THE CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ... · THE CIRCULAR IS IMPORTANT AND REQUIRES...

THE 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 shouldconsult your licensed securities dealer, bank manager, solicitor, professional accountant or otherprofessional adviser.

If you have sold or transferred all your shares in China Insurance International HoldingsCompany Limited, you should at once hand this Circular and the accompanying form of proxy tothe purchaser or the transferee or to the bank, licensed securities dealer or other agent through whomthe sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this Circular,makes no representation as to its accuracy or completeness and expressly disclaims any liabilitywhatsoever for any loss howsoever arising from or in reliance upon the whole or any part of thecontents of this Circular.

CHINA INSURANCE INTERNATIONAL HOLDINGS COMPANY LIMITED

( Incorporated in Hong Kong with limited liability under the Companies Ordinance )( Stock Code: 966 )

CONNECTED TRANSACTION —FORMATION OF A JOINT STOCK LIMITED COMPANY

Independent financial adviser to the Independent Board Committeeand Independent Shareholders

Yu Ming Investment Management Limited

A letter from the Board is set out on pages 4 to 11 of this Circular. A letter from the IndependentBoard Committee containing its recommendation to the Independent Shareholders is set out on page12 of this Circular. A letter from Yu Ming Investment Management Limited, the Independent FinancialAdviser to the Independent Board Committee and the Independent Shareholders, is set out on pages13 to 16 of this Circular.

A notice convening an extraordinary general meeting of the Company to be held at 24/F., Ming AnPlaza Phase II, 8 Sunning Road, Causeway Bay, Hong Kong on Wednesday, 25 August 2004 at 11:00a.m. is set out on pages 23 to 24 of this Circular. Whether or not you are able to attend the extraordinarygeneral meeting, you are requested to complete the accompanying form of proxy, in accordance withthe instructions printed thereon and return it to the registered office of the Company at 12/F., MingAn Plaza Phase II, 8 Sunning Road, Causeway Bay, Hong Kong as soon as possible but in any eventnot less than 48 hours before the time appointed for the holding of the extraordinary general meetingor any adjournment thereof. Completion and return of the form of proxy will not prevent Shareholdersfrom attending and voting at the extraordinary general meeting if they so wish.

30 July 2004

CONTENTS

– i –

Page

Definitions ........................................................................................................................... 1

Letter from the Board ....................................................................................................... 4

Letter from the Independent Board Committee ........................................................... 12

Letter from Yu Ming ......................................................................................................... 13

Appendix — General Information .................................................................................. 17

Notice of the EGM ............................................................................................................. 23

DEFINITIONS

– 1 –

In this Circular, the following expressions have the following meanings, unless context otherwise

requires:

“associate(s)” has the meaning ascribed to it under the Listing Rules

“Board” the board of Directors

“CIGAM” China Insurance Group Assets Management Limited (

), a company incorporated in Hong Kong with limited liability

and a wholly-owned subsidiary of the Company as at the Latest Practicable

Date

“CIHC” (China Insurance (Holdings) Company,

Limited*), a PRC state-owned joint stock limited company established

in PRC and the ultimate holding company of the Company, which

effectively holds approximately 54.55% equity interest in the Company

as at the Latest Practicable Date; CIHC is also a substantial shareholder

of TPI holding 45.05% equity interest and a substantial shareholder of

TPL holding 25.05% equity interest as at the Latest Practicable Date

“Circular” this circular, including the appendix hereto

“Company” China Insurance International Holdings Company Limited (

), a company incorporated in Hong Kong with limited

liability, the shares of which are listed on the main board of Stock

Exchange as at the Latest Practicable Date

“Director(s)” the director(s) of the Company

“EGM” the extraordinary general meeting of the Company convened to be held

at 24/F., Ming An Plaza Phase II, 8 Sunning Road, Causeway Bay, Hong

Kong on Wednesday, 25 August 2004 at 11:00 a.m., notice of which is

set out on pages 23 to 24 of this Circular

“Fortis” Fortis International N.V. ( ), a company

incorporated in the Netherlands and a holder of 24.90% equity interest in

aggregate in TPL as at the Latest Practicable Date

“Group” the Company and its subsidiaries

DEFINITIONS

– 2 –

“Hong Kong” the Hong Kong Special Administrative Region of PRC

“ICBC (Asia)” (Industrial and Commercial Bank of

China (Asia) Limited), which is a subsidiary of (Industrial

and Commercial Bank of China) holding 9.46% interest in the Company

and a substantial shareholder in TPI holding 24.90% equity interest as at

the Latest Practicable Date

“Independent Board an independent committee of the Board comprising of the two independent

Committee” non-executive Directors, namely Dr. Wu Jiesi and Mr. Lau Wai Kit

“Independent Shareholder(s) other than CIHC, ICBC (Asia) and their respective

Shareholders” associates

“Latest Practicable Date” 27 July 2004, 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 Stock Exchange

