Target Insurance : (1) CONNECTED TRANSACTION IN RELATION TO PROPOSED ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE; (2) RE-ELECTION OF DIRECTORS; AND (3) NOTICE OF GM

March 10, 2021 at 02:37 pm IST

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Target Insurance (Holdings) Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities.

TARGET INSURANCE (HOLDINGS) LIMITED 泰加保險（控股）有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 6161)

(1) CONNECTED TRANSACTION IN RELATION TO

PROPOSED ISSUE OF CONVERTIBLE BONDS

UNDER SPECIFIC MANDATE;

(2) RE-ELECTION OF DIRECTORS;

AND

(3) NOTICE OF GM

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

The general meeting (the "GM") of the Company will be held at Jade Room, Artzen Club, 401A, 4th Floor, Shun Tak Centre, 200 Connaught Road Central, Hong Kong on Monday, 29 March 2021 at 4:00 p.m.. A notice of the GM is set out on pages GM-1 to GM-3 to this circular.

A letter from the Board is set out on pages 5 to 26 of this circular. A letter from the Independent Board Committee is set out on pages 27 to 28 of this circular. A letter from Rainbow Capital (HK) Limited, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, is set out on pages 29 to 74 of this circular.

There is enclosed a form of proxy for use at the GM. Whether or not you intend to be present thereat, you are requested to complete the form of proxy and return it to the share registrar and transfer ofﬁce of the Company, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time ﬁxed for holding the GM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the GM or its adjournment thereof if you so wish.

In compliance with the Hong Kong Government's directive on social distancing, personal and environmental hygiene, and the guidelines issued by the Centre for Health Protection of the Department of Health on the prevention of coronavirus disease 2019 ("COVID-19''), the Company will implement the following precautionary measures at the GM including, without limitation:

•

compulsory body temperature screening; wearing of surgical face masks;

•

no distribution of corporate gift or refreshment;

•

mandatory health declaration - anyone subject to the Hong Kong Government's prescribed quarantine or who has travelled overseas within 14 days immediately before the date of the GM will be denied entry into the GM venue; and

•

appropriate seating arrangement in line with the guidance from the Hong Kong Government will be made.

The Company strongly advises Shareholders to appoint the chairman of the GM as their proxy to vote on the relevant resolution(s) as an alternative to attending the GM in person. Shareholders are advised to read page (ii) of this circular for further details and monitor the development of COVID-19. Subject to the development of COVID-19, the Company may implement further changes and precautionary measures and may issue further announcement on such measures as appropriate.

11 March 2021

CONTENTS
Page
Precautionary Measures for the GM ..............................................................................	ii
Deﬁnitions .........................................................................................................................	1
Letter from the Board ......................................................................................................	5
Letter from the Independent Board Committee ...........................................................	27
Letter from the Independent Financial Adviser ............................................................	29
Appendix I - Details of the Directors proposed to be re-elected at
the General Meeting .....................................................................	App I-1
App II-1
GM-1

Appendix II - General Information .........................................................................

Notice of the General Meeting .........................................................................................

- i -

PRECAUTIONARY MEASURES FOR THE GM

In compliance with the Hong Kong Government's directive on social distancing, personal and environmental hygiene, and the guidelines issued by the Centre for Health Protection of the Department of Health ("CHP") on the prevention of coronavirus disease 2019 ("COVID-19"), the Company will implement precautionary measures at the GM in the interests of the health and safety of our shareholders, investors, directors, staff and other participants of the GM (the "Stakeholders") which include without limitation:

(1) Every attendee will be required to wear a surgical face mask throughout the GM and inside the GM venue. Attendees are advised to maintain appropriate social distance with each other at all times when attending the GM.
(2) There will be compulsory body temperature screening for all persons before entering the GM venue. Any person with a body temperature of 37.3 degrees Celsius or above or any person which exhibits any flu-like symptoms may be denied entry to the GM venue or be required to promptly leave the GM venue.
(3) No refreshment will be served, and there will be no corporate gift.
(4) Attendees may be asked (i) if he/she has travelled outside of Hong Kong within 14 days immediately before the GM; AND (ii) if he/she is subject to any Hong Kong Government prescribed quarantine requirement. Any person who responds positively to any of these questions will be denied entry into the GM venue.
(5) Anyone attending the GM is reminded to observe good personal hygiene at all times.
(6) Appropriate seating arrangement at the GM venue in line with the guidance from the Hong Kong Government will be made.
(7) In light of the continuing risks posed by the COVID-19 pandemic, and in the interests of protecting the Stakeholders, the Company is supportive of the precautionary measures being adopted and reminds Shareholders that physical attendance in the GM is not necessary for the purpose of exercising voting rights. The Company strongly advises
Shareholders to appoint the chairman of the GM as their proxy to vote on the relevant resolution(s) as an alternative to attending the GM in person.
(8) Shareholders are advised to monitor the development of COVID-19. Subject to the development of COVID-19, the Company may implement further changes and precautionary measures and may issue further announcement on such measures as appropriate.
(9) Health education materials and up-to-date development on COVID-19 can be found on the CHP website (www.chp.gov.hk) and the website of the Hong Kong Government on
COVID-19 (www.coronavirus.gov.hk).

In this circular, the following expressions shall have the meanings set out below unless the context requires otherwise:

"Articles of Association" or	the articles of association of the Company, as amended from
"Article(s)"	time to time
"associate(s)"	has the meaning as ascribed thereto under the Listing Rules
"Audit Committee"	the audit committee of the Board
"Board"	the board of Directors
"Bondholder(s)"	the holder(s) of the Convertible Bonds
"Business Day(s)"	a day (other than a Saturday or Sunday or public holiday in
Hong Kong or any day on which a tropical cyclone warning
no.8 or above or a "black" rain warning signal is hoisted in
Hong Kong at any time between 9:00 a.m. and 5:00 p.m.) on
which licensed banks in Hong Kong are open for business
throughout their normal business hours
"Companies Ordinance"	the Companies Ordinance (Chapter 622 of the Laws of Hong
Kong)
"Company"	Target Insurance (Holdings) Limited, a company incorporated in
Hong Kong with limited liability, the Shares of which are listed
on the Main Board of the Stock Exchange (Stock Code: 6161)
"Completion"	completion of the Subscription pursuant to the terms and
conditions of the Subscription Agreement
"connected person(s)"	has the meaning ascribed to it under the Listing Rules
"Conversion Price"	the conversion price per Conversion Share and initially at
HK$0.57 per Conversion Share (subject to adjustments)
"Conversion Share(s)"	the Share(s) which may fall to be allotted and issued upon
exercise of the conversion rights attaching to the Convertible
Bonds
"Convertible Bonds"	HK$400.0 million zero coupon unsecured redeemable
convertible bonds due 2026 to be issued by the Company to
the Subscriber in accordance with the terms of the Subscription
Agreement
"Director(s)"	the director(s) of the Company

"GM"

a general meeting of the Company to be convened and held at Jade Room, Artzen Club, 401A, 4th Floor, Shun Tak Centre, 200 Connaught Road Central, Hong Kong on Monday, 29 March 2021 at 4:00 p.m. for (i) the Independent Shareholders to consider and, if thought fit, approve the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate); and (ii) the Shareholders to approve the re-election of the Retiring Directors

"Group"

the Company and its subsidiaries

"Hong Kong"

the Hong Kong Special Administrative Region of the PRC

"HK$"

Hong Kong dollars, the lawful currency for the time being of Hong Kong

"IA"

the Insurance Authority of Hong Kong

"Independent Board Committee"

an independent committee of the Board comprising all the independent non-executive Directors established to advise the Independent Shareholders on (i) the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate); and (ii) the connected transaction regarding the Subscription (including the grant of the Speciﬁc Mandate) under the Listing Rules

"Independent Financial Adviser"

Rainbow Capital (HK) Limited, a corporation licensed to carry out Type 6 (advising on corporate finance) regulated activity under the SFO, being the independent ﬁnancial adviser appointed to advise the Independent Board Committee and the Independent Shareholders on the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Speciﬁc Mandate)

"Independent Shareholders"

the Shareholders who are not required to abstain from voting in respect of the Subscription Agreement and the transactions contemplated thereunder

"Insurance Ordinance"

the Insurance Ordinance (Chapter 41 of the Laws of Hong Kong)

"Latest Practicable Date"

8 March 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

"Listing Rules"

the Rules Governing the Listing of Securities on the Stock Exchange

DEFINITIONS
"Long Stop Date"	30 April 2021 or such other date as the Company and the
Subscriber may agree in writing
"Nomination Committee"	the nomination committee of the Board
"Pre-IPO Share Option Scheme"	the pre-IPO share option scheme conditionally adopted by the
Company on 30 September 2014
"PRC"	the People's Republic of China, and for the purpose of
this circular only, excludes Hong Kong, Macau Special
Administrative Region of the People's Republic of China and
Taiwan
"Remuneration Committee"	the remuneration committee of the Board
"Retiring Directors"	those Directors who, as named under the section headed "Re-
election of Directors" in the Letter from the Board contained
in this circular, will offer themselves for re-election at the GM
pursuant to the Articles of Association
"SFC"	the Securities and Futures Commission
"SFO"	The Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended from time to time
"Share(s)"	ordinary shares of no par value in the share capital of the
Company
"Shareholder(s)"	holder(s) of the Share(s)
"Specific Mandate"	the specific mandate to be sought from the Independent
Shareholders for the allotment and issuance of the Conversion
Shares
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Subscriber"	Smart Neo Holdings Limited, a company incorporated in Hong
Kong with limited liability, a substantial Shareholder and is
wholly-owned by Mr. Ng Yu, an executive Director and the
co-chairman of the Board
"Subscription"	the subscription for the Convertible Bonds by the Subscriber
pursuant to terms and conditions of the Subscription
Agreement
- 3 -

"Subscription Agreement"

the conditional subscription agreement dated 26 January 2021 entered into between the Company and the Subscriber in relation to the Subscription, as amended and/or supplemented from time to time

"Takeovers Code"

the Codes on Takeovers and Mergers and Share Buybacks

"Target"

Target Insurance Company, Limited, a wholly-owned subsidiary of the Company which is principally engaged in the writing of general insurance business

"Unsecured Loans"

the loan agreements dated 13 March 2020 and entered into between the Company and each of Dr. Cheung Haywood, Mr. Chiu Sun Ting, and Mr. Lai Bing Leung, for loans in the principal amount of HK$40.0 million, HK$25.0 million and HK$25.0 million respectively at an interest rate of 3.5% per annum for a term commencing from 13 March 2020 to 12 September 2020, which were subsequently extended to 12 March 2021 on 25 August 2020 and the outstanding loans were further extended to 12 May 2021 on 5 March 2021

"%"

per cent

TARGET INSURANCE (HOLDINGS) LIMITED 泰加保險（控股）有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 6161)

Executive Directors:

CHEUNG Haywood (Chairman) NG Yu (Co-chairman)

MUK Wang Lit Jimmy (Chief Executive Ofﬁcer) CHAN Hok Ching

LAU Ka Yee WEI Weicheng LIN Feng DAI Chengyan RUI Yuanqing

Independent Non-executive Directors: WAN Kam To

WONG Shiu Hoi Peter Anthony ESPINA LEUNG Ho Yin Alexander WANG Jun Sheng

To the Shareholders

Dear Sir or Madam,

Registered ofﬁce, headquarters and principal place of business of the

Company:

5/F., Low Block

Grand Millennium Plaza 181 Queen's Road Central Hong Kong

11 March 2021

(1) CONNECTED TRANSACTION IN RELATION TO

PROPOSED ISSUE OF CONVERTIBLE BONDS

UNDER SPECIFIC MANDATE;

(2) RE-ELECTION OF DIRECTORS;

AND

(3) NOTICE OF GM

INTRODUCTION

Reference is made to the announcement of the Company dated 26 January 2021 in relation to, among other things, the Subscription Agreement and the transactions contemplated thereunder.

The purpose of this circular is to provide you with, among other things, (i) further information in relation to details of the Subscription Agreement and the transactions contemplated thereunder; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Speciﬁc Mandate); (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate); (iv) information on the re-election of the Retiring Directors; (v) a notice convening the GM; and (vi) other information as required under the Listing Rules.

THE SUBSCRIPTION AGREEMENT

Date

26 January 2021

Parties

(i) The Company (as issuer); and
(ii) Smart Neo Holdings Limited (as Subscriber).

The Subscription

Pursuant to the Subscription Agreement, the Company conditionally agreed to issue, and the Subscriber conditionally agreed to subscribe for, the Convertible Bonds in the aggregate principal amount of HK$400.0 million, which may be converted into 701,754,385 Conversion Shares based on the initial Conversion Price of HK$0.57 per Conversion Share upon full conversion.

As at the Latest Practicable Date, the Company had 625,692,000 Shares in issue. The Conversion Shares represent approximately 112.16% of the existing issued Shares and approximately 52.86% of the issued Shares as enlarged by the allotment and issue of the Conversion Shares immediately after full conversion of the Convertible Bonds at the initial Conversion Price (assuming that there is no change in the issued Shares).

Conditions Precedent

Completion is conditional upon the fulfilment (or otherwise waived by the Company or the Subscriber (as the case may be) in writing, to the extent such conditions precedent may be waived) of the following conditions precedent:

(a)to the extent not waived or consented to by or the requisite approval or ruling not obtained from the relevant regulatory or governmental authorities, compliance by each party of all applicable laws and regulations, including but not limited to those under the Listing Rules, the Companies

Ordinance and the laws and regulations of each party's jurisdiction of incorporation;

(b) the passing by the Shareholders (other than those who are required by the Listing Rules to abstain from voting in respect of each resolution) in the GM of resolutions which are necessary to give effect to the transactions contemplated under the Subscription Agreement and comply with the Listing Rules, among other things, approving (i) the execution, delivery and performance of the Subscription Agreement; and (ii) the allotment and issue of the Conversion Shares under the Speciﬁc Mandate;
(c) the Listing Committee of the Stock Exchange granting the approval for the listing of, and permission to deal in, the Conversion Shares (with or without conditions) and the Stock Exchange not having withdrawn or revoked such approval;
(d) no relevant government, governmental, quasi-governmental, statutory or regulatory body, court or agency having granted any order or made any decision that would make the Subscription void, unenforceable or illegal, or restrict or prohibit the implementation of, or impose any additional material conditions or obligations with respect to the Subscription (other than such orders or decisions as would not have a material adverse effect on the legal ability of the Company and/or the Subscriber to proceed with the Subscription);
(e) all license, permit, consent, authorisation, permission, clearance, warrant, confirmation, certiﬁcate or approval of any competent governmental, administrative, supervisory, regulatory, judicial, determinative, disciplinary, enforcement or tax raising body, authority, agency, board, department, court or tribunal of any jurisdiction (including the Stock Exchange, the SFC or any relevant securities exchange) and whether supranational, national, regional or local or any other person which are required for the issue of the Convertible Bonds and all matters contemplated thereunder having been obtained or made, if any; and
(f) all the representations and warranties contained in the Subscription Agreement in relation to the Company and the Subscriber remain true, accurate in all material respects and not misleading when made, and being true, accurate in all material respects and not misleading on and as of the date of Completion.

The Company shall use its reasonable endeavours to procure the satisfaction of the above conditions precedent (where applicable to the Company) (unless otherwise waived by the Subscriber) on the date of Completion. The Subscriber shall use its reasonable endeavours to procure the satisfaction of the conditions precedent set out in paragraphs (a), (e) and (f) (where applicable to the Subscriber) above (unless otherwise waived by the Company) on the date of Completion.

The conditions precedent in paragraph (f) (in respect of the Company) above may be waived by the Subscriber (in whole or in part) and the conditions precedent in paragraph (f) (in respect of the Subscriber) may be waived by the Company (in whole or in part). No other conditions precedent may be unilaterally waived by the Company or the Subscriber.

If the above conditions precedent are unfulfilled or, if applicable, waived on or prior to the Long Stop Date, all obligations of the Company and the Subscriber shall cease and determine immediately on the Long Stop Date and none of the Company and the Subscriber (nor any of their respective afﬁliates) shall have any claim against the other (or any of their respective afﬁliates) except in respect of any rights and liabilities which have accrued prior to termination.

As at the Latest Practicable Date, none of the conditions precedent have been fulfilled or (where applicable) waived.

Completion

Completion shall take place in Hong Kong on the ﬁfth Business Day following the date on which the conditions precedent set out in the Subscription Agreement are fulﬁlled and/or waived (or such other date as the parties may agree).

PRINCIPAL TERMS AND CONDITIONS OF THE CONVERTIBLE BONDS

The principal terms and conditions of the Convertible Bonds are summarised as follows:

Issuer:

The Company

Principal amount:

HK$400.0 million

Issue Price:

100% at the full face value of the Convertible Bonds free from any interest, claim or equity of any person (including any right to acquire, option or right of pre-emption or conversion) or any mortgage, charge, pledge, lien, encumbrances, assignment, hypothecation, security interest, title retention or any other security agreement or arrangement, or any agreement to create any of the above.

Status:

The Convertible Bonds constitute direct unconditional, unsubordinated and unsecured obligations of the Company and shall at all times rank pari passu and rateably without any preference equally with all other unsecured and unsubordinated obligations of the Company. The payment obligations of the Company under the Convertible Bonds shall, save for such exceptions as may be provided by applicable legislation, rank at least equally with all its other present and future unsecured and unsubordinated obligations.

Form and Denomination:

The Convertible Bonds will be issued in registered form in denomination of HK$5,000,000 each. The certificate will be issued to the Subscriber in respect of its registered holding of the Convertible Bonds.

Interest:

The Convertible Bonds do not bear any interest.

Maturity Date:

The date falling on the fifth (5th) anniversary of the date of issue of the Convertible Bonds.

Conversion Price:

HK$0.57 per Conversion Share (subject to adjustments as set out and in accordance with the terms and conditions of the Convertible Bonds).

The initial Conversion Price of HK$0.57 per Conversion Share represents:

(i) a discount of approximately 8.06% to the closing price of HK$0.62 per Share as quoted on the Stock Exchange on 26 January 2021, being the date of the Subscription Agreement;
(ii) a discount of approximately 12.31% to the average closing price of HK$0.65 per Share as quoted on the Stock Exchange for the last five (5) consecutive trading days immediately prior to the date of the Subscription Agreement;
(iii) a discount of approximately 13.64% to the average closing price of HK$0.66 per Share as quoted on the Stock Exchange for the last ten (10) consecutive trading days immediately prior to the date of the Subscription Agreement;
(iv) a discount of approximately 9.52% to the average closing price of HK$0.63 per Share as quoted on the Stock Exchange for the last thirty (30) consecutive trading days immediately prior to the date of the Subscription Agreement; and
(v) a premium of approximately 2.33% over the Company's net asset value per Share of approximately HK$0.557 as at 30 June 2020.

The Conversion Price was arrived at after arm's length negotiations between the Company and the Subscriber, taking into account of (i) the prevailing market prices of the Shares as shown above; (ii) the monetary amount of the Subscription;

(iii) the zero interest rate under the Convertible Bonds; and
(iv) no collateral was required as security for the Convertible Bonds and represents a discount of approximately 12.31% to the average closing price of HK$0.65 per Share as quoted on the Stock Exchange for the last five (5) consecutive trading days immediately prior to the date of the Subscription Agreement. The discount of approximately 12.31% translates to a compounded interest rate of approximately 2.3%, which represents a rate lower than the indicative interest rates and handling charges for secured bank borrowings offered to the Company which ranges from 1.75% per annum above the Hong Kong Interbank Offered Rate (the "HIBOR") for one month to 1.75% per annum above the HIBOR for six months plus a flat handling fee of 0.60% of the amount of the loan facility payable upon ﬁrst drawdown of the loan. Having taken into account that (i) the Convertible Bonds are unsecured and carry no interest; (ii) the Convertible Bonds, being free of interest, provide the Company with an inexpensive means to raise a funding of HK$400.0 million and do not cause immediate dilution to the shareholding of the Shareholders; and (iii) the market price of the Shares has been volatile in the past 12 months with the lowest closing price of HK$0.47 per Share, the Directors (other than (i) Mr. Ng Yu who has material interest in the transactions as contemplated under the Subscription Agreement, and (ii) the independent non-executive Directors who will form an opinion after taking into consideration the advice of the Independent Financial Adviser) consider that the Conversion Price and the terms and conditions of the Subscription Agreement and the Convertible Bonds are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Adjustment events:

The Conversion Price is subject to customary adjustments in accordance with the terms and conditions set out in the Convertible Bonds if any of the following specific events occurs:

(a) where there is an alteration to the number of issued Shares by reason of any consolidation or subdivision;
(b) where the Company issues (other than in lieu of a cash dividend) any Shares credited as fully paid by way of capitalisation of proﬁts or reserves;

(c) where the Company makes (whether on a reduction of capital or otherwise except pursuant to any purchase by the Company of its own Shares which is permitted by law and by the rules of the Stock Exchange and in accordance with the provisions of the Articles) any capital distribution (including distributions in cash or specie, and any dividend charged or provided for in the accounts for any financial period) to the Shareholders (in their capacity as such) or grants to the Shareholders rights to acquire for cash assets of the Group;
(d) where the Company offers to the Shareholders Shares for subscription by way of rights, or grants to the Shareholders any options or warrants to subscribe for Shares at a price per Share which is less than 90% of the market price (as deﬁned in the Convertible Bonds) as at
the date of the announcement of the terms of the offer or
grant;
(e) where the Company issues wholly for cash any securities which by their terms are convertible into or exchangeable for or carrying rights of conversion for Shares, and the total effective consideration (as defined in the Convertible Bonds) per Share initially receivable for such securities is less than 90% of the market price (as deﬁned in the Convertible Bonds) as at the date of the announcement of the terms of issue of such securities;
(f) where the rights of conversion or exchange attached to any such securities as mentioned in subparagraph (e) above are modified so that the total effective consideration (as defined in the Convertible Bonds) per Share initially receivable for such securities shall be less than 90% of the market price (as defined in the Convertible Bonds) as at the date of announcement of the proposal to modify such rights of conversion or exchange;
(g) where the Company issues wholly for cash any Shares at a price per Share which is less than 90% of the market price as at the date of the announcement of the terms of such issue; or

(h)where the Company shall be permitted by law and, by the rules of the Stock Exchange and in accordance with the provisions of its articles of association, purchases and makes an offer or invitation to Shareholders to tender for sale to the Company any Shares or if the Company purchases any Shares or securities convertible into Shares or any rights to acquire Shares (excluding any such purchase made on the Stock Exchange, or any recognised stock exchange, being a stock exchange recognised for this purpose by the SFC or equivalent authority and the Stock Exchange).

