to the approval of the Shareholders and the Registrar of Companies in Bermuda granting approval for such change. The Company will carry out the necessary filing procedures with the Registrar of Companies in Bermuda and with the Registrar of Companies in Hong Kong once such change of name has been passed by the Shareholders at the Annual General Meeting. The effective date of the proposed change of name will be the date on which the new name is entered by the Registrar of Companies in Bermuda on the register in place of the existing name. Upon the proposed change of name of the Company becoming effective, the name of the Company will be changed to Taifook Securities Group Limited. The Chinese name of the Company,, which has been registered under Part XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) in September 2002, will continue to form part of the Company s name in Hong Kong for identification purpose only. 6

9 LETTER FROM THE BOARD Upon the proposed change of name of the Company becoming effective, all existing share certificates of the Company in issue bearing the existing name of the Company will continue to be evidence of title to the Shares and will continue to be valid for trading, settlement and delivery for the same number of Shares in the proposed name of the Company and the rights of any Shareholders will not be affected as a result of the proposed change of name. Once the proposed change of name has become effective, any issues of share certificates of the Company thereafter will be in the new name of the Company and the securities of the Company will be traded on the Stock Exchange in the new name. However, there will be no special arrangement for free exchange of the existing share certificates of the Company for new share certificates printed in the Company s new name. An announcement will be made by the Company once the proposed change of name of the Company has become effective. 7. AMENDMENTS TO THE BYE-LAWS In early 2005, the Stock Exchange has amended the Listing Rules for the purpose of implementing the Code, which came into effect on 1 January The Code replaces the Code of Best Practice as set out in Appendix 14 to the then Listing Rules. In order to bring the Bye-laws in line with some of the corporate governance requirements set out in the Code, the Board proposes to put forward a special resolution at the Annual General Meeting for the Shareholders to consider and, if thought fit, approve the proposed amendments to the Bye-laws, details of which are set out in Special Resolution no. 7.2 in the AGM Notice. In the present form, bye-law 6 of the Bye-laws provides that a reduction of the authorized or issued share capital or any share premium account or other undistributable reserve in any manner permitted by law shall be approved by special resolution. Since there is currently no such requirements under any Bermuda or Hong Kong law or the Listing Rules in relation to the reduction of the authorized share capital, the Company proposes to amend the contents of such bye-law accordingly. In addition, the Board proposes to amend bye-laws 66 and 68 of the Bye-laws in order to bring such bye-laws in line with some of the corporate governance requirements regarding voting by poll in general meetings and disclosure of poll figures as set out in the Code. Pursuant to paragraph A.4.2 of the Code, every director of a listed issuer should be subject to retirement by rotation at least once every three years. In the present form, bye-law 87(1) of the Bye-laws provides, amongst others, that at each annual general meeting one-third of the Directors (or, if their number is not a multiple of three, the number nearest to but not greater than one-third) shall retire from office by rotation but the chairman of the Board and/or the managing director shall not be subject to such retirement by rotation, which is inconsistent with the new requirement under A.4.2 of Appendix 14 to the Listing Rules. 7

10 LETTER FROM THE BOARD In this circumstances, in order to bring the Bye-laws in line with the Code, the Board proposes to put forward a special resolution at the Annual General Meeting for the Shareholders to consider and, if thought fit, approve the proposed amendments to the Bye-laws, details of which are set out in Special Resolution no. 7.2 in the AGM Notice. 8. RE-ELECTION OF RETIRING DIRECTORS As at the Latest Practicable Date, the executive Directors were Dr. CHENG Kar Shun, Henry, Messrs. LO Lin Shing, Simon, DOO Wai Hoi, William, WONG Shiu Hoi, Peter, LEE Yiu Wing, William, CHAN Chi On, Derek; the non-executive Directors were Messrs. WONG Kwok Kin, Andrew, LAM Wai Hon, Patrick, CHEUNG Wing Yui, Edward, HO Hau Chong, Norman, TO Hin Tsun, Gerald; and the independent non-executive Directors were Messrs. MAN Mo Leung, TSUI Hing Chuen, William and WEI Chi Kuan, Kenny. Pursuant to bye-law 87 of the Bye-laws, Messrs. CHAN Chi On, Derek, HO Hau Chong, Norman, LEE Yiu Wing, William and TO Hin Tsun, Gerald shall retire from office at the Annual General Meeting and shall be eligible for re-election. Particulars of the Directors proposed to be re-elected at the Annual General Meeting are set out in Appendix II to this circular. 9. ANNUAL GENERAL MEETING The AGM Notice is set out on pages 20 to 25 of this circular. At the Annual General Meeting, Ordinary Resolutions and Special Resolutions, amongst others, will be proposed to: re-elect each of Messrs. CHAN Chi On, Derek, HO Hau Chong, Norman, LEE Yiu Wing, William and TO Hin Tsun, Gerald as Directors; grant to the Directors a general mandate to exercise all the powers of the Company to allot, issue and deal with Shares not exceeding 20% of the issued share capital of the Company as at the date of passing such Ordinary Resolution; grant to the Directors a general mandate to exercise all the powers of the Company to repurchase on the Stock Exchange or any other stock exchange on which the securities of the Company may be listed and recognized by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose Shares representing up to a maximum of 10% of the issued share capital of the Company as at the date of passing such Ordinary Resolution; extend the general mandate which will be granted to the Directors to allot, issue and deal with Shares by adding to it the number of Shares repurchased under the Repurchase Proposal after the granting of such general mandate; increase the authorized share capital of the Company to HK$200,000,000 divided into 2,000,000,000 shares of nominal value of HK$0.10 each; 8

