Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement. GUOTAI JUNAN INTERNATIONAL HOLDINGS LIMITED (incorporated in Hong Kong with limited liability) (Stock Code: 1788) CONNECTED TRANSACTION PROVISION OF FINANCIAL SERVICES On 24 February 2017 (after trading hours of the Stock Exchange), GTJA Securities HK (an indirect wholly-owned subsidiary of the Company) and Guotai Junan Securities (a controlling shareholder of the Company) entered into the Appointment Memorandum, pursuant to which Guotai Junan Securities conditionally agreed to engage GTJA Securities HK, and GTJA Securities HK and/or its affiliated companies conditionally agreed to act, as one of the underwriters for the Proposed Offering. LISTING RULES IMPLICATIONS As at the date of this announcement, Guotai Junan Securities is a controlling shareholder of the Company holding approximately 64.92% of the total number of issued Shares and is therefore a connected person of the Company. Accordingly, the transaction contemplated under the Appointment Memorandum constitutes a connected transaction for the Company under the Listing Rules and is subject to the reporting, announcement and Independent Shareholders approval requirements under Chapter 14A of the Listing Rules. The extraordinary general meeting of the Company will be convened and held to consider, and if thought fit, approve, among others, the Appointment Memorandum and the transaction contemplated thereunder. An Independent Board Committee comprising all of the independent non-executive Directors will be formed to advise the Independent Shareholders on the terms of the Appointment Memorandum. Celestial Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. 1
As additional time is required to prepare a circular containing, amongst other things, (i) further details relating to the Appointment Memorandum; (ii) a letter of advice from the Independent Board Committee to the Independent Shareholders; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and (iv) the notice of convening the extraordinary general meeting, the circular will be despatched to the Shareholders on or before 31 March 2017. As the appointment of GTJA Securities HK as one of the underwriters is subject to the conditions precedent under the paragraph headed Conditions Precedent to the Appointment of GTJA Securities HK in this announcement, the appointment may or may not proceed. Shareholders and potential investors of the Company should exercise caution when dealing in the Shares and other securities of the Company. BACKGROUND On 24 February 2017 (after trading hours of the Stock Exchange), GTJA Securities HK (an indirect wholly-owned subsidiary of the Company) and Guotai Junan Securities (a controlling shareholder of the Company) entered into the Appointment Memorandum, pursuant to which Guotai Junan Securities conditionally agreed to engage GTJA Securities HK, and GTJA Securities HK and/or its affiliated companies conditionally agreed to act, as one of the underwriters for the Proposed Offering. APPOINTMENT MEMORANDUM The principal terms of the Appointment Memorandum are set out as follows: Date 24 February 2017 (after trading hours of the Stock Exchange) Parties (i) GTJA Securities HK (an indirect wholly-owned subsidiary of the Company); and (ii) Guotai Junan Securities (a controlling shareholder of the Company). Subject Matter Pursuant to the Appointment Memorandum, Guotai Junan Securities conditionally agreed to engage GTJA Securities HK, and GTJA Securities HK and/or its affiliated companies conditionally agreed to act, as one of the underwriters for the Proposed Offering. GTJA Securities HK and Guotai Junan Securities shall further enter into an underwriting agreement to set out the specific terms of the appointment. 2
Conditions Precedent to the Appointment of GTJA Securities HK Pursuant to the Appointment Memorandum, appointment of GTJA Securities HK as one of the underwriters for the Proposed Offering is conditional upon the approval of the Appointment Memorandum and the transaction contemplated therein (including the Commission (as defined below)) by the Independent Shareholders in accordance with the requirements under the Listing Rules and compliance with other requirements on connected transactions under the Listing Rules. If the conditions precedent above are not satisfied, the Appointment Memorandum shall immediately terminate. Commission In consideration of the services to be provided by GTJA Securities HK as contemplated under the Appointment Memorandum, an underwriting commission will be payable by Guotai Junan Securities to GTJA Securities HK based on the commission rate to be agreed and the number of shares of Guotai Junan Securities to be underwritten by GTJA Securities HK. The commission rate will be agreed on an arm s length basis between Guotai