The Company will make announcement(s) on any adjustment to the Conversion Price.

Assuming conversion of the Convertible Bonds into Conversion Shares in full at the initial Conversion Price, the net price per Conversion Share to the Company is HK$0.57.

Conversion Rights:

The Bondholder will have the right, during the period commencing on the date of issue of the Convertible Bonds and ending on the third Business Day prior to the maturity date of the Convertible Bonds, to convert the Convertible Bonds in whole or in part of the outstanding principal amount of the Convertible Bonds into Conversion Shares, provided that the exercise of the Conversion Rights will not result in:

(i) any mandatory offer obligation under Rule 26.1 of the Takeovers Code being triggered by the Bondholder and/ or parties acting in concert (as defined in the Takeovers Code) with such Bondholder unless (i) a whitewash waiver is obtained in accordance with the requirements of the Takeovers Code; or (ii) a general offer is made in accordance with the requirements of the Takeovers Code; or
(ii) the Company being in breach of any provision of the Listing Rules, including the requirement to maintain any prescribed minimum percentage of the issued Shares held by the public, and the conversion by the Bondholder shall be restricted until and unless the regulatory requirements under the Listing Rules are fully complied with.

Conversion Shares:Redemption at maturity:Based on the initial Conversion Price of HK$0.57 per Conversion Share, a maximum number of 701,754,385 Conversion Shares will be allotted and issued upon exercise of the conversion rights attached to the Convertible Bonds in full, which represent:

(i) approximately 112.16% of the issued Shares as at the Latest Practicable Date; and
(ii) approximately 52.86% of the issued Shares as enlarged by the allotment and issue of the Conversion Shares to be allotted and issued upon the exercise of the conversion rights attaching to the Convertible Bonds in full (assuming that there is no change in the issued Shares).

The Company shall redeem the Convertible Bonds by repaying the holder(s) of the Convertible Bonds all outstanding principal amount and any other outstanding amount due but unpaid under the Convertible Bonds (if any) on the maturity date of the Convertible Bonds.

Early redemption:

The Company may at any time during the period commencing from the beginning of the 13th month from the date of issue of the Convertible Bonds up to the maturity date of the Convertible Bonds redeem the Convertible Bonds then outstanding at 100% of the outstanding principal amount of the Convertible Bonds to be redeemed.

Transferability:

The Convertible Bonds are transferable except that no Convertible Bonds shall be transferred to any person who:

(i) is not independent of the Group or the connected persons of the Company (unless otherwise permitted with prior written consent of the Company and prior approval of the Stock Exchange (if necessary) and full compliance with the Listing Rules and other relevant laws and regulations); or
(ii) is a party acting in concert (as defined in the Takeovers Code) with any person or Shareholder to the effect that any transfer of the Convertible Bonds to such transferee(s) and/or the exercise by such transferee(s) of any conversion right attaching to the Convertible Bonds subject to such transfer will trigger the mandatory offer obligation under Rule 26.1 of the Takeovers Code unless (i) a whitewash waiver is obtained in accordance with the requirement of the Takeovers Code; or (ii) a general offer is made in accordance with the requirement of the Takeovers Code.

In the case of any transfer of the Convertible Bond(s) which will result in the transferee holding 15% of more of the issued Shares upon conversion of the Convertible Bond(s), thereby becoming a controller under section 9(1)(a)(iii)(B) of the Insurance Ordinance, the Bondholder shall give prior written notice to the Company of such proposed transfer and the Directors shall, at their own opinion and discretion, be entitled to refuse registration of such transfer(s) until the transferee has obtained the approval of the IA in accordance with the

Insurance Ordinance.

Ranking of Conversion Shares:The Conversion Shares allotted and issued upon conversion of the Convertible Bonds will in all respects rank pari passu with the Shares already in issue on the conversion date.

Voting rights:

The Bondholder(s) are not entitled to attend or vote at any general meetings of the Shareholders by reason only of them being Bondholders.

Listing:

No application will be made by the Company for the listing of the Convertible Bonds on the Stock Exchange. An application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares that may be issued upon the conversion of the Convertible Bonds.

SPECIFIC MANDATE

The Conversion Shares will be allotted and issued under the Speciﬁc Mandate to be sought from the Independent Shareholders at the GM.

INFORMATION ABOUT THE PARTIES

The Company

The Company is a limited liability company incorporated in Hong Kong and is principally engaged in investment holding. The Group is principally engaged in writing motor and other general insurance in Hong Kong with leading market position on motor insurance for taxi and public light bus.

The Subscriber

The Subscriber is a limited liability company incorporated in Hong Kong and is principally engaged in investment holding. To the best of the knowledge, information and belief of the Company, as at the Latest Practicable Date, the Subscriber is a substantial Shareholder holding 138,822,000 Shares, representing approximately 22.19% of the issued Shares. The Subscriber is directly wholly-owned by Mr. Ng Yu, an executive Director and the co-chairman of the Board.

REASONS FOR THE SUBSCRIPTION AND USE OF PROCEEDS

Reasons for and beneﬁts of the Subscription

It has been the business goal of Target to be the most preferred local general insurance company in Hong Kong. Since 2017, Target has diversified its general insurance business by providing quality general insurance products and services to local enterprises and individual clients. The detailed breakdown of gross premium written is as follows: -

For the six months ended

30 June
2020	2019	2018	2017
(HK$ million)	(HK$ million)	(HK$ million)	(HK$ million)
Motor vehicle, damage and
liability ("Motor")	213.4	430.9	428.0	406.1
Employees' Compensation ("EC")	76.1	85.2	21.0	1.2
Others	5.3	11.6	3.3	0.9
TOTAL	294.8	527.7	452.3	408.2

For the year ended 31 December

There exists an authorized annual aggregate gross premium income limit (the "Target Limit") imposed by the IA on Target in carrying out its businesses, which in the view of the Directors, restricts the business development and expansion of the Group.

For the year ending 31 December 2021, the Target Limit is HK$590.0 million (2020: HK$560.0 million) and the authorized annual gross premium income limit on EC business (the "EC Target Limit") is HK$120.0 million (2020: HK$93.0 million). Any adjustment of the Target Limit will require Target to submit an application to the IA for its consideration. The Company intends to increase the Target Limit to HK$920.0 million to accommodate the Company's estimated business growth for the next three years. The capital strength of Target is one of the key factors in determining the Target Limit and other factors include, but are not limited to, the (i) capital adequacy; (ii) underwriting performance; (iii) profitability; and (iv) business volatility of Target. The Company is of the view that upon Completion, it will have sufﬁcient capital to satisfy the capital strength and capital adequacy factors and the Company has no intention to conduct any fund raising in the near future.

Raising sufficient funds is only the first step towards achieving the proposed increase of the Target Limit. The Company will also, subject to the economic and business environment, strive to improve its underwriting performance and widen the product base offered to minimize business volatility to support the Company's application for an increased Target Limit. The Company will focus on achieving underwriting improvement through the following approaches: (i) portfolio steering - tostrike a balance between consistency in the Company's risk appetite and the need to continuously calibrate that appetite, the Company will ensure that it is willing and able to pull back when conditions are unsustainable; (ii) pricing adequacy - to introduce technical pricing as a core part of underwriting governance and as a benchmark, the Company is thus provided with insight into directional movement of pricing for a portfolio over time; (iii) risk selection - to supplement data-driven analysis, the Company will encourage collective risk discussion and underwriting assessment; (iv) capacity optimization - to encourage dynamic recalibration of limits and retention, the Company will deploy capacity more prudently through deductibles and also through net retention across the portfolio by way of optimal use of reinsurance arrangement; and (v) coverage design - to translate qualitative policy terms and endorsements into quantitative parameters, the Company will carefully control around its policy wording. Given the improved underwriting performance and proﬁtability of the Group for the six months ended 30 June 2020, which is expected by the Directors to continue to improve for the rest of the financial year, coupled with the expected enhancement in the financial strength of Target resulting from the Subscription, Target intends to submit an application to the IA for the relaxation of the Target Limit for 2021 by the end of March 2021.

Apart from adhering to the Target Limit, the Insurance Ordinance also requires insurers operating in Hong Kong to maintain a solvency margin at a level prescribed by the Insurance Ordinance and it is general practice for insurers to maintain a higher solvency margin (the "Benchmark Solvency Margin") than the minimum level required under the Insurance Ordinance. The Benchmark Solvency Margin is calculated by dividing eligible net asset value (after the adjustments as required under the Insurance Ordinance) by the relevant amount determined with reference to, among other things, gross premium income and claims outstanding arising from the insurer's Hong Kong insurance business. The objective of a solvency margin is to provide a reasonable safeguard against the risk that an insurer's assets may be inadequate to meet its liabilities arising from unpredictable events, such as adverse fluctuations in its operating result or the value of its assets and liabilities.

Where an insurer's solvency margin falls below the Benchmark Solvency Margin, the IA may take regulatory measures to ensure the insurer restores its solvency margin to the Benchmark Solvency Margin.

As required by the IA, Target needs to carry out both primary review and peer review on its annual actuarial estimation on insurance claims and premium liabilities (the "Actuarial Result"). Based on the Actuarial Result for the year ended 31 December 2019 ﬁnalised on 12 March 2020, the Company became aware that Target's solvency margin fell below the Benchmark Solvency Margin. In response to Target's solvency margin falling below the Benchmark Solvency Margin, the Company took immediate action by entering into the Unsecured Loans and capital injections of HK$90.0 million (from the proceeds of the Unsecured Loans) and HK$13.0 million (from the internal resources of the Company) were made to Target to restore Target's solvency margin above the Benchmark Solvency Ratio. As Target took remedial actions to restore the Benchmark Solvency Ratio soon after the Actuarial Result was ﬁnalized and kept the IA closely informed on the status, no regulatory measures were taken by the IA.

As Target's business portfolio mainly comprises Motor and EC, which has more long tail liabilities, any increase in the business underwritten by Target will inevitably increase Target's liabilities and may reduce its solvency margin to a level below the Benchmark Solvency Margin. In the past, the IA has imposed the Target Limit on Target to limit its downside risk that may further erode its solvency position. Having considered that Target's solvency margin had previously fallen below the Benchmark Solvency Margin, the Directors consider that the low solvency margin of Target, as compared to other general insurers of similar size (based on gross premium written), will hamper its ability to meet consistent market demand as indicated from time to time by Target's existing clients and intermediaries, thereby leading to a reduction in Target's ability to take up business and, by extension, its competitiveness. An expanded capital base will ensure that any business expansion will not be hindered by or violate the Benchmark Solvency Margin.

Target is in the course of developing other insurance products, building its internal capacity on human resources and information technology to prepare for future business needs and regulatory developments, actively managing its relationship with its existing agent network and strengthening and developing its relationship with other insurance intermediaries to continue to grow its business portfolio, hence raising the Target Limit is essential for the Group to increase its competitiveness and ﬂexibility to expand its business and to be able to capture any imminent opportunities to their fullest extent.

According to the Hong Kong insurance business statistics for 2019 released by the IA, the gross premium written in the general insurance business for Motor, EC and reinsurance inward ("Reinsurance Inward") in 2019 are as follows:

Gross Premium Target's market

Class of business	Written	share
(HK$ million)
Motor	4,632.2	8.8%
EC	7,068.2	0.6%
Reinsurance Inward	13,419.7	0.0%

Although the market is competitive, the Directors are of the view that there is sufficient room for the Company's growth. Subject to obtaining an increase in the Target Limit to HK$920.0 million to accommodate the Company's estimated business growth for the next three years, the Company plans to expand its business in the areas of Motor, EC and Reinsurance Inward with details as follows:

(1) Motor - the Company expects growth in this class of business will be from renewal of existing business with a higher premium rate and/or stricter underwriting terms and the newly launched B2B automation platform for motor business.
(2) EC - in the past few years, the Company has built close and collaborative relationships with selected intermediaries to identify quality business and provide hands on risk and claims management to policyholders. The Company's gross premium written grew from HK$1.2 million in 2017 to HK$85.0 million in 2019. In 2020, growth was limited by the Target Limit and already reached HK$76.0 million in the ﬁrst 6 months.

(3)Reinsurance Inward - the Company sources Reinsurance Inward business from industry peers. At the same time, the Company maintains close business relationships with renowned reinsurance brokers for potential business opportunities.

Upon improving the Company's capital strength, operational performance and business profile (diversiﬁcation), the Company will apply for A.M. Best Credit rating (specializing in the insurance industry) to promote its credibility, transparency and acceptance for new markets and business penetration. A credit rating status is needed for writing business with larger corporates and Reinsurance Inward. It can also enhance the Company's image and standing in the industry.

As such, there is an imminent need for the Group to raise funds whereby the funds from the Subscription would enhance the ﬁnancial strength of the Group and strengthen Target's application to the IA to relax the Target Limit, which is essential to Target in order for it to sustain its business expansion strategy and growth momentum.

In order to keep pace with the evolving global financial landscape and changing international standards, the IA is developing a risk-based capital regime (the "RBC Regime"), which aims to enhance corporate governance and risk management practices for the insurance industry. Similar to requirements globally, the RBC Regime is a three-pillared approach which covers: (i) Pillar I - consisting of the quantitative requirements that include assessment of capital adequacy and valuation; (ii) Pillar II - setting out the qualitative requirements that include corporate governance, Enterprise Risk Management as well as Own Risk and Solvency Assessment; and (iii) Pillar III - including disclosure requirements for enhancing transparency of relevant information of insurers to the public. The implementation of the RBC Regime is in a phased approach - the IA introduced Pillar II through Guideline on Enterprise Risk Management with effect from 1 January 2020, which requires insurers to voluntarily meet or have plans to meet the Pillar I capital requirements.

While the "go live" dates for Pillar I and Pillar III are targeted to be introduced by 2024, the relevant legislation and details of the capital requirement have yet to be finalized. Based on the latest quantitative impact study launched by the IA for the purpose of forming the data set for the insurance industry in Hong Kong to moderate and calibrate the set of rules on Pillar I capital requirements, the Pillar I capital requirements are expected to be measured with reference to: (i) prescribed capital requirement, being the solvency control level above which the IA does not intervene on the capital adequacy grounds, which is defined such that assets will exceed technical provisions and other liabilities with a specified level of safety over a defined time horizon; and (ii) capital resources, which will be measured based on assets and liabilities under economic valuation basis. The Directors expect that the Pillar I capital requirements will be more stringent than the existing requirement imposed by the IA.

As Target's business portfolio consists mainly of Motor and EC, which carry comparatively higher risk charges, the Company anticipates the Pillar I capital requirement will be more stringent than the capital requirement under the existing rule-based regime. To allow sufﬁcient time for insurers to familiarise themselves with the RBC Regime, the IA has adopted a phased implementation on Pillar II and expects insurers to voluntarily meet or have plans to meet the Pillar I capital requirements. Inaddition, Target was reminded by the IA to consider the implications of its business plan on its ability to comply with the capital requirements in the future RBC Regime. Accordingly, for the beneﬁts of the Company and the Shareholders, it is crucial for the Company to plan ahead and be sufficiently prepared before the RBC Regime is fully implemented.

Under the RBC Regime, capital requirements for insurers need to be commensurate with the risks they bear and insurers with several product lines will enjoy major diversiﬁcation advantage.

By reinforcing the Company's capital strength and diversifying its business into other general insurance products, the Company will be well prepared both technically and strategically for new regulatory challenges and sustainable growth opportunities.

Apart from the Subscription, the Company has also considered other financing alternatives such as equity financing and bank borrowings. In light of the historical financial performance of the Group where the Company had incurred net losses for the two consecutive years ended 31 December 2019, banks and financial institutions have shown reluctance in providing financial assistance to the Company and such financing alternatives are either unavailable to the Group or at very high financing cost. Having considered that (i) the Subscription will enable the Company to raise a considerable amount of funds for a longer period to strengthen the ﬁnancial position of the Group; (ii) the Convertible Bonds will not bear any interest, thereby reduces the cash ﬂow burden on the Group; and (iii) no security will be required to be provided by the Group under the Convertible Bonds, the Directors consider that raising funds through issue of the Convertible Bonds would substantially reduce the ﬁnancing costs of the Company.

Use of Proceeds

The gross proceeds from the Subscription will be HK$400.0 million and the net proceeds from the Subscription, after deduction of expenses, are expected to amount to approximately HK$399.0 million. It is expected that the net proceeds from the Subscription of (i) approximately HK$50.0 million will be applied for repayment of the Unsecured Loans; (ii) approximately HK$330.0 million will be applied as funds available to Target for business expansion and preparation of regulatory development to meet prevailing capital adequacy requirements; and (iii) approximately HK$19.0 million will be utilised for general working capital of the Group.

As announced by the Company on 13 March 2020, the Company was granted the Unsecured Loans, the purpose of which was for capital injection into Target to improve its solvency margin. An amount of HK$40.0 million from the net proceeds of the shares placement as announced on 4 January 2021 has been applied as partial repayment to the Unsecured Loans. The outstanding principal amount of the Unsecured Loans as at the Latest Practicable Date is HK$50.0 million, which the Company intends to repay with the proceeds from the Subscription.

The Directors consider that the net proceeds of HK$399.0 million to be raised from the Subscription would be sufficient to meet the Company's funding needs for the 12 months following the Latest Practicable Date.

Based on the above, the Directors (excluding the independent non-executive Directors who will form their opinion after reviewing the letter from the Independent Financial Adviser) consider that the Subscription (i) represents a good opportunity for the Company to raise a substantial amount of funds for the capital injection into Target and (ii) will facilitate Target to demonstrate to the IA its confidence and commitment towards the long-term business development in the local general insurance industry.

