CIRCULAR DATED 29 OCTOBER 2014 This Circular is issued by Ouhua Energy Holdings Limited (the Company ). THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ IT CAREFULLY. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser(s) immediately. If you have sold or transferred all your issued and fully-paid ordinary shares in the capital of the Company (the Shares ) held through The Central Depository (Pte) Limited ( CDP ), you need not forward this Circular with the Notice of Special General Meeting and the attached Proxy Form to the purchaser or transferee as arrangements will be made by CDP for a separate Circular with the Notice of Special General Meeting and the Proxy Form to be sent to the purchaser or transferee. If you have sold or transferred all your Shares represented by physical share certifi cate(s), you should immediately forward this Circular with the Notice of Special General Meeting and the attached Proxy Form immediately to the purchaser or transferee or to the bank, stockbroker or other agent through whom you effected the sale or transfer for onward transmission to the purchaser or the transferee. Your attention is drawn to Section 8 of this Circular in respect of actions to be taken if you wish to attend and vote at the Special General Meeting. The Singapore Exchange Securities Trading Limited ( SGX-ST ) assumes no responsibility for the contents of this Circular, including the accuracy or correctness of any of the statements made, reports contained or opinions expressed in this Circular. OUHUA ENERGY HOLDINGS LIMITED (Incorporated in Bermuda on 3 January 2006) (Company Registration Number 37791) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED CHANGE OF AUDITORS FROM MESSRS BDO LLP TO MESSRS MAZARS LLP IMPORTANT DATES: Last date and time for lodgment of Proxy Form : 11 November 2014 at 10.00 am Date and time of Special General Meeting : 13 November 2014 at 10.00 am Place of Special General Meeting : Lotus Room, P eninsula Excelsior Hotel, 5 Coleman Street, Singapore 179805
CONTENTS Page DEFINITIONS... 3 LETTER TO SHAREHOLDERS... 5 1. INTRODUCTION... 5 2. REASONS FOR THE PROPOSED CHANGE OF AUDITORS... 5 3. REQUIREMENTS UNDER LISTING MANUAL... 6 4. REQUIREMENTS UNDER BERMUDA LAWS... 8 5. AUDIT COMMITTEE S STATEMENT... 9 6. DIRECTORS RECOMMENDATION... 9 7. SPECIAL GENERAL MEETING... 9 8. ACTIONS TO BE TAKEN BY SHAREHOLDERS... 9 9. DIRECTORS RESPONSIBILITY STATEMENT... 10 10. DOCUMENTS FOR INSPECTION... 10 NOTICE OF SPECIAL GENERAL MEETING... 11 2
DEFINITIONS In this Circular, the following defi nitions shall apply throughout unless the context otherwise requires or unless otherwise stated: ACRA : The Accounting and Corporate Regulatory Authority, established under the Accounting and Corporate Regulatory Authority Act (Chapter 2A) of Singapore Audit Committee : The audit committee of the Company for the time being Bermuda Companies Act : The Companies Act 1981 of Bermuda (as amended from time to time) Board or Board of Directors : The board of directors of the Company CDP : The Central Depository (Pte) Limited Circular : This Circular to the Shareholders dated 29 October 2014 Company : Ouhua Energy Holdings Limited Directors : The directors of the Company for the time being, and each, a Director FY : Financial year ended or, as the case may be, ending 31 December Group : The Company and its subsidiaries Listing Manual : The Listing Manual of the SGX-ST, as amended from time to time PRC : People s Republic of China Proposed Change of Auditors : The proposed change of auditors from Messrs BDO LLP to Messrs Mazars LLP Register of Members SGM or Special General Meeting : The principal register of members and where applicable, any branch register of members, of the Company kept pursuant to the Bermuda Companies Act : The special general meeting of the Company to be held at Lotus Room, Peninsula Excelsior Hotel, 5 Coleman Street, Singapore 179805 on 13 November 2014 at 10.00 am SGX-ST : Singapore Exchange Securities Trading Limited Shareholder or Shareholders : Registered holder(s) of Shares Share or Shares : The issued and fully-paid ordinary share(s) in the capital of the Company Singapore Companies Act : The Companies Act (Chapter 50) of Singapore (as amended from time to time) The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Singapore Companies Act. 3
Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall include corporations. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defi ned under the Singapore Companies Act, the Bermuda Companies Act, or the Listing Manual or any statutory modifi cation thereof and used in this Circular shall, where applicable, have the meaning assigned to it under the Singapore Companies Act, the Bermuda Companies Act, or the Listing Manual or such statutory modifi cation, as the case may be. Any reference to a time of day in this Circular shall be a reference to Singapore time unless otherwise stated. 4
OUHUA ENERGY HOLDINGS LIMITED (Incorporated in Bermuda on 3 January 2006) (Company Registration Number 37791) Directors: Liang Guo Zhan, Executive Chairman Ye Tian Shun, Executive Director Gerald Yeo, Independent Director Tham Hock Chee, Independent Director Xiong Wei, Independent Director Registered Office: Canon s Court, 22 Victoria Street, Hamilton HM12, Bermuda 29 Octo ber 2014 To: The Shareholders of Ouhua Energy Holdings Limited Dear Sir/Madam PROPOSED CHANGE OF AUDITORS 1. INTRODUCTION The purpose of this Circular is to provide Shareholders with the relevant information pertaining to the Proposed Change of Auditors and to seek their approval for the resolution relating to the same. The approval of Shareholders for the Proposed Change of Auditors will be sought at the SGM of the Company to be convened and held at Lotus Room, Peninsula Excelsior Hotel, 5 Coleman Street, Singapore 179805 on 13 November 2014 at 10.00 am. The notice of the SGM is set out on page 1 1 of this Circular. 2. REASONS FOR THE PROPOSED CHANGE OF AUDITORS 2.1 Current Auditors Messrs BDO LLP ( BDO ), the existing auditors, has been the auditors of the Company since its initial public offering in 2006. BDO was last re-appointed at the annual general meeting of the Company held on 29 April 2014. BDO has been the auditors of the Company for eight consecutive audits since FY2006. For the reasons specifi ed in Section 2.2 of this Circular, the Company and BDO had, upon due discussion, mutually agreed that a change of auditors from BDO to Messrs Mazars LLP ( Mazars ) is in the best interest of the Company. In this regard and as announced by the Company on 24 September 2014, BDO has informed the Company in writing of its intention to resign as auditors on 3 September 2014. 2.2 Reasons for the Proposed Change of Auditors As BDO has been the auditors of the Company for eight consecutive audits, the management of the Company has proposed a change of auditors as part of its efforts to enhance its corporate governance. The Board has taken into account the management s proposal and is also of the view that a rotation of audit fi rm should be recommended to discourage an audit fi rm from focusing on maintaining long-term relationships with its audit client, which might undermine the independence and effectiveness of the audit fi rm. A change of auditors would also enable the Company to benefi t from fresh perspectives and views of another professional fi rm and also further enhance the value of the audit. This will further strengthen the corporate governance processes of the Company. The Board, having reviewed Mazars s fee proposal, and in consultation with the Audit Committee, had determined that the proposal from Mazars is reasonable and cost effective. In comparison with the fee arrangement and terms of BDO s engagement, Mazars s fee proposal would enable the Company to reduce its audit expenses by approximately 5%. 5
After having considered the above circumstances and the resources, set-up and experience of Mazars specifi ed in Section 2.3 of this Circular, the Board, with the concurrence of the Audit Committee, proposes to appoint Mazars as auditors of the Company in place of BDO for the fi nancial year ending 31 December 2014. The Company s two wholly-owned subsidiaries are (1) Chaozhou Ouhua Energy Co., Ltd. which is incorporated in the PRC ( Chaozhou Ouhua ) and (2) Ouhua Energy (Singapore) Pte. Ltd. which is incorporated in Singapore ( Ouhua Singapore ). Mazars will assign a Singapore team led by audit partner, Mr. Lai Keng Wei, to undertake the Group audit. Mr. Lai Keng Wei will be assisted by one audit manager, one senior auditor and one team member. Details of Mr. Lai Keng Wei s audit qualifi cations and experience are set out below. The same Singapore team will undertake the audit of Ouhua