“Parties” the parties to the Shareholders’ Agreement, namely TPL, CIGAM, TPI,

Fortis and CIHC

“PRC” the People’s Republic of China, and for the purpose of this Circular,

excludes Taiwan, Hong Kong and the Macau Special Administrative

Region of PRC

“SFO” the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong

Kong

“Share(s)” share(s) of HK$0.05 each in the issued share capital of the Company

“Shareholder(s)” registered holder(s) of Share(s) of the Company

“Shareholders’ a conditional shareholders’ agreement dated 9 July 2004 entered into

Agreement” between the Parties in relation to the formation of Tai Ping Pension

“Stock Exchange” The Stock Exchange of Hong Kong Limited

DEFINITIONS

– 3 –

“subsidiary(ies)” if a company controls the composition of the board of directors of another

company, or controls more than half of the voting rights or holds more

than half of the issued share capital of another company (excluding any

part of it which carries no right to participate beyond a specified amount

in a distribution of either profits or capital), the second mentioned

company is regarded as a subsidiary of the first mentioned company

“substantial shareholder(s)” has the meaning ascribed to it under the Listing Rules

“Tai Ping Pension” (Tai Ping Pension Company Limited*), a

joint stock limited company to be established in PRC by the Parties under

the Shareholders’ Agreement

“TPI” (The Tai Ping Insurance Company, Limited*), a Sino-

foreign equity joint venture established in PRC and is owned as to 45.05%

by CIHC, as to 30.05% by the Company and as to 24.90% by ICBC

(Asia) as at the Latest Practicable Date

“TPL” (Tai Ping Life Insurance Company, Limited*),

a Sino-foreign equity joint venture established in PRC and is owned as

to 50.05% by the Company, as to 25.05% by CIHC and as to 24.90% by

Fortis as at the Latest Practicable Date

“Yu Ming” or “Independent Yu Ming Investment Management Limited, a deemed licensed corporation

Financial Adviser” permitted to engage in types 1, 4, 6 and 9 regulated activities under the

SFO

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“RMB” Renminbi, the lawful currency of PRC

“US$” United States dollars, the lawful currency of the United States of America

“%” per cent.

“*” for identification purposes only

In this Circular, the following exchange rates have been used:

HK$1.00 = RMB1.06

HK$7.80 = US$1.00

LETTER FROM THE BOARD

– 4 –


( Incorporated in Hong Kong with limited liability under the Companies Ordinance )

( Stock Code: 966 )

Executive Directors: Registered Office:

Mr. Yang Chao (Chairman) 12/F., Ming An Plaza Phase II

Mr. Miao Jianmin 8 Sunning Road

Mr. Ng Yu Lam, Kenneth Causeway Bay

Dr. Dong Ming Hong Kong

Mr. Shen Koping, Michael

Mr. Lau Siu Mun, Sammy

Non-executive Director:

Mr. Zheng Changyong

Independent non-Executive Directors:

Dr. Wu Jiesi

Mr. Lau Wai Kit

30 July 2004

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION

FORMATION OF A JOINT STOCK LIMITED COMPANY

1. INTRODUCTION

On an announcement of the Company dated 9 July 2004 published on certain newspapers on

12 July 2004, the Board announced that on 9 July 2004, the Company (through TPL and CIGAM,

its subsidiaries) entered into the Shareholders’ Agreement with TPI, Fortis and CIHC to form

a new joint stock limited company, namely Tai Ping Pension. Upon its establishment, Tai Ping

Pension will become a subsidiary of the Company.


– 5 –

CIHC is the ultimate holding company of the Company. TPI is an associate of the CIHC. Fortis

is a substantial shareholder of TPL. All of them are connected persons of the Company as

defined under the Listing Rules. The Shareholders’ Agreement also constitutes a connected

transaction for the Company under the Listing Rules. Accordingly, the Shareholders’ Agreement

requires the approval by the Independent Shareholders at the EGM by poll.

In view of the interest of CIHC, ICBC (Asia) and their respective associates in relation to the

Shareholders’ Agreement, the Independent Board Committee has been established by the Board

to advise the Independent Shareholders in relation to the Shareholders’ Agreement. Yu Ming

has been appointed as the Independent Financial Adviser to provide its advice to the Independent

Board Committee and the Independent Shareholders in connection with the Shareholders’

Agreement.

The purpose of this Circular is to provide you with, among other things, details of the

Shareholders’ Agreement, the letter from the Independent Board Committee to the Independent

Shareholders containing its recommendation to the Independent Shareholders, the letter from

Yu Ming containing its advice to the Independent Board Committee and the Independent

Shareholders and the notice of the EGM.

2. THE SHAREHOLDERS’ AGREEMENT

Date of the Shareholders’ Agreement

9 July 2004

The Parties

(a) TPL, a subsidiary of the Company in which the Company holds 50.05% equity interest

as at the Latest Practicable Date;

(b) CIGAM, a wholly-owned subsidiary of the Company;

(c) TPI, a company in which the Company holds 30.05% equity interest as at the Latest

Practicable Date;

(d) Fortis, a substantial shareholder of TPL; and

(e) CIHC, the ultimate holding company of the Company.