As such, the Board (other than (i) Mr. Ng Yu, who was required to abstain from voting on the relevant Board resolution(s) approving the Subscription Agreement and the transactions contemplated thereunder by virtue of him having a material interest in the Subscription, and (ii) the independent non-executive Directors who will form an opinion after taking into consideration the advice from the Independent Financial Adviser) considers that the Conversion Price and the terms and conditions of the Subscription Agreement, which are determined after arm's length negotiations between the Company and the Subscriber, are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

EFFECT ON SHAREHOLDING STRUCTURE OF THE COMPANY

For illustration purposes only, the shareholding structure of the Company as at the Latest Practicable Date, and the effect on the shareholding structure of the Company upon completion of the allotment and issue of the Conversion Shares pursuant to the Subscription Agreement are set out as follows:

Immediately after full exercise of the conversion rights attaching to the Convertible Bonds (Note 1) Assuming no outstanding Assuming all of outstandingName of ShareholdersAs at the Latest Practicable Date Number of Approximate %share options of the Company share options of the Companybeing exercised

having been fully exercised

Number of Approximate %

Shares of issued Shares

Shares of issued Share

(Notes 2 & 3)

(Note 3)

Independent Assets

Management Limited

(Note 4)

The Subscriber (Note 5) Convoy Collateral Limited

(Note 6)

158,750,000 138,822,000 75,484,000

Muk Wang Lit Jimmy

(Note 7)

Lau Ka Yee (Note 8) Public Shareholders

360,000 168,000 252,108,000

25.37 22.19 12.06 0.06 0.02 40.30

158,750,000 840,576,385 75,484,000

360,000 168,000 252,108,000

11.96 63.32 5.69 0.03 0.01 18.99

158,750,000 11.87

840,576,385 62.87

75,484,000 5.64

2,000,000 0.15

254,000 0.02

260,000,000 19.45

Total

625,692,000

100.00 1,327,446,385

100.00 1,337,064,385 100.00

Notes:

1. Assuming that there is no change in the number of issued Shares from the Latest Practicable Date up to the date when the conversion rights are exercised in full.
2. Based on 625,692,000 Shares in issue as at the Latest Practicable Date.
3. Certain percentage figures included in the above table have been subject to rounding adjustments. Accordingly, ﬁgures shown as totals may not be an arithmetic aggregation of the ﬁgures preceding them.
4. Independent Assets Management Limited is the beneficial owner of 158,750,000 Shares and is wholly and beneﬁcially owned by Dr. Cheung Haywood, an executive Director and the chairman of the Board. Therefore, Dr.
Cheung Haywood is deemed to be interested in the Shares owned by Independent Assets Management Limited pursuant to the SFO.
5. The Subscriber is the beneﬁcial owner of 138,822,000 Shares and is wholly and beneﬁcially owned by Mr. Ng Yu, an executive Director and the co-chairman of the Board. Therefore, Mr. Ng Yu is deemed to be interested in the Shares owned by the Subscriber pursuant to the SFO.
6. Convoy Collateral Limited is the beneficial owner of 75,484,000 Shares and is wholly-owned by Convoy (BVI) Limited, Convoy (BVI) Limited is wholly-owned by Convoy Global Holdings Limited. Therefore, Convoy Global Holdings Limited is deemed to be interested in the Shares owned by Convoy Collateral Limited pursuant to the SFO.
7. Mr. Muk Wang Lit Jimmy is an executive Director and the Chief Executive Officer of the Company and is the beneﬁcial owner of 360,000 Shares and 1,640,000 share options of the Company.
8. Ms. Lau Ka Yee is an executive Director and is the beneﬁcial owner of 168,000 Shares and 86,000 share options of the Company.

EQUITY FUND RAISING ACTIVITIES IN THE PAST TWELVE-MONTH PERIOD

Net proceeds and

Date of announcement(s)Event

intended use of Actual use of proceeds proceeds

4 January 2021

(the "Placing Announcement") and 22 January 2021

Placing of 104,282,000 placing shares at the placing price of HK$0.50 per placing share under general mandate pursuant to a placing agreement dated 4 January 2021 entered into between the Company and Emperio Securities and Assets Management Limited

Net proceeds of approximately HK$51.55 million will be utilised for the repayment of loans and/or for the general working capital of the GroupOn 26 January 2021,

Unsecured Loans in the principal amount of HK$40.0 million were repaid in full.

As at the Latest

Practicable Date, HK$11.55 million of the remaining net proceeds remain unutilised. As disclosed in the Placing Announcement, such remaining net proceeds are intended to be utilised for the general working capital of the Group.

Save as disclosed above, the Company has not conducted any other equity fund raising activities in the past twelve months immediately preceding the Latest Practicable Date.

LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, the Subscriber is a substantial Shareholder holding 138,822,000 Shares, representing approximately 22.19% of the issued Shares, which is in turn wholly-owned by Mr. Ng Yu, an executive Director and the co-chairman of the Board, and is therefore a connected person of the Company. Accordingly, the Subscription constitutes a connected transaction of the Company under the Listing Rules and is subject to announcement, reporting and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

Mr. Ng Yu abstained from voting on the relevant Board resolution(s) approving the Subscription Agreement and the transactions contemplated thereunder by virtue of him having a material interest in the Subscription.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Company has established the Independent Board Committee comprising all the independent non-executive Directors to advise the Independent Shareholders in respect of (i) the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate); and (ii) the connected transaction regarding the Subscription (including the grant of the Specific Mandate) under the Listing Rules. None of the members of the Independent Board Committee has any material interest in the Subscription Agreement and the transaction contemplated thereunder.

The Company has appointed Rainbow Capital (HK) Limited as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Speciﬁc Mandate).

RE-ELECTION OF DIRECTORS

Pursuant to Article 72(1) of the Articles, a Director may serve consecutive terms if re-elected by the Company in general meeting upon the expiration of his term. The ﬁxed period of appointment of Dr.

Cheung Haywood ("Dr. Cheung"), Mr. Muk Wang Lit Jimmy ("Mr. Muk"), Mr. Chan Hok Ching ("Mr. Chan"), Mr. Wan Kam To ("Mr. Wan") and Mr. Wong Shiu Hoi Peter ("Mr. Wong"), being the Retiring Directors, expired on 14 January 2021. Therefore, each of them is subject to re-election at the GM, and, being eligible, offers himself for re-election.

Brief biographical and other details of each of the Retiring Directors offering himself for re-election, which are required to be disclosed under the Listing Rules, are set out in Appendix I to this circular.

The Nomination Committee has reviewed the biographical information of each of the Retiring Directors with reference to the board diversity policy of the Company and their contributions to the Board and the Group during their tenure. The Retiring Directors have extensive experience and knowledge in their respective professional and commercial fields, who can contribute valuable advice on the business and development of the Group and can also conform with the Company's board diversity policy.

As at the Latest Practicable Date, Mr. Wan holds seven listed company directorships. During his tenure in acting as an independent non-executive Director and as chairman of the Audit Committee, Mr. Wan has devoted significant time and effort in attending to various business affairs of the Company that were brought to the attention, or which required the supervision, of the Board and/or the Audit Committee, and with respect to which he has rendered valuable contributions. Notwithstanding that Mr. Wan is an independent non-executive director of six other listed companies, the Board considers that taking into account (i) his contribution, performance and attendance at meetings of the Board and the Audit Committee during his past tenure; (ii) that he is retired with adequate time for reviewing and participating in the Board's affairs; (iii) that his appointments as director of other listed companies are of a non-executive nature which does not require day-to-day involvement in the management of those companies; and (iv) that he is only involved in one Board committee of the Company, Mr. Wan will be able to continue to devote sufficient time for the business affairs of the Company and competently discharge his duties as an independent non-executive Director. Based on the above, the Nomination Committee is satisfied that Mr. Wan can continuously fulﬁll his role as an independent non-execution Director effectively.

The Nomination Committee has also assessed the independence of each of Mr. Wan and Mr. Wong based on reviewing their written confirmations of independence to the Company pursuant to Rule 3.13 of the Listing Rules and conﬁrmed that both of them remain independent.

Accordingly, with the recommendation of the Nomination Committee, the Board has proposed all the Retiring Directors stand for re-election at the GM.

GENERAL

The notice of the GM at which ordinary resolutions will be proposed to consider and, if thought ﬁt, (i) to approve among other things, the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Speciﬁc Mandate); and (ii) to re-elect the Retiring Directors to be held at Jade Room, Artzen Club, 401A, 4th Floor, Shun Tak Centre, 200 Connaught Road Central, Hong Kong on Monday, 29 March 2021 at 4:00 p.m., is set out on pages GM-1 to GM-3 of this circular.

Enclosed is a form of proxy for use at the GM. Whether or not you intend to be present at the GM, you are requested to complete the form of proxy and return it to the share registrar and transfer ofﬁce of the Company, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time ﬁxed for holding the GM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the GM or its adjournment thereof if you so wish.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of Shareholders at a general meeting must be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. As such, all the resolution(s) set out in the notice of the GM will be voted by poll.

The Subscriber and its associates, holding approximately 22.19% of the total number of issued Shares as at the Latest Practicable Date, and Shareholders who are involved in or have a material interest in the Subscription and the transactions contemplated thereunder (including the grant of the Specific Mandate) will be required to abstain from voting in respect of the resolution(s) to approve the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Speciﬁc Mandate) at the GM. To the best of the Directors' knowledge, information and belief after having made all reasonable enquiries, save for the Subscriber and its associates, no other Shareholder is involved in or interested in the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Speciﬁc Mandate) and will be required to abstain from voting on the resolution(s) to approve the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Speciﬁc Mandate) at the GM.

CLOSURE OF REGISTER OF MEMBERS

For determining the identity of the shareholders to attend and vote at the GM, the register of members of the Company will be closed from Tuesday, 23 March 2021 to Monday, 29 March 2021 (both days inclusive) during which period no transfer of shares will be registered. In order to be eligible to attend and vote at the GM, all transfers of shares accompanied by the relevant share certiﬁcates must be lodged with the Company's share registrar and transfer ofﬁce, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong for registration not later than 4:30 p.m. on Monday, 22 March 2021.

RECOMMENDATION

Your attention is drawn to:

(i) the letter from the Independent Board Committee which contains its advice set out on pages 27 to 28 of this circular to the Independent Shareholders in respect of (i) the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate); and (ii) the connected transaction regarding the Subscription (including the grant of the Speciﬁc Mandate) under the Listing Rules; and
(ii) the letter from the Independent Financial Adviser which contains its advice set out on pages 29 to 74 of this circular to the Independent Board Committee and the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Speciﬁc Mandate).

The Board, including the Independent Board Committee after having considered the advice of the Independent Financial Adviser, considers that the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate) are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole, and recommends that the Independent Shareholders vote in favour of the resolution(s) relating to the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Speciﬁc Mandate) at the GM.

The Board also considers that the re-election of the Retiring Directors is in the best interests of the Company and the Shareholders as a whole and therefore recommends the Shareholders to vote in favour of the relevant resolution to be proposed at the GM.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information contained in the appendices to this circular and the notice of the GM.

Completion of the Subscription is subject to the fulfilment or waiver (as applicable) of the conditions precedent set out in the Subscription Agreement. Accordingly, the Subscription may or may not proceed. Shareholders and potential investors of the Company should exercise extreme caution when dealing in the Shares.

Yours faithfully,

For and on behalf of the Board of

Target Insurance (Holdings) Limited

Cheung Haywood

Chairman

TARGET INSURANCE (HOLDINGS) LIMITED 泰加保險（控股）有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 6161)

11 March 2021

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION IN RELATION TO

PROPOSED ISSUE OF CONVERTIBLE BONDS

UNDER SPECIFIC MANDATE

We refer to the circular issued by the Company to its Shareholders dated 11 March 2021 (the "Circular"), of which this letter forms part. Capitalised terms used in this letter shall bear the same meanings as deﬁned in the Circular unless the context otherwise requires.

We have been appointed by the Board as the Independent Board Committee to advise you in respect of (i) the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Speciﬁc Mandate); and (ii) the connected transaction regarding the Subscription (including the grant of the Speciﬁc Mandate) under the Listing Rules.

Rainbow Capital (HK) Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate). Details of the advice of the Independent Financial Adviser, together with the principal factors and reasons it has taken into consideration in giving its advice, are contained in its letter set out on pages 5 to 26 of the Circular. Your attention is also drawn to the letter from the Board and the additional information set out in the appendix to the Circular.

After taking into account the factors and reasons considered by the Independent Financial Adviser and its conclusion and advice, we concur with their views and consider that although the entering into of the Subscription Agreements is not in the ordinary and usual course of business of the Company, the terms of the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Specific Mandate) are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote in favor of the ordinary resolution(s) to be proposed at the GM to approve the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Speciﬁc Mandate).

Yours faithfully,

For and on behalf of the Independent Board Committee

Mr. Wan Kam	Mr. Wong Shiu	Mr. Anthony	Mr. Leung Ho Yin	Dr. Wang Jun
To	Hoi Peter	Espina	Alexander	Sheng
Independent	Independent	Independent	Independent	Independent
non-executive	non-executive	non-executive	non-executive	non-executive
Director	Director	Director	Director	Director
- 28 -

The following is the full text of a letter of advice from Rainbow Capital (HK) Limited, the independent ﬁnancial adviser to the Independent Board Committee and the Independent Shareholders, in relation to the Subscription which has been prepared for the purpose of inclusion in this circular.

Rainbow Capital (HK) Limited

11 March 2021

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION

IN RELATION TO

PROPOSED ISSUE OF CONVERTIBLE BONDS

UNDER SPECIFIC MANDATE

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Subscription, details of which are set out in the letter from the Board (the "Letter from the Board") contained in the circular issued by the Company to the Shareholders dated 11 March 2021 (the "Circular"), of which this letter forms part. Unless the context otherwise requires, capitalised terms used in this letter shall have the same meanings as those deﬁned in the Circular.

On 26 January 2021 (after trading hours), the Company and the Subscriber entered into the Subscription Agreement, pursuant to which the Subscriber conditionally agreed to subscribe for the Convertible Bonds in the aggregate principal amount of HK$400.0 million primarily for business development and expansion of the Group.

The Subscriber, incorporated in Hong Kong, is principally engaged in investment holding. As at the Latest Practicable Date, the Subscriber is a substantial Shareholder holding approximately 22.19% of the issued Shares, which is in turn wholly-owned by Mr. Ng Yu, an executive Director and the co-chairman of the Board. Accordingly, the Subscriber is a connected person of the Company and the Subscription constitutes a connected transaction for the Company which is subject to announcement, reporting and independent Shareholders' approval requirements under Chapter 14A of the Listing Rules. The Conversion Shares will be allotted and issued pursuant to the Specific Mandate to be sought from the Independent Shareholders at the GM. An application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares that may be issued upon conversion of the Convertible Bonds. The Subscriber and its associates shall abstain from voting on the resolution to approve the Subscription Agreement and the transactions contemplated thereunder (including the grant of the Speciﬁc Mandate) at the GM.

The Independent Board Committee, comprising all independent non-executive Directors, namely Mr. Wan Kam To, Mr. Wong Shiu Hoi Peter, Mr. Anthony Espina, Mr. Leung Ho Yin Alexander and Dr. Wang Jun Sheng, has been formed to advise the Independent Shareholders on whether (i) the Subscription is in the ordinary and usual course of business of the Group; (ii) the terms of the Subscription Agreement are on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned; and (iii) the Subscription is in the interests of the Company and the Shareholders as a whole, and as to voting. We, Rainbow Capital (HK) Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

As at the Latest Practicable Date, we did not have any relationships or interests with the Group and the Subscriber that could reasonably be regarded as relevant to our independence. In the last two years, there was no engagement between the Group and us. Apart from normal professional fees paid or payable to us in connection with this appointment as the Independent Financial Adviser, no arrangements exist whereby we had received any fees or beneﬁts from the Group and the Subscriber. Accordingly, we are qualiﬁed to give independent advice in respect of the Subscription.

BASIS OF OUR OPINION

In formulating our opinion and advice, we have relied on (i) the information and facts contained or referred to in the Circular; (ii) the information supplied by the Group and its advisers; (iii) the opinions expressed by and the representations of the Directors and the management of the Group; and (iv) our review of the relevant public information. We have assumed that all the information provided and representations and opinions expressed to us or contained or referred to in the Circular were true, accurate and complete in all respects as at the date thereof and may be relied upon. We have also assumed that all statements contained and representations made or referred to in the Circular are true at the time they were made and continue to be true as at the Latest Practicable Date and all such statements of belief, opinions and intentions of the Directors and the management of the Group and those as set out or referred to in the Circular were reasonably made after due and careful enquiry. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the management of the Group. We have also sought and received confirmation from the Directors that no material facts have been withheld or omitted from the information provided and referred to in the Circular and that all information or representations provided to us by the Directors and the management of the Group are true, accurate, complete and not misleading in all respects at the time they were made and continued to be so until the date of the Circular.

We consider that we have reviewed sufficient information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our recommendation. We have not, however, carried out any independent verification of the information provided, representations made or opinion expressed by the Directors and the management of the Group, nor have we conducted any form of in-depth investigation into the business, affairs, operations, ﬁnancial position or future prospects of the Group, or any of its respective substantial shareholders, subsidiaries or associates.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In considering whether the terms of the Subscription Agreement are fair and reasonable in so far as the Independent Shareholders are concerned, we have taken into account the principal factors and reasons set out below:

1. Background of the Group

With more than 40 years of experience, the Company, through its wholly-owned subsidiary, Target, is principally engaged in writing motor, employees' compensation ("EC") and other general insurance in Hong Kong. Since 2010, Target has maintained a leading market position in motor insurance for taxi and public light bus ("PLB") in terms of motor insurance gross premium income. It was the first Hong Kong based general insurance company listed on the Stock Exchange since January 2015. In 2017, following its development of new general insurance products, Target has successfully diversified and enriched its product and service offerings to local enterprises and individual clients.

Set out below is a summary of the consolidated financial information of the Group for (i) the two years ended 31 December 2019 ("FY2018" and "FY2019", respectively) as extracted from the annual report of the Company for the year ended 31 December 2019 (the "2019 Annual Report"); and (ii) the six months ended 30 June 2019 and 2020 ("2019H1" and "2020H1", respectively) as extracted from the interim report of the Company for the six months ended 30 June 2020 (the "2020 Interim Report"):

(i)Financial performance

For the year ended 31 DecemberFor the six months ended 30 June

2019	2018	2020	2019
HK$'000	HK$'000	HK$'000	HK$'000
(audited)	(audited)	(unaudited)	(unaudited)
Gross premium written (unaudited)	527,743	452,262	294,827	254,619
- Taxi	244,131	246,820	124,876	118,627
- PLB	75,745	82,375	37,117	37,630
- Other motor vehicles (Note 1)	111,025	98,800	51,448	53,655
- EC	85,220	21,035	76,079	38,816
- Others (Note 2)	11,622	3,232	5,307	5,891
Net income	442,466	384,337	212,094	222,478
Net insurance premium revenue	397,899	360,802	214,183	192,887
- Taxi	227,078	219,568	111,002	112,638
- PLB	72,263	74,916	34,067	36,878
- Other motor vehicles	65,564	60,121	30,849	33,245
- EC	28,466	4,612	35,803	8,632
- Others	4,528	1,585	2,462	1,494
Net investment (loss)/income	43,293	22,003	(2,908)	28,931
Other income	1,274	1,532	819	660
Expenses	(635,673)	(510,116)	(225,057)	(266,805)
Net insurance claims and loss
adjustment expenses	(512,538)	(395,791)	(158,780)	(205,868)
- Taxi	(344,677)	(265,255)	(113,666)	(134,191)
- PLB	(60,701)	(36,293)	(24,995)	(28,322)
- Other motor vehicles	(63,792)	(85,664)	(13,053)	(32,834)
- EC	(42,077)	(7,080)	(6,471)	(10,025)
- Others	(1,291)	(1,499)	(595)	(496)
Acquisition costs and other
underwriting expenses, net	(42,499)	(36,893)	(23,663)	(20,347)
Employee beneﬁt expenses	(36,901)	(35,624)	(17,926)	(18,346)
Other operating expenses	(42,012)	(40,057)	(22,975)	(21,366)
Finance costs	(1,723)	(1,751)	(1,713)	(878)
Loss before tax	(193,207)	(125,779)	(12,963)	(44,327)
Loss for the year/period	(198,520)	(126,786)	(13,985)	(44,624)
Loss ratio (Note 3)	128.8%	109.7%	74.1%	106.7%
- Taxi	151.8%	120.8%	102.4%	119.1%
- PLB	84.0%	48.4%	73.4%	76.8%
- Other motor vehicles	97.3%	142.5%	42.3%	98.8%
- EC	147.8%	153.5%	18.1%	116.1%
- Others	28.5%	94.6%	24.2%	33.2%
Net cash (used in)/generated from
operating activities	(9,471)	67,193	(11,438)	(7,833)
Net cash generated from/(used in)
investing activities	440,522	(191,498)	24,723	40,853
- 32 -

Notes:

1. Mainly include private cars, goods carrying vehicles and motorcycles.
2. Mainly comprise small and medium enterprise ("SME") business insurance and contractors' all risks insurance.
3. Being net insurance claims and loss adjustment expenses divided by net insurance premium revenue.

(a)FY2019 vs FY2018

Gross premium written increased by approximately 16.7% from approximately HK$452.3 million for FY2018 to approximately HK$527.7 million for FY2019, which was primarily driven by the motor business on other motor vehicles, the EC business and other general insurance business. This was partially offset by the moderate decrease in the motor business on taxi and PLB due to keen market competition. Gross premium written for FY2019 represented approximately 94.2% of the authorised annual aggregate gross premium income limit (the "Target Limit") of HK$560 million imposed by the IA for FY2019. As disclosed in the Letter from the Board, the Target Limit is determined by the IA with reference to, among other things, the capital strength, underwriting performance and proﬁtability of Target.

For FY2019, net income of the Group was approximately HK$442.5 million, representing an increase of approximately 15.1% from approximately HK$384.3 million for FY2018. Such increase was primarily attributable to the increase in (1) net insurance premium revenue by approximately 10.3% from approximately HK$360.8 million for FY2018 to approximately HK$397.9 million for FY2019; and (2) net investment income by approximately 96.8% from approximately HK$22.0 million for FY2018 to approximately HK$43.3 million for FY2019.