11 LETTER FROM THE BOARD refresh the Scheme Mandate Limit of the existing Share Option Scheme; change the name of the Company to Taifook Securities Group Limited ; and amend the Bye-laws as set out in Special Resolution no. 7.2 contained in the AGM Notice. 10. PROCEDURES BY WHICH A POLL MAY BE DEMANDED Pursuant to bye-law 66 of the existing Bye-laws, a resolution put to the vote of a general meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by: (a) (b) (c) (d) the chairman of such meeting; or at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy for the time being entitled to vote at the meeting; or a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy and holding Shares conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Shares conferring that right. A demand by a person as proxy for a Shareholder or in the case of a Shareholder being a corporation by its duly authorized representative shall be deemed to be the same as a demand by the Shareholder. 11. ACTION TO BE TAKEN A form of proxy for use by the Shareholders at the Annual General Meeting and at any adjournment thereof is enclosed. Whether or not you propose to attend the Annual General Meeting, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company s Branch Share Registrars and Transfer Office in Hong Kong, Tricor Investor Services Limited at 26th Floor, Tesbury Centre, 28 Queen s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the Annual General Meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Annual General Meeting or any adjourned meeting if you so wish. 9

12 LETTER FROM THE BOARD 12. RECOMMENDATION The Directors are of the opinion that the proposals referred to in this circular are in the best interests of the Company and the Shareholders as a whole and therefore recommend the Shareholders to vote in favour of the Ordinary Resolutions and the Special Resolutions to be proposed at the Annual General Meeting. 13. GENERAL The Group is principally engaged in securities and futures contracts broking and trading, the provision of margin and other financing, the provision of corporate advisory, placing and underwriting services, bullion contracts dealing and trading, leveraged foreign exchange trading, the provision of nominee and custodian services, fund management and the provision of agency services for savings plans. By Order of the Board WONG Shiu Hoi, Peter Managing Director 10

13 APPENDIX I EXPLANATORY STATEMENT This appendix serves as an explanatory statement, as required by the Share Repurchase Rules, to provide requisite information to you for your consideration of the proposal to permit the repurchase of Shares up to a maximum of 10% of the issued share capital of the Company as at the date of passing the Ordinary Resolution in relation to the Repurchase Proposal. 1. SHARE CAPITAL As at the Latest Practicable Date, the issued share capital of the Company comprised 576,667,699 Shares. Subject to the passing of the Ordinary Resolution in relation to the Repurchase Proposal and on the basis that no further Shares are issued or repurchased prior to the Annual General Meeting, the Company would be allowed under the Repurchase Proposal to repurchase a maximum of 57,666,769 fully paid-up Shares representing not more than 10% of the issued share capital of the Company as at the date of passing of such Ordinary Resolution. 2. REASONS FOR REPURCHASES The Directors have no present intention to repurchase any Shares and it is not possible to anticipate in advance any specific circumstances in which the Directors might think it appropriate to repurchase Shares. Moreover, the Directors believe that the Repurchase Proposal would give the Company additional flexibility where situation warrants and is in the best interests of the Company and the Shareholders. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement in the net assets and /or earnings per Share of the Company and will only be made when the Directors believe that such a repurchase will benefit the Company and the Shareholders. 3. FUNDING OF REPURCHASES In repurchasing the Shares, the Company may only apply its available cash flow or working capital which are legally available for such purpose in accordance with its memorandum of association and Bye-Laws and the Companies Act. The Companies Act provides that the amount of capital repaid in connection with a share repurchase may only be derived from capital paid up on the relevant Shares to be repurchased, or funds of the Company that would otherwise be available for dividend or distribution or the proceeds of a fresh issue of Shares made for the purpose. The amount of premium payable on repurchases may only be derived from funds of the Company that would otherwise be available for dividend or distribution or the share premium account of the Company. There might be an adverse impact on the working capital or gearing position of the Company as compared with the position disclosed in the audited accounts contained in the annual report for the year ended 31 December 2005 of the Company in the event that the power to repurchase Shares pursuant to the Repurchase Proposal was to be exercised in 11