– 6 –

Business of Tai Ping Pension

Upon establishment, Tai Ping Pension will engage in the supplementary corporate pension

business and other related pension businesses. The Company will have an effective control of

74% equity interests in Tai Ping Pension (through its interests in TPL and CIGAM as shown in

the chart below) and Tai Ping Pension will become a subsidiary of the Company.

The relationship between the Group and the connected persons in relation to the formation of

Tai Ping Pension is shown in the chart below:

Fortis

TPL CIGAM TPI

Tai Ping Pension

The Company

China Insurance H.K.

(Holdings) Co, Ltd.

CIHC

24.90%

10%

4%

60% 14% 12%

30.05%100%50.05%

54.55%

100%25.05% 45.05%

Conditions

The formation of Tai Ping Pension under the Shareholders’ Agreement is subject to, among

other things, the approval of the relevant PRC authority and the Independent Shareholders’

approval at the EGM.


– 7 –

Registered capital

RMB200,000,000 (equivalent to approximately HK$188,679,000) of which:

(a) 60% (being RMB120,000,000 or approximately HK$113,208,000) shall be contributed

in cash by TPL;

(b) 14% (being RMB28,000,000 or approximately HK$26,415,000) shall be contributed in cash

by CIGAM;

(c) 12% (being RMB24,000,000 or approximately HK$22,642,000) shall be contributed in

cash by TPI;

(d) 10% (being RMB20,000,000 or approximately HK$18,868,000) shall be contributed in

cash by Fortis; and

(e) 4% (being RMB8,000,000 or approximately HK$7,547,000) shall be contributed in cash

by CIHC.

Upon the establishment of Tai Ping Pension, the percentage shareholding of each of the Parties

in Tai Ping Pension will be in the same proportion as their respective capital contribution of

registered capital in Tai Ping Pension as shown above.

The total registered capital of Tai Ping Pension was determined on an arm’s length basis between

the Parties. The Group’s contribution to the registered capital of Tai Ping Pension is funded by

internal resources of the Group. The registered capital has been paid by the respective Parties

in escrow in order to expedite the approval process in PRC.

Other than the amount of the registered capital payable by the Parties under the Shareholders’

Agreement, the Parties do not have any further commitment to invest in Tai Ping Pension under

the Shareholders’ Agreement. Should there be any future commitment to invest in Tai Ping

Pension, the Company will comply with all such relevant requirements under the Listing Rules

accordingly.

Board of directors

The board of directors of Tai Ping Pension shall comprise of seven directors. The Group will

be entitled to nominate four directors of Tai Ping Pension, including one independent director.


– 8 –

Board of supervisors

The board of supervisors of Tai Ping Pension shall comprise of three supervisors who shall be

nominated by the shareholders and employees of the company.

Profits

Distributable profits, after deducting any statutory and optional accumulative funds, public

welfare funds and necessary reserves for indemnities, may be distributed to the Parties in

proportion to their respective capital contributions in Tai Ping Pension.

Dissolution / Winding-up

Tai Ping Pension may be dissolved or wound up, subject to the approval of the Insurance

Supervisory Committee of PRC upon the occurrence of any

one or more of the following situation(s):

(a) the shareholders of Tai Ping Pension passing a resolution for its dissolution / winding-up

in general meeting;

(b) as a result of any mergers or spin-offs of Tai Ping Pension;

(c) upon an order to dissolve / wind-up by any government authorities as a result Tai Ping

Pension’s breach(es) in any law and/or regulations;

(d) Tai Ping Pension being unable to carry on its business due to the occurrence(s) of any

force majeure events; and/or

(e) Upon a court order to wind up due to insolvency of Tai Ping Pension.

Upon dissolution or winding-up of Tai Ping Pension, the net assets of Tai Ping Pension, after

the payment of all its dissolution or winding-up expenses, salaries and employment insurance

premiums for its employees, and debts, will be distributed to the Parties in proportion to their

respective capital contributions in Tai Ping Pension.


– 9 –

3. REASONS FOR AND EFFECTS OF THE ESTABLISHMENT OF TAI PING PENSION

The Directors consider the Shareholders’ Agreement to be an important milestone for the Group

since Tai Ping Pension will be able to play a leading role in pension management business in

PRC. Tai Ping Pension will focus exclusively on supplementary corporate pension business

and other related pension business. By having a clear focus on pension business, Tai Ping

Pension can broaden and enrich its range of products and services as well as actuarial support

offered to both its corporate and individuals pension clients. This will also help the marketing

of pension services and raise the level of expertise in investment management and account

management of pension funds.

The Directors believe that the Shareholders’ Agreement was entered into upon normal

commercial terms. The Directors consider that the terms of the Shareholders’ Agreement are

fair and reasonable and the formation of Tai Ping Pension is in the interest of the Shareholders

as a whole.

4. INFORMATION ON THE GROUP

The principal activity of the Company is investment holding. The principal activities of the

Group (including without limitation, TPL and CIGAM) are the reinsurance underwriting, assets

management, reinsurance broking and life insurance businesses.

TPI is principally engaged in general insurance business in PRC.

Fortis is principally engaged in international financial services businesses with core businesses

in insurance, banking and asset management.

CIHC is principally engaged in insurance and insurance related financial services businesses.