Junan Securities and GTJA Securities HK. Such commission rate will be comparable to the commission rate charged in comparable offerings of H-shares of securities companies in the market at the time the Offering will be launched, and will be determined with reference to the then market conditions (the Commission ). Based on the information contained in the announcement of Guotai Junan Securities dated 14 October 2016 and published on the Shanghai Stock Exchange, the number of H shares of Guotai Junan Securities to be issued shall not exceed 1,040 million. As at 23 February 2017 (being the date immediately preceding the date of the Appointment Memorandum), the closing price of the A shares of Guotai Junan Securities was RMB19.32 each. Assuming the 15% over-allotment option is fully exercised and the convertible bonds of Guotai Junan Securities have not been converted, the market capitalisation of shares of Guotai Junan Securities proposed to be issued on the Main Board of the Stock Exchange is expected to be approximately RMB23.11 billion (equivalent to approximately HK$26.19 billion). 3
The Directors note that the commission rate charged by GTJA Securities HK in comparable listing and offerings of H-shares of securities companies on the Main Board of the Stock Exchange in the past 12 months preceding the date of this announcement has not exceeded 2.5% of the gross proceeds of such offerings. Therefore, the Directors estimate that the total underwriting commission payable by Guotai Junan Securities to GTJA Securities HK and other underwriters to be appointed by Guotai Junan Securities for the Proposed Offering shall not exceed the aggregate amount of HK$654.65 million. Termination The Appointment Memorandum will expire on the earlier of (i) 31 December 2017; and (ii) the commencement of trading of the H shares of Guotai Junan Securities on the Stock Exchange. REASONS FOR THE ENTERING INTO OF THE APPOINTMENT MEMORANDUM The Company is an investment holding company and its subsidiaries are principally engaged in brokerage, corporate finance, asset management, loans and financing, financial products, market making and investments. Guotai Junan Securities is a joint stock limited company incorporated in the PRC and is principally engaged in securities and futures brokerage, proprietary trading, securities underwriting and sponsoring, asset management, direct investment, fund management, securities investment consultancy, securities dealing and securities investment related financial advisory, margin financing and securities lending, sales of securities investment funds and financial products, market making and other businesses in the PRC as approved by the China Securities Regulatory Commission, as well as the provision of securities products and services overseas. GTJA Securities HK is an indirect wholly-owned subsidiary of the Company incorporated in Hong Kong and is licensed under the SFO to carry out Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities. It is principally engaged in securities brokerage services. The Appointment Memorandum was entered into in the ordinary course of business of GTJA Securities HK. The Directors consider that the Group will benefit from the profits generated from the provision of services under the Appointment Memorandum. Further, the provision of the services to Guotai Junan Securities is effective in enhancing the capacities of GTJA Securities HK in providing professional and comprehensive services, which is in line with the Group s business development needs. In addition, Guotai Junan Securities HK and Guotai Junan Securities shall further agree upon and enter into an underwriting agreement. The underwriting agreement will be signed with other underwriters appointed by Guotai Junan 4
Securities for the Proposed Offering and will include customary representations and warranties, conditions to closing, termination provisions, indemnification and underwriting commission. By reason of this, GTJA Securities HK would be subject to the same terms under the underwriting agreement as all other underwriters (save that the appointment of GTJA Securities HK is conditional on the Company having obtained the Independent Shareholders approval as required under the Listing Rules). In view of the above, the Directors (excluding the independent non-executive Directors who will express their views after taking into account the letter of advice from the Independent Financial Adviser) are of the view that the transaction contemplated under the Appointment Memorandum is conducted in the ordinary and usual course of business of the Group and the terms are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole. LISTING RULES IMPLICATIONS As at the date of this announcement, Guotai Junan Securities is a controlling shareholder of the