The increase in net insurance premium revenue was mainly attributable to (1) the substantial growth of the EC business from approximately HK$4.6 million for FY2018 to approximately HK$28.5 million for FY2019; (2) the growth of the taxi business by approximately 3.4% from approximately HK$219.6 million for FY2018 to approximately HK$227.1 million for FY2019; (3) the continued growth of the business on other motor vehicles by approximately 9.1% from approximately HK$60.1 million for FY2018 to approximately HK$65.6 million for FY2019 due to expansion of distribution channels for private cars and goods carrying vehicles business via direct online and intermediaries; and (4) the significant growth of other general insurance business, mainly comprising SME business insurance and contractors' all risks insurance, from approximately HK$1.6 million for FY2018 to approximately HK$4.5 million for FY2019. This was partially offset by the decrease in net insurance premium revenue from the PLB business due to keen market competition.

The increase in net investment income was primarily attributable to the recognition of a net fair value gain on ﬁnancial assets at fair value through proﬁt or loss ("FVPL") of approximately HK$10.5 million for FY2019, whereas a loss of approximately HK$16.0 million was incurred for FY2018.

For FY2019, loss for the year was approximately HK$198.5 million, representing an increase of approximately 56.6% as compared to that of approximately HK$126.8 million in the previous year. Such increase was mainly due to, among other things, (1) the increase in net insurance clams and loss adjustment expenses of approximately HK$116.7 million; (2) the increase in acquisition costs and other underwriting expenses, net of approximately HK$5.6 million, primarily attributable to the growth of other general insurance business with a higher commission rate; and (3) the increase in depreciation and amortisation of approximately HK$5.0 million.

The increase in net insurance clams and loss adjustment expenses was mainly attributable to (1) the substantial increase in claims frequency and severity on third party bodily injury claims for the taxi business; (2) certain severe accidents for FY2019 and claims deterioration on prior years' claims for the PLB business; and (3) the increase in net insurance claim for EC due to additional provision made based on actuarial estimation as the portfolio was at an early growth stage.

The loss ratio, being net insurance claims and loss adjustment expenses divided by net insurance premium revenue, increased from approximately 109.7% for FY2018 to approximately 128.8% for FY2019, primarily attributable to the businesses on taxi, PLB and EC.

Coupled with the increase in loss for FY2019 as aforesaid, the Group also recorded net cash used in operating activities of approximately HK$9.5 million for FY2019, as compared to net cash generated from operating activities of approximately HK$67.2 million for FY2018. It has been the first time ever the Group recorded a negative operating cashflow for a full financial year since its listing in 2015. The Group, however, recorded net cash generated from investing activities of approximately HK$440.5 million for FY2019 as compared to net cash used in investing activities of approximately HK$191.5 million for FY2018.

As disclosed in the 2019 Annual Report, while the motor insurance for taxi and PLB remained the core business segments of the Group, keen competitions were seen from new and existing competitors, leading to a slight drop in gross premium written in both segments. Both taxi and PLB businesses are expected to remain challenging given the increasing number of accidents for FY2019. The taxi business recorded the highest loss ratio for FY2019. On the other hand, while the competition in the other motor vehicles segment will continue to be fierce with increasing number of players in such saturated market, the Group's business on other motor vehicles was picking up for FY2019. Due to the Group's continued effort in developing its other general insurance business, such segment, together with the EC business, recorded a signiﬁcant growth for FY2019.

(b)

2020H1 vs 2019H1

Gross premium written increased by approximately 15.8% from approximately HK$254.6 million for 2019H1 to approximately HK$294.8 million for 2020H1, which was primarily driven by the EC business and the motor business on taxi. This was partially offset by the slight decrease in the motor business on PLB and other motor vehicles due to keen market competition. Gross premium written for 2020H1 represented approximately 52.6% of the Target Limit of HK$560 million imposed by the IA for 2020. Particularly, for the EC business, gross premium written for 2020H1 represented approximately 81.8% of the authorised annual gross premium income limit of HK$93 million (the "EC Limit") imposed by the IA for 2020.

For 2020H1, net income of the Group was approximately HK$212.1 million, representing a decrease of approximately 4.7% from approximately HK$222.5 million for 2019H1. Such decrease was primarily attributable to the net investment loss of approximately HK$2.9 million for 2020H1 as compared to the net investment income of approximately HK$28.9 million for 2019H1, which was partially offset by the increase in net insurance premium revenue by approximately 11.0% from approximately HK$192.9 million for 2019H1 to approximately HK$214.2 million for 2020H1.

The net investment loss for 2020H1 was mainly due to (1) the recognition of a net fair value loss on financial assets at FVPL of approximately HK$7.5 million for 2020H1 as compared to the gain of approximately HK$12.1 million for 2019H1 due to market volatility; and (2) the decrease in interest income of approximately HK$6.5 million as a result of the decrease in the holding of debt securities for 2020H1 as the Group focused its strategy on more liquid investments including currency fund and certiﬁcates of deposit.

The increase in net insurance premium revenue for 2020H1 was primarily attributable to the growth of EC and other general insurance businesses as a result of the Group's effort in developing both segments for the purpose of risk diversiﬁcation. However, the net insurance premium revenue of the Group's core business segment, the motor insurance business, demonstrated a general decrease in view of the keen market competition for 2020H1 as compared to 2019H1.

For 2020H1, loss for the period was approximately HK$14.0 million, representing a decrease of approximately 68.7% as compared to that of approximately HK$44.6 million in the previous period. Such decrease was mainly due to the decrease in net insurance clams and loss adjustment expenses of approximately HK$47.1 million, primarily attributable to the decrease in net insurance claims for the motor and EC businesses, mainly as a result of the reduced claims frequency due to lower business activities for the taxi and PLB businesses and the increase of business mix to private cars for the other motor vehicles business. Such decrease was partially offset by the increase in acquisition costs and other underwriting expenses, net of approximately HK$3.3 million due to the growth of other general insurance business with a higher commission rate.

As a result of the foregoing, the loss ratio decreased from approximately 106.7% for 2019H1 to approximately 74.1% for 2020H1. The Group recorded an increase in net cash used in operating activities of approximately 46.0% from approximately HK$7.8 million for 2019H1 to approximately HK$11.4 million for 2020H1 and a decrease in net cash generated from investing activities of approximately 39.5% from approximately HK$40.9 million for 2019H1 to approximately HK$24.7 million for 2020H1.

As disclosed in the 2020 Interim Report, the Group's overall motor insurance business, comprising the businesses on taxi, PLB and other motor vehicles, remained stagnant. In terms of gross premium written, while the taxi business had picked up slightly, both PLB and other motor vehicles businesses recorded a decrease due to the increased competition. Despite the Group's continued effort to develop other general insurance products, such segment recorded a decrease in terms of gross premium written as a result of loss of travel insurance business due to COVID-19 pandemic. On the other hand, due to the significant growth of the EC business, the Group recorded an encouraging result of approximately HK$76.1 million in gross premium written for 2020H1 in this segment, which already approached to that of approximately HK$85.2 million in FY2019 as well as the EC Limit.

(ii)Financial position

As at
30 June
2020	2018
HK$'000	HK$'000	HK$'000
(unaudited)	(audited)	(audited)
Total assets, including:	2,095,219	2,007,009	1,791,946
- Property, plant and equipment	498,173	508,556	531,357
- Debt securities measured
at fair value through other
comprehensive income	9,377	31,109	373,126
- Certiﬁcates of deposit	53,875	4,451	24,317
- Insurance and other receivables	174,103	160,486	106,845
- Reinsurance assets	277,864	273,130	137,622
- Financial assets at FVPL	60,778	49,469	113,379
- Statutory deposit	100,000	100,000	100,000
- Pledged deposit	10,000	-	-
- Time deposits with original maturity
over 3 months	11,423	82,151	31,925
- Cash and time deposits at banks
and other ﬁnancial institutions	857,145	758,622	335,264
Total liabilities, including:	1,804,705	1,701,133	1,306,078
- Insurance liabilities	1,550,871	1,533,058	1,145,798
- Interest-bearing borrowings	171,399	84,448	90,418
Total equity	290,514	305,876	485,868
Solvency margin ratio (Note)	236%	135%	261%
Note:

As at 31 December 2019

Solvency margin ratio is a measure of capital adequacy for insurance companies in Hong Kong and is calculated by dividing eligible net asset value (after the adjustments as required under the Insurance Ordinance) by the relevant amount determined with reference to, among other things, gross premium income and claims outstanding arising from the insurer's Hong Kong insurance business in accordance with

the Insurance Ordinance.

The Group's total assets of approximately HK$2,095.2 million as at 30 June 2020 primarily included (a) property, plant and equipment of approximately HK$498.2 million, which mainly represented the Group's leasehold land and buildings stated at valuation less accumulated depreciation; (b) insurance and other receivables of approximately HK$174.1 million, which mainly represented premium receivables and claims receivable from reinsurers and others; (c) reinsurance assets of approximately HK$277.9 million, which represented insurance liabilities recoverable from reinsurers; (d) ﬁnancial assets at FVPL of approximately HK$60.8 million, which represented listed equity securities and unlisted investment fund; (e) statutory deposit of HK$100 million; and (f) cash and time deposits at banks and other ﬁnancial institutions and time deposits with original maturity over 3 months of approximately HK$868.6 million.

The Group's total liabilities of approximately HK$1,804.7 million as at 30 June 2020 primarily included (a) insurance liabilities of approximately HK$1,550.9 million; and (b) interest-bearing borrowings of approximately HK$171.4 million which represented (1) unsecured loans from Dr. Cheung Haywood, Mr. Chiu Sun Ting and Mr. Lai Bing Leung of HK$90 million (the "Unsecured Loans") with an interest rate of 3.5% per annum for a term from 13 March 2020 to 12 September 2020 which were subsequently extended to 12 March 2021 on 25 August 2020 and the outstanding loans were further extended to 12 May 2021 on 5 March 2021; and (2) secured bank loan of approximately HK$81.4 million which bears interest at the lower of Hong Kong Inter-bank Offered Rate plus 1.2% and HK$ Prime Rate less 3.15% and was pledged by the Group's leasehold land and buildings, repayable by 180 equal monthly instalments. HK$40 million out of the Unsecured Loans was repaid from the net proceeds from the share placement completed on 22 January 2021.

Based on the unaudited total equity of approximately HK$290.5 million as at 30 June 2020 and 625,692,000 Shares in issue as at the Latest Practicable Date, the net asset value per Share was approximately HK$0.464 (the "NAV per Share").

Solvency margin ratio is a measure of capital adequacy for insurance companies in Hong Kong which are required by the IA to maintain a surplus of assets over their liabilities with a speciﬁed solvency margin. While the Insurance Ordinance stipulates a minimum solvency requirement of 100%, the IA adopts a solvency margin ratio benchmark of 200% (the "Benchmark Solvency Margin") for general insurers including motor vehicles insurers for monitoring purpose. Target's solvency margin ratio decreased from approximately 261% as at 31 December 2018 to approximately 135% as at 31 December 2019 as a result of the annual actuarial estimation on insurance claims and premium liabilities which was finalised in March 2020. Subsequent to the injection of the Unsecured Loans of HK$90 million and internal resources of HK$13 million into Target in March 2020, its solvency margin was restored to above 200% and reached approximately 236% as at 30 June 2020.

(iii)Overall comment

Although the motor insurance business of the Group is under keen competition as stated in the 2019 Annual Report and the 2020 Interim Report, the Group recorded an overall growth in gross premium written by approximately 16.7% and 15.8% for FY2019 and 2020H1, respectively, as compared to the previous year or period, primarily driven by the EC business and other general insurance business. The Group utilised approximately 94.2% of the Target Limit for FY2019. For 2020H1, the Group utilised approximately 52.6% of the Target Limit and particularly, approximately 81.8% of the EC Limit. The annualised gross premium written based on that for 2020H1 would be approximately HK$589.7 million, including approximately HK$152.2 million for the EC business, which (a) already exceed the Target Limit and the EC Limit of HK$560 million and HK$93 million for 2020; and (b) represent approximately 99.9% and 126.8% of the Target Limit and the EC Limit of HK$590 million and HK$120 million for 2021, respectively. In view of the growth of gross premium written for FY2019 and 2020H1 and the utilisation of the Target Limit and the EC Limit for 2020H1, we consider the Target Limit and the EC Limit may restrict the business growth of the Group. There is a need for Target to raise the Target Limit, including the EC Limit, to allow more room for future business growth.

The loss ratio of the Group also showed a signiﬁcant improvement from approximately 128.8% for FY2019 to approximately 74.1% for 2020H1. In particular, the loss ratio of the EC business improved remarkably from approximately 147.8% for FY2019 to approximately 18.1% for 2020H1. Given the improved business mix and profitability demonstrated by the Group for 2020H1, coupled with the expected enhancement in the ﬁnancial strength of Target resulting from the Subscription, we consider that Target will be in a position to apply to the IA for a relaxation of the Target Limit, including the EC Limit.

Despite the injection of the Unsecured Loans in March 2020, Target's solvency margin ratio (i.e. approximately 236%) only marginally met the Benchmark Solvency Margin as at 30 June 2020 and was still much lower than those of its peers which ranged from approximately 466% to approximately 649% in 2019, details of which are set out in the following section. We consider it is essential for Target to enhance its solvency margin to a level comparable to its peers so that it is able to take up more businesses and compete effectively with its peers.

2. Reasons for and beneﬁts of the Subscription

The Company, through its wholly-owned subsidiary, Target, is principally engaged in underwriting motor, EC and other general insurance policies in Hong Kong. For FY2019, the Group recorded an increase in loss of approximately 56.6% to approximately HK$198.5 million primarily due to the deterioration of net insurance claims and loss adjustment expenses by approximately HK$116.7 million. For 2020H1, due to the decrease in net insurance clams and loss adjustment expenses resulting from lower business activities, the loss of the Group narrowed. The solvency margin ratio of Target has only marginally met the Benchmark Solvency Margin. We consider there is an imminent need for the Group to raise the required fund from the Subscription for the following reasons:

(i)The capital from the Subscription allows Target to apply to the IA for raising the Target Limit for business expansion

As set out in the Letter from the Board, the IA will impose an authorised annual aggregate gross premium income limit (i.e. the Target Limit) on Target in carrying out its businesses. For FY2019 and 2020H1, gross premium written of the Group increased by approximately 16.7% and 15.8%, respectively. For 2020H1, gross premium written of the Group amounted to approximately HK$294.8 million, representing approximately 52.6% of the Target Limit of HK$560 million for 2020. Among which, gross premium written of the EC business amounted to approximately HK$76.1 million, representing approximately 81.8% of the EC Limit of HK$93 million for 2020. In view of the growth of gross premium written for FY2019 and 2020H1 and the utilisation of the Target Limit for 2020H1, the Directors consider there is a need to raise the Target Limit to tailor for future business growth.

In August 2020, in view of the business need, Target applied to the IA for an increase in the Target Limit from HK$560 million to HK$620 million, with the gross premium income limit on the EC business from HK$90 million to HK$150 million, for 2020. However, given the risk exposure of Target which might further worsen its solvency position, the IA only permitted to raise the gross premium income limit on the EC business to HK$93 million with the Target Limit of HK$560 million remaining unchanged. In October 2020, based on its projections and consultation with its major intermediaries, Target applied to the IA for uplifting the Target Limit to HK$920 million as well as the gross premium income limit on the EC business to HK$160 million for 2021. In November 2020, taking into account the financial performance and position and the business plan of Target, the IA only agreed to raise the Target Limit to HK$590 million, including the gross premium income limit on the EC business of HK$120 million, for 2021. As disclosed in the Letter from the Board, the Directors consider that the Target Limit has been restricting the business development and expansion of the Group.

As stated in the Letter from the Board, the capital strength of Target, as measured by the solvency margin ratio, is one of the key factors considered by the IA in determining the Target Limit. While all insurers are required to maintain assets in excess of liabilities by the amount of solvency margin as stipulated in the Insurance Ordinance (i.e. a solvency margin ratio of 100%), the IA in practice requires general insurers to maintain not less than 200% of the required solvency margin (i.e. the Benchmark Solvency Margin) for monitoring purpose. As at 30 June 2020, Target had a solvency margin ratio of approximately 236%.

Although Target has satisfied the Benchmark Solvency Margin, any increase in the business underwritten by Target will increase its liabilities and thereby may reduce the solvency margin ratio of Target, particularly given that Target primarily provides motor and EC insurance with longer tail liabilities. As mentioned above, the IA has been imposing the Target Limit on Target to limit its downside risk that may further erode its solvency position. We consider the proceeds from the Subscription will signiﬁcantly improve the solvency margin ratio of Target and provide an additional buffer for Target to withstand the downside risk that its assets may be inadequate to cover its liabilities. As disclosed in the Letter from the Board, Target is in the course of developing other insurance products, building its internal capacity on human resources and information technology to prepare for future business needs and regulatory development, actively managing its relationship with its existing agent network and strengthening and developing its relationship with other insurance intermediaries to continue to grow its business portfolio. With strengthened capital base, Target will be in a position to apply for raising the Target Limit to further develop and expand its businesses.

Moreover, Target has a solvency margin ratio much lower than those of other major general insurers with gross premium written comparable to that of Target. For FY2019, the gross premium written of Target amounted to approximately HK$527.7 million. Based on public information as at the Latest Practicable Date, besides Target, there were three general insurers (the "Comparable Insurers") with available ﬁnancial information for FY2019 and gross premium written ranging from HK$500 million to HK$700 million, an underwriting size that is comparable to that of Target. The solvency margin ratios of the Comparable Insurers ranged from approximately 466% to approximately 649%, with an average and median of approximately 543% and 514%, respectively. We consider the comparatively low solvency margin ratio of Target will restrict its capability of taking up more businesses, thereby reducing its competitiveness, as compared with other industry peers with much higher solvency margin ratios. Hypothetically, based on the HK$330 million of the proceeds to be raised from the Subscription for strengthening Target's capital base for business expansion, assuming the levels of relevant premium income and relevant claims outstanding of Target remained the same as those as at 30 June 2020, the solvency margin ratio of Target would increase to approximately 520%. We consider the proceeds from the Subscription is essential to uplifting the solvency margin ratio of Target to a level comparable to those of its peers.

We concur with the Directors that the fund to be raised from the Subscription will strengthen the capital base of Target and align its solvency position with those of its peers so that it will be in a position to apply to the IA for an uplift of the Target Limit.

With a higher Target Limit, Target will have more capacity and ﬂexibility in developing and expanding its businesses.

(ii) Limited ﬁnancing alternatives to raise the required fund

As stated in the Letter from the Board, apart from the Subscription, the Company has considered other ﬁnancing alternatives such as equity ﬁnancing and bank borrowings.

In respect of equity financings, the Company has considered several means including share placement, rights issue and/or open offer. The Company has approached certain securities brokerage firms to explore the possibility and feasibility of identifying potential investors for equity financings, but did not receive any concrete feedback from them. Given (a) the large size of the fund raising which would be required; (b) the substantial discount of the price of a share placement or a right issue or open offer to the market that may be required due to the loss making position of the Group for FY2018, FY2019 and 2020H1 as well as the trading liquidity of the Shares; (c) the likely costs involved (including the amount of placing or underwriting commissions and other administrative and legal expenses); and (d) the lack of certainty in the successful implementation of a share placement or a rights issue or open offer, we concur with the Directors that a share placement or a rights issue or open offer may not be feasible.

As regards bank borrowings, as advised by the Directors, the ability of the Group to obtain bank borrowings largely depends on the Group's ﬁnancial position, proﬁtability, collateral being available and the then prevailing market condition. Taking into account (a) the historical financial performance of the Group where the Company incurred net losses for FY2018, FY2019 and 2020H1; (b) the requirement of additional collateral from the Group as security to accommodate the size of loan facility required which is HK$400.0 million whereas the Convertible Bonds are unsecured; and (c) the requirement of interest payments whereas the Convertible Bonds are interest free, we concur with the Directors that obtaining further bank borrowings to support the business development of the Group may not be feasible and is not in the interests of the Shareholders.

In assessing the possibility of other financing alternatives, we (a) have approached three securities brokerage ﬁrms in January 2021 to explore the feasibility of identifying potential investors for equity financings such as share placement, rights issue and/or open offer and no deﬁnite proposal was received from them given the required amount of fund to be raised and the thin trading liquidity of the Shares; (b) have reviewed the 2020 Interim Report and noted that the Group's leasehold land and buildings with a carrying amount of approximately HK$490.7 million were pledged to secure the outstanding bank loan of approximately HK$81.4 million as at 30 June 2020; and (c) have reviewed the correspondence between the Group and a local commercial bank in January 2021 and noted that the value of the Group's leasehold land and buildings was insufficient for the bank to grant an additional loan facility in the principal amount of HK$400.0 million. As such, we consider that limited ﬁnancing alternatives are available for the Group to raise the required amount under the Convertible Bonds.