Singapore while the audit of Chaozhou Ouhua will be undertaken by Mazars s team in Guangzhou, the PRC. 2.3 About Messrs Mazars LLP Mazars is an international, integrated and independent organisation specialising in audit, accountancy, tax, legal and advisory services. It operates in 72 countries with 13,800 professionals. Its integrated partnership spans fi ve continents and enables Mazars to offer local expertise, coordinated on a local or global basis. Mazars is also a founding member of The Praxity Alliance, which extends its service coverage to 33,400 professionals in 97 countries. Mazars s unique integrated model guarantees responsiveness and consistent quality of service to its clients. Mazars is a global partnership, which shares cohesive values that bind different cultures. Globally, Mazars audits more than 500 listed companies. It is one of the only fi ve audit and advisory fi rms selected as a joint auditor to the Global 500, the world s largest 500 companies. It is recognised as a major global player in insurance, banking, industry and services, as well as public organisations and associations. Mazars in Singapore hosts a team of over 150 staff and the Asia Pacifi c management team. To support its international clients, Mazars offers Chinese, French and US d esks. Its language capabilities include English, French, Japanese, Mandarin, Bahasa Indonesian, Bahasa Malay, Burmese, Cantonese, Tagalog, Italian, Spanish and Tamil. Previously part of the Moores Rowland International network of fi rms, Mazars in Singapore has over 25 years of providing audit and advisory services to local and international fi rms. Presently, Mazars in Singapore audits approximately 20 companies listed on SGX-ST and other exchanges. Mr. Lai Keng Wei is one of the audit partners of Mazars. He has more than 20 years of audit and commercial experience in international public accounting fi rms, including the Big Four accounting fi rms, in both Singapore and Malaysia. He is a fellow member of the Association of Chartered Certifi ed Accountants and a practising member of the Institute of Singapore Chartered Accountants. He has extensive audit and assurance experience spanning a range of industries including public companies, multinational companies, not-for-profi t organisations and the private sector. He served as a member of the Financial Statements Review Committee of the Institute of Singapore Chartered Accountants f rom FY2011 to FY2014. He is currently the engagement partner for several companies listed on the SGX-ST. 3. REQUIREMENTS UNDER LISTING MANUAL 3.1 Rule 712 of the Listing Manual Pursuant to Rule 712 of the Listing Manual, the Company must appoint a suitable fi rm to meet its audit obligations, having regard to the following factors: the adequacy of the resources and experience of the auditing fi rm and the audit engagement partner assigned to the audit; the fi rm s other audit engagements; 6
(c) (d) the size and complexity of the Group; and the number and experience of supervisory and professional staff assigned to the particular audit. The Audit Committee has also considered various facts or factors, including: (c) (d) (e) the reputation, credentials and the adequacy of resources of Mazars; the reputation, credentials and experience of Mr. Lai Keng Wei, the proposed engagement partner from Mazars; the independence of Mazars; Mazars s resources and experience in the PRC; and Mazars s experience in providing audit services to companies listed on the SGX-ST. Rule 712 of the Listing Manual requires that the audit fi rm appointed by the Company must be: (c) registered with ACRA; registered with and/or regulated by an independent audit oversight body acceptable to the SGX-ST. Such oversight bodies should be members of the International Forum of Independent Audit Regulators, independent of the accounting profession and directly responsible for the system of recurring inspection of accounting fi rms or are able to exercise oversight of inspections undertaken by professional bodies; or any other auditing fi rm acceptable by the SGX-ST. Mazars is an auditing fi rm registered with ACRA. The Board and the Audit Committee have considered the factors described above and under Rule 712 of the Listing Manual in relation to the Proposed Change of Auditors, and are of the opinion that Mazars is a suitable auditing fi rm to meet the Company s audit obligations. Accordingly, the Board is seeking Shareholders approval for the resolution pertaining to the Proposed Change of Auditors. The Board confi rms that, based on the foregoing, the Company will have complied with Rule 712 of the Listing Manual upon Shareholders approval of the resolution for the Proposed Change of Auditors. 