BUSINESS DEVELOPMENT Overview Our Group primarily comprises our Company and our principal operating subsidiary, Guangzhou Fineland Property Consultancy. Our Company was incorporated in the Cayman Islands with limited liability on 16 February 2017 and became the holding company of our Group as part of the Reorganisation. We are an established real estate agent with our main operators in Guangzhou, the PRC, and we principally provide comprehensive real estate agency services in both the primary and secondary property markets. History The history of our Group can be traced back to March 1997 for the establishment of our principal operating subsidiary, Guangzhou Fineland Property Consultancy (which was known as Guangzhou Fineland Sino Property Consultancy Limited* ( 廣州方圓中粵物業顧問有限公司 )atthe time of incorporation) as a sino-foreign joint venture in the PRC with a registered share capital of HK$500,000, by (i) GD Fineland Property Development and (ii) Sinoland, which held 60% and 40% of equity interest in Guangzhou Fineland Property Consultancy, respectively. At the time of the establishment of Guangzhou Fineland Property Consultancy, GD Fineland Property Development was held as to 99% and 1% by Mr. Fong and Mr. Han Shuguang ( 韓曙光 ), respectively, and Sinoland was wholly-owned by Mr. Liu Yuhong ( 劉宇宏 ). Mr. Fong, one of our Controlling Shareholders and our non-executive Director, began his involvement in the real estate industry in 1993 when he established Guangzhou Fineland Enterprises Company Limited* ( 廣州方圓企業有限公司 ) and Guangzhou Fineland Real Estate Development Company Limited* ( 廣州市方圓房地產發展有限公司 ). For further details of Mr. Fong s biography, see Directors, Senior Management and Employees Directors Nonexecutive Directors. Mr. Fong foresaw great potential in the real estate agency industry and in 1997, invited Mr. Liu Yuhong, who Mr. Fong met in Sun Yat-Sen University while receiving his tertiary education, to invest into the real estate agency industry by establishing Guangzhou Fineland Property Consultancy through their personal savings. In September 1997, as Mr. Liu Yuhong immigrated from the PRC and shifted in his business and investment focus, Mr. Liu Yuhong directed Sinoland to transfer all of its equity interest in Guangzhou Fineland Property Consultancy to Peggo International, which ultimate shareholders were friends of Mr. Liu Yuhong. Peggo International acquired the equity interest in Guangzhou Fineland Property Consultancy with the personal savings of its then shareholders. After the aforesaid equity transfer, Guangzhou Fineland Property Consultancy was owned as to 60% and 40% by GD Fineland Property Development and Peggo International respectively, and changed to its current name and commenced the provision of real estate agency services. In March 2001, Ms. Tse, who had then been working with Guangzhou Fineland Property Consultancy as a director since April 1997, was confident in the prospects of the real estate agency industry and intended to further her engagement with Guangzhou Fineland Property Consultancy. Ms. Tse therefore acquired 30% equity interest in Guangzhou Fineland Property Consultancy from Peggo International with her personal savings whereas GD Fineland Property Development acquired the remaining 10% equity interest in Guangzhou Fineland Property Consultancy then held 80
by Peggo International. After the aforesaid equity transfer, Guangzhou Fineland Property Consultancy was owned as to 70% and 30% by GD Fineland Property Development and Ms. Tse respectively. In August 2006, due to reorganisation of the corporate structure of the companies beneficially held by Mr. Fong, Mr. Fong directed GD Glory Trade (formerly known as GD Fineland Property Development) to transfer the 70% equity interest in Guangzhou Fineland Property Consultancy it held to Stand Smooth. After the aforesaid equity transfer, Guangzhou Fineland Property Consultancy was owned as to 70% and 30% by Stand Smooth and Ms. Tse respectively. In March 2009, as Mr. Fong intended to further reorganise the corporate structure of the companies beneficially held by him, Mr. Fong directed Stand Smooth to transfer the 70% equity interest in Guangzhou Fineland Property Consultancy it held to Luck Health. After the aforesaid equity transfer, Guangzhou Fineland Property Consultancy was owned as to 70% and 30% by Luck Health and Ms. Tse respectively. In May 2016, as we intended to expand our business into the referral of property developers to other real estate agents through utilising online or electronic platforms, Guangzhou