Taking into account that (a) the Subscription through the issue of the five-year Convertible Bonds will enable the Company to raise a considerable amount of fund with certainty for a longer period to strengthen the financial strength of Target for business development and expansion; (b) the Convertible Bonds are interest free and therefore reduce the cash flow burden of the Group; (c) no security is required to be provided by the Group under the Convertible Bonds; and (d) limited financing alternatives are available to raise the required fund as explained above, we concur with the Directors that the Subscription through the issue of the Convertible Bonds is the most appropriate means of fund raising.

(iii) Preparation for compliance with the capital requirements under the RBC Regime (as deﬁned below)

As disclosed in the Letter from the Board, in order to keep pace with the evolving global ﬁnancial landscape and changing international standards, the IA is developing a risk-based capital regime (the "RBC Regime"), which aims to enhance the corporate governance and risk management practice for the insurance industry. The RBC Regime is a three-pillared approach which covers (a) Pillar I - consisting of the quantitative requirements that include assessment of capital adequacy and valuation; (b) Pillar II - setting out the qualitative requirements that include corporate governance, enterprise risk management and own risk and solvency assessment; and (c) Pillar III - including disclosure requirements for enhancing transparency of relevant information of insurers to the public. While the IA has adopted a phased implementation on Pillar II through Guideline on Enterprise Risk Management with effect from 1 January 2020, Pillar I and Pillar III are targeted to be implemented by 2024. However, insurers are expected to voluntarily meet or have plans to meet the Pillar I capital requirements. Although therelevant legislation and details of the capital requirements under the RBC Regime have not yet finalised as at the Latest Practicable Date, the Directors expect that the Pillar I capital requirements will be more stringent than the existing requirement imposed by the IA, given that the Group's business portfolio primarily includes motor and EC insurance which generally carry higher risk charges as compared to other types of general insurance. It should also be noted that Target was reminded by the IA in November 2020 to consider the implication of its business plan on its ability to comply with the capital requirements under the future RBC Regime. As such, we concur with the Directors that the Company should plan ahead and get sufficiently prepared by reinforcing Target's capital strength and diversifying its business into other general insurance products before the RBC Regime is fully implemented.

(iv)Sum-up

Given (a) the growth of gross premium written for FY2019 and 2020H1 and the utilisation of the Target Limit for 2020H1 indicated the current Target Limit may not be sufficient for the business development and expansion of the Group; (b) the capital strength of Target is one of the key factors in determining the Target Limit granted by the IA to Target in conducting its businesses; (c) Target has only marginally met the Benchmark Solvency Margin and therefore, any increase in the business underwritten will inevitably increase its liabilities which may reduce its solvency margin to a level below the Benchmark Solvency Margin; (d) Target has a much lower solvency margin ratio as compared to its peers which restricts its ability to take up more businesses; (e) it is expected that with the proceeds from the Subscription, the solvency margin ratio of Target would increase to a level comparable to those of its peers, assuming other factors remained unchanged; (f) limited financing alternatives with acceptable terms are available to raise a considerable amount of fund with certainty for a longer period; and (g) the IA reminded Target to consider the implication of its business plan on its ability to comply with the capital requirements under the future RBC Regime which the Directors expect more stringent than the existing requirement imposed by the IA, we consider that the Subscription will allow the Group to raise the critical fund to enhance its financial strength such that Target will be in a position to apply to the IA for a relaxation of the Target Limit which are crucial to the business expansion of the Group.

3. Use of proceeds from the Subscription

As set out in the Letter from the Board, the net proceeds from the Subscription after deduction of expenses are expected to be approximately HK$399 million. The proposed use of the net proceeds from the Subscription is summarised as follows:

Amount to be applied (approximate percentage of total

Use of proceeds

net proceeds)

HK$' million

(i)	Funds available for enhancing the capital adequacy of Target	330 (82.7%)
(ii)	Repayment of the Unsecured Loans	50 (12.5%)
(iii)	General working capital	19 (4.8%)
Total	399 (100%)
(i)	Enhancement of the capital adequacy of Target

As set out in the section headed "2. Reasons for and benefits of the Subscription" above, the current Target Limit may not be sufﬁcient for the business development and expansion of the Group and therefore, there is a need for Target to raise the Target Limit to allow more room for future business growth. The proceeds from the Subscription will enhance the financial strength of Target which is one of the key factors considered by the IA in determining the Target Limit. The enhancement in the capital base of Target and the improved profitability of the Group for 2020H1 will in turn facilitate Target to apply to the IA for a relaxation of the Target Limit so that Target will have more capacity and flexibility in developing and expanding its businesses. In determining the amount of fund required for enhancing the capital adequacy of Target, the Directors have considered the solvency margin ratios of the Comparable Insurers. The amount of fund available under the Subscription is expected to enhance the solvency margin ratio of Target to a level comparable to its peers.

As advised by the Directors, Target plans to expand its motor insurance and EC businesses and develop the reinsurance inward business as follows:

(a)Motor insurance business

The Directors expect the growth of the motor insurance business will be driven by the renewal of existing business with a higher premium rate and/or stricter underwriting terms and the newly launched B2B automation platform for the motor insurance business.

According to the statistics published by the IA, the motor insurance market in Hong Kong as measured by the direct gross written premiums grew at a compound annual growth rate ("CAGR") of approximately 3.2% from approximately HK$4,077.5 million in 2015 to approximately HK$4,632.2 million in 2019. In particular, it achieved a growth of approximately 7.5% in 2019 as compared to the previous year. Based on the provisional statistics released by the IA in November 2020, the gross premium written generated from the motor insurance business in Hong Kong increased by approximately 4.1% to approximately HK$3,580.6 million for the nine months ended 30 September 2020 as compared to approximately HK$3,439.6 million for the corresponding period in 2019.

As for the number of vehicles registered in Hong Kong, it increased from 797,634 in 2015 to 878,539 in 2019, representing a CAGR of approximately 2.4%, according to the Census and Statistics Department of the Government of HKSAR. As at 31 December 2020, the number of vehicles registered in Hong Kong grew by approximately 3.9% to 912,790 from 878,539 as at 31 December 2019.

While the motor insurance industry in Hong Kong has been affected by the local social incidents in 2019 and the outbreak of COVID-19 since early 2020, we consider the stable growth of the market as illustrated above will provide a favourable environment for the Group to expand its motor business. Given that it is mandatory by law that all motor vehicles owners in Hong Kong have to purchase an insurance policy to protect other road users and the continued expansion in the vehicles population, we expect the motor insurance market will continue to grow.

(b)EC business

As advised by the Directors, in the past few years, the Group has built close and collaborative relationships with selected intermediaries to identify quality business and provide hands on risk and claims management to policyholders.

The Group's gross premium written on the EC business therefore increased significantly from approximately HK$1.2 million in 2017 to approximately HK$21.0 million for FY2018 and to approximately HK$85.2 million for FY2019 which further increased to approximately HK$76.1 million for 2020H1.

According to the statistics published by the IA, the gross premium written of the EC business in Hong Kong recorded a growth of approximately 4.4% and 14.5% to approximately HK$6,173.9 million and HK$7,068.2 million for FY2018 and FY2019, as compared to the previous year, respectively. Based on the provisional statistics released by the IA in November 2020, the gross premium written of the EC business in Hong Kong increased by approximately 6.5% from approximately HK$5,812.2 million for the nine months ended 30 September 2019 to approximately HK$6,188.9 million for the nine months ended 30 September 2020.

While the motor insurance business will remain the core business segment of the Group, the EC business is expected to contribute to the growth of the Group, in view of its historical strong growth and the development of the overall market as described above.

(c)Reinsurance inward business

As for the reinsurance inward business, the Company plans to source such business from industry peers while maintaining close business relationship with renowned reinsurance brokers for potential business opportunities.

According to the statistics published by the IA, although the gross premium written of the reinsurance inward business in Hong Kong recorded a decrease of approximately 8.5% to approximately HK$13,419.7 million for FY2019, it increased significantly by approximately 23.2% to approximately HK$12,888.4 million for the nine months ended 30 September 2020 as compared to approximately HK$10,464.2 million for the corresponding period in 2019.

We consider the engagement in the reinsurance inward business will diversify the Group's insurance products to reduce its reliance on motor vehicles insurance.

In overall, subject to the relaxation of the Target Limit by the IA with Target's enhanced financial strength, we consider the fund available from the Subscription in the amount of HK$330 million will equip Target with increased capabilities and flexibility to expand its existing businesses as well as diversifying its risk by tapping into other general insurance products with a view to improving the profitability of the Group. While the overall insurance industry is expected to exhibit stable growth, it is under keen competition as stated in the 2019 Annual Report and the 2020 Interim Report. We consider the fund to be raised from the Subscription will provide immediate liquid capital and support to the development of the Group's businesses in face of the current competitive environment.

(ii) Repayment of loans
Part of the net proceeds from the Subscription in the amount of HK$50 million will be used to repay the outstanding principal amount of the Unsecured Loans which shall fall due on 12 May 2021. As the Unsecured Loans are interest bearing at 3.5% per annum, we consider the repayment of the Unsecured Loans by the proceeds from the Subscription which is interest free can reduce the ﬁnancing costs of the Group.
(iii) General working capital
The Company will apply the remaining balance of HK$19 million for general working capital which is expected to cover the operating expenses of the Company.

(iv) Conclusion

In assessing the fairness and reasonableness of the intended use of proceeds from the Subscription, we have considered (a) the business growth of the Group and the utilisation of the Target Limit for FY2019 and 2020H1; (b) the amount of fund that may be required to restore the solvency margin ratio of Target to a level comparable to the Comparable Insurers; (c) the business plan of the Group; (d) the historical growth of the local insurance industry; and (e) the maturity proﬁle of the Group's indebtedness. Based on the above, we consider the amount of fund to be raised under the Subscription and its intended uses to be justiﬁable.

4. Principal terms of the Subscription Agreement and the Convertible Bonds

(i)The Subscription Agreement

Details of the Subscription Agreement are set out in the Letter from the Board, which are summarised below:

Date

: 26 January 2021
Parties
: (a) the Company, as issuer; and
(b) Smart Neo Holdings Limited, as SubscriberSubject
: Pursuant to the Subscription Agreement, the Subscriber conditionally agreed to subscribe for the Convertible Bonds in the aggregate principal amount of HK$400.0 million, which may be converted into 701,754,385 Conversion Shares based on the initial Conversation Price of HK$0.57 per Conversation Share upon full conversion.

Conditions precedent

:Completion is conditional upon the fulfilment (or otherwise waived by the Company or the Subscriber (as the case may be) in writing, to the extent such conditions precedent may be waived) of, among other things, the following:

(a) the passing by the Shareholders (other than those who are required by the Listing Rules to abstain from voting in respect of each resolution) in the GM of resolutions which are necessary to give effect to the transactions contemplated under the Subscription Agreement and comply with the Listing Rules, among other things, approving (1) the execution, delivery and performance of the Subscription Agreement; and (2) the allotment and issue of the Conversion Shares under the Speciﬁc Mandate; and
(b) the Listing Committee of the Stock Exchange granting the approval for the listing of, and permission to deal in, the Conversion Shares (with or without conditions) and the Stock Exchange not having withdrawn or revoked such approval.

If the conditions precedent to the Subscription Agreement are not fulfilled or, if applicable, waived on or prior to the Long Stop Date, all obligations of the Company and the Subscriber shall cease and determine immediately on the Long Stop Date and none of the Company and the Subscriber (nor any of their respective affiliates) shall have any claim against the other (or any of their respective affiliates) except in respect of any rights and liabilities which have accrued prior to termination.

As at the Latest Practicable Date, none of the conditions precedent have been fulfilled or (where applicable) waived.

(ii)The Convertible Bonds

Details of the principal terms of the Convertible Bonds are set out in the Letter from the Board, which are summarised below:

Principal amount

: HK$400.0 million
Interest
: Interest free
Maturity date
: The date falling on the ﬁfth (5th) anniversary of the date of issue of the Convertible Bonds
Conversion price
: HK$0.57 per Conversion Share (subject to adjustments as set out and in accordance with the terms and conditions of the Convertible Bonds)
Conversion Shares
: A maximum number of 701,754,385 Conversion Shares based on the initial Conversion Price of HK$0.57 per Conversion Share
Conversion rights
: The Bondholder will have the right, during the period commencing on the date of issue of the Convertible Bonds and ending on the third Business Day prior to the maturity date of the Convertible Bonds, to convert the Convertible Bonds in whole or in part of the outstanding principal amount of the Convertible Bonds into Conversion Shares, provided that the exercise of the Conversion Rights will not result in:

(a)any mandatory offer obligation under Rule 26.1 of the Takeovers Code being triggered by the Bondholder and/or parties acting in concert (as defined in the Takeovers Code) with such Bondholder unless:

(1) a whitewash waiver is obtained in accordance with the requirements of the Takeovers Code; or
(2) a general offer is made in accordance with the requirements of the Takeovers Code; or

(b)the Company being in breach of any provision of the Listing Rules, including the requirement to maintain any prescribed minimum percentage of the issued Shares held by the public, and the conversion by the Bondholder shall be restricted until and unless the regulatory requirements under the Listing Rules are fully complied with.

Adjustment events

(the "Adjustment Events")

Early redemption

: The Conversion Price is subject to customary adjustments in accordance with the terms and conditions set out in the Convertible Bonds upon the occurrence of, among other things, share consolidation or sub-division, capitalisation of profits or reserves, capital distribution, grant of rights to acquire for cash assets, rights issue, grant of options or warrants to subscribe for shares, issue of convertible securities or repurchase of shares or convertible securities.
Further details of the Adjustment Events are set out in the Letter from the Board.
: The Company may at any time during the period commencing from the beginning of the 13th month from the date of issue of the Convertible Bonds up to the maturity date of the Convertible Bonds redeem the Convertible Bonds then outstanding at 100% of the outstanding principal amount of the Convertible Bonds to be redeemed.
Transferability
: The Convertible Bonds are transferrable except that no Convertible Bonds shall be transferred to any person who:

(a)is not independent of the Group or the connected persons of the Company (unless otherwise permitted with prior written consent of the Company and prior approval of the Stock Exchange (if necessary) and full compliance with the Listing Rules and other relevant laws and regulations); or

(b)is a party acting in concert (as defined in the Takeovers Code) with any person or Shareholder to the effect that any transfer of the Convertible Bonds to such transferee(s) and/or the exercise by such transferee(s) of any conversion right attaching to the Convertible Bonds subject to such transfer will trigger the mandatory offer obligation under Rule 26.1 of the Takeovers Code unless:

(1) a whitewash waiver is obtained in accordance with the requirement of the Takeovers Code; or
(2) a general offer is made in accordance with the requirement of the Takeovers Code.

Voting rights

The Bondholder(s) are not entitled to attend or vote at any general meetings of the Shareholders.

5. Assessment of the principal terms of the Subscription

(i) Conversion Price

The initial Conversion Price of HK$0.57 per Conversion Share represents:

(i) a discount of approximately 8.06% to the closing price of HK$0.62 per Share as quoted on the Stock Exchange on 26 January 2021, being the date of the Subscription Agreement;

(ii)a discount of approximately 12.31% to the average closing price of HK$0.65 per Share as quoted on the Stock Exchange for the last five (5) consecutive trading days immediately prior to the date of the Subscription Agreement;

(iii) a discount of approximately 13.64% to the average closing price of HK$0.66 per Share as quoted on the Stock Exchange for the last ten (10) consecutive trading days immediately prior to the date of the Subscription Agreement;
(iv) a discount of approximately 9.52% to the average closing price of HK$0.63 per Share as quoted on the Stock Exchange for the last thirty (30) consecutive trading immediately prior to the date of the Subscription Agreement;
(v) a discount of approximately 8.06% to the average closing price of HK$0.62 per Share as quoted on the Stock Exchange for the last sixty (60) consecutive trading immediately prior to the date of the Subscription Agreement;
(vi) a discount of approximately 6.56% to the average closing price of HK$0.61 per Share as quoted on the Stock Exchange for the last ninety (90) consecutive trading immediately prior to the date of the Subscription Agreement;
(vii) a discount of approximately 1.72% to the average closing price of HK$0.58 per Share as quoted on the Stock Exchange for the last 180 consecutive trading immediately prior to the date of the Subscription Agreement;

(viii) a discount of approximately 1.72% to the average closing price of HK$0.58 per Share as quoted on the Stock Exchange for the last 360 consecutive trading immediately prior to the date of the Subscription Agreement; and
(ix) a premium of approximately 22.8% over the unaudited NAV per Share.

As disclosed in the Letter from the Board, the Conversion Price was arrived at after arm's length negotiations between the Company and the Subscriber, after considering, among other things, (a) the prevailing market prices of the Shares; (b) the monetary amount of the Subscription; (c) the zero interest rate under the Convertible Bonds; and (d) no collateral was required as security for the Convertible Bonds and represent a discount of approximately 12.31% to the average closing price of HK$0.65 per Share as quoted on the Stock Exchange for the last ﬁve (5) consecutive trading days immediately prior to the date of the Subscription Agreement.

(a)Comparison of the Conversion Price with historical Share prices

In assessing the fairness and reasonableness of the Conversion Price, we have performed a review on the daily closing prices of the Shares as quoted on the Stock Exchange from 2 January 2019 to 26 January 2021 (i.e. the date of the Subscription Agreement), being approximately two years, and up to the Latest Practicable Date (the "Review Period") and compared them with the Conversion Price. We consider that the Review Period is adequate to reﬂect the general market sentiment primarily caused by the social incident in the second half of 2019 and the outbreak of COVID-19 since early 2020 and illustrates the general trend and level of movement of the daily closing prices of the Shares.

Historical daily closing Share prices

0.90

0.85

ClosingpriceperShare(HK$)

0.80

0.75

0.70

0.65

0.60

0.55

0.50

0.45

0.40

2020/7/2

2020/9/2

2020/11/2

2021/1/2

2021/3/2

Share price

Conversion Price

Source: website of the Stock Exchange

Since the beginning of the Review Period, the closing prices of the Shares had been in a downward trend from HK$0.64 per Share on 9 January 2019 to HK$0.49 per Share on 14 May 2019 subsequent to the release of a proﬁt warning announcement on 8 March 2019 and the annual results announcement of the Company for the year ended 31 December 2018 on 25 March 2019. Afterwards, the closing prices of the Shares fluctuated and rose gradually to reach a high of HK$0.84 per Share on 14 January 2020 following the announcement of the conditional disposal (the "Disposal") of an aggregate of 138,822,000 Shares by the substantial Shareholders to the Subscriber on 13 January 2020. The Disposal was completed on 23 December 2020.

The Share price then declined significantly to HK$0.57 per Share on 29 January 2020 and surged again to a high of HK$0.74 per Share on 4 February 2020. Afterwards, the closings prices of the Shares demonstrated a downward trend to a low of HK$0.47 per Share on 30 June 2020 after publication of the announcement of proﬁt warning and provision of loans in an aggregate amount of HK$90 million by the connected persons of the Company on 13 March 2020 and the annual results announcement of the Company for the year ended 31 December 2019 on 27 March 2020. The Share price then exhibited an upward trend from HK$0.49 per Share on 2 July 2020 to HK$0.64 per Share on 26 August 2020. Afterwards, the Share price remained fluctuated above the Conversion price of HK$0.57 per

Conversion Share until the end of 2020.

Subsequent to the announcement of a placing of new Shares under general mandate for net proceeds of approximately HK$51.55 million for repayment of loans and general working capital of the Group on 4 January 2021, the closing price of the Shares showed an upward trend in general and reached HK$0.69 per Share on 13 January 2021. The Share price then dropped to HK$0.62 per Share on 26 January 2021, the date of the Subscription Agreement. The closing price of the Shares increased by approximately 14.5% to HK$0.71 per Share on 27 January 2021, the first trading day immediately following the announcement of the Subscription. The Shares closed at HK$0.79 as at the Latest Practicable Date.

As shown above, during the Review Period, the closing price of the Shares reached the lowest at HK$0.47 per Share on 30 June 2020 and climbed the highest at HK$0.84 per Share on 14 January 2020, and the average closing price of the Shares was approximately HK$0.58 per Share. The Conversion Price of HK$0.57 per Conversion Share represents (1) a premium of approximately 21.3% over the lowest closing price of HK$0.47 per Share; (2) a discount of approximately 32.1% to the highest closing price of HK$0.84 per Share; and (3) approximately the same as the average closing price of HK$0.58 per Share. The Shares were closed at or below the Conversion Price in 281 (or approximately 52.2%) out of a total of 538 trading days during the Review Period.

