CONNECTED TRANSACTIONS

Transcription

1 We have entered into a number of agreements and arrangements with our connected persons (as set out below) in our ordinary and usual course of business. Upon the [REDACTED], the transactions disclosed in this section will constitute connected transactions under the Listing Rules. Based on the tentative timetable for the proposed [REDACTED], it is expected that the Company will be [REDACTED]. Accordingly, all references to the provisions in Chapter 14A of the Listing Rules in this section are references to the new connected transaction provisions in accordance with the amendments to Chapter 14A of the Listing Rules which will take effect from [REDACTED]. CONNECTED PERSONS The table below sets forth the connected persons of our Company who conduct or will conduct connected transactions with our Group upon [REDACTED] and the nature of their connection with our Group: Name Mr. Fu SINA HK Beijing SINA Hantang Jinhua Jinhua Xingxiu Connected Relationship Mr. Fu is our Director and is therefore our connected person pursuant to Rule 14A.07(1) of the Listing Rules. SINA HK is a substantial shareholder of our Company and is therefore our connected person pursuant to Rule 14A.07(1) of the Listing Rules. Beijing SINA is a subsidiary of SINA HK and is therefore our connected person pursuant to Rule 14A.07(4) of the Listing Rules. Hantang is owned as to 98% by Mr. Fu and is therefore our connected person pursuant to Rule 14A.07(4) of the Listing Rules. Jinhua9158 is owned as to 98% by Mr. Fu and is therefore our connected person pursuant to Rule 14A.07(4) of the Listing Rules. Jinhua99 is owned as to 98% by Mr. Fu and is therefore our connected person pursuant to Rule 14A.07(4) of the Listing Rules. Xingxiu is owned as to 98% by Mr. Fu and is therefore our connected person pursuant to Rule 14A.07(4) of the Listing Rules. 209

2 CONTINUING The following table is a summary of our continuing connected transactions: Nature of Transaction Applicable Hong Kong Listing Rules Exempt Continuing Connected Transactions Waiver Sought Proposed Annual Cap for the Year Ending December 31, (RMB) Sina Show IP Agreements 14A.76(1) N/A Nil Nil Nil Non-Exempt Continuing Connected Transactions (i) Framework Cooperation Agreement 14A.35, 14A.36, 14A.51 to 14A.53 Waiver from announcement and independent shareholders approval requirements under 14A.35, 14A.36 to 14A.45 Aggregate amounts paid for services provided by SINA Group to us: 17,500,000 21,000,000 25,200,000 Aggregate amounts paid for services provided by us to SINA Group: 12,600,000 15,120,000 18,144,000 (ii) Contractual Arrangements 14A.35, 14A.36, 14A.51 to 14A.53 Waiver from (i) announcement and independent shareholders approval requirements; (ii) the requirement of setting an annual cap; and (iii) the requirement of limiting the term of the New Agreements to three years or less under 14A.35, 14A.36 to 14A.45, 14A.52 and 14A.53 N/A N/A N/A 210