Fineland Property Consultancy acquired the entire equity interest in Fang Yuan Bao from Ms. Tse and Guangzhou Lexian Investment, with the financial resources of Guangzhou Fineland Property Consultancy accumulated from its business operations. In addition, Guangzhou Fineland Property Consultancy established Hai Yuan Bao as the sole shareholder with the financial resources of Guangzhou Fineland Property Consultancy accumulated from its business operations. As at the Latest Practicable Date, Hai Yuen Bao has not commenced its business operations. Accordingly, Fang Yuan Bao and Hai Yuan Bao became an indirect wholly-owned subsidiary of our Group. In September 2016, Luck Health and Ms. Tse transferred all their respective 70% and 30% equity interest in Guangzhou Fineland Property Consultancy to Fineland Real Estate Services, our indirect wholly-owned subsidiary, after which Guangzhou Fineland Property Consultancy became an indirect wholly-owned subsidiary of our Group. For further details, please refer to the paragraph headed Corporate Development in this section. Business Milestones The following table summarises the significant business developments and milestones of our Group s business: 1997 Guangzhou Fineland Property Consultancy was established in Guangzhou and commenced providing real estate agency services. 2000 Our Group was awarded as a Top Tier Agency* ( 廣州市地產中介 一級代理公司 ). 2011 2013 Our Group was awarded the Most Influential Brand Award* ( 最具品牌影響力獎 ) by Fang.com ( 搜房網 ). 81
2014 Our Group was recognised as the vice-president unit* ( 副會長單位 ) of the second members meeting of the Guangzhou Property Agency Association ( 廣州市房地產中介協會第二屆會員代表大會 ). 2015 Our Group was named as a Five-Star Service Association in the Guangzhou Property Agency Industry* ( 廣州市房地產中介行業星級服務機構 (5 星 ) 星級服務機構 ) by the Guangzhou Real Estate Intermediary Association* ( 廣州市房地產中介協會 ). 2016 Our Group was awarded The Innovative Real Estate Agency Company in the South China for the year 2016 Award* (2016 華南房地產創新經紀企業 ) by Guangzhou ZhuTianXia Internet Joint Stock Limited Company* ( 廣州住天下網絡有限公司 ). CORPORATE DEVELOPMENT Our Company Our Company was incorporated in the Cayman Islands on 16 February 2017 as an exempted company under the Companies Law in anticipation of the Listing. Upon completion of the Reorganisation, our Company became the holding company of our Group which comprises the following subsidiaries and their respective corporate history is set out below. All of our subsidiaries are private companies. Fineland Real Estate Services Fineland Real Estate Services was incorporated in Hong Kong with limited liability on 16 June 2016 by Luck Health as its sole shareholder holding its one issued share. On 30 June 2016, pursuant to an equity transfer agreement, Fineland Real Estate Services agreed to acquire 70% and 30% of equity interest in Guangzhou Fineland Property Consultancy from Luck Health and Ms. Tse respectively. In consideration of the aforesaid acquisition, on 21 September 2016, six shares and three shares in Fineland Real Estate Services were allotted and issued to Luck Health and Ms. Tse respectively, credited as fully paid. After the allotment and issue, Fineland Real Estate Services was owned as to 70% and 30% by Luck Health and Ms. Tse respectively. Upon completion of the Reorganisation, Fineland Real Estate Services became a wholly-owned subsidiary of our Group, further details of which is described in Reorganisation below. Guangzhou Fineland Property Consultancy Guangzhou Fineland Property Consultancy, our principal operating subsidiary, was established in Guangzhou as a sino-foreign joint venture enterprise with limited liability by GD Fineland Property Development and Sinoland on 17 March 1997. At the time of its establishment, it was known as Guangzhou Fineland Sino Property Consultancy Limited* ( 廣州方圓中粵物業顧問有限公司 ) and its registered share capital was HK$500,000 and contributed by GD Fineland Property Development and Sinoland as to HK$300,000 and HK$200,000 respectively, which was fully settled on 17 March 1997. At the time of incorporation, Guangzhou Fineland Property 82