5. THE EGM

A notice convening the EGM, which is to be held at 24/F., Ming An Plaza Phase II, 8 Sunning

Road, Causeway Bay on Wednesday, 25 August 2004 at 11:00 a.m. is set out on pages 23 to 24

of this Circular. The EGM will be held for the purpose of proposing an ordinary resolution to

the Shareholders to consider and, if thought fit, approving the Shareholders’ Agreement and

the transactions contemplated thereunder.


– 10 –

At the EGM, any connected persons of the Company or of any Shareholders with a material

interest in the Shareholders’ Agreement and its associates will abstain from voting in respect

of the ordinary resolution to be proposed thereat and at any adjournment thereof. Accordingly,

CIHC (which is the ultimate holding company of the Company, controlling or is entitled to

exercise 54.55% voting rights in the Company as at the Latest Practicable Date), ICBC (Asia)

(which is a shareholder of the Company controlling or is entitled to exercise 9.46% voting

rights in the Company as at the Latest Practicable Date) and their respective associates will

abstain from voting at the EGM or any adjournment thereof. None of TPL, CIGAM, TPI and

Fortis and their respective associates (other than CIHC, ICBC (Asia) and their respective

associates) holds any interest in the Company.

A form of proxy for use at the EGM is enclosed with this Circular. Whether or not you are able

to attend the EGM, you are requested to complete the accompanying form of proxy, in accordance

with the instructions printed thereon and return it to the registered office of the Company at

12/F., Ming An Plaza Phase II, 8 Sunning Road, Causeway Bay, Hong Kong as soon as possible

but in any event not less than 48 hours before the time appointed for the holding of the EGM or

any adjournment thereof. Completion and return of the form of proxy will not preclude you

from attending and voting in person at the EGM if you so wish.

6. PROCEDURES FOR DEMANDING A POLL

Pursuant to Article 71 of the articles of association of the Company, at any general meeting, a

resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is

taken as may from time to time required under the Listing Rules or any other applicable laws,

rules or regulations or unless (before or on the declaration of the results of the show of hands or

on the withdrawal of any other demand of a poll) a poll is properly demanded by:

(a) the chairman of the meeting; or

(b) at least three Shareholders present in person or by proxy and entitled to vote; or

(c) any Shareholder or Shareholders present in person or by proxy and representing in the

aggregate of not less than one-tenth of the total voting rights of all Shareholders having

the right to attend and vote at the meeting; or

(d) any Shareholder or Shareholders present in person or by proxy and holding Shares

conferring a right to attend and vote at the meeting on which there have been paid up

sums in the aggregate equal to not less than one-tenth of the total sum paid up on all

Shares conferring that right.


– 11 –

7. RECOMMENDATION

Yu Ming has been appointed as the Independent Financial Adviser to advise the Independent

Board Committee and the Independent Shareholders with regard to the Shareholders’ Agreement.

Yu Ming is of the view that the terms of the Shareholders’ Agreement are in the interest of the

Company and are fair and reasonable insofar as the Independent Shareholders are concerned.

Accordingly, Yu Ming advises the Independent Shareholders to vote in favour of the ordinary

resolution to be proposed at the EGM to approve the Shareholders’ Agreement and the

transactions contemplated thereunder. Your attention is drawn to the text of the letter of advice

from Yu Ming set out on pages 13 to 16 of this Circular.

The Independent Board Committee, having taken into account the advice of Yu Ming, considers

that the terms of the Shareholders’ Agreement and the transactions contemplated thereunder to

be fair and reasonable so far as the Independent Shareholders are concerned and are in the

interest of the Company and the Independent Shareholders as a whole. Accordingly, the

Independent Board Committed recommends the Independent Shareholders to vote in favour of

the ordinary resolution to be proposed at the EGM to approve the Shareholders’ Agreement

and the transactions contemplated thereunder. Your attention is drawn to the text of the letter

from the Independent Board Committee set out on page 12 of this Circular.

8. ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendix to this Circular.

Yours faithfully

By order of the Board

China Insurance International

Holdings Company Limited

YANG Chao

The Chairman

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

– 12 –



( Stock Code: 966 )

Members of the Independent Board Committee: Registered Office:

Dr. Wu Jiesi 12/F., Ming An Plaza Phase II

Mr. Lau Wai Kit 8 Sunning Road

Causeway Bay

Hong Kong

30 July 2004

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION


We have been appointed to advise you in respect of the Shareholders’ Agreement and the transactions

contemplated thereunder. We refer to the Circular of which this letter forms part. Terms defined in the

Circular shall have the same meanings when used in this letter, unless the context otherwise requires.

We wish to draw your attention to the letter from the Board as set out on pages 4 to 11 of the Circular

which sets out, among other things, information relating to the Shareholders’ Agreement and the

letter from Yu Ming as set out on pages 13 to 16 of the Circular which contains its advice to us and to

you in relation to the Shareholders’ Agreement.

Having taken into account the terms of the Shareholders’ Agreement and the advice of Yu Ming, we

consider that the terms of the Shareholders’ Agreement and the transactions contemplated thereunder

to be fair and reasonable so far as the Independent Shareholders are concerned and are in the interests

of the Company and the Independent Shareholders as a whole. Accordingly, we recommend the

Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to

approve the Shareholders’ Agreement and the transactions contemplated thereunder.