3.2 Rules 715 and 716 of the Listing Manual Rule 715 of the Listing Manual provides that, subject to Rule 716, the Company must engage the same auditing fi rm based in Singapore to audit its accounts, and its Singapore-incorporated subsidiaries and signifi cant associated companies. Rule 716 of the Listing Manual provides that, the Company may appoint different auditing fi rms for its subsidiaries or signifi cant associated companies provided that: the issuer s Board and the Audit Committee are satisfi ed that the appointment would not compromise the standard and effectiveness of the audit of the Company; or the issuer s subsidiary or associated company, is listed on a stock exchange. The Company has no signifi cant associated companies. 7
Mazars will assign a Singapore team comprising audit partner, Mr. Lai Keng Wei, to undertake the Group audit. Mr. Lai Keng Wei will be assisted by one audit manager, one senior auditor and one team member. Details of Mr. Lai Keng Wei s audit qualifi cations and experience are set out above. The same Singapore team will undertake the audit of Ouhua Singapore while the audit of Chaozhou Ouhua will be undertaken by Mazars s team in Guangzhou, the PRC The Board confi rms that, based on the foregoing, the Company will have complied with Rules 715 and 716 of the Listing Manual upon Shareholders approval of the resolution for the Proposed Change of Auditors. 3.3 Rule 1203(5) of the Listing Manual For the purposes of Rule 1203(5) of the Listing Manual: (c) (d) (e) BDO has confi rmed with Mazars in a letter dated 3 September 2014 that they are not aware of any professional reasons why Mazars should not accept the appointment as auditors. the Company confi rms that there had been no disagreement with BDO on accounting treatments within the last 12 months; the Company confi rms that they are not aware of any circumstances connected with the Proposed Change of Auditors that should be brought to Shareholders attention which has not been disclosed in this Circular; the Company confi rms that the specifi c reasons for the Proposed Change of Auditors are disclosed in Section 2.2 above; and the Company confi rms that it has complied with Rule 712 and Rule 715 of the Listing Manual in relation to the appointment of Mazars as auditors of the Company. BDO had on 3 September 2014 given its letter of resignation, indicating its intention to resign as auditors of the Company subject to Shareholders approval for the resolution relating to the Proposed Change of Auditors at the SGM. Mazars had on 23 September 2014 given its consent to be appointed as auditors of the Company in place of BDO for the fi nancial year ending 31 December 2014, subject to the approval of Shareholders at the SGM. The resignation of BDO and the appointment of Mazars will take effect upon the approval of the same by Shareholders at the SGM. The Board wishes to express its appreciation for the past services rendered by BDO. 4. REQUIREMENTS UNDER BERMUDA LAWS The Bermuda Companies Act provides that no person shall accept appointment or consent to be appointed as auditor of a company if he is replacing an auditor who has resigned or who has vacated offi ce until the incoming auditor has requested and received from the outgoing auditor a written statement of the circumstances and the reasons why, in the outgoing auditor s opinion, he is to be replaced. The incoming auditor may accept appointment or consent to be appointed as auditor if, within 15 days after making the aforesaid request, he does not receive a written statement as requested. Under the Bermuda Companies Act, the appointment as auditor of an incoming auditor who has not requested such a written statement from the outgoing auditor is voidable by a resolution of the shareholders at a general meeting. The Board has received confi rmation from Mazars that Mazars has requested and received a written statement from BDO in accordance with the Bermuda Companies Act. In this written statement, BDO disclosed that the Company would like to appoint new auditors to enable the Company to benefi t from the fresh perspectives and views of another professional fi rm as well as to realise cost savings in audit fees. 8