Consultancy was held as to 60% and 40% by GD Fineland Property Development and Sinoland respectively. It principally provides real estate consultation, agency, market analysis and marketing services. On 8 July 1997, Sinoland entered into an equity transfer agreement with Peggo International, pursuant to which Sinoland agreed to transfer all its 40% equity interest in Guangzhou Fineland Property Consultancy to Peggo International for a consideration of HK$200,000, which had been fully settled. After the completion of the equity transfer and obtaining the relevant approvals from the respective governmental and regulatory bodies, as at 29 September 1997, Guangzhou Fineland Property Consultancy was owned as to 60% by GD Fineland Property Development and 40% by Peggo International. On 9 June 2000, Peggo International entered into an equity transfer agreement with GD Fineland Property Development and Ms. Tse, pursuant to which Peggo International agreed to transfer its 10% and 30% equity interest in Guangzhou Fineland Property Consultancy to GD Fineland Property Development and Ms. Tse for a consideration of HK$50,000 and HK$150,000, respectively, which had been fully settled. After completion of the equity transfer and obtaining the relevant approvals from the respective governmental and regulatory bodies, as at 28 March 2001, Guangzhou Fineland Property Consultancy was owned as to 70% by GD Fineland Property Development and 30% by Ms. Tse. On 8 March 2004, Guangzhou Fineland Property Consultancy increased its registered capital from HK$500,000 to HK$3,000,000, which was subscribed by GD Fineland Property Development and Ms. Tse for HK$1,750,000 and HK$750,000 respectively, which had been fully settled. The respective shareholding of the shareholders of Guangzhou Fineland Property Consultancy remained unchanged immediately after the aforesaid capital increase. On 10 August 2006, GD Glory Trade entered into an equity transfer agreement with Stand Smooth pursuant to which GD Glory Trade agreed to transfer all its 70% equity interest in Guangzhou Fineland Property Consultancy to Stand Smooth for a consideration of HK$2,500,000, which had been fully settled. After completion of the equity transfer and obtaining the relevant approvals from the respective governmental and regulatory bodies, as at 10 October 2006, Guangzhou Fineland Property Consultancy was owned as to 70% by Stand Smooth and 30% by Ms. Tse. On 29 February 2008, Guangzhou Fineland Property Consultancy increased its registered capital from HK$3,000,000 to HK$6,000,000, which was subscribed by GD Glory Trade and Ms. Tse for HK$2,100,000 and HK$900,000 respectively, and had been fully settled. The respective shareholding of the shareholders of Guangzhou Fineland Property consultancy remained unchanged immediately after the aforesaid capital increase. On 22 September 2008, Stand Smooth entered into an equity transfer agreement with Luck Health, pursuant to which Stand Smooth agreed to transfer all its 70% equity interest in Guangzhou Fineland Property Consultancy to Luck Health for a consideration of HK$4,200,000, which had been fully settled. After the completion of the equity transfer and obtaining the relevant approvals from the respective governmental and regulatory bodies, as at 2 March 2009, Guangzhou Fineland Property Consultancy was owned as to 70% by Luck Health and 30% by Ms. Tse. 83
On 30 June 2016, Luck Health and Ms. Tse entered into an equity transfer agreement with Fineland Real Estate Services, pursuant to whichluckhealthandms.tseagreedtotransferall their respective 70% and 30% equity interest in Guangzhou Fineland Property Consultancy to Fineland Real Estate Services at a consideration of HK$4,200,000 and HK$1,800,000, respectively. In consideration of the aforesaid acquisition, on 21 September 2016, six shares and three shares in Fineland Real Estate Services were allotted and issued to Luck Health and Ms. Tse respectively, credited as fully paid. After completion of the equity transfer and obtaining the relevant approvals from the respective governmental and regulatory bodies, as at 21 September 2016, Guangzhou Fineland Property Consultancy was owned as to by Fineland Real Estate Services and became a wholly foreign-owned enterprise. Fang Yuan Bao Fang Yuan Bao was established by Ms. Tse on 17 June 2015 in the PRC and was whollyowned by Ms. Tse. Upon its establishment, Fang Yuan Bao had a registered capital of RMB300,000 and commenced its business in providing online property referral and agency services in or around November 2015. For further details of the business operations of Fang Yuan Bao, see Business Integrated Services Fangyuanbao. On 30 July 2015, Fang Yuan Bao increased its registered capital from RMB300,000 to RMB1,000,000, which was subscribed by Guangzhou Lexian for RMB700,000 and was fully settled on 20 August 2015. After the aforesaid capital increase, Fang Yaun Bao was owned as to 70% and 30% by Guangzhou Lexian and Ms. Tse respectively. On 24 May 