Yours faithfully

The Independent Board Committee

Wu Jiesi Lau Wai Kit

LETTER FROM YU MING

– 13 –

The following is the text of the letter from Yu Ming giving its advice to the Independent Board Committee

and the Independent Shareholders, in relation to the terms and conditions of the Shareholders’

Agreement prepared for the purpose of inclusion in this Circular.

Yu Ming Investment Management Limited

30 July 2004

To: the Independent Board Committee and the Independent Shareholders of

China Insurance International Holdings Company Limited

12th Floor

Ming An Plaza Phase II

8 Sunning Road

Causeway Bay

Hong Kong

Dear Sir or Madam,

CONNECTED TRANSACTION —


INTRODUCTION

We, Yu Ming, have been appointed as the independent financial adviser to advise the Independent

Board Committee and the Independent Shareholders on the Shareholders’ Agreement, the details of

which are contained in the section headed “Letter from the Board” in the Circular, of which this letter

forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless

the context otherwise requires.

In formulating our opinion, we have relied on the statements, information, opinions and representations

contained in the Circular and the information and representations provided to us by the Directors. We

have assumed that all information, representations and opinions contained or referred to in the Circular

and all information, representations and opinions which have been provided by the Directors, for

which they are solely responsible, are true and accurate at the time they were made and continued to

be so at the date hereof.

LETTER FROM YU MING

– 14 –

We consider that we have been provided with sufficient information on which to form a reasonable

basis for our opinion. We have no reason to suspect that any relevant information has been withheld,

nor are we aware of any fact or circumstance which would render the information provided and the

representations and opinions made to us untrue, inaccurate or misleading. Having made all reasonable

enquiries, the Directors have further confirmed that, to the best of their knowledge, they believe there

are no other facts or representations the omission of which would make any statement in the Circular,

including this letter, misleading. We have not, however, carried out any independent verification of

the information provided by the Directors, nor have we conducted an independent investigation into

the business and affairs of any of the Company, CIHC, TPL, CIGAM, TPI or Fortis or any of their

respective associates.

THE SHAREHOLDERS’ AGREEMENT

On 9 July 2004, the Company (through TPL and CIGAM, its subsidiaries) entered into the

Shareholders’ Agreement with TPI, Fortis and CIHC to form a new joint stock limited company,

namely Tai Ping Pension. Upon establishment, Tai Ping Pension will engage in the supplementary

corporate pension business and other related pension businesses. The Company will have an effective

control of 74% equity interests in Tai Ping Pension and Tai Ping Pension will become a subsidiary of

the Company

The total registered capital of Tai Ping Pension will be RMB200,000,000 (equivalent to approximately

HK$188,679,000) of which:

(a) 60% (being RMB120,000,000 or approximately HK$113,208,000) shall be contributed in cash

by TPL;

(b) 14% (being RMB28,000,000 or approximately HK$26,415,000) shall be contributed in cash

by CIGAM;

(c) 12% (being RMB24,000,000 or approximately HK$22,642,000) shall be contributed in cash

by TPI;

(d) 10% (being RMB20,000,000 or approximately HK$18,868,000) shall be contributed in cash

by Fortis; and

(e) 4% (being RMB8,000,000 or approximately HK$7,547,000) shall be contributed in cash by

CIHC.

LETTER FROM YU MING

– 15 –

Upon the establishment of Tai Ping Pension, the percentage shareholding of each of the Parties in Tai

Ping Pension will be in the same proportion of their respective capital contribution of registered

capital in Tai Ping Pension as shown above.

The total registered capital of Tai Ping Pension was determined on an arm’s length basis between the

Parties. The Group’s contribution to the registered capital of Tai Ping Pension is funded by internal

resources of the Group. Other than the amount of the registered capital payable by the Parties under

the Shareholders’ Agreement, the Parties do not have any further commitment to invest in Tai Ping

Pension.

CIHC is the ultimate holding company of the Company. TPI is an associate of the CIHC. Fortis is a

substantial shareholder of TPL. All of them are connected persons of the Company as defined under

the Listing Rules. The Shareholders’ Agreement also constitutes a connected transaction for the

Company under the Listing Rules. Accordingly, the Shareholders’ Agreement requires the approval

by the Independent Shareholders at the EGM by poll. CIHC and its associates will abstain from

voting at the EGM.

PRINCIPAL FACTORS CONSIDERED

Development of business for the Group

The principal activities of the Group are the reinsurance underwriting, assets management, reinsurance

broking and life insurance businesses. Upon establishment, Tai Ping Pension will engage in the

supplementary corporate pension business and other related pension business. The formation of Tai

Ping Pension is in line with the existing businesses of the Group and will enable the Group to play a

leading role in pension management business in the PRC. By having a clear focus on pension business,

the Group can broaden and enrich its range of products and services as well as actuarial support

offered to both its corporate and individuals pension clients. This will also help the marketing of

pension services and raise the level of expertise in investment management and account management

of pension funds. Therefore, we are of the view that the formation of Tai Ping Pension is in the

interest of the business of the Group and the Shareholders.