14 APPENDIX I EXPLANATORY STATEMENT full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the power to repurchase Shares pursuant to the Repurchase Proposal to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company. 4. SHARE PRICES The highest and lowest prices at which the Shares have traded on the Stock Exchange during each of the 12 months preceding the Latest Practicable Date were as follows: 2005 Share Prices Highest Lowest HK$ HK$ April May June July August September October November December January February March April (up to and including the Latest Practicable Date) UNDERTAKING The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the Repurchase Proposal and in accordance with the Listing Rules and the applicable laws of Bermuda. None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates (as defined in the Listing Rules), have any present intention to sell any Shares to the Company or its subsidiaries under the Repurchase Proposal if such is approved by the Shareholders. No connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company or its subsidiaries, or have undertaken not to do so, in the event that the Repurchase Proposal is approved by the Shareholders. 12

15 APPENDIX I EXPLANATORY STATEMENT 6. TAKEOVERS CODE If on the exercise of the power to repurchase Shares pursuant to the Repurchase Proposal, a Shareholder s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of Rule 32 of the Takeovers Code. As a result, a Shareholder or a group of Shareholders acting in concert could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code. As at the Latest Practicable Date, according to the register kept by the Company pursuant to Section 336(1) of the SFO, the following interests in the Shares were recorded: Name of Substantial Shareholders Notes Number of shares held and nature of interest Direct Deemed Approximate % of existing issued share capital of the Company Approximate% of issued share capital of the Company if Repurchase Proposal was exercised in full Chow Tai Fook Nominee Limited ( CTFN ) Cheng Yu Tung Family Holdings Limited ( CYTF ) Centennial Success Limited ( CSL ) Chow Tai Fook Enterprises Limited ( CTFE ) New World Development Company Limited ( NWD ) NWS Holdings Limited ( NWS ) NWS Service Management Limited (incorporated in the Cayman Islands) ( NWSSM (Cayman) ) NWS Service Management Limited (incorporated in the British Virgin Islands) ( NWSSM (BVI) ) NWS Financial Management Services Limited ( NWSFM ) Lo Lin Shing, Simon ( Mr. Lo ) Wellington Equities Inc. ( WEI ) 1 107,140, ,602, ,602, ,977, ,624, ,624, ,624, ,624, ,624, ,624, ,500,000 70,616, ,616, Ku Ming Mei, Rouisa 10 76,116,