2016, Guangzhou Lexian and Ms. Tse entered into an equity transfer agreement, pursuant to which Guangzhou Lexian and Ms. Tse agreed to transfer all their 70% and 30% equity interest in Fang Yuan Bao to Guangzhou Fineland Property Consultancy at a consideration of RMB700,000 and RMB300,000, respectively, which was determined based on the then issued share capital of Fang Yuan Bao and was fully settled on 14 June 2016. Since 26 May 2016, after obtaining the relevant approvals from the respective governmental and regulatory bodies, Fang Yuan Bao had been a wholly-owned subsidiary of our Group. Hai Yuan Bao Hai Yuan Bao was established by Guangzhou Fineland Property Consultancy on 13 May 2016 in the PRC and was wholly-owned by Guangzhou Fineland Property Consultancy. Upon its establishment, Hai Yuan Bao had a registered capital of RMB300,000, which was fully settled on 21 July 2016. As at the Latest Practicable Date, Hai Yuan Bao has not commenced its business operations. As advised by our PRC Legal Advisers, the transfers or subscriptions of equity interests in our subsidiaries as detailed in the paragraph headed Corporate Development in this section above were properly and legally completed. 84
DEED OF CONCERT PARTIES Since 28 March 2001, being the date when Ms. Tse acquired 30% equity interest in Guangzhou Fineland Property Consultancy from Peggo International, Mr. Fong and Ms. Tse have been acting in concert with each other in exercising and implementing the management and operations of our subsidiaries. As we were a group of private entities in the past, these arrangements were not formalised in writing and each of Mr. Fong and Ms. Tse was content with such arrangements based on their long term business relationship, as well as the trust and confidence they have in each other. In preparation of the Listing, Mr. Fong and Ms. Tse executed the Deed of Concert Parties on 31 March 2017, details of which are set out in Relationship with Controlling Shareholders Our Controlling Shareholders. PRE-IPO INVESTMENTS Overview On 1 March 2017, Mansion Green (as vendor), and the Pre-IPO Investors (as purchasers), entered into the Pre-IPO Investment Agreements, pursuant to which Mansion Green agreed to sell, and the Pre-IPO Investors agreed to acquire Shares in our Company, representing in aggregate approximately 28% of the then total issued share capital of our Company, for an aggregate consideration of HK$42,000,000. Each of the Pre-IPO Investors financed the Pre-IPO Investments with his or her personal resources, and none of the Pre-IPO Investors acquired the Shares according to the instructions of the Group or its connected persons. 85
Information regarding the pre-ipo Investors Name of Pre-IPO Investors Place of Incorporation Business nature Direct shareholder and ultimate beneficial owner Relationship between the Fineland Group/the Group and the ultimate beneficial owner Metropolitan Dawn BVI Investment holding Ms. Rong director of Fineland Real Estate and executive Director of our Group Totoro BVI Investment holding Mr. Yi executive Director of our Group Kaffir Holding Limited BVI Investment holding Mr. Xu Jun employee of the Fineland Group ( 徐珺先生 ) Kingson Pine Holdings Limited BVI Investment holding Mr. Zhou Song employee of the Fineland Group ( 周松先生 ) Moxie Holding Limited BVI Investment holding Mr. Luo Xiaoyong employee of the Fineland Group ( 羅小勇先生 ) Kingson Orient Holdings Limited BVI Investment holding Mr. Lin Tingfang employee of the Fineland Group ( 林庭芳先生 ) Beaming Light Holdings Limited BVI Investment holding Mr. Chen Xi employee of the Fineland Group ( 陳曦先生 ) Meanvalue Holding Limited BVI Investment holding Mr. Xie Junhua employee of the Fineland Group ( 謝均華先生 ) Prudent Vision Holdings Limited BVI Investment holding Ms. Zhang Lili employee of our Group ( 張莉麗女士 ) Curassow Holding Limited BVI Investment holding Mr. Xu Peng senior management of our Group ( 徐鵬先生 ) Refined Standard Holdings Limited BVI Investment holding Ms. Xu Feng employee of our Group ( 徐奉女士 ) Akari International Holdings Limited BVI Investment holding Ms. Zhu Xiaoming ( 朱曉明女士 ) senior management of our Group Thriving International Holdings Limited BVI Investment holding Mr. Deng Haozhi ( 鄧浩志先生 ) Tiffany Orient Holdings Limited BVI Investment holding Ms. Xie Dan ( 謝丹女士 ) Adwan Orient Holdings Limited BVI Investment holding Mr. Han Shuguang ( 韓曙光先生 ) senior management of our Group employee of our Group director of Fineland Real Estate and a director of an operating subsidiary of our Group 86