3 Exempt Continuing Connected Transactions The following agreements constitute continuing connected transactions for our Group, which are exempt from the reporting, annual review, announcement and independent shareholders approval requirements under Rule 14A.73(1) of the Listing Rules. Sina Show IP agreements In connection with our operation of Sina Show, Hantang and Beijing SINA entered into the following agreements: (a) (b) a trademark licensing agreement on July 1, 2010 and a supplemental agreement on March 13, 2014, which extended the license term to July 1, 2020 (together, the Sina Show Trademark Licensing Agreement ). Pursuant to the Sina Show Trademark Licensing Agreement, Beijing SINA granted Hantang a sole license to use the Show, and SinaShow logos (the Sina Show Logos ) in the PRC. In addition, Beijing SINA also granted Hantang a non-exclusive right to use the,, and sina trademarks (the Sina Show Trademarks, together with the Sina Show Logos, the Sina Show Marks ) in the PRC only in connection with our operation of Sina Show and related products or services; and a domain name licensing agreement on July 1, 2010 and a supplemental agreement on March 13, 2014 which extended the license term to July 1, 2020 (together, the Sina Show Domain Name Licensing Agreement, together with the Sina Show Trademark Licensing Agreement, the Sina Show IP Agreements ). Pursuant to the Sina Show Domain Name Licensing Agreement, Beijing SINA granted Hantang a sole license to use its show.sina.com.cn domain name (the Sina Show Domain Name ) in the PRC. The licenses under both agreements are royalty-free. Hantang is entitled to sub-license the Sina Show Marks and Sina Show Domain Name to our Company and its subsidiaries, including our PRC Operating Entities. If Beijing SINA terminates the Sina Show IP Agreements due to Hantang s (i) failure to remedy a breach of contract and compensate Beijing SINA accordingly, (ii) entering into bankruptcy or winding-up proceedings, or (iii) inability to fulfil its obligations under the agreement due to a force majeure event, Beijing SINA shall give Hantang a six-month grace period to seek replacement solutions. In addition, if anytime during the license term, PRC laws and regulations require any member of our Group or its respective shareholders to own any of the Sina Show Logos used by it, Beijing SINA agrees to transfer the relevant Sina Show Logo to Hantang or other member of our Group at no consideration, provided that such transfer can be operated. Upon expiration of the license term, Hantang or the relevant member of our Group shall transfer such Sina Show Logos back to Beijing SINA at no consideration. For further details of the Sina Show Marks and the Sina Show Domain Name, please refer to the Appendix IV Statutory and General Information 2. Our Material Intellectual Property Rights section in this [REDACTED]. 211

4 Listing Rules Implications Under the Listing Rules, the transactions contemplated under the Sina Show IP Agreements will be aggregated and treated as if they were one transaction as they are of similar nature with parties connected or otherwise associated with one another. As the applicable percentage ratios set out in Rule of the Listing Rules in respect of the Sina Show IP Agreements, as aggregated, are less than 0.1%, the transactions contemplated under these agreements constitute de minimis continuing connected transactions pursuant to Rule 14A.73(1) of the Listing Rules, and are exempt from reporting, announcement and independent shareholders approval requirements. No annual cap is therefore set for these agreements. As required by Rule 14A.52 of the Listing Rules, the period for continuing connected transactions must not exceed three years, except in cases where the nature of the transaction requires the contract to be of a duration longer than three years. Our Directors and the Joint Sponsors are of the view that the trademarks and domain names granted under the Sina Show IP Agreements are essential for the operation of Sina Show and a longer duration of the agreements will provide and maintain stability of such business. Moreover, our Group has to devote significant capital commitment and management effort to operate the relevant platforms, which makes it commercially desirable for our Group to have a sufficiently long term use of the trademarks and domain names to capture the benefits arising for our effort. Non-Exempt Continuing Connected Transactions We set out below details of the continuing connected transactions for our Group, which are subject to the reporting, annual review, announcement and independent shareholders approval requirements under Rule 14A.35, 14A.36 to 14A.45, 14A.49, 14A.55 to 14A.59 and 14A.71 of the Listing Rules. Framework Cooperation Agreement We entered into a business cooperation agreement with SINA HK (the Framework Cooperation Agreement ) on June 10, 2014, which is valid until December 31, The Framework Cooperation Agreement serves as a framework agreement containing the scope of services, transaction principles, and pricing terms and policies for those services. Provision of services A. Provision of services by SINA Group to us Pursuant to the Framework Cooperation Agreement, the SINA Group agrees to provide a range of services to our Group, including (i) advertising or related marketing for our Group, our customers or in relation to business collaborations between the SINA Group and our Group; (ii) technical development or consultation; and (iii) provision of wireless messaging channels for delivering messages the content of which are supplied by us. 212