16 APPENDIX I EXPLANATORY STATEMENT Notes: 1. Mr. Cheng Yu Tung beneficially owns all of the issued shares in CTFN. 2. CYTF has interests in more than one-third of the issued shares of CSL and is accordingly deemed to have an interest in the shares in which CSL is deemed to be interested. 3. CTFE is a wholly-owned subsidiary of CSL and CTFE s interests in the Company are deemed to be held by CSL. 4. CTFE and its subsidiaries have interests in more than one-third of the issued shares of NWD and is accordingly deemed to have an interest in the shares in which NWD is deemed to be interested. 5. NWD has interests in more than one-third of the issued shares of NWS and is accordingly deemed to have an interest in the shares in which NWS is deemed to be interested. 6. NWSSM (Cayman) is a wholly-owned subsidiary of NWS and NWSSM (Cayman) s interests in the Company are deemed to be held by NWS. 7. NWSSM (BVI) is a wholly-owned subsidiary of NWSSM (Cayman) and NWSSM (BVI) s interests in the Company are deemed to be held by NWSSM (Cayman). 8. NWSFM is a wholly-owned subsidiary of NWSSM (BVI) and NWSFM s interests in the Company are deemed to be held by NWSSM (BVI). 9. Mr. Lo beneficially owns all of the issued shares in WEI and is accordingly deemed to have an interest in the shares held by WEI. In addition, Mr. Lo also holds options to subscribe for 4,000,000 shares which were granted to him on 10 February Ms. Ku Ming Mei, Rouisa is the spouse of Mr. Lo and is thus taken to be interested in the same parcel of shares held by Mr. Lo. Based on the above-mentioned shareholdings and in the event that the Directors exercise in full the power to repurchase Shares pursuant to the Repurchase Proposal, the aggregate interests of Chow Tai Fook Nominee Limited, Chow Tai Fook Enterprises Limited, Wellington Equities Inc. and Mr. Lo Lin Shing, Simon, acting in concert in exercising their respective voting rights in the Company, will be increased from approximately 58.94% to approximately 65.48% of the issued share capital of the Company and the Directors are not aware of any consequences which may arise under the Takeovers Code as a result of any repurchases made under the Repurchase Proposal. The Directors do not propose to repurchase shares which would result in the aggregate amount of the share capital of the Company in public hands reducing to below 25%. 14

17 APPENDIX I EXPLANATORY STATEMENT 7. SHARE REPURCHASES MADE BY THE COMPANY The Company had repurchased a total of 4,564,000 Shares (whether on the Stock Exchange or otherwise) in the six months preceding the Latest Practicable Date. Transaction Date of Shares Repurchased Number of Shares Repurchased Purchase Price Paid Per Share Highest Lowest Total Purchase Price Paid HK$ HK$ HK$ 3 October , ,500 5 October , ,260 6 October , ,400 7 October , , October , , October , , October , , October , , October , , October , , October , ,800 1 November , ,380 2 November , ,260 7 November , ,040 8 November , ,400 9 November , , November , , November , , November , , November , , November , , November , , November , ,000 Save as disclosed above, there was no other share repurchase made by the Company (whether on the Stock Exchange or otherwise) during the said six months period. 15

18 APPENDIX II BIOGRAPHICAL DETAILS OF RETIRING DIRECTORS This appendix provides you with biographical details of the Directors who will retire from their offices at the Annual General Meeting and being eligible, will offer themselves for re-election at the Annual General Meeting, for consideration of the proposal in relation to the re-election of retiring Directors: CHAN Chi On, Derek (a) (b) Mr. Chan, aged 42, joined the Group in 1996 and was appointed as an Executive Director of the Company on 29 June He is also a member of the Executive Committee of the Company and the Managing Director of Tai Fook Capital Limited as well as a Responsible Officer of Tai Fook Capital Limited under the Securities and Futures Ordinance. Mr. Chan is in charge of the corporate finance division. Save as disclosed herein, Mr. Chan has not held any other positions with the Company and other members of the Group. Mr. Chan possesses over 15 years of experience in the financial services industry. He holds a Master of Business Administration Degree from the Hong Kong University of Science and Technology as well as a Social Sciences Degree in Economics from the University of Hong Kong. He also published a book on the subject of listing procedures and securities rules and regulations. Mr. Chan is an independent non-executive director of GST Holdings Limited as well as GZI REIT Asset Management Limited, manager of GZI REIT, the shares and units of which are respectively listed on the Stock Exchange. Saved as disclosed herein, Mr. Chan had not held any other directorships in listed public companies in the last three years. (c) Mr. Chan had entered into a service agreement with the Company on 10 December 2003 for a term of three years commencing on 1 January 2004 and thereafter continuing until terminated by either party giving to the other not less than six months prior written notice. He is also subject to retirement by rotation and re-election at the annual general meetings of the Company in accordance with the Bye-laws. The monthly salary of Mr. Chan specified in the service agreement is HK$135,000, which shall be adjusted from time to time at a rate to be determined by the independent non-executive Directors. His current monthly salary is HK$159,000 which has been taken effect from 1 January Mr. Chan is entitled to a management bonus as may be determined by the Board with the aggregate of the management bonuses payable to all the executive Directors in respect of any financial year not exceeding 5% of the consolidated profit of the Group after tax and minority interests but before extraordinary items for the relevant financial year. (d) (e) Mr. Chan has no relationships with any directors, senior management or substantial or controlling shareholders of the Company. As at the Latest Practicable Date, Mr. Chan held an interest in 2,250,000 share options of the Company which were granted by the Company on 10 February 2006 at a subscription price of HK$0.94 per Share with an option period of eight years commencing from 10 August 2006 to 9 August 2014 (both dates inclusive). Saved as disclosed herein, Mr. Chan had no other interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance as at the Latest Practicable Date. 16