Control of management and voting rights

The board of directors of Tai Ping Pension shall comprise of seven directors. The Group will be

entitled to nominate four directors of Tai Ping Pension, including one independent director. As

mentioned above, Tai Ping Pension will become a subsidiary of the Company upon its establishment.

Therefore, the Company will have effective control over the management and voting rights of Tai

Ping Pension under the Shareholders’ Agreement which is in the interest of Company and the

Shareholders.

LETTER FROM YU MING

– 16 –

Basis of contribution and financial impact

The total registered capital of Tai Ping Pension was determined on an arm’s length basis between the

Parties and the respective registered capital contribution payable by each of the Parties are in proportion

to their respective equity interest in Tai Ping Pension. In addition, as mentioned above, Tai Ping

Pension will become a subsidiary of the Company upon its establishment. The formation of Tai Ping

Pension will therefore have no impact on the consolidated balance sheet and profit and loss account

of the Group. Accordingly, we are of the view that the basis of contribution by the Group under the

Shareholders’ Agreement is fair and reasonable.

Working capital

As per the latest audited consolidated account, the Group had over HK$1.6 billion cash as at 31

December 2003. Moreover, other than the amount of the registered capital payable by the Group

under the Shareholders’ Agreement, the Parties do not have any further commitment to invest in Tai

Ping Pension. Therefore, the formation of Tai Ping Pension and the Shareholders’ Agreement will

not have any impact on the working capital of the Group as a whole.

RECOMMENDATION

The Shareholders’ Agreement was entered into upon normal commercial terms and the total registered

capital of Tai Ping Pension was determined on an arm’s length basis between the Parties. Upon

establishment of Tai Ping Pension, the Group can broaden and enrich its range of products and services

as well as actuarial support offered to both its corporate and individuals pension clients. Moreover,

there will be no impact on any of the net asset value, profit and loss, working capital and gearing ratio

of the Group as a result of the Shareholders’ Agreement.

Having taken into account the above, we are of the view that the terms of the Shareholders’ Agreement

are in the interest of Company and are fair and reasonable insofar as the Independent Shareholders

are concerned. Accordingly, we advise the Independent Shareholders to vote in favour of the ordinary

resolution to be proposed at the EGM to approve the Shareholders’ Agreement and the transactions

contemplated thereunder.

Yours faithfully

For and on behalf of

YU MING INVESTMENT MANAGEMENT LIMITED

Warren Lee

Director

APPENDIX GENERAL INFORMATION

– 17 –

1. RESPONSIBILITY STATEMENT

This Circular includes particulars given in compliance with the Listing Rules for the purpose

of giving information with regard to the Group. The Directors collectively and individually

accept full responsibility for the accuracy of the information contained in this Circular and

confirm, having made all reasonable enquiries, that to the best of their knowledge and belief,

there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’ interests and short positions in the securities of the Company and its

associated corporations

As at the Latest Practicable Date, the interests and short positions of each Director and

the chief executive of the Company in the shares, underlying shares and debentures of

the Company and its associated corporations (within the meaning of Part XV of the

SFO) which (i) were required to be notified to the Company and Stock Exchange pursuant

to Divisions 7 and 8 of Part XV of the SFO (including interests or 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, pursuant to the Model Code for Securities Transactions by Directors

of Listed Companies as contained in the Listing Rules, to be notified to the Company

and Stock Exchange, were as follows:

Ordinary Shares in the Company:

Personalinterests Approximate (held as Underlying percentage

Name of beneficial Shares pursuant Total of issuedDirector owner) to share options interest share capital

(%)

Yang Chao — 3,970,000 3,970,000 0.30(Note)

Miao Jianmin — 2,640,000 2,640,000 0.20(Note)

Ng Yu Lam, Kenneth 366,000 2,200,000 2,566,000 0.19(Note)

Dong Ming — 2,300,000 2,300,000 0.17(Note)


– 18 –

Personalinterests Approximate (held as Underlying percentage

Name of beneficial Shares pursuant Total of issuedDirector owner) to share options interest share capital

(%)

Shen Koping, Michael 2,000 2,006,000 2,008,000 0.15(Note)

Lau Siu Mun, Sammy 600,000 1,550,000 2,150,000 0.16(Note)

Zheng Changyong — 1,500,000 1,500,000 0.11(Note)

Note: These represent interests of options granted to the Directors under the share option schemes adopted

by the Company on 24 May 2000 (“Old scheme”) and on 7 January 2003 (“New scheme”)

respectively to acquire for Shares.

Save as disclosed in this Circular, as at the Latest Practicable Date, none of the Directors

nor the chief executive of the Company or their associates had any interests or short

positions in the shares, underlying shares or debentures of the Company or any of its

associated corporations (within the meaning of Part XV of the SFO) which (i) were

required to be notified to the Company and Stock Exchange pursuant to Divisions 7 and

8 of Part XV of the SFO (including interests or 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, pursuant to the Model Code for Securities Transactions by Directors of Listed

Companies as contained in the Listing Rules, to be notified to the Company and Stock

Exchange.