5 B. Provision of services by us to SINA Group Pursuant to the Framework Cooperation Agreement, our Group shall provide certain services to members of SINA Group, including (i) advertising or related marketing for SINA Group, customers represented by it or in relation to business collaborations between the SINA Group and us; and (ii) technical development or consultation. Agreements underlying the Framework Cooperation Agreement Any agreements to be entered into for the services provided under the Framework Cooperation Agreement shall be entered in accordance with the transaction principles, pricing terms and policies set out thereunder. However, members of our Group have entered into agreements with members of the SINA Group for certain services under the Framework Cooperation Agreement which are still valid. For those agreements, the pricing of the services provided shall continue to be determined in accordance with the pricing terms and policies set out in the relevant agreement. Transaction principle Both parties shall ensure the services provided to the other party should be in good quality and at fair and reasonable prices. If there are specific regulations under the applicable law, the parties shall follow such regulations in providing the services. Basis of determination of price The pricing of the services to be provided under the Framework Cooperation Agreement shall be determined in accordance with the (i) the applicable market price or fees at the time; and (ii) if no applicable market price or fees is available, then in accordance with the reasonable costs and reasonable profits of the relevant services. Reasons for transaction As part of our strategic cooperation with Sina Group, we have entered into long-term collaboration with Sina Group in different business operations. Both parties consider that the continuous procurement of services from each other facilitates the sharing of technical resources and gives our business complementary strengths. Existing underlying agreements As aforementioned, the agreements underlying the Framework Cooperation Agreement which are still valid and existing between members of the SINA Group and members of our Group are set out below: (i) Advertising Advertisement Cooperation Agreement On September 1, 2011, Hantang entered into an advertising cooperation agreement (the Advertising Cooperation Agreement ) with Beijing SINA, Beijing Sina Advertisement Co., Ltd. ( ), Jinzhuo Hengbang Technology 213

6 (Beijing) Co., Ltd. ( ( ) ) and Shanghai Sina Advertising Co., Ltd. ( ) (together, the Original Sina Parties ). The parties entered into a supplemental agreement on September 1, 2012 which extended the term of the Advertising Cooperation Agreement to August 31, 2014, and a further supplemental agreement on April 1, 2013 which added Beijing MicroDream TechnoInnovation IT Technology Co. ( ) (together with the Original Sina Parties, the Sina Parties ) as a party to the agreement. Pursuant to the Advertising Cooperation Agreement, the Sina Parties are responsible for the sales and marketing, while Hantang is responsible for placing advertisements on Sina Show platform for customers recruited by the Sina Parties and for providing technical and operational support. Income generated from the services under the Advertising Cooperation Agreement is split in half by Hantang and the Sina Parties, after deduction of a 12% agent commission by the Sina Parties. (ii) Wireless Payment Services Wireless Payment Services Agreement On October 1, 2012, Jinhua9158 and Beijing SINA entered into a cooperation agreement (the Wireless Payment Services Agreement ) which shall be valid until September 30, The parties entered into a supplemental agreement on January 1, 2013 pursuant to which Xingxiu replaced Jinhua9158 as a party to the Wireless Payment Services Agreement and assumed all of Jinhua9158 s obligations thereunder. Pursuant to the Wireless Payment Services Agreement, the parties launched wireless payment services including pre-paid cards, mobile banking, online banking. Xingxiu is responsible for providing technical support and services while Beijing SINA is responsible for operation and settlement. Accordingly, Xingxiu pays a service fee to Beijing SINA amounting to 2% or 3.5% of the payments collected from users, depending on the method of payment used by users. (iii) Wireless Payment Services Sina Show Wireless Payment Services Agreement On September 1, 2010, Hantang, Beijing SINA and Beijing Star Online Cultural Development Co., Ltd. ( ) entered into a cooperation agreement (the Sina Show Wireless Payment Services Agreement ). Subsequently, the parties entered into three supplemental agreements on March 1, 2011, March 1, 2013 and March 1, 2014 respectively. As a result of these supplemental agreements: (a) Shenzhen Wangxing Technology Co., Ltd. ( ) became a party to the Sina Show Wireless Payment Services Agreement, (b) Xingxiu replaced Hantang as a party to the Sina Show Wireless Payment Services Agreement and assumed all of Hantang s obligations under the agreement, and (c) the term of the Sina Show Wireless Payment Services Agreement was extended to February 28, Pursuant to the Sina Show Wireless Payment Services Agreement, Beijing SINA, Beijing Star Online Cultural Development Co., Ltd and Shenzhen Wangxing Technology Co., Ltd. provide wireless channels to users of Sina Show to top-up their virtual currency used on Sina Show. Accordingly, Hantang (and later Xingxiu) pays to each of those parties a portion of the net income generated from the relevant top-up services. 214