Investment by the pre-ipo Investors Details of the Pre-IPO Investments are set out in the table below: Name of Pre-IPO Investors Number of Shares acquired after completion of the Pre-IPO Investments and immediately before completion of the Capitalisation Issue and the Share Offer Number of Shares acquired immediately after completion of the Capitalisation Issue and the Share Offer (without taking into account any Shares to be issued upon the exercise of the options that have been or may be granted under the Share Option Scheme) Cost per Share paid under the Pre-IPO Investments (Note 1) Total consideration paid Date of consideration paid Basis of determination of the consideration Use of proceeds from the Pre-IPO Investments Strategic benefits/ Reasons for investment Percentage of total share capital of our Company after completion of the Pre-IPO Investments and immediately before completion of the Capitalisation Issue and the Share Offer Discount to mid-point of the Share Offer price range Percentage of shareholding in our Company immediately after completion of the Capitalisation Issue and the Share Offer Lock-up Metropolitan Dawn 16 24,000,000 HK$0.5 HK$12,000,000 1 March 2017 The net asset value Not applicable since For those Pre-IPO Investors 8% 35.0% 6% Subject to a Totoro 6 9,000,000 HK$0.5 HK$4,500,000 1 March 2017 of Fineland Real all the considerations who are employees of our 3% 35.0% 2.25% lock-up period Kaffir Holding Limited 3 4,500,000 HK$0.5 HK$2,250,000 1 March 2017 Estate Services as at were paid to Mansion Group, our Directors are of 1.5% 35.0% 1.125% of 12 months 31 December 2016 Green for the the view that by providing from the Kingson Pine Holdings Limited 3 4,500,000 HK$0.5 HK$2,250,000 1 March 2017 acquisition of Shares them with the opportunity to 1.5% 35.0% 1.125% Listing Date Moxie Holding Limited 3 4,500,000 HK$0.5 HK$2,250,000 2 March 2017 and our Company acquire equity interests in 1.5% 35.0% 1.125% Kingson Orient Holdings Limited 3 4,500,000 HK$0.5 HK$2,250,000 1 March 2017 will not receive any our Company, it would (i) 1.5% 35.0% 1.125% Beaming Light Holdings Limited 3 4,500,000 HK$0.5 HK$2,250,000 1 March 2017 of the proceeds from incentivize them to remain 1.5% 35.0% 1.125% Meanvalue Holding Limited 2 3,000,000 HK$0.5 HK$1,500,000 1 March 2017 the Pre-IPO in our Group; and (ii) 1% 35.0% 0.75% Investments motivate them to strive for Prudent Vision Holdings Limited 2 3,000,000 HK$0.5 HK$1,500,000 1 March 2017 the future development and 1% 35.0% 0.75% Curassow Holding Limited 2 3,000,000 HK$0.5 HK$1,500,000 2 March 2017 expansion of our Group. 1% 35.0% 0.75% Refined Standard Holdings 2 3,000,000 HK$0.5 HK$1,500,000 1 March 2017 1% 35.0% 0.75% Limited For those Pre-IPO Investors Akari International Holdings 2 3,000,000 HK$0.5 HK$1,500,000 1 March 2017 who are with the Fineland 1% 35.0% 0.75% Limited Group, they have been with Thriving International Holdings 4 6,000,000 HK$0.5 HK$3,000,000 1 March 2017 the Fineland Group, on 2% 35.0% 1.5% Limited average, for more than five years and they considered Tiffany Orient Holdings Limited 2 3,000,000 HK$0.5 HK$1,500,000 1 March 2017 that our Group s business 1% 35.0% 0.75% Adwan Orient Holdings Limited 3 4,500,000 HK$0.5 HK$2,250,000 1 March 2017 has a good prospect and 1.5% 35.0% 1.125% decided to invest in our Group. Public Float Note (2), (3) 87
Notes: (1) Calculated by dividing the total consideration paid under the respective Pre-IPO Investments Agreements with the total number of Shares acquired immediatelyafter completion of the Capitalisation Issue and the Share Offer (without taking into account any Shares to be issued upon the exercise of the options that have been or may be granted under the Share Option Scheme). (2) Immediately upon completion of the Capitalisation Issue and the Share Offer (without taking into account any Shares to be issued upon the exercise of the options that have been or may be granted under the Share Option Scheme), Ms. Rong, Mr. Yi and Mr. Han Shuguang (the respective sole legal and beneficial owner of Metropolitan Dawn, Totoro and Adwan Orient Holdings Limited) will hold approximately 6%, 2.25% and 1.125% of the total issued share capital of our Company. As both Ms. Rong and Mr. Yi are our executive Directors and Mr. Han Shuguang is a director of Fineland Real Estate Services, Guangzhou Fineland Property Consultancy, Fang Yuan Bao and Hai Yuan Bao, the relevant Shares held by Ms. Rong, Mr. Yi and Mr. Han Shuguang, through Metropolitan Dawn, Totoro and Adwan Orient Holdings Limited respectively, will not be counted as part of the