The Bermuda Companies Act also provides that no person, other than an incumbent auditor, shall be capable of being appointed auditor at a general meeting unless notice in writing of an intention to nominate that person to the offi ce of auditor has been given not less than 21 days before the general meeting and the company shall also send a copy of any such notice to the incumbent auditor and shall give notice thereof to the members, either by advertisement in an appointed newspaper or in any other mode provided by the bye-laws of the company, not less than 7 days before the general meeting. However, the foregoing requirements will not apply if the incumbent auditor shall have by notice in writing to the secretary of the company waived the said requirements. The Board has ensured that the notice in writing of an intention to nominate Mazars to the offi ce of auditor has been given not less than 21 days before the SGM. 5. AUDIT COMMITTEE S STATEMENT The Audit Committee has reviewed the Proposed Change of Auditors and recommended the same to the Board after taking into consideration the suitability of Mazars and the requirements of the Listing Manual. 6. DIRECTORS RECOMMENDATION Having considered the rationale of the Proposed Change of Auditors, the Board is of the opinion that the Proposed Change of Auditors is in the interest of the Company. Accordingly, the Board recommends that Shareholders vote in favour of the resolution to be proposed at the SGM. 7. SPECIAL GENERAL MEETING The SGM, notice of which is set out on page 11 hereof, will be held at Lotus Room, Peninsula Excelsior Hotel, 5 Coleman Street, Singapore 179805 on 13 November 2014 at 10.00 a.m. for the purpose of considering and, if thought fi t, passing the ordinary resolution, with or without any modifi cations, as set out in the notice of SGM. 8. ACTIONS TO BE TAKEN BY SHAREHOLDERS 8.1 Shareholders who are unable to attend the SGM and who wish to appoint a proxy to attend and vote at the SGM on their behalf should complete, sign and return the proxy form attached to the notice of SGM in accordance with the instructions printed thereon as soon as possible and in any event so as to arrive at the offi ce of the Company s Singapore Share Transfer Agent, Tricor Barbinder Share Registration Services (a division of Tricor Singapore Pte. Ltd.) at 80 Robinson Road #02-00, Singapore 068898 not less than 48 hours before the time fi xed for the SGM. The completion and return of the proxy form by such Shareholder will not prevent him from attending the SGM and voting in person in place of his proxy should he subsequently wish to do so. Only Shareholders whose names are entered on the Register of Members of the Company and who are entitled to attend and vote at a general meeting of the Company will receive a proxy form with this Circular. A proxy need not be a Shareholder of the Company. 8.2 Depositors who wish to attend and vote at the SGM, and whose names are shown in the records of CDP as at a time not earlier than 48 hours prior to the time of the SGM supplied by CDP to the Company, may attend as CDP s proxies. Depositors who are individuals and who wish to attend the SGM in person need not take any further action and can attend and vote at the SGM without the lodgment of any proxy form. Depositors who are individuals and who are unable to attend the SGM personally and wish to appoint a nominee to attend and vote on his behalf, and Depositors who are not individuals, will fi nd attached to this Circular a Depositor Proxy Form which they are requested to complete, sign and return in accordance with the instructions printed thereon as soon as possible and in any event so as to arrive at the offi ce of the Company s Singapore Share Transfer Agent, Tricor Barbinder Share Registration Services (a division of Tricor Singapore Pte. Ltd.), at 80 Robinson Road #02-00, Singapore 068898 not less than 48 hours before the time fi xed for the SGM. The completion and return of the Depositor Proxy Form by a Depositor will not prevent him from attending and voting in person at the SGM as a proxy of CDP if he subsequently wishes to do so. 9