(b)Average daily trading volume of the Shares

Apart from historical daily closing prices of the Shares, we have reviewed the average daily trading volume of the Shares for each month since 2020, details of which are set out below:

Approximate
percentage
Approximate	of average
percentage	daily trading
Approximate	of average	volume to total
average daily	daily trading	number of
trading volume	volume to total	issued Shares
of the existing	Number of	number of	held by public
Shares	trading days	issued Shares	Shareholders
(Number of	(Note 1)	(Note 2)
Shares)
Year 2020
January	1,859,800	20	0.36%	1.26%
February	532,800	20	0.10%	0.36%
March	304,818	22	0.06%	0.21%
April	271,158	19	0.05%	0.18%
May	177,500	20	0.03%	0.12%
June	191,238	21	0.04%	0.13%
July	340,818	22	0.07%	0.23%
August	571,333	21	0.11%	0.39%
September	109,545	22	0.02%	0.07%
October	75,444	18	0.01%	0.05%
November	88,952	21	0.02%	0.06%
December	180,727	22	0.03%	0.12%
Year 2021
January	1,417,000	20	0.23%	0.56%
February	1,167,111	18	0.19%	0.46%
1 March to the
Latest
Practicable Date	737,666	6	0.12%	0.29%

Source: website of the Stock ExchangeNotes:

1. Based on the total number of issued Shares as at each month end as disclosed in the monthly returns of the Company.
2. Based on the number of Shares held by public Shareholders calculated by deducting the Shares held by Independent Assets Management Limited, Mr. Lai Bing Leung, Mr. Chiu Sun Ting, Convoy Collateral Limited, Mr. Muk Wang Lit Jimmy, Ms. Lau Ka Yee, the Subscriber and their respective associates from the total number of issued Shares as at each month or period end.

As shown in the table above, the average daily trading volume of the Shares in each month ranged from 75,444 Shares in October 2020 to 1,859,800 Shares in January 2020, representing approximately 0.01% and 0.36% of the total number of issued Shares as at the end of the relevant months and approximately 0.05% to 1.26% of the total number of issued Shares held by public Shareholders as at the end of the relevant months, respectively, indicating a relatively thin trading liquidity during the Review Period and up to the Latest Practicable Date.

We consider the relatively high trading volumes of the Shares in January 2020 and January 2021 were probably due to the announcement of (1) the Disposal on 13 January 2020; (2) a placing of 104,282,000 new Shares under general mandate on 4 January 2021; and (3) the Subscription.

Given the thin trading liquidity of the Shares in general as illustrated above, coupled with the loss making position of the Group for FY2018, FY2019 and 2020H1, the Directors consider that conducting fund raising exercises such as a share placement or a rights issue or open offer may not be feasible given (1) it is difﬁcult to ﬁnd independent third parties who are willing to act as placing agents or underwriters without any favorable terms; and (2) considerable discount to the market prices of the Shares will be required to attract potential investors or existing Shareholders to participate in the fund raising exercise. As such, we consider that the Subscription through the issue of the Convertible Bonds, with the Conversion Price set at a moderate discount to the prevailing market prices of the Shares, is the most appropriate means of fund raising as compared to other alternative equity ﬁnancings.

(c)Comparison with other issues and subscriptions of convertible bonds or notes

In evaluating the fairness and reasonableness of the terms of the Convertible Bonds, we have further reviewed the issues and subscriptions of convertible bonds or notes (excluding those for the purpose of rescue or debt restructuring) conducted by companies listed on the Stock Exchange (the "CB Comparables") as announced during the period from 1 December 2020 to the Latest Practicable Date (being approximately two months) (the "Comparable Period"). Based on

the aforesaid criteria, we have identiﬁed an exhaustive list of 22 CB Comparables.

Independent Shareholders should note that the businesses, market capitalisation and prospects of the Company and the terms of the Convertible Bonds are not the same as, or even substantially vary from, those of the CB Comparables and their respective issuers. We consider the CB Comparables, whether issued to connected persons or independent third parties, are relevant to our analysis given they are reﬂecting recent market practice or normal commercial terms.

We consider that the CB Comparables represent fair and representative samples given (1) the Comparable Period adequately covers the prevailing market conditions and sentiments of the capital market in Hong Kong; (2) the CB Comparables represent recent structures of the convertible bond or note issues in Hong Kong; (3) the CB Comparables demonstrate the market practice during the period and allow the Independent Shareholders to have a general understanding of recent issues of convertible bonds or notes being conducted in the capital market of Hong Kong; (4) the proceeds raised from the CB Comparables were used for business development, refinancing of debts and/or general working capital which were analogous to the proposed use of proceeds from the Subscription; (5) the sufficient number of the CB Comparables identified; and (6) there are no comparable companies listed on the Stock Exchange with principal businesses and market capitalisation similar to those of the Company.

Premium/

(discount) oftheconversion priceover/(to)the average closingprice forthelast ﬁvetrading dayspriorto/up toandincluding Adjustments thedateof toconversion

price (Yes/No)

Yes

agreement (approximate %)

0.00

39.70

6.10

Premium/

(discount) oftheconversion priceover/(to)the closingprice pershareon/prior tothedate ofagreement

(approximate

0.00

40.50

5.82

Coupon rate (%p.a.)

Termto maturity (Numberof years)

The subscribers are connected persons (Yes/No)

Yes

SetoutbelowarethedetailsoftheCBComparables:

Sizeofissuance anduseof proceeds (million)

HK$100

Reﬁnancing

US$855

Business development andgeneral workingcapital

US$175

Reﬁnancing

Market capitalisation asatthe

Latest Practicable

Date (HK$'million)

769.5

563,249.9

8,277.6

Stock code

1673

1810

699

Companynameand principalactivities

Dateof announcement

1December2020 HuazhangTechnology HoldingLimited
Researchand development, manufactureandsales ofindustrialautomation systemsandsludge treatmentproducts
2December2020 XiaomiCorporation
Research,development
andsalesof
smartphones,internetof
thingsandlifestyle
products
3December2020 CARInc.
Carrentalbusinessand
saleofusedrental
vehicles

Premium/

(discount) oftheconversion priceover/(to)the average closingprice forthelast ﬁvetrading dayspriorto/up toandincluding Adjustments thedateof toconversion

price (Yes/No)

Yes

agreement (approximate %)

11.73

39.40

1.49

Premium/

(discount) oftheconversion priceover/(to)the closingprice pershareon/prior tothedate ofagreement

(approximate

5.79

35.00

(14.29)

Coupon rate (%p.a.)

Termto maturity (Numberof years)

The subscribers are connected persons (Yes/No)

Sizeofissuance anduseof proceeds (million)

HK$10

General workingcapitalUS$280

Business development, generalworking capitaland reﬁnancing

HK$48

Acquisitionfor business development

Market capitalisation asatthe

Latest Practicable

Date (HK$'million)

115.9

12,072.8

2,240.0

Stock code

2221

1873

8606

Companynameand principalactivities

Dateof announcement

14December2020 NewConcepts

HoldingsLimited

Foundationworks,civil engineeringconstruction, generalbuildingworksand environmentalprotection

18December2020 VivaBiotechHoldings
Provisionofthe structure-baseddrug discoveryservices
21December2020 KinetixSystems HoldingsLimited
Provisionof
informationtechnology
services

Premium/

(discount) oftheconversion priceover/(to)the average closingprice forthelast ﬁvetrading dayspriorto/up toandincluding Adjustments thedateof toconversion

price (Yes/No)

Yes

agreement (approximate %)

45.35

12.71

22.19

Premium/

(discount) oftheconversion priceover/(to)the closingprice pershareon/prior tothedate ofagreement

(approximate

25.00

14.29

14.94

Coupon rate (%p.a.)

4.95

3.5

Termto maturity (Numberof years)

4 (Note1)

The subscribers are connected persons (Yes/No)

Yes

Sizeofissuance anduseof proceeds (million)

HK$100

Business developmentand generalworking capital

US$150

Business developmentUS$30

Business development

Market capitalisation asatthe

Latest Practicable

Date (HK$'million)

4,055.1

10,418.0

9,757.5

Stock code

3681

2666

1860

Companynameand principalactivities

Dateof announcement

22December2020 SinoMabBioScience

Limited

Research,development,

manufacturingand

commercializationof

therapeuticsforthe

treatmentof

immunologicaldiseasesGenertecUniversal MedicalGroup CompanyLimited

Provisionofmedical services,including healthcareﬁnancial services,hospital investmentand managementservices

MobvistaInc.

Mobileadvertising services

29December2020

3January2021

Premium/

(discount) oftheconversion priceover/(to)the average closingprice forthelast ﬁvetrading dayspriorto/up toandincluding Adjustments thedateof toconversion

price (Yes/No)

Yes

agreement (approximate %)

0.00

35.20

51.63

Premium/

(discount) oftheconversion priceover/(to)the closingprice pershareon/prior tothedate ofagreement

(approximate

3.74

35.00

44.06

Coupon rate (%p.a.)

Termto maturity (Numberof years)

The subscribers are connected persons (Yes/No)

Sizeofissuance anduseof proceeds (million)

US$6.35

Business developmentand generalworking capital

Euro230

Reﬁnancing

US$600

Business developmentand generalworking capital

Market capitalisation asatthe

Latest Practicable

Date (HK$'million)

500.0

28,881.7

209,828.2

Stock code

8363

576

3692

Companynameand principalactivities

Dateof announcement

5January2021 SDMGroup HoldingsLimited
Operationof danceacademies
6January2021 ZhejiangExpressway Co.,Ltd.
Operationand managementof high-graderoads
8January2021 HansohPharmaceutical GroupCompanyLimited
Researchand
development,production
andsaleofpharmaceutical
products

Premium/

(discount) oftheconversion priceover/(to)the average closingprice forthelast ﬁvetrading dayspriorto/up toandincluding Adjustments thedateof toconversion

price (Yes/No)

Yes

agreement (approximate %)

19.76

22.81

6.45

Premium/

(discount) oftheconversion priceover/(to)the closingprice pershareon/prior tothedate ofagreement

(approximate

14.97

25.00

5.10

Coupon rate (%p.a.)

5.25

2.25

Termto maturity (Numberof years)

The subscribers are connected persons (Yes/No)

Yes

Sizeofissuance anduseof proceeds (million)

US$300

Generalworking capitaland reﬁnancing

US$125

Generalworking capitaland reﬁnancing

HK$3,420.6

Acquisitionfor business development

Market capitalisation asatthe

Latest Practicable

Date (HK$'million)

90,914.3

6,290.2

12,410.5

Stock code

1378

1317

2768

Companynameand principalactivities

Dateof announcement

8January2021 ChinaHongqiao GroupLimited
Manufacturingand
salesofaluminum
products
13January2021 ChinaMapleLeaf EducationalSystems Limited
Operationof
internationalschools
13January2021 JiayuanInternational GroupLimited
Developmentof
large-scale
residentialcomplex
projectsand
integratedcommercial
complexprojects

Premium/

(discount) oftheconversion priceover/(to)the average closingprice forthelast ﬁvetrading dayspriorto/up toandincluding Adjustments thedateof toconversion

price (Yes/No)

Yes

agreement (approximate %)

14.84

(27.72)

24.07

Premium/

(discount) oftheconversion priceover/(to)the closingprice pershareon/prior tothedate ofagreement

(approximate

14.03

24.99

21.95

Coupon rate (%p.a.)

5.5

3 (Note2)

Termto maturity (Numberof years)

The subscribers are connected persons (Yes/No)

Yes

Sizeofissuance anduseof proceeds (million)

US$15

Generalworking capitaland reﬁnancing

RMB4,000

Generalworking capitalHK$40

Business development, generalworking capitaland reﬁnancing

Market capitalisation asatthe

Latest Practicable

Date (HK$'million)

595.7

155,953.5

140.9

Stock code

6128

2319

389

Companynameand principalactivities

Dateof announcement

19January2021 EarthasiaInternational HoldingsLimited
Landscapearchitecture
inHongKong,
theMainlandChinaand
thePhilippines
24January2021 ChinaMengniuDiary CompanyLimited
Manufactureand distributionofquality dairyproductsinChina
27January2021 ChinaTontineWines GroupLimited
Manufactureand salesofgrape wineproducts

Premium/

(discount) oftheconversion priceover/(to)the average closingprice forthelast ﬁvetrading dayspriorto/up toandincluding Adjustments thedateof toconversion

price (Yes/No)

Yes

agreement (approximate %)

25.84

0.82

0 (Note3)

Premium/

(discount) oftheconversion priceover/(to)the closingprice pershareon/prior tothedate ofagreement

(approximate

30.00

0 (Note3)

Coupon rate (%p.a.)

2.75

Termto maturity (Numberof years)

The subscribers are connected persons (Yes/No)

Sizeofissuance anduseof proceeds (million)

HK$6,740

Business development, generalworking capitaland reﬁnancing

HK$379.62

ReﬁnancingHK$35

Business development andinvestments

Market capitalisation asatthe

Latest Practicable

Date (HK$'million)

45,060.4

2,414.8

207.2

Stock code

293

1115

1736

Companynameand principalactivities

CathyPaciﬁc AirwaysLimited

Provisionofinternational passengerandcargoair transportation

Dateof announcement

28January2021

2February2021 TibetWaterResources Limited
Productionandsalesof
premiumbottledmineral
waterproductsandbeer
products
9February2021 ChinaParentingNetwork HoldingsLimited
Verticalonlineplatformfor
children-babies-maternity
market

Premium/

(discount) oftheconversion priceover/(to)the average closingprice forthelast ﬁvetrading dayspriorto/up toandincluding Adjustments thedateof toconversion

price (Yes/No)

Yes

agreement (approximate %)

Premium/

(discount) oftheconversion priceover/(to)the closingprice pershareon/prior tothedate ofagreement

(approximate

24.19 18.10

44.06 51.63

(14.29) (27.72)

16.82 16.84

14.96 16.47

(8.06) (12.31)

Coupon rate (%p.a.)

15 0 3.92 3.25

Termto maturity (Numberof years)

7 1 3.95 5 5

The subscribers are connected persons (Yes/No)

Maximum Minimum Average Median

Sizeofissuance anduseof proceeds (million)

US$350

Business developmentand generalworking capital

HK$400

Business development, reﬁnancingand generalworking capital

Market capitalisation asatthe

Latest Practicable

Date (HK$'million)

20,652.2

494.3

Stock code

1765

6161

Companynameand principalactivities

HopeEducationGroup Co.,Ltd.

Provisionofprivateformal highereducationTheCompany

Dateof announcement

22February2021

26January2021

Source:announcementsofrelevantcompaniespublishedonthewebsiteoftheStockExchange

Notes:

1. The term to maturity is estimated based on the average of the initial maturity of 3 years, extended maturity of 4 years and ﬁnal maturity date of 5 years.
2. The interest rate of 3% per annum is estimated based on the interest rate between 2% to 4%.
3. Based on the supplemental announcement of China Parenting Network Holdings Limited dated 16 February 2021, the conversion price has been amended.

As shown in the table above, the initial conversion prices of the CB Comparables ranged from a discount of approximately 14.29% to a premium of approximately 44.06% to/over the respective closing price per share on/prior to the date of the relevant agreement, with an average and median of a premium of approximately 16.82% and 14.96%, respectively. The discount of 8.06%, as represented by the Conversion Price to the closing price of HK$0.62 per Share on the date of the Subscription Agreement, is within the aforesaid range.

In addition, the initial conversion prices of the CB Comparables ranged from a discount of approximately 27.72% to a premium of approximately 51.63% to/ over the average closing price per share for the last five trading days prior to or up to and including the date of the relevant agreement, with an average and median of a premium of approximately 16.84% and 16.47%, respectively. The discount of approximately 12.31%, as represented by the Conversion Price to the average closing price of HK$0.65 per Share for the last five consecutive trading days immediately prior to the date of the Subscription Agreement, is within the aforesaid range.

Notwithstanding that the above discounts of the Conversion Price to the market prices on or before the date of the Subscription Agreement (the "Discounts") compare unfavorably to the averages and medians of those of the CB Comparables, we consider the Conversion Price to be fair and reasonable after taking into account the following as a whole:

(1) the Discounts are within the ranges of those of the CB Comparables;
(2) the Conversion Price was (i) equal to or above the closing prices of the Shares in 281 (or approximately 52.2%) out of a total of 538 trading days; and (ii) approximately the same as the average closing price of the Shares, during the Review Period, as set out in the section headed "5. Assessment of the principal terms of the Subscription - (i) Conversion Price - (a) Comparison of the Conversion Price with historical Share prices" above;
(3) the Conversion Price represents a premium of approximately 22.8% over the unaudited NAV per Share;

(4) for illustrative purpose only, based on (i) the Conversion Price of HK$0.57 per Conversion Share; and (ii) the average closing price of HK$0.65 per Share for the last ﬁve consecutive trading days immediately prior to the date of the Subscription Agreement (to which the Conversion Price represents a discount of approximately 12.31%), the implied return over a five-year period would be approximately 14.0% (being HK$0.65 less HK$0.57 and divided by HK$0.57), i.e. approximately 2.8% per annum (the "Implied CB Interest"), which is lower than the average and median of the coupon rates of the CB Comparables as well as the interest rate of the Unsecured Loans of 3.5% per annum; and
(5) given (i) the considerable amount of fund involved in the Subscription; (ii) the Convertible Bonds are unsecured and interest free; (iii) the loss making position of the Group for FY2018, FY2019 and 2020H1; (iv) the thin trading liquidity of the Shares in general; and (v) limited financing alternatives with acceptable terms are available to raise a considerable amount of fund with certainty for a longer period, the Conversion Price should be set at a discount to the market prices to promote its attractiveness.

(ii) Maturity and coupon rate
The terms of the CB Comparables ranged from one year to seven years whereas the coupon rates of the CB Comparables ranged from nil to 15% per annum. The term and coupon rate of the Convertible Bonds are in line with the market practice.
(iii) Adjustments to conversion price
Pursuant to the terms of Convertible Bonds, the Conversion Price shall be adjusted upon the occurrence of, among other things, share consolidation or sub-division, capitalisation of proﬁts or reserves, capital distribution, grant of rights to acquire for cash assets, rights issue, grant of options or warrants to subscribe for shares, issue of convertible securities or repurchase of shares or convertible securities.
In assessing the fairness and reasonableness of the adjustment terms of the Convertible Bonds as regards the Conversion Price, we have reviewed the relevant adjustment terms of the CB Comparables and noted that the initial conversion prices of the CB Comparables are generally subject to adjustments upon occurrence of similar adjustment events as the Convertible Bonds including, among other things, share consolidation or sub-division, capitalisation of profits or reserves, capital distribution, grant of rights to acquire for cash assets, rights issue, grant of options or warrants to subscribe for shares, issue of convertible securities or repurchase of shares or convertible securities. Therefore, we consider that the relevant adjustment terms of the Convertible Bonds are usual and normal adjustment terms which are comparable to those of other convertible bonds or notes in the market.

(iv)Overall comment

We noted that (a) the principal activities and market capitalisation of the Company and the respective issuers of the CB Comparables; and (b) the terms of the Convertible Bonds and the CB Comparables, including the size of issuance, term to maturity, coupon rate and premium/ discount of the conversion price over/to market prices, are not the same or may even substantially vary (the "Variations").

In our view, the terms of a convertible bond issuance, after arm's length negotiation between the issuer and the subscriber, are dependent on various factors including but not limited to (a) the amount of fund required for achieving the objectives of the subscription (the "Objectives") which will determine the size of issuance; (b) the time horizon for achieving the Objectives which will determine the term to maturity; (c) the financial performance and position of the issuer which will determine the cost of capital of the issuer and therefore the required coupon rate and premium/discount of the conversion price over/to market prices; (d) the trading liquidity of the shares of the issuer - the lower the trading liquidity, the higher coupon rate and/or discount of the conversion price to market prices that the subscriber may request; and (e) the availability of other alternative means of financing - the lesser financing alternatives being available, the more favourable terms of the convertible bond that the subscriber may ask for (collectively, the "Major Factors"). As such, we consider that the terms of the Convertible Bonds should be determined and assessed based on the specific circumstances of the Company as mentioned above in addition to the terms of the CB Comparables.

Notwithstanding the Variations, we consider the CB Comparables to be fair and representative samples given (a) the CB Comparables represent recent structures of convertible bonds or notes issued by companies listed on the Stock Exchange under the prevailing market conditions and sentiments of the capital market in Hong Kong; (b) the proceeds raised from the CB Comparables were used for business development, refinancing of debts and/or general working capital which were analogous to the proposed use of proceeds from the Subscription; (c) the number of the CB Comparables identified; (d) there are no comparable companies listed on the Stock Exchange with principal businesses and market capitalisation similar to those of the Company; and (e) the Major Factors vary among the Company and the respective issuers of the CB Comparables and so do the terms of the Convertible Bonds and the CB Comparables.