(b) Persons or corporations who have an interest or short position which is discloseable

under Divisions 2 and 3 of Part XV of the SFO and substantial Shareholders

So far as is known to each Director or the chief executive of the Company, as at the

Latest Practicable Date, the following persons (not being Directors or chief executive of

the Company) or corporations had an interests or short positions in the Shares and

underlying Shares which would fall to be disclosed to the Company under the provisions

of Divisions 2 and 3 of Part XV of the SFO, or who/which was, directly or indirectly,

interested in 10% or more of the nominal value of any class of share capital carrying


– 19 –

rights to vote in all circumstances at general meetings of any other member of the Group

and the amount of each of such person’s / corporate’s interest in such securities, together

with particulars of any options in respect of such capital, were as follows:

(i) The Company

Approximatepercentage

Number of issuedName of company Capacity of Shares share capital

(%)

CIHC Interest of 726,389,705 54.55controlled (Note 1)

corporation

China Insurance 643,425,705 Shares 726,389,705 54.55H.K. (Holdings) as beneficial (Note 2)Company owner andLimited 82,964,000 Shares(“CIHK”) as interest of

controlledcorporation

Interest of controlled 125,964,887 9.46(Industrial and Corporation (Note 3)

CommercialBank of China)(“ICBC”)

ICBC (Asia) Beneficial owner 125,964,887 9.46

J.P. Morgan Chase 79,622,000 Shares 79,622,000 5.98& Co. as investment

manager with48,852,000 Shares

as approvedlending agent

Lloyd George Investment manager 75,842,000 5.70InvestmentManagement(Bermuda) Ltd.

Notes:

1. CIHC’s interest in the Company is held by CIHK, Golden Win Development Limited and

Toplap Investments Limited, all of which are wholly-owned subsidiaries of CIHC.

2. 82,794,000 Shares are held by Golden Win Development Limited and 170,000 Shares are

held by Toplap Investments Limited.

3. ICBC’s interest in the Company is held by ICBC (Asia), a subsidiary of ICBC.


– 20 –

(ii) The subsidiaries of the Company

Approximate

percentage

of issued

Name of subsidiary Name of shareholder share capital

(%)

TPL CIHC 25.05

Fortis 24.90

Save as disclosed above, as at the Latest Practicable Date, none of the Directors

nor the chief executive of the Company was aware of any other person (other than

a Director or chief executive of the Company) or corporation who had an interest

or short position in the Shares or underlying Shares which would fall to be disclosed

to the Company under provisions of Divisions 2 and 3 of Part XV of the SFO, or

who/which was, directly or indirectly, interested in 10% or more of the nominal

value of any class of share capital carrying rights to vote in all circumstances at

general meetings of any other member of the Group, or any options in respect of

such capital.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered, or proposed to enter, into

a service contract with any member of the Group which does not expire or is not determinable

by relevant member of the Group within one year without payment of compensation, other

than statutory compensation.

4. QUALIFICATION AND CONSENT OF EXPERT

The following is the qualifications of the expert who has given an opinion of advice which is

contained in this Circular:

Name Qualification

Yu Ming A deemed licensed corporation permitted to engage in types 1, 4, 6 and 9

regulated activities under the SFO

Yu Ming has given and has not withdrawn its written consent to the issue of this Circular with

the inclusion herein of its letter and references to its name in the form and context in which

they respectively appear.


– 21 –

As at the Latest Practicable Date, Yu Ming had no shareholding interest in any member of the

Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons

to subscribe for securities of any member of the Group.

As at the Latest Practicable Date, Yu Ming was not interested, directly or indirectly, in any

assets which had since 31 December 2003 (being the date to which the latest published audited

accounts of the Company were made up) been acquired or disposed of by or leased to any

member of the Group or which are proposed to be acquired or disposed of by or leased to any

member of the Group.

5. LITIGATION

As at the Latest Practicable Date, a claim has been made by the liquidator of an Australian

reinsurance company against China International Reinsurance Company Limited, a wholly-

owned subsidiary of the Company, for repayment of an amount received to commute a policy

of US$3 million (equivalent to approximately HK$23.4 million) plus interest. The liquidator

alleged that the payment was an unfair preference within the meaning of Australian insolvency

law. Based on a recently up-dated legal opinion given by an Australian-based law firm (on

information then available to those lawyers), the Directors have considered that China

International Reinsurance Company Limited’s prospects of successfully defending the claim

to be evenly balanced and no provision has been made.

6. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors nor their respective associates had any

interest in any business that competed or was likely to compete, either directly or indirectly,

with the business of the Group.

7. MATERIAL INTEREST

As at the Latest Practicable Date, no Directors was materially interested in any contract or

arrangement entered into by any member of the Group subsisting at the Latest Practicable Date

which was significant in relation to the business of the Group taken as a whole.

As at the Latest Practicable Date, no Directors had any direct or indirect interest in any assets

which have been acquired or disposed of by or leased to any member of the Group since 31

December 2003 (being the date to which the latest audited financial statements of the Group

were made up), or are proposed to be acquired or disposed of by or leased to any member of the

Group.