Company holding approximately 64.92% of the total number of issued Shares in the Company and is therefore a connected person of the Company. Accordingly, the transaction contemplated under the Appointment Memorandum constitutes a connected transaction for the Company under the Listing Rules and is subject to the reporting, announcement and Independent Shareholders approval requirements under Chapter 14A of the Listing Rules. The extraordinary general meeting of the Company will be convened and held to consider, and if thought fit, approve, among others, the Appointment Memorandum and the transaction contemplated thereunder. An Independent Board Committee comprising the independent non-executive Directors will be formed to advise the Independent Shareholders on the terms of the Appointment Memorandum. Celestial Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. As additional time is required to prepare a circular containing, amongst other things, (i) further details relating to the Appointment Memorandum; (ii) a letter of advice from the Independent Board Committee to the Independent Shareholders; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and (iv) the notice of convening the extraordinary general meeting, the circular will be despatched to the Shareholders on or before 31 March 2017. 5
As the appointment of GTJA Securities HK as one of the underwriters is subject to the conditions precedent under the paragraph headed Conditions Precedent to the Appointment of GTJA Securities HK in this announcement, the appointment may or may not proceed. Shareholders and potential investors of the Company should exercise caution when dealing in the Shares and other securities of the Company. DEFINITIONS In this announcement, the following expressions shall have the meanings set out below unless the context requires otherwise: Appointment Memorandum associates Board Company connected person controlling shareholder Director(s) Group GTJA Securities HK Guotai Junan Securities HK$ Hong Kong the memorandum entered into between GTJA Securities HK and Guotai Junan Securities on 24 February 2017; has the meaning ascribed to it under the Listing Rules; the board of Directors; Guotai Junan International Holdings Limited, a company incorporated in Hong Kong with limited liability, whose shares are listed on the main board of the Stock Exchange; has the meaning ascribed to it under the Listing Rules; has the meaning ascribed to it under the Listing Rules; the director(s) of the Company; the Company and its subsidiaries; Guotai Junan Securities (Hong Kong) Limited, an indirect wholly-owned subsidiary of the Company; Guotai Junan Securities Co., Ltd., a joint stock company incorporated in PRC, the A shares of which are listed on the Shanghai Stock Exchange (stock code: 601211), and the controlling shareholder of the Company; Hong Kong dollar, the lawful currency of Hong Kong; the Hong Kong Special Administrative Region of the People s Republic of China; 6
Independent Board Committee Independent Financial Adviser Independent Shareholders Listing Rules Proposed Offering PRC SFO Shareholder(s) Share(s) Stock Exchange an independent committee of the Board, comprising all the independent non-executive Directors, appointed by the Board to advise the Independent Shareholders in relation to the Appointment Memorandum; Celestial Capital Limited, a corporation licensed to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and the independent financial adviser appointed for the purpose of advising the Independent Board Committee and the Independent Shareholders as to the Appointment Memorandum and the transaction contemplated thereunder; Shareholders other than Guotai Junan Securities and its associates; the Rules Governing the Listing of Securities on the Stock Exchange; the proposed public offering and listing of the H shares of Guotai Junan Securities on the Stock Exchange; the People s Republic of China; Securities and Future Ordinance (Chapter 571, Laws of Hong Kong); shareholder(s) of the Company; ordinary share(s) of the Company; and The Stock Exchange of Hong Kong Limited. Unless otherwise specified in this announcement, translations of RMB into HK$ are made in this announcement, for illustration only, at the rate of RMB1.00 to HK$1.1331. No representation is made that any amounts in RMB or HK$ could have been or could be converted at that rate or at any other rate or at all. Hong Kong, 24 February 2017 By order of the Board Guotai Junan International Holdings Limited FENG Zheng Yao Helen Company Secretary 7
As at the date of this announcement, the Board comprises four executive directors, being Dr. YIM Fung, Mr. WONG Tung Ching, Ms. QI Haiying and Mr. LI Guangjie; and three independent non-executive directors, being Dr. FU Tingmei, Dr. SONG Ming and Mr. TSANG Yiu Keung. 8