19 APPENDIX II BIOGRAPHICAL DETAILS OF RETIRING DIRECTORS Save as disclosed above, there are no more information relating to the proposed re-election of Mr. Chan as a Director that should be disclosed pursuant to any of the requirements of Rule 13.51(2) (h) to (v) of the Listing Rules and there are also no other matters that need to be brought to the attention of the Shareholders. HO Hau Chong, Norman (a) Mr. Ho, aged 50, was appointed as a Non-executive Director of the Company on 14 May He is also a member of the Audit Committee of the Company. Save as disclosed herein, Mr. Ho has not held any other positions with the Company and other members of the Group. (b) Mr. Ho possesses over 20 years of experience in international finance and property development. He is a member of the Institute of Chartered Accountants in England and Wales and a member of the Hong Kong Institute of Certified Public Accountants. Mr. Ho is a director of Tak Hung (Holding) Company Limited and Honorway Investments Limited, which are private companies owned by his family. He is also a director of New World Mobile Holdings Limited, CITIC Pacific Limited, Lee Hing Development Limited and Hong Kong Ferry (Holdings) Company Limited. Save as disclosed herein, Mr. Ho had not held any other directorships in listed public companies in the last three years. (c) Mr. Ho had entered into a service contract with the Company on 27 July 2004 for a term of two years commencing on 1 July 2004 and is subject to the retirement and re-appointment provisions in the Bye-laws. Subject to approval of the Shareholders in annual general meetings, Mr. Ho is entitled to an annual director fee of HK$200,000 payable every half-yearly in equal amounts of HK$100,000 each. He is not entitled to any additional benefits unless decided by the Board of the Company otherwise. (d) Mr. Ho has no relationships with any directors, senior management or substantial or controlling shareholders of the Company. (e) As at the Latest Practicable Date, Mr. Ho had no interests in the shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance. Save as disclosed above, there are no more information relating to the proposed re-election of Mr. Ho as a Director that should be disclosed pursuant to any of the requirements of Rule 13.51(2) (h) to (v) of the Listing Rules and there are also no other matters that need to be brought to the attention of the Shareholders. 17

20 APPENDIX II BIOGRAPHICAL DETAILS OF RETIRING DIRECTORS LEE Yiu Wing, William (a) Mr. Lee, aged 45, first joined the Group in 1988 and subsequently rejoined in 1997 after his departure in He was appointed as an Executive Director of the Company on 29 June Mr. Lee is also the Chief Operating Officer, a member of the Business Review Committee, the Credit Committee, the Executive Committee and the Information Technology Steering Committee of the Company. In addition, Mr. Lee is the Managing Director of Tai Fook Securities Company Limited, a Responsible Officer of Tai Fook Securities Company Limited and Tai Fook Investment Services Limited under the Securities and Futures Ordinance and a director of various subsidiaries of the Company. He is responsible for the management of all operations divisions as well as the retail and corporate services and sales department. Save as disclosed herein, Mr. Lee has not held any other positions with the Company and other members of the Group. (b) Mr. Lee possesses over 18 years of experience in the financial services industry. He holds a BA Degree in Economics and Management from the University of Guelph, Canada. Mr. Lee is a member of both the Hong Kong Institute of Directors and the Hong Kong Securities Institute. He is also a committee member of Hong Kong Stockbrokers Association. Saved as disclosed herein, Mr. Lee had not held any other directorships in listed public companies in the last three years. (c) Mr. Lee had entered into a service agreement with the Company on 10 December 2003 for a term of three years commencing on 1 January 2004 and thereafter continuing until terminated by either party giving to the other not less than six months prior written notice. He is also subject to retirement by rotation and re-election at the annual general meetings of the Company in accordance with the Bye-laws. The monthly salary of Mr. Lee specified in the service agreement is HK$117,000, which shall be adjusted from time to time at a rate to be determined by the independent non-executive Directors. His current monthly salary is HK$154,500 which has been taken effect from 1 January Mr. Lee is entitled to a management bonus as may be determined by the Board with the aggregate of the management bonuses payable to all the executive Directors in respect of any financial year not exceeding 5% of the consolidated profit of the Group after tax and minority interests but before extraordinary items for the relevant financial year. (d) Mr. Lee has no relationships with any directors, senior management or substantial or controlling shareholders of the Company. (e) As at the Latest Practicable Date, Mr. Lee held an interest in 2,500,000 share options of the Company which were granted by the Company on 10 February 2006 at a subscription price of HK$0.94 per Share with an option period of eight years commencing from 10 August 2006 to 9 August 2014 (both dates inclusive). Saved as disclosed herein, Mr. Lee had no other interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance as at the Latest Practicable Date. 18