7 (iv) Wireless Messaging Mobile Messaging Agreement On April 18, 2013 Xingxiu and Beijing SINA entered into a wireless platform business cooperation agreement (the Mobile Messaging Agreement ), which took effect on February 1, 2013, and a supplemental agreement on February 1, 2014 to extend the Mobile Messaging Agreement to January 31, Pursuant to the Mobile Messaging Agreement, Beijing SINA provides wireless messaging channels to Xingxiu to deliver wireless messages to users and Xingxiu supplies the content of the messages. For the services provided by Beijing SINA, Xingxiu pays a service fee of RMB0.06 per message successfully delivered. Historical transaction amounts The annual aggregate amounts paid for services provided by SINA Group to us and for services provided by us to SINA Group under the Framework Cooperation Agreement in each of the three financial years ending December 31, 2013, including the amount paid pursuant to each of the aforementioned existing underlying agreements, are set out as follows: Year ending December 31, (RMB in thousands) Aggregate amounts paid for services provided by SINA Group to us ,000 16,360 2,209 Advertising or related marketing ,360 2,000 Technical development ,000 Wireless payment services/messaging Aggregate amounts paid for services provided by us to SINA Group ,305 9,573 6,479 Advertising or related marketing ,070 9,086 6,062 Wireless payment services/messaging (1) Note: (1) Payments for wireless payment services are settled by SINA Group and then transferred to us. 215

8 Annual caps The annual aggregate amounts to be paid for services provided by SINA Group to us and for services provided by us to SINA Group under the Framework Cooperation Agreement for each of the three financial years ending December 31, 2016 will not exceed the following annual caps: Annual Caps Year ending December 31, (RMB) Aggregate amounts paid for services provided by SINA Group to us ,500,000 21,000,000 25,200,000 Aggregate amounts paid for services provided by us to SINA Group ,600,000 15,120,000 18,144,000 Basis of annual caps Provision of services by SINA Group to us Following the [REDACTED], we expect a significant increase in expenditure in the promotion of our brands during 2014 to As discussed in the section Future plans and use of proceeds Use of proceeds, we plan to use approximately 20% of the net proceeds of the [REDACTED] for expanding our marketing and promotion activities. As of the first quarter of 2014, the Group has already placed advertisements costing approximately RMB3.6 million of advertising fees to SINA Group s portals. Provision of services by us to SINA Group Following the [REDACTED], we anticipate an increase in our advertising revenue during 2014 to 2016 as a result of better recognition of our brands and greater social influence by us. In particular, we have developed specific strategies to increase our advertising revenue generated through SINA Group, such as developing new modes of placing built-in advertisements such as via hosts and virtual items, adjusting our advertisement marketing measures to accommodate changing needs from customers referred by SINA Group, conducting training to SINA Group s marketing staff to enhance their understanding of the Group s advertising resources, so that they could make better recommendations to their clients to place advertisements on our portals. Contractual Arrangements As disclosed in the section Contractual Arrangements in this [REDACTED], our Principal Business is considered to be value-added telecommunications services, a sector where foreign investment is subject to significant restrictions under PRC laws and regulations. Accordingly, we, as foreign investors, cannot acquire equity interest in our PRC Operating Entities, which hold certain licenses and permits required for the operation of our Principal 216