public float under Rule 11.23 of the GEM Listing Rules. (3) Immediately upon completion of the Capitalisation Issue and the Share Offer (without taking into account any Shares to be issued upon the exercise of the options that have been or may be granted under the Share Option Scheme), save and except for Metropolitan Dawn, Totoro and Adwan Orient Holdings Limited, each of the other Pre-IPO Investors will hold less than 10% of the issued share capital of our Company and is not a substantial shareholder or a connected person of our Company under the GEM Listing Rules. As such, the relevant Shares held by the Pre-IPO Investors (excluding Metropolitan Dawn, Totoro and Adwan Orient Holdings Limited) will be counted as part of the public float under Rule 11.23 of the GEM Listing Rules. (4) No special rights have been offered to the Pre-IPO Investors. 88
Sole Sponsor s Confirmation The Sole Sponsor is of the view that the Pre-IPO investments mentioned above complies with the requirements set out in the Guidance Letters HKEx-GL29 12 and HKEx-GL43 12, to the extent applicable based on the review of the relevant documents. REORGANISATION The following chart sets out the shareholding and corporate structure of our Group immediately before the Reorganisation: Mr. Fong Widethrive Investment Fineland Real Estate Hero Dragon Stand Smooth Luck Health Ms. Tse 70% 30% Fineland Real Estate Services Off-shore On-shore Guangzhou Fineland Property Consultancy Fang Yuan Bao Hai Yuan Bao 89
In preparation for the Listing, we have carried out the Reorganisation which involved the following steps: (A) Incorporation of our Company and Fineland Holdings Our Company was incorporated in the Cayman Islands on 16 February 2017 with an authorised share capital of HK$380,000 divided into 38,000,000 Shares of HK$0.01 each. One nil-paid Share was allotted and issued to the subscriber to the Memorandum and Articles, which was transferred to Mansion Green on the same date. Fineland Holdings was incorporated in the BVI on 16 February 2017 with an authorised share capital of US$50,000 divided into 50,000 shares of US$1.00 each. On the same date, one share in Fineland Holdings was allotted and issued to our Company at par, pursuant to which Fineland Holdings became a direct wholly-owned subsidiary of our Company. (B) Acquisition of Fineland Real Estate Services by our Group On 1 March 2017, Mr. Fong, Luck Health, Ms. Tse, Fineland Holdings, Mansion Green and our Company entered into a share swap agreement, pursuant to which Fineland Holdings acquired the entire issued share capital of Fineland Real Estate Services and as consideration, as directed by Luck Health and Ms. Tse, (i) 199 shares in Fineland Holdings were allotted and issued to our Company, credited as fully paid; (ii) one nil-paid Share held by Mansion Green was credited as fully paid and 199 Shares were allotted and issued to Mansion Green, credited as fully paid; and (iii) 63 shares and 27 shares in Mansion Green were allotted and issued to Stand Smooth and Aspiring Vision, credited as fully-paid, respectively. Upon completion of the aforesaid acquisition, Fineland Real Estate Services became an indirect wholly-owned subsidiary of our Company and our Company was owned as to by MansionGreen.Theconsiderationintheformof Shares was determined with reference to the then shareholding of Luck Health and Ms. Tse in Fineland Real Estate Services. (C) Acquisition of approximately 28% of Shares in our Company by the Pre-IPO Investors On 1 March 2017, Mansion Green (as vendor) and the Pre-IPO Investors (as purchaser) entered into the Pre-IPO Investment Agreements, pursuant to which Mansion Green agreed to sell, and the Pre-IPO Investors agreed to acquire, approximately an aggregate of 28% of equity interest in our Company at an aggregate consideration of HK$42,000,000. The consideration was determined with reference to the net asset value of Fineland Real Estate Services as at 31 December 2016 and was fully settled on 2 March 2017. After completion of the Pre-IPO Investments, our Company was owned as to approximately 28% by the Pre-IPO Investors and approximately 72% by Mansion Green. 90
The following chart sets out the shareholding and corporate structure of our Group immediately after the Reorganisation but before the Share Offer: Mr. Fong Widethrive Investment Fineland Real Estate Ms. Tse Hero Dragon Stand Smooth 70% Aspiring Vision 30% Mansion Green The Pre-IPO Investors 72% 28% Our Company Fineland Holdings Fineland Real Estate Services Off-shore On-shore Guangzhou Fineland Property