Taking into account (a) the considerable amount of fund required for the Group to enhance its financial strength such that Target will be in a position to apply to the IA for a relaxation of the Target Limit which are crucial to the business expansion of the Group; (b) the business plan of the Group as set out in the section headed "3. Use of proceeds from the Subscription - (i) Enhancement of the capital adequacy of Target" above; (c) the loss making position of the Group for FY2018, FY2019 and 2020H1; (d) the thin trading liquidity of the Shares in general; (e) limited ﬁnancing alternatives with acceptable terms are available to raise a considerable amount of fund with certainty for a longer period; (f) the Convertible Bonds are unsecured and interest free; and (g) the terms of the CB Comparables, we consider the terms of the Subscription (including the issue of the Convertible Bonds) to be fair and reasonable as a whole.

Although the Discounts compare unfavorably to the averages and medians of those of the CB Comparables, we consider it to be justifiable and therefore fair and reasonable after considering (a) the Conversion Price was equal to or above the closing prices of the Shares for a majority of time and approximately the same as the average closing price of the Shares, during the Review Period; (b) the Conversion Price represents a premium of approximately 22.8% over the unaudited NAV per Share; (c) the Implied CB Interest is lower than the average and median of the coupon rates of the CB Comparables as well as the interest rate of the Unsecured Loans; and (d) other factors stated above.

6. Financial effect of the Subscription

(i)Earnings and working capital

On initial recognition, the Convertible Bonds shall be recognised as a compound financial instrument with a conversion option, which comprise an equity component and a liability component, on the consolidated financial statements of the Company. The carrying amount of the liability component is first determined by measuring the fair value of a similar liability that does not have an associated equity component. The carrying amount of the equity component is then determined by deducting the fair value of the liability component from the fair value of the Convertible Bonds as a whole. The liability component of the Convertible Bonds is subsequent measured at amortised cost, using the effective interest method. The related interest expense is recognised in profit or loss. The Subscription is therefore expected to have a bearing on the earnings of the Group.

Given that (a) the Subscription will enable the Company to raise a considerable amount of fund for a term of ﬁve years to strengthen the ﬁnancial position of the Group; and (b) the Convertible Bonds are interest free, therefore reducing the cash flow burden of the Group, the Subscription is expected to improve the liquidity of the Group.

(ii)Net asset value

It is expected that the Subscription will not have an immediate material impact on the net asset value of the Group. Subject to compliance with the Listing Rules and the Takeovers Code, the net asset value of the Group is expected to improve upon conversion of the Convertible Bonds, given the reduction in the Group's overall indebtedness.

It should be noted that the aforementioned analyses are for illustrative purpose only and does not purport to represent how the financial performance and position of the Company would be following the Subscription.

7. Potential dilution effect on the shareholding interests of the existing public Shareholders

As shown in the Letter from the Board under the section headed "Effect of shareholding structure of the Company", assuming there is no other change in the issued share capital and shareholding structure of the Company other than the conversion of the Convertible Bonds, the shareholding in the Company held by existing public Shareholders would be diluted from approximately 40.30% as at the Latest Practicable Date to (i) approximately 18.99% immediately after full conversion of the Convertible Bonds, assuming no outstanding share options of the Company are exercised; and (ii) approximately 19.45% immediately after full conversion of the Convertible Bonds and full exercise of all outstanding share options of the Company.

Taking into account (i) without the fund from the Subscription to enhance the financial strength of Target, Target may not be able to raise the Target Limit to accommodate its business need as evidenced by the growth of gross premium written for FY2019 and 2020H1 and the utilisation of the Target Limit and the EC Limit for 2020H1; (ii) limited financing alternatives with acceptable terms are available to raise a considerable amount of fund with certainty for a longer period; and (iii) the terms of the Subscription (including the issue of the Convertible Bonds) are fair and reasonable, we consider that the potential dilution effect on the shareholding of existing public Shareholders in the Company is acceptable as far as they are concerned. Under the terms of the Convertible Bonds, the holder(s) may not convert the Convertible Bonds if it would result in (i) the holder(s) being obliged to make a general offer under the Takeovers Code unless a whitewash waiver is obtained or a general offer is made in accordance with the Takeovers Code; or (ii) the Company failing to comply with the minimum public ﬂoat requirement under the Listing Rules.

OPINION AND RECOMMENDATION

In arriving at our opinion and recommendation, we have considered the principal factors and reasons as discussed above and in particular the following (which should be read in conjunction with and interpreted in the full context of this letter):

• the Group recorded an overall growth in gross premium written by approximately 16.7% and 15.8% for FY2019 and 2020H1, respectively. The Group utilised approximately 94.2% of the Target Limit for FY2019. For 2020H1, the Group utilised approximately 52.6% of the Target Limit and particularly, approximately 81.8% of the EC Limit. As such, the Target Limit, including the EC Limit, may not be sufficient to accommodate the business growth of the Group. There is an imminent need for Target to raise the Target Limit, including the EC Limit, which is determined with reference to, among other things, the capital strength of Target;
• the capital adequacy of Target as measured by the solvency margin ratio has only marginally met the Benchmark Solvency Margin imposed by the IA and is still at a low level as compared to its peers, indicating that Target's capabilities to take up more businesses are restricted by its liquid capital, subject to the relaxation of the Target Limit by the IA, resulting in reduced competitiveness as compared to its peers;
• a fund-raising plan is therefore crucial to enhancing the capital strength of Target such that Target will be in a position to apply to the IA for a relaxation of the Target Limit to further develop and expand its businesses;
• the amount of fund required to be raised and its intended uses are justifiable taking into account (i) the business growth of the Group and the utilisation of the Target Limit for FY2019 and 2020H1; (ii) the amount of fund that may be required to restore the solvency margin ratio of Target to a level comparable to its peers; (iii) the business plan of the Group; (iv) the historical growth of the local insurance industry; and (v) the maturity profile of the Group's indebtedness;
• the Subscription through the issue of the Convertible Bonds is the most appropriate means of fund raising, after taking into account the following:
- • other alternative means of equity ﬁnancings such as a share placement or a rights issue or open offer may not be feasible given (i) the large size of the fund raising which would be required; (ii) the substantial discount of the price of a share placement or a right issue or open offer to the market that may be required due to the loss making position of the Group for FY2018, FY2019 and 2020H1 as well as the trading liquidity of the Shares; (iii) the likely costs involved (including the amount of placing or underwriting commissions and other administrative and legal expenses); and (iv) the lack of certainty in the successful implementation of a share placement or a rights issue or open offer;
- • obtaining further bank borrowings to support the business development of the Group may not be feasible given (i) the size of loan facility involved; and (ii) the requirements of collateral from the Group as security and interest payments; and

• the Subscription through the issue of the five-year Convertible Bonds, which are unsecured and interest free, will enable the Company to raise a considerable amount of fund with certainty for a longer period to strengthen the ﬁnancial strength of Target for business development and expansion;

• the terms of the Subscription (including the issue of the Convertible Bond) are fair and reasonable as a whole after taking into account the following:
- • the Conversion Price is fair and reasonable:
  - • the discounts as represented by the Conversion Price to (i) the closing price of the Shares on the date of the Subscription Agreement; and (ii) the average closing price of the Shares for the last ﬁve consecutive trading days immediately prior to the date of the Subscription Agreement are within the ranges of those of the CB Comparables;
  - • the Conversion Price was (i) equal to or above the closing prices of the Shares in 281 (or approximately 52.2%) out of a total of 538 trading days; and (ii) approximately the same as the average closing price of the Shares, during the Review Period;
  - • the Conversion Price represents a premium of approximately 22.8% over the unaudited NAV per Share; and
  - • given (i) the considerable amount of fund involved in the Subscription; (ii) the Convertible Bonds are unsecured and interest free; (iii) the thin trading liquidity of the Shares in general; and (iv) limited ﬁnancing alternatives with acceptable terms are available to raise a considerable amount of fund with certainty for a longer period, the Conversion Price should be set at a discount to the market prices to promote its attractiveness.
- • other principal terms of the Subscription, including the term and coupon rate of the Convertible Bonds and the adjustment terms on the Conversion Price, are in line with the market practice as demonstrated by the CB Comparables;
• the Subscription is expected to improve the liquidity of the Group and enhance the capital strength of Target; and
• the potential dilution effect on the shareholding of existing public Shareholders in the Company from approximately 40.30% as at the Latest Practicable Date to approximately 18.99% immediately after full conversion of the Convertible Bonds (assuming no outstanding share options of the Company are exercised) is acceptable after taking into account the factors stated above.

Based on the above, we consider that the terms of the Subscription (including the grant of the Specific Mandate) are on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned. We also consider that the Subscription (including the grant of the Speciﬁc Mandate), while not in the ordinary and usual course of business of the Group, are nevertheless in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the GM to approve the Subscription (including the grant of the Speciﬁc Mandate).

Yours faithfully,

For and on behalf of Rainbow Capital (HK) Limited

Larry Choi Managing Director

Mr. Larry Choi is a licensed person and a responsible officer of Rainbow Capital (HK) Limited registered with the Securities and Futures Commission to carry out type 6 (advising on corporate finance) regulated activity under the SFO. He has over ten years of experience in the corporate ﬁnance industry.

Dr. CHEUNG HAYWOOD ("Dr. Cheung"), aged 68, is an executive Director and the Chairman of the Board. He is concurrently the chairman and an executive director, and a member of the reinsurance committee of Target ("Reinsurance Committee"). Dr. Cheung is also a director of Chartered Properties Limited ("CPL"), a wholly-owned subsidiary of the Company. He joined the Group in 2010. He has over 37 years' experience in metals trading, securities and futures brokerage and forex dealings in Hong Kong. Dr. Cheung has extensive business connections in Hong Kong and the PRC. He has served as the President of the Executive and Supervisory Committees of Chinese Gold & Silver Exchange Society (the "Society") from June 2010 to December 2014 and January 2017 to present. Since then, he has also become the Chairman of the supervisory committee of the Society from January 2015 to December 2016. He is the President of the New Territories General Chamber of Commerce for the year 2012 to present.

The SFC has publicly reprimanded Cheung's Securities Brokers Limited (now known as Huarong International Securities Limited ("CSB")) for breach of Client Money Rules in September 2005. CSB was a wholly-owned subsidiary of Simsen International Corporation Limited ("Simsen", currently known as "Huarong International Financial Holdings Limited"; Stock code: 993), a company listed on the Main Board of the Stock Exchange where Dr. Cheung was an executive director and controlling shareholder of Simsen at that time.

Dr. Cheung was a director of Hong Kong TelePDA Technology Limited ("HKTTL") during the period between 10 November 2000 and 6 December 2002 which was subsequently dissolved by creditor's voluntary winding up on 28 November 2006.

In April 2000, the SFC announced that it had publicly reprimanded Dr. Cheung as a dealing director of CSB because it is alleged that (i) during the period between January and December 1997, the staff of CSB were not registered under the repealed Securities Ordinance (Chapter 33 of the Laws of Hong Kong) (the "SO") or the Commodities Trading Ordinance before undertaking securities dealing and commodities trading for clients and (ii) between March 1998 and June 1998, another director of CSB on the instruction of Dr. Cheung had pledged securities belonging to two clients without proper prior written authority as required by section 81 of the SO. In this connection, Dr. Cheung has surrendered his registration as a dealer and was not allowed to apply for registration for 1 year.

Cheung Yan Lung Stock Investment Company ("CYL"), a partnership which was formerly owned by Mr. Cheung Yan Lung (the father of Dr. Cheung) and Dr. Cheung as to 50% and 50% respectively at the relevant time, was privately reprimanded by the SFC on 4 January 1993 for unlicensed securities dealings of a dealing representative of CYL with an unlicensed third party in contravention of the SO between 1 July 1991 and 18 August 1991. For details of the above incidents, please refer to the prospectus of the Company dated 31 December 2014.

Dr. Cheung obtained a Bachelor Degree in Science with a major in Geology Engineering and Economics from Concordia University, Montreal in 1978. He has also obtained a degree of Executive Master of Business Administrations and a Doctor degree of Business Administrations from the City University of Hong Kong in 2012 and 2014 respectively.

Dr. Cheung is a director and the ultimate beneficial owner of Independent Assets Management Limited, a substantial Shareholder (as deﬁned under the Listing Rules) of the Company.

Save as disclosed above, as at the Latest Practicable Date, Dr. Cheung did not (i) hold any directorships in any other listed companies in Hong Kong or overseas in the last three years; (ii) hold any other position with the Company or other members of the Group; and (iii) have any relationship with any other directors, senior management, substantial or controlling Shareholders (as respectively deﬁned in the Listing Rules) of the Company.

Service Agreement

Dr. Cheung has entered into a renewed service agreement with the Company on 11 January 2021 for a ﬁxed term of three years commencing from 15 January 2021 unless terminated by not less than three months' notice in writing served by either party on the other or by payment of three months' fixed salary in lieu of such notice. He is subject to retirement and re-election in accordance with the Articles and the Code on Corporate Governance under Appendix 14 to the Listing Rules. Dr.

Cheung is entitled to an annual salary of HK$1,200,000 and an annual director's fee of HK$96,000, which were recommended by the Remuneration Committee and determined by the Board based on his qualification, experience, duties and responsibilities in the Company and the prevailing market conditions. Dr. Cheung is also entitled to a discretionary bonus as may be recommended by the Remuneration Committee from time to time and approved by majority of the members of the Board by reference to the then prevailing market conditions, the performance of the Company as well as his individual performance.

Interests in Shares

As at the Latest Practicable Date, save that Dr. Cheung was deemed to be interested in 158,750,000 Shares held by Independent Assets Management Limited, Dr. Cheung was not interested in any Shares within the meaning of Part XV of the SFO.

Other

Save as disclosed above, there is no other information to be disclosed pursuant to any of the requirements of Rule 13.51(2) of the Listing Rules (particularly in relation to sub-paragraphs (h) to (v) therein), nor are there any other matters relating to the re-election of Dr. Cheung that need to be brought to the attention of the Shareholders.

Mr. MUK WANG LIT JIMMY ("Mr. Muk"), aged 66, is an executive Director and the Chief Executive Officer of the Company, as well as a member of each of the Nomination Committee and the risk committee of the Company (the "Risk Committee"). Mr. Muk is concurrently an executive director, the chief executive officer and the compliance officer of Target, and the chairman of each of the Reinsurance Committee and the claims settlement committee and a member of each of the underwriting committee and the investment committee of Target. Mr. Muk is also a director of CPL and Target Credit Limited ("TCL"), a wholly-owned subsidiary of the Company. He is responsible for reporting to the Board on Target's compliance matters, and for monitoring Target's compliance with the requirements under the Insurance Ordinance and other requirements as imposed by the IA. He joined the Group in 1979. Mr. Muk has over 41 years of experience in general insurance business, particularly motor insurance business. Mr. Muk ﬁrst joined the insurance industry in 1979 by joiningTarget in that year as claims supervisor and was responsible for handling and conducting claims and related matters. He was promoted as claims manager in 1982 and as assistant general manager in 1986 and was responsible for overseeing all functions and the daily operations of all departments. He was subsequently appointed as the general manager in 1993, taking up further planning, administration, compliance and decision-making responsibilities. He has also been a director of Target since 1983, participating in setting objectives and formulating strategies and corporate governance with his fellow directors. Mr. Muk has served as a member of the Executive Committee on Insurance Fraud Prevention Claims Database under The Hong Kong Federation of Insurers since February 2019 and the Board of the Employee's Compensation Insurance Residual Scheme Bureau since June 2019.

Mr. Muk obtained a Bachelor of Business (Business Administration) degree with Distinction from Royal Melbourne Institute of Technology in 2003 and a Master of Business Administration degree from University of Ballarat in 2006. Mr. Muk also obtained a Master of Corporate Governance degree, which is a distance learning course and a Master of Arts in Applied English Linguistics degree from the Open University of Hong Kong in 2013 and 2016 respectively. He has been a fellow of The Australian and New Zealand Institute of Insurance and Finance since 1995.

Save as disclosed above, as at the Latest Practicable Date, Mr. Muk did not (i) hold any directorships in any other listed companies in Hong Kong or overseas in the last three years; (ii) hold any other position with the Company or other members of the Group; and (iii) have any relationship with any other directors, senior management, substantial or controlling Shareholders (as respectively deﬁned under the Listing Rules) of the Company.

Service Agreement

Mr. Muk has entered into a renewed service agreement with the Company on 11 January 2021 for a fixed term of three years commencing from 15 January 2021 unless terminated by not less than three months' notice in writing served by either party on the other or by payment of three months' fixed salary in lieu of such notice. He is subject to retirement and re-election in accordance with the Articles and the Code on Corporate Governance under Appendix 14 to the Listing Rules. Mr.

Muk is entitled to an annual salary of HK$1,562,400 and an annual director's fee of HK$96,000, which were recommended by the Remuneration Committee and determined by the Board based on his qualification, experience, duties and responsibilities in the Company and the prevailing market conditions. Mr. Muk is also entitled to a discretionary bonus as may be recommended by the Remuneration Committee from time to time and approved by majority of the members of the Board by reference to the then prevailing market conditions, the performance of the Company as well as his individual performance.

Interests in Shares

As at the Latest Practicable Date, save that Mr. Muk is interested in 360,000 Shares and 1,640,000 share options granted by the Company exercisable into 1,640,000 Shares pursuant to the Pre-IPO Share Option Scheme, Mr. Muk was not interested in any Shares within the meaning of Part XV of the SFO.

Other

Save as disclosed above, there is no other information to be disclosed pursuant to any of the requirements of Rule 13.51(2) of the Listing Rules (particularly in relation to sub-paragraphs (h) to (v) therein), nor are there any other matters relating to the re-election of Mr. Muk that need to be brought to the attention of the Shareholders.

Mr. CHAN HOK CHING ("Mr. Chan"), aged 58, is an executive Director. He joined the Group in July 2010 as the assistant to chairman and is responsible for assisting the Chairman of the Board in performing his duties in all areas. Mr. Chan is also a member of each of the Remuneration Committee and the Risk Committee. Mr. Chan has been appointed as an executive director of Target since June 2012, and he is concurrently the chairman of each of the underwriting committee and the investment committee, and a member of the Reinsurance Committee of Target. He is also a director of CPL and TCL. Mr. Chan has over 31 years' experience in banking and ﬁnancial industry. Mr. Chan has been elected as an executive director of the New Territories General Chamber of Commerce for the year 2012 to present.

The SFC has publicly reprimanded CSB for breach of Client Money Rules in September 2005. CSB was a wholly-owned subsidiary of Simsen where Mr. Chan was the general manager of Simsen at that time.

Mr. Chan was appointed as a director of HKTTL in August 2002. HKTTL was subsequently dissolved by creditor's voluntary winding up on 28 November 2006.

Save as disclosed above, as at the Latest Practicable Date, Mr. Chan did not (i) hold any directorships in any other listed companies in Hong Kong or overseas in the last three years; (ii) hold any other position with the Company or other members of the Group; and (iii) have any relationship with any other directors, senior management, substantial or controlling Shareholders (as respectively deﬁned under the Listing Rules) of the Company.

Service Agreement

Mr. Chan has entered into a renewed service agreement with the Company on 11 January 2021 for a fixed term of three years commencing from 15 January 2021 unless terminated by not less than three months' notice in writing served by either party on the other or by payment of three months' fixed salary in lieu of such notice. He is subject to retirement and re-election in accordance with the Articles and the Code on Corporate Governance under Appendix 14 to the Listing Rules. Mr.

Chan is entitled to an annual salary of HK$1,406,400 and an annual director's fee of HK$96,000, which were recommended by the Remuneration Committee and determined by the Board based on his qualification, experience, duties and responsibilities in the Company and the prevailing market conditions. Mr. Chan is also entitled to a discretionary bonus as may be recommended by the Remuneration Committee from time to time and approved by majority of the members of the Board by reference to the then prevailing market conditions, the performance of the Company as well as his individual performance.

Interests in Shares

As at the Latest Practicable Date, save that Mr. Chan is interested in 1,300,000 share options granted by the Company exercisable into 1,300,000 Shares pursuant to the Pre-IPO Share Option Scheme, Mr. Chan was not interested in any Shares within the meaning of Part XV of the SFO.

Other

Save as disclosed above, there is no other information to be disclosed pursuant to any of the requirements of Rule 13.51(2) of the Listing Rules (particularly in relation to sub-paragraphs (h) to (v) therein), nor are there any other matters relating to the re-election of Mr. Chan that need to be brought to the attention of the Shareholders.