21 APPENDIX II BIOGRAPHICAL DETAILS OF RETIRING DIRECTORS Save as disclosed above, there are no more information relating to the proposed re-election of Mr. Lee as a Director that should be disclosed pursuant to any of the requirements of Rule 13.51(2) (h) to (v) of the Listing Rules and there are also no other matters that need to be brought to the attention of the Shareholders. TO Hin Tsun, Gerald (a) Mr. To, aged 56, was appointed as a Non-executive Director of the Company on 14 May Save as disclosed herein, Mr. To has not held any other positions with the Company and other members of the Group. (b) Mr. To has been a practising solicitor in Hong Kong since He is also qualified as a solicitor in the United Kingdom, as well as an advocate and solicitor in Singapore. He is currently the senior and managing partner of Messrs. T. S. Tong & Co., Solicitors and Notaries. Mr. To is also an executive director of New World Mobile Holdings Limited and a non-executive director of New World CyberBase Limited and NWS Holdings Limited, all of which are companies whose shares are listed on the Stock Exchange. Mr. To resigned as director of Asean Resources Holdings Limited (currently known as Mexan Limited) on 21 July 2003 and The Kwong Sang Hong International Limited on 4 February 2005, both of which are companies whose shares are listed on the Stock Exchange. Save as disclosed herein, Mr. To had not held any other directorships in listed public companies in the last three years. (c) Mr. To had entered into a service contract with the Company on 27 July 2004 for a term of two years commencing on 1 July 2004 and is subject to the retirement and re-appointment provisions in the Bye-laws. Subject to approval of the Shareholders in annual general meetings, Mr. To is entitled to an annual director fee of HK$200,000 payable every half-yearly in equal amounts of HK$100,000 each. He is not entitled to any additional benefits unless decided by the Board otherwise. (d) Mr. To has no relationships with any directors, senior management or substantial or controlling shareholders of the Company. (e) As at the Latest Practicable Date, Mr. To had no interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance. Save as disclosed above, there are no more information relating to the proposed re-election of Mr. To as a Director that should be disclosed pursuant to any of the requirements of Rule 13.51(2) (h) to (v) of the Listing Rules and there are also no other matters that need to be brought to the attention of the Shareholders. 19

22 NOTICE OF ANNUAL GENERAL MEETING TAI FOOK SECURITIES GROUP LIMITED (Incorporated in Bermuda with limited liability) (Stock Code: 00665) NOTICE IS HEREBY GIVEN that an annual general meeting (the Annual General Meeting ) of the shareholders of Tai Fook Securities Group Limited (the Company ) will be held at Tai Fook Training Centre, Unit D, 14th Floor, On Hing Building, 1 On Hing Terrace, Central, Hong Kong on Monday, 29 May 2006 at 11:00 a.m. for the following purposes: 1. To receive and consider the audited financial statements and reports of the board of directors and auditors for the year ended 31 December 2005; 2. To declare a final dividend; 3. To re-elect the following retiring directors as directors: (a) (b) (c) (d) Mr. CHAN Chi On, Derek who was an executive director retiring by rotation; Mr. HO Hau Chong, Norman who was a non-executive director retiring by rotation; Mr. LEE Yiu Wing, William who was an executive director retiring by rotation; and Mr. TO Hin Tsun, Gerald who was a non-executive director retiring by rotation. 4. To fix the remuneration of directors; 5. To re-appoint auditors and to authorize the board of directors to fix their remuneration; and 6. As special business, to consider and, if thought fit, pass with or without modifications the following resolutions as ordinary resolutions: ORDINARY RESOLUTIONS 6.1 THAT: (a) subject to paragraph (c) below, the exercise by the directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares of HK$0.10 each in the capital of the Company and to make or grant offers, agreements and options (including bonds, warrants and debentures convertible into shares of the Company) which would or might require the exercise of such power be and is hereby generally and unconditionally approved; 20