9. DIRECTORS RESPONSIBILITY STATEMENT The Directors collectively and individually accept full responsibility for the accuracy of the information given in this Circular and confi rm, after making all reasonable enquiries that, to the best of their knowledge and belief, this Circular constitutes full and true disclosure of all material facts about the Proposed Change of Auditors, the Company and its subsidiaries, and the Directors are not aware of any facts, the omission of which would make any statement in this Circular misleading. Where information in this Circular has been extracted from published or otherwise publicly available sources or obtained from a named source (if any), the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this Circular in its proper form and context. Shareholders are advised to read this Circular in its entirety. For any Shareholder who may require advice in the context of his specifi c investment, please consult your stockbroker, bank manager, solicitor, accountant or other professional adviser(s) immediately. 10. DOCUMENTS FOR INSPECTION Copies of the following documents may be inspected by the Shareholders at 16 Gemmill Lane, Singapore 069254 during normal business hours on any weekday from the date of this Circular up to and including the date of the SGM: the Memorandum of Association and Bye-Laws of the Company; the annual report of the Group for the fi nancial year ended 31 December 2013; (c) the notice of resignation as auditors from BDO dated 3 September 2014; (d) the professional clearance letter issued by BDO to Mazars dated 3 September 2014 pursuant to and in accordance with Rule 1203(5) of the Listing Manual; (e) (f) Mazars s letter to BDO dated 5 September 2014 requesting a written statement of the circumstances and the reasons why BDO believes it is to be replaced as auditors; the written statement dated 23 September 2014 from BDO to Mazars pursuant to and in accordance with Section 89(3A) of the Bermuda Companies Act; and (g) the consent to act as auditors from Mazars dated 23 September 2014. Yours faithfully For and on behalf of the Board of Directors Liang Guo Zhan Executive Chairman 10
OUHUA ENERGY HOLDINGS LIMITED (Incorporated in Bermuda on 3 January 2006) (Company Registration Number 37791) NOTICE OF SPECIAL GENERAL MEETING NOTICE IS HEREBY GIVEN that a Special General Meeting of Ouhua Energy Holdings Limited (the Company ) will be held at Lotus Room, Peninsula Excelsior Hotel, 5 Coleman Street, Singapore 179805 on Thursday, 13 November 2014 at 10.00 a.m. for the purpose of considering and, if thought fi t, passing with or without any modifi cations the following ordinary resolution: ORDINARY RESOLUTION PROPOSED CHANGE OF AUDITORS That: Messrs Mazars LLP be and is hereby appointed as auditors of the Company in place of Messrs BDO LLP to hold offi ce until the conclusion of the next annual general meeting at a fee to be agreed between the Directors and Mazars; and approval be and is hereby given to the Directors to take such steps and exercise such discretion and do all such acts and things as any Director may deem desirable, necessary, advisable or expedient to give effect to the matters set out in above. By Order of the Board Chia Foon Yeow Company Secretary Singapore 29 October 2014 NOTES: (i) (ii) (iii) (iv) A member of the Company (other than CDP) entitled to attend and vote at a meeting of the Company and who holds two or more Shares shall be entitled to appoint not more than two proxies to attend and vote instead of him. A proxy need not be a member of the Company. Where a member appoints two proxies, the appointments shall be invalid unless he specifi es the number of his Shares to be represented by each proxy respectively. The instrument appointing a proxy or proxies must be deposited at the offi ce of the Company s Singapore Share Transfer Agent, Tricor Barbinder Share Registration Services (a division of Tricor Singapore Pte. Ltd.) at 80 Robinson Road #02-00, Singapore 068898, not less than 48 hours before the time appointed for the Special General Meeting. The instrument appointing a proxy or proxies shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under its seal or under the hand of an offi cer or attorney duly authorised. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the power of attorney or a duly certifi ed copy thereof must be lodged with the instrument of proxy, failing which the instrument may be treated as invalid. 11