Mr. WAN KAM TO ("Mr. Wan"), aged 68, was appointed as an independent non-executive Director on 1 November 2014. Mr. Wan is also the chairman of the Audit Committee. He is concurrently an independent non-executive director and the chairman of the audit committee of Target. He has been awarded the Higher Diploma in Accountancy by Hong Kong Polytechnic (now known as Hong Kong Polytechnic University) in 1975. Mr. Wan is a fellow member of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants. Mr. Wan was a former partner of PricewaterhouseCoopers Hong Kong & China with extensive experience in auditing and financial management. Mr. Wan was a non-executive director of Taikang Life Insurance Company Limited during the period between November 2009 and March 2011. Mr. Wan also serves or has served as an independent non-executive director/independent director of the following listed companies:

Which stock exchange the

Company	Stock code	company is listed	Duration
A-Living Smart City Services Co., Ltd.	3319	Stock Exchange	August 2017 to present
(formerly known as A-Living Services
Co., Ltd.)
China Resources Land Limited	1109	Stock Exchange	March 2009 to present
China World Trade Centre Co., Ltd.	600007	Shanghai Stock Exchange	November 2016 to present
Dalian Port (PDA) Company Limited	2880	Stock Exchange	June 2011 to June 2017
601880	Shanghai Stock Exchange
Fairwood Holdings Limited	52	Stock Exchange	September 2009 to present
Haitong International Securities	665	Stock Exchange	June 2018 to present
Group Limited
Harbin Bank Co., Ltd.	6138	Stock Exchange	October 2013 to October 2019
Huaneng Renewables	958	Stock Exchange	August 2010 to June 2019
Corporation Limited
Kerry Logistics Network Limited	636	Stock Exchange	November 2013 to May 2019
KFM Kingdom Holdings Limited	3816	Stock Exchange	September 2012 to present
S. Culture International	1255	Stock Exchange	May 2013 to July 2017
Holdings Limited
(now known as TATA Health
International Holdings Limited)
Shanghai Pharmaceuticals	2607	Stock Exchange	June 2013 to June 2019
Holding Co., Ltd.	601607	Shanghai Stock Exchange

Save as disclosed above, as at the Latest Practicable Date, Mr. Wan did not (i) hold any directorships in any other listed companies in Hong Kong or overseas in the last three years; (ii) hold any other position with the Company or other members of the Group; and (iii) have any relationship with any other directors, senior management, substantial or controlling Shareholders (as respectively deﬁned in the Listing Rules) of the Company.

Letter of Appointment

Mr. Wan signed a renewed letter of appointment with the Company on 5 March 2021 for a term of three years commencing on 15 January 2021 subject to the terms of the appointment letter and the Articles and can be terminated by not less than three months' notice in writing served by either party on the other or by payment in lieu of notice. He is subject to retirement and re-election pursuant to the Articles and the Code on Corporate Governance under Appendix 14 to the Listing Rules.

Mr. Wan is entitled to an annual director's fee of HK$240,000, which was recommended by the Remuneration Committee and determined by the Board based on his qualiﬁcation, experience, duties and responsibilities in the Company and the prevailing market conditions.

Interests in Shares

As at the Latest Practicable Date, save that Mr. Wan is interested in 500,000 share options granted by the Company exercisable into 500,000 Shares pursuant to the Pre-IPO Share Option Scheme, Mr. Wan was not interested in any Shares within the meaning of Part XV of the SFO.

Other

Save as disclosed above, there is no other information to be disclosed pursuant to any of the requirements of Rule 13.51(2) of the Listing Rules (particularly in relation to sub-paragraphs (h) to (v) therein), nor are there any other matters relating to the re-election of Mr. Wan that need to be brought to the attention of the Shareholders.

Mr. WONG SHIU HOI PETER ("Mr. Wong"), aged 80, was appointed as an independent non-executive Director on 1 November 2014. Mr. Wong is also the chairman of each of the Remuneration Committee and the Risk Committee, and a member of the Audit Committee and the Nomination Committee. Mr. Wong is concurrently an independent non-executive director and a member of each of the audit committee and the investment committee of Target. Mr. Wong obtained a Master of Business Administration Degree from the University of Macau (formerly known as the University of East Asia, Macau) in 1986. Mr. Wong possesses over 45 years of experience in the ﬁnancial services industry. He is the past chairman of the Hong Kong Institute of Directors and was an executive director, deputy chairman and chief executive of Haitong International Securities Group Limited. He is a former member of the Standing Committee of Company Law Reform, Listing Committee of the Stock Exchange and Financial Services Advisory Committee of the Hong Kong Trade Development Council. He was an overseas business advisor of Haitong Securities Company Limited. Mr. Wong also serves as an independent non-executive director of the following listed companies:

Which stock exchange the

Company

Tai Hing Group Holdings Limited

Agile Group Holdings Limited

Stock code	company is listed	Duration
6811	Stock Exchange	May 2019 to present
3383	Stock Exchange	June 2014 to present
(formerly known as Agile Property
Holdings Limited)
High Fashion International Limited	608	Stock Exchange	July 2004 to present
Tianjin Development Holdings Limited	882	Stock Exchange	December 2012 to present

Save as disclosed above, as at the Latest Practicable Date, Mr. Wong did not (i) hold any directorships in any other listed companies in Hong Kong or overseas in the last three years; (ii) hold any other position with the Company or other members of the Group; and (iii) have any relationship with any other directors, senior management, substantial or controlling Shareholders (as respectively deﬁned in the Listing Rules) of the Company.

Letter of Appointment

Mr. Wong signed a renewed letter of appointment with the Company on 5 March 2021 for a term of three years commencing on 15 January 2021 subject to the terms of the appointment letter and the Articles and can be terminated by not less than three months' notice in writing served by either party on the other or by payment in lieu of notice. He is subject to retirement and re-election pursuant to the Articles and the Code on Corporate Governance under Appendix 14 to the Listing Rules.

Mr. Wong is entitled to an annual director's fee of HK$240,000, which was recommended by the Remuneration Committee and determined by the Board based on his qualiﬁcation, experience, duties and responsibilities in the Company and the prevailing market conditions.

Interests in Shares

As at the Latest Practicable Date, save that Mr. Wong is interested in 500,000 share options granted by the Company exercisable into 500,000 Shares pursuant to the Pre-IPO Share Option Scheme, Mr. Wong was not interested in any Shares within the meaning of Part XV of the SFO.

Other

Save as disclosed above, there is no other information to be disclosed pursuant to any of the requirements of Rule 13.51(2) of the Listing Rules (particularly in relation to sub-paragraphs (h) to (v) therein), nor are there any other matters relating to the re-election of Mr. Wong that need to be brought to the attention of the Shareholders.

1. RESPONSIBILITY STATEMENT
This circular for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, conﬁrm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.
2. DISCLOSURE OF INTERESTS

(a)Interests of Directors and chief executive of the Company

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notiﬁed to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred therein; or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, were as follows:

The Company

Total numberName of DirectorNature of interestOrdinary

SharesUnderlying Shares (equity derivatives of the Company)of Shares (including underlying

Shares)Long position/ short positionApproximate percentage of shareholding

(Note 8)

Dr. Cheung

HaywoodInterest in a controlled corporation

158,750,000

158,750,000 Long position 25.37%

(Note 1)

Mr. Ng Yu

Interest in a controlled corporation

138,822,000

138,822,000 Long position 22.19%

(Note 2)

Mr. Muk Wang

Beneﬁcial owner

360,000

1,640,000

Lit Jimmy

2,000,000 Long position 0.32% (Note 3)

Mr. Chan HokBeneﬁcial owner

1,300,000

1,300,000 Long position 0.21%

Ching

(Note 4)

Mr. Wong Shiu Hoi Beneﬁcial owner

500,000

Peter

500,000 Long position 0.08% (Note 5)

Mr. Wan Kam ToBeneﬁcial owner

500,000

500,000 Long position 0.08% (Note 6)

Ms. Lau Ka YeeBeneﬁcial owner

168,000

86,000

254,000 Long position 0.04% (Note 7)

Notes:

(1) These Shares are held by Independent Assets Management Limited, a company incorporated in the British Virgin Islands, which is wholly and beneﬁcially owned by Dr. Cheung Haywood. By virtue of the SFO, Dr. Cheung Haywood is deemed to be interested in the Shares owned by Independent Assets Management Limited.
(2) These Shares are held by the Subscriber, which is wholly and beneﬁcially owned by Mr. Ng Yu. By virtue of the SFO, Mr. Ng Yu is deemed to be interested in the Shares owned by the Subscriber.
(3) Mr. Muk Wang Lit Jimmy, an executive Director and the Chief Executive Ofﬁcer of the Company, is the beneﬁcial owner of 360,000 Shares and 1,640,000 share options of the Company.
(4) Mr. Chan Hok Ching, an executive Director, is the beneficial owner of 1,300,000 share options of the Company.

APPENDIX II	GENERAL INFORMATION
(5)	Mr. Wong Shiu Hoi Peter, an independent non-executive Director, is the beneficial owner of
500,000 share options of the Company.
(6)	Mr. Wan Kam To, an independent non-executive Director, is the beneﬁcial owner of 500,000 share
options of the Company.
(7)	Ms. Lau Ka Yee, an executive Director, is the beneﬁcial owner of 168,000 Shares and 86,000 share
options of the Company.
(8)	The percentage of interest in the Company is calculated by reference to the number of Shares in
issue as at the Latest Practicable Date (i.e. 625,692,000 Shares).

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests and short positions in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required to be notiﬁed to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers under the Listing Rules.

(b)

Interests of substantial shareholders of the Company

So far as is known to the Directors, as at the Latest Practicable Date, each of the following persons (other than a Director or chief executive of the Company) had, or was deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 10% or more of any class of shares carrying rights to vote in all circumstances at general meetings of any other member of the Group:

ApproximateName of ShareholderNature of interestsNumber of

SharesLong position/ short positionpercentage of shareholding

(Note 4)

Independent AssetsBeneﬁcial owner

158,750,000 Long Position 25.37%

Management Limited (Note 1)

The Subscriber (Note 2)Beneﬁcial owner

138,822,000 Long Position 22.19%

Convoy Collateral LimitedBeneﬁcial owner

75,484,000 Long Position 12.06%

(Note 3)

Convoy Global Holdings

Limited (Note 3)

Interest of controlled corporation

75,484,000 Long Position 12.06%

Notes:

(1) Independent Assets Management Limited is the beneficial owner of 158,750,000 Shares and is wholly and beneficially owned by Dr. Cheung Haywood, an executive Director and the chairman of the Board. Therefore, Dr. Cheung Haywood is deemed to be interested in the Shares owned by Independent Assets Management Limited pursuant to the SFO.
(2) The Subscriber is the beneﬁcial owner of 138,822,000 Shares and is wholly and beneﬁcially owned by Mr. Ng Yu, an executive Director and the co-chairman of the Board. Therefore, Mr. Ng Yu is deemed to be interested in the Shares owned by the Subscriber pursuant to the SFO.
(3) Convoy Collateral Limited is the beneficial owner of 75,484,000 Shares and is wholly-owned by Convoy (BVI) Limited, Convoy (BVI) Limited is wholly-owned by Convoy Global Holdings Limited. Therefore, Convoy Global Holdings Limited is deemed to be interested in the Shares owned by Convoy Collateral Limited pursuant to the SFO.
(4) The percentage of interest in the Company is calculated by reference to the number of Shares in issue as at the Latest Practicable Date (i.e. 625,692,000 Shares).

Save as disclosed above, as at the Latest Practicable Date, no other persons (other than a Director and chief executive of the Company) had an interest or short position in the Shares and underlying Shares which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO or were directly or indirectly interested in 10% or more of any class of shares carrying rights to vote in all circumstances at general meetings of any other member of the Group.

3. SERVICE CONTRACTS
As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).
4. OTHER INTERESTS OF THE DIRECTORS
As at the Latest Practicable Date:
- (a) save as disclosed in this circular, none of the Directors had any direct or indirect interest in any assets which have, since 31 December 2019, being the date of the latest published audited consolidated ﬁnancial statements of the Group were made up, been acquired or disposed of by, or leased to, or are proposed to be acquired or disposed of by, or leased to any member of the Group; and
- (b) save as disclosed in this circular, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group which contract or arrangement was subsisting as at the Latest Practicable Date and which is signiﬁcant in relation to the business of the Group as a whole.
5. EXPERT'S CONSENT AND QUALIFICATION
The following is the qualiﬁcation of the professional adviser who has given opinion or advice which is contained in this circular:

Name

Qualiﬁcation

Rainbow Capital (HK) Limited

a corporation licensed to carry out Type 6 (advising on corporate finance) regulated activity under the SFO

Rainbow Capital (HK) Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and all reference to its name in the form and context in which they appear.

As at the Latest Practicable Date, Rainbow Capital (HK) Limited was not beneficially interested in the share capital of any member of the Group nor did it has any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group nor did it have any interest, either direct or indirect, in any assets which have been, since 31 December 2019 being the date to which the latest published audited consolidated financial statements of the Group were made up, acquired, disposed of by, or leased to, or are proposed to be acquired or disposed of by, or leased to any member of the

Group.

6. COMPETING INTERESTS
As at the Latest Practicable Date, none of the Directors nor their respective close associates had any interests in other business, which competes or may compete, either directly or indirectly with the business of the Group.
7. MATERIAL ADVERSE CHANGE
As at the Latest Practicable Date, the Directors confirmed that there had been no material adverse change in the financial or trading position of the Group since 31 December 2019, being the date to which the latest published audited consolidated financial statements of the Group were made up.
8. LITIGATION
As at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against the Company or any of its subsidiaries.
9. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection during normal business hours (other than Saturdays, Sundays and public holidays in Hong Kong) at the principal place of business of the Company at 5/F, Low Block, Grand Millennium Plaza, 181 Queen's Road Central, Hong Kong from the date of this circular up to and including the date of the GM:
- (a) the Articles;
- (b) the Subscription Agreement;
- (c) the letter of recommendation from the Independent Board Committee, the text of which is set out on pages 27 to 28 of this circular;
- (d) the letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and Independent Shareholders, the text of which is set out on pages 29 to 74 of this circular;
- (e) the written consent from Rainbow Capital (HK) Limited referred to in the paragraph headed "Expert's Consent and Qualiﬁcation" in this appendix; and
- (f) a copy of this circular.

10. MISCELLANEOUS

(a) The company secretary of the Company is Mr. Tse Kam Fai, who is a fellow member of the Hong Kong Institute of Chartered Secretaries and the Chartered Governance Institute (formerly known as the Institute of Chartered Secretaries and Administrators). He is also a member of The Hong Kong Institute of Directors.
(b) The registered office, headquarters and principal place of business of the Company is situated at 5/F., Low Block, Grand Millennium Plaza, 181 Queen's Road Central, Hong Kong.
(c) The share registrar and transfer office of the Company is Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong.
(d) This circular has been prepared in both English and Chinese. In the case of inconsistency, the English text of this circular will prevail over the Chinese text.

TARGET INSURANCE (HOLDINGS) LIMITED 泰加保險（控股）有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 6161)

NOTICE IS HEREBY GIVEN THAT a general meeting (the "Meeting") of Target Insurance (Holdings) Limited (the "Company") will be held at Jade Room, Artzen Club, 401A, 4th Floor, Shun Tak Centre, 200 Connaught Road Central, Hong Kong on Monday, 29 March 2021 at 4:00 p.m., for the purposes of considering and, if thought ﬁt, passing, with or without amendments, the following resolutions of the Company:

Unless otherwise deﬁned, capitalised terms used herein shall have the same meanings as ascribed to them in the circular of the Company dated 11 March 2021.

ORDINARY RESOLUTIONS

1. "THAT

(a) the Subscription Agreement entered into between the Company as issuer and the Subscriber as subscriber in relation to the subscription of the Convertible Bonds in the aggregate principal amount of HK$400.0 million (a copy of the Subscription Agreement having been produced to the Meeting marked "A" and initialled by the chairman of the Meeting for identiﬁcation purpose) and the transactions contemplated thereunder and in connection therewith, be and are hereby approved, conﬁrmed and ratiﬁed;
(b) the issue by the Company of the Convertible Bonds in the aggregate principal amount of HK$400.0 million at an initial Conversion Price of HK$0.57 per Share (subject to adjustments) pursuant to the Subscription Agreement be and are hereby approved;
(c) the Directors be and are hereby granted a specific mandate to allot and issue up to 701,754,385 Conversion Shares (subject to adjustment pursuant to the terms of the Subscription Agreement) upon the exercise of the conversion rights attaching to the Convertible Bonds; and

(d) subject to and conditional upon the fulfilment of the conditions in the Subscription Agreement, any one or more Directors be and is/are hereby authorised to, for and on behalf of the Company, execute all such documents, instruments and agreements, and take such action, do all such acts or things, as he/she/they may, in his/her/their absolute discretion, consider necessary, appropriate, desirable or expedient for the purpose of, or in connection with, the implementation of or giving effect or completion of any matters relating to the Subscription Agreement and the transactions contemplated thereunder."
2.
(a) To re-elect Dr. Cheung Haywood as an executive Director.
(b) To re-elect Mr. Muk Wang Lit Jimmy as an executive Director.
(c) To re-elect Mr. Chan Hok Ching as an executive Director.
(d) To re-elect Mr. Wan Kam To as an independent non-executive Director.
(e) To re-elect Mr. Wong Shiu Hoi Peter as an independent non-executive Director.

Yours faithfully,

For an on behalf of the Board of Target Insurance (Holdings) Limited

Cheung Haywood

Chairman

As at the date of this notice, the Board comprises nine executive Directors, namely Dr. Cheung Haywood (Chairman), Mr. Ng Yu (Co-chairman), Mr. Muk Wang Lit Jimmy (Chief Executive Ofﬁcer), Mr. Chan Hok Ching, Ms. Lau Ka Yee, Mr. Wei Weicheng, Mr. Lin Feng, Mr. Dai Chengyan, and Mr. Rui Yuanqing; and five independent non-executive Directors, namely Mr. Wan Kam To, Mr. Wong Shiu Hoi Peter, Mr. Anthony Espina, Mr. Leung Ho Yin Alexander and Dr. Wang Jun Sheng.

Hong Kong, 11 March 2021

Registered ofﬁce

5/F, Low Block

Grand Millennium Plaza 181 Queen's Road Central Hong Kong

Notes:

(1) For determining the identity of the shareholders to attend and vote at the Meeting, the register of members of the Company will be closed from Tuesday, 23 March 2021 to Monday, 29 March 2021 (both days inclusive) during which period no transfer of shares will be registered. In order to be eligible to attend and vote at the Meeting, all transfers of shares accompanied by the relevant share certiﬁcates must be lodged with the Company's share registrar and transfer ofﬁce, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong for registration not later than 4:30 p.m. on Monday, 22 March 2021.
(2) A member entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him. A proxy need not be a member of the Company but must attend the Meeting and at any adjournment thereof in person to represent you.
(3) In order to be valid, the proxy form completed in accordance with the instructions set out therein, together with the power of attorney or other authority, if any, under which it is signed (or a notarially certiﬁed copy of that power or authority), must be deposited at the Company's share registrar and transfer ofﬁce, Tricor Investor Services Limited not less than 48 hours before the time appointed for the Meeting or any adjournment thereof.
(4) The form of proxy must be signed by you or your attorney duly authorized in writing or, in the case of a corporation, must be under its seal or under the hand of an ofﬁcer or attorney duly authorized.
(5) In the case of joint holders, the vote of the sender who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose, seniority will be determined by the order in which the names stand in the register in respect of the joint holding.
(6) With respect to resolution no. 2 (a) to (e) of this notice, each of Dr. Cheung Haywood, Mr. Muk Wang Lit Jimmy, Mr. Chan Hok Ching, Mr. Wan Kam To and Mr. Wong Shiu Hoi Peter shall retire from ofﬁce of directorship and shall offer themselves for re-election in accordance with the Articles of Association. Details of the retiring Directors which are required to be disclosed under the Listing Rules are set out in the circular of the Company dated 11 March 2021.
(7) In compliance with the Hong Kong Government's directive on social distancing, personal and environmental hygiene, and the guidelines issued by the Centre for Health Protection of the Department of Health on the prevention of coronavirus disease 2019 ("COVID-19"), the Company will implement precautionary measures at the Meeting. Shareholders are advised to read page (ii) of this circular for details of the precautionary measures and monitor the development of COVID-19. Subject to the development of COVID-19, the Company may implement further changes and precautionary measures and may issue further announcement on such measures as appropriate.
(8) In light of the continuing risks posed by the COVID-19 pandemic, the Company strongly advises Shareholders to appoint the chairman of the Meeting as their proxy to vote on the relevant resolution(s) as an alternative to attending the Meeting in person.
(9) In case the venue is being closed on the date of Meeting due to COVID-19 or bad weather, the Meeting shall stand adjourned to the same day in the next week or at such other time and place as the chairman of the Meeting may determine. The Company will post an announcement on the Stock Exchange and the Company's website notifying Shareholders of the date, time and place of the adjourned Meeting.

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Target Insurance (Holdings) Ltd. published this content on 10 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 March 2021 09:06:02 UTC.

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Target Insurance (Holdings) Limited

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6161

HK0000231883

Property & Casualty Insurance

Target Insurance : (1) CONNECTED TRANSACTION IN RELATION TO PROPOSED ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE; (2) RE-ELECTION OF DIRECTORS; AND (3) NOTICE OF GM

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Sector Insurance - Automobile