– 22 –

8. MATERIAL ADVERSE CHANGE

So far as the Directors are aware, as at the Latest Practicable Date, the following factors may

have a material adverse impact on the financial or trading position of the Group since 31

December 2003, being the date to which the latest audited financial statements of the Group

were made up. First, due to further expansion of the scope of operations in the PRC by TPL

and TPI, the net operating losses of both of these companies have increased and may have a

material adverse impact on the financial or trading position of the Group. Secondly, the global

equity markets experienced certain volatility since 31 December 2003 which may affect the

valuation of the Group’s investment in equities and debts and in turn may have a material

adverse impact on the financial or trading position of the Group.

9. GENERAL

(a) The registered office of the Company is situated at 12/F., Ming An Plaza Phase II, 8

Sunning Road, Causeway Bay, Hong Kong.

(b) The Company’s Hong Kong share registrar and transfer office is Hong Kong Registrars

Limited, which is situated at Rooms 1901-05, 19th Floor, Hopewell Centre, 183 Queen’s

Road East, Wanchai, Hong Kong.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours

at the office of Messrs. Woo, Kwan, Lee & Lo at 27th Floor, Jardine House, 1 Connaught

Place, Central, Hong Kong up to and including 13 August 2004:

(a) the Shareholders’ Agreement;

(b) the letter from the Independent Board Committee as set out on page 12 of this Circular;

(c) the letter from Yu Ming as set out on pages 13 to 16 of this Circular; and

(d) the written consent of Yu Ming referred to in this appendix.

NOTICE OF THE EGM

– 23 –



( Stock Code: 966 )

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of China Insurance International

Holdings Company Limited ( ) (the “Company”) will be held at 24/F., Ming

An Plaza Phase II, 8 Sunning Road, Causeway Bay, Hong Kong on Wednesday, 25 August 2004 at

11:00 a.m. for the purpose of considering and, if thought fit, passing the following resolution, with or

without modification, as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“THAT a conditional shareholders’ agreement (the “Shareholders’ Agreement”) dated 9 July 2004

entered into between (i) (Tai Ping Life Insurance Company, Limited) (“TPL”),

a subsidiary of the Company in which the Company currently holds 50.05% equity interest; (ii)

(China Insurance Group Assets Management Limited), a wholly-owned

subsidiary of the Company; (iii) (The Tai Ping Insurance Company, Limited), a

company in which the Company currently holds 30.05% equity interest; (iv) Fortis International N.V.

( ), a substantial shareholder of TPL; and (v) ( ) (China

Insurance (Holdings) Company, Limited), the ultimate holding company of the Company, in relation

to the formation of (Tai Ping Pension Company Limited) as a joint

stock limited company (a copy of which marked “A” has been produced to the meeting and signed by

the Chairman of the meeting for the purpose of identification) and all transactions contemplated

thereby be and are hereby approved and that the directors of the Company be and are hereby authorised

for and on behalf of the Company to sign, seal, execute, perfect, perform and deliver all such documents

and deeds, and do all such acts, matters and things as they may in their discretion consider necessary

or desirable to give effect to the Shareholders’ Agreement and the implementation of all transactions

contemplated thereunder.”

Yours faithfully

By Order of the Board

TAM Chiu Tai Richard

Company Secretary

Hong Kong, 30 July 2004

NOTICE OF THE EGM

– 24 –

Registered office:

12/F., Ming An Plaza Phase II

8 Sunning Road

Causeway Bay

Hong Kong

Notes:

1. A member who is entitled to attend and vote at this meeting shall be entitled to appoint up to two proxies if he

holds two or more shares in the Company, to attend and vote instead of him, and on a poll, votes may be given

either personally (or, in the case a member being a corporation, by its duly authorised representative) or by proxy

in accordance with the articles of association of the Company. A proxy need not be a member of the Company but

must attend this meeting in person to represent you.

2. In the case of joint holders of a share the vote of the senior 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 shall be determined

by the order in which the names stand in the register in respect of the joint holding.

3. To be valid, a form of proxy together with any power of attorney or other authority (if any) under which it is

executed, or a notarially certified copy thereof, must be delivered to 12/F., Ming An Plaza Phase II, 8 Sunning

Road, Causeway Bay, Hong Kong not less than 48 hours before the time appointed for the holding of the meeting

or any adjournment thereof.

4. The Ordinary Resolution as set out above will be determined by way of poll.

5. ( ) (China Insurance (Holdings) Company, Limited) (the ultimate holding company of the

Company and a substantial shareholder of TPI and of TPL), ( ) (Industrial and

Commercial Bank of China (Asia) Limited) (a shareholder of the Company and a substantial shareholder of TPI)

and their respective associates (as defined under the Rules Governing the Listing of Securities on The Stock

Exchange of Hong Kong Limited) will abstain from voting on the Ordinary Resolution as set out above at the

meeting or any adjournment thereof.

THE CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ... · THE CIRCULAR IS IMPORTANT AND REQUIRES...

Documents

Transcript of THE CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ... · THE CIRCULAR IS IMPORTANT AND REQUIRES...