9 Business. Therefore, our Group, through our WFOEs, Hangzhou Tiange and Zhejiang Tiange, has entered into the Contractual Arrangements with our PRC Operating Entities and their shareholders in order to conduct the Principal Business in the PRC and to assert management control over the operations of, and enjoy all economic benefits of, each of the PRC Operating Entities. As part of the Reorganization, Hangzhou Tiange and Zhejiang Tiange, the PRC Operating Entities, Mr. Fu and Mr. Fu Yanchang as the registered shareholders of the PRC Operating Entities entered into the New Agreements. Each of the PRC Operating Entities, the relevant WFOE and the Registered Shareholders (where applicable) entered into a set of underlying agreements on the same terms, being (i) Exclusive Technology Service Agreement ( ); (ii) Exclusive Call Option Agreement ( ); (iii) Voting Rights Proxy Agreement ( ); (iv) Loan Agreement ( ); and (v) Equity Pledge Agreement ( ). The detailed terms of the New Agreements are set out in the section headed Contractual Arrangements in this [REDACTED]. Listing Rules Implications Framework Cooperation Agreement Since the highest applicable percentage ratio as set out in the Listing Rules based on the relevant annual cap as set out above is, on an annual basis, expected to exceed 5%, such transaction is subject to the (i) reporting and announcement requirements under Rules 14A.35, 14A.49 and 14A.71 of the Listing Rules, (ii) annual review requirements under Rules 14A.55 to 14A.59 of the Listing Rules, and (iii) independent shareholders approval requirements under Rule 14A.36 to 14A.45 of the Listing Rules. Contractual Arrangements Each of our PRC Operating Entities is owned as to 98% by Mr. Fu and hence an associate of Mr. Fu and a connected person of our Company under Rule 14A.07(4) of the Listing Rules. Accordingly, the transactions contemplated under the New Agreements constitute continuing connected transactions of our Company under the Listing Rules upon Listing. Our PRC Legal Advisor is of the opinion that, except for certain provisions in the New Agreements may not be enforceable under PRC laws (see the section Risk Factors Risks Related to Our Contractual Arrangements Certain terms of the Contractual Arrangements may not be enforceable under PRC laws. ), the New Agreements, taken individually or collectively, are valid and legally binding on and enforceable against the parties to them in accordance with their respective terms and provisions under PRC laws and regulations. However, our PRC Legal Advisor has also advised that, given the uncertainties in relevant PRC laws and the wide discretion the government authorities have in their interpretation of PRC laws, there is no assurance that the PRC government authorities will have the same opinion on the interpretation of PRC laws. 217

10 Our Directors believe that our Group s structure whereby the financial results of each of our PRC Operating Entities are consolidated into our Group s financial statements as indirect subsidiaries, and the flow of economic benefits of their business to our Group places our Group in a special position in relation to relevant rules concerning connected transactions under the Listing Rules. Accordingly, notwithstanding that the transactions contemplated under the New Agreements and any new transactions, contracts and agreements or renewal of existing agreements to be entered into between our PRC Operating Entities and any member of our Group ( New Intergroup Agreements ) technically constitute continuing connected transactions under Chapter 14A of the Listing Rules, our Directors consider that it would be unduly burdensome and impracticable, and would add unnecessary administration costs to our Company if such transactions are subject to strict compliance with the requirements set out under Chapter 14A of the Listing Rules, including, among others, the announcement and independent shareholders approval requirements. In addition, our Directors (including the independent non-executive Directors) and the Joint Sponsors are of the view that the New Agreements and the transactions contemplated thereunder are fundamental to our Group s legal structure and business operations, that such transactions have been and shall be entered into in the ordinary and usual course of business of our Group, are on normal commercial terms and are fair and reasonable and in the interests of our Company and the Shareholders as a whole. Application for Waiver In view of the above, on behalf of the Company and pursuant to Rule 14A.105 of the Listing Rules, we hereby apply for a waiver to exempt: (i) the non-exempt continuing connected transactions under the Framework Cooperation Agreement and the New Agreements from strict compliance with announcement and independent shareholders approval requirements under Chapter 14A of the Listing Rules; (ii) the non-exempt continuing connected transactions under the New Agreements from strict compliance with the requirement of setting a maximum aggregate annual value (i.e., an annual cap) for the fees payable to the Group under the New Agreements, and the requirement of limiting the term of the New Agreements to three years or less, for so long as the Shares are listed on the Stock Exchange and subject to the following conditions: (a) No change without independent non-executive Directors approval No change to the New Agreements will be made without the approval of the independent non-executive Directors; 218

11 (b) No change without independent Shareholders approval Save as described in paragraph (d) below, no change to the New Agreements will be made without the approval of our Company s independent Shareholders. Once independent Shareholders approval of any change has been obtained, no further announcement or approval of the independent Shareholders will be required under Chapter 14A of the Listing Rules unless and until further changes are proposed. The periodic reporting requirement regarding the New Agreements in the annual reports of our Company (as set out in paragraph (e) below) will however continue to be applicable. (c) Economic benefits flexibility The New Agreements shall continue to enable our Group to receive the economic benefits derived by our PRC Operating Entities through (i) our Group s option, to the extent permitted under PRC laws and regulations, to acquire, all or part of the equity interest in and/or assets of each of our PRC Operating Entities at the minimum purchase price permitted under PRC laws and regulations, (ii) the business structure under which the profit generated by each of our PRC Operating Entities is substantially retained by our Group, such that no annual cap shall be set on the amount of service fees payable to Hangzhou Tiange and Zhejiang Tiange by the relevant PRC Operating Entity under the relevant Exclusive Technology Service Agreement, and (iii) our Group s right to control the management and operation of, as well as, in substance, all of the voting rights of each of our PRC Operating Entities. (d) Renewal and reproduction On the basis that the New Agreements provide an acceptable framework for the relationship between our Company and its subsidiaries in which our Company has direct shareholding, on one hand, and our PRC Operating Entities, on the other hand, that framework may be renewed and/or reproduced upon the expiry of the existing arrangements or in relation to any existing or new wholly foreign owned enterprise or operating company (including branch company) engaging in the same business as that of our Group which our Group might wish to establish when justified by business expediency, without obtaining the approval of the Shareholders, on substantially the same terms and conditions as the New Agreements. The directors, chief executive or substantial shareholders of any existing or new wholly foreign owned enterprise or operating company (including branch company) engaging in the same business as that of our Group which our Group may establish will, upon renewal and, or reproduction of the New Agreements, however be treated as connected persons of our Company and transactions between these connected persons and our Company other than those under similar contractual arrangements shall comply with Chapter 14A of the Listing Rules. This condition is subject to relevant PRC laws, regulations and approvals. 219

12 (e) Ongoing reporting and approvals Our Group will disclose details relating to the New Agreements on an ongoing basis as follows: The New Agreements in place during each financial period will be disclosed in our Company s annual report and accounts in accordance with relevant provisions of the Listing Rules. Our independent non-executive Directors will review the New Agreements annually and confirm in our Company s annual report and accounts for the relevant year that (i) the transactions carried out during such year have been entered into in accordance with the relevant provisions of the New Agreements, have been operated so that the profit generated by each of our PRC Operating Entities has been substantially retained by Hangzhou Tiange and Zhejiang Tiange (as the case may be), (ii) no dividends or other distributions have been made by any of our PRC Operating Entities to the relevant holders of its equity interests which are not otherwise subsequently assigned or transferred to our Group, and (iii) any new contracts entered into, renewed or reproduced between our Group and our PRC Operating Entities during the relevant financial period under paragraph (d) above are fair and reasonable, or advantageous, so far as our Group is concerned and in the interests of the Shareholders as a whole. Our Company s auditor will carry out review procedures annually on the transactions carried out pursuant to the New Agreements and will provide a letter to our Directors with a copy to the Stock Exchange confirming that the transactions have received the approval of our Directors, have been entered into in accordance with the New Agreements and that no dividends or other distributions have been made by our PRC Operating Entities to the relevant holders of its equity interests which are not otherwise subsequently assigned or transferred to our Group. For the purpose of Chapter 14A of the Listing Rules, and in particular the definition of connected person, each of our PRC Operating Entities will be treated as our Company s wholly-owned subsidiary, but at the same time, the directors, chief executives or substantial shareholders of each of our PRC Operating Entities and its associates will be treated as connected persons of our Company (excluding for this purpose, the relevant PRC Operating Entity), and transactions between these connected persons and our Group (including for this purpose, the relevant PRC Operating Entity), other than those under the New Agreements, will be subject to requirements under Chapter 14A of the Listing Rules. 220

13 Each of our PRC Operating Entities will undertake that, for so long as the Shares are listed on the Stock Exchange, it will provide our Group s management and our Company s auditor full access to its relevant records for the purpose of our Company s auditor s review of the connected transactions. In addition, we have also applied to the Stock Exchange for, and the Stock Exchange has agreed to grant, a waiver pursuant to Rule 14A.105 of the Listing Rules from strict compliance with (i) the announcement and independent shareholders approval requirements under Chapter 14A of the Listing Rules in respect of the transactions contemplated under any New Intergroup Agreements, (ii) the requirement of setting an annual cap for the fees payable by/to any member of our Group to/from any of our PRC Operating Entities under any New Intergroup Agreements, and (iii) the requirement of limiting the term of any New Intergroup Agreement to three years or less, for so long as Shares are listed on the Stock Exchange subject however to the condition that the Contractual Arrangements subsist and that our PRC Operating Entities will continue to be treated as our Company s wholly-owned subsidiary, but at the same time, the directors, chief executives or substantial shareholders of each PRC Operating Entity and its associates will be treated as connected persons of our Company (excluding for this purpose, the relevant PRC Operating Entity), and transactions between these connected persons and our Group (including for this purpose, the relevant PRC Operating Entity), other than those under the Contractual Arrangements, will be subject to requirements under Chapter 14A of the Listing Rules. We will comply with the applicable requirements under the Listing Rules, and will immediately inform the Stock Exchange if there are any changes to these continuing connected transactions. CONFIRMATION FROM THE DIRECTORS Our Directors (including our independent non-executive Directors) are of the view that the continuing connected transactions described above have been entered into in the ordinary and usual course of business of our Group, on normal commercial terms, are fair and reasonable and in the interests of our Company and our Shareholders as a whole, and that the proposed annual caps for these transactions are fair and reasonable and in the interests of our Company and our Shareholders as a whole. CONFIRMATION FROM THE JOINT SPONSORS The Joint Sponsors have reviewed the relevant documents and information provided by our Group, have participated in the due diligence and discussions with our management and our PRC Legal Advisor and have obtained necessary representations and confirmations from our Company and our Directors. 221

14 The Joint Sponsors are of the view that the New Agreements are fundamental to our Group s legal structure and business operations. With respect to the term of the New Agreements being of a duration longer than three years, the Joint Sponsors are of the view that it is a justifiable and normal business practice to ensure that (i) the financial and operational policies of our PRC Operating Entities can be effectively controlled by Hangzhou Tiange and Zhejiang Tiange (as the case may be), (ii) Hangzhou Tiange and Zhejiang Tiange can obtain the economic benefits derived from our PRC Operating Entities, and (iii) possible leakages of assets and values of our PRC Operating Entities can be prevented. Further, the Joint Sponsors are of the view that the non-exempt continuing connected transactions described above, and for which waivers have been sought, have been entered into in the ordinary and usual course of business of our Group, on normal commercial terms, are fair and reasonable and in the interests of our Company and our Shareholders as a whole, and that the proposed annual caps for transactions contemplated under the Framework Cooperation Agreement are fair and reasonable and in the interests of our Company and our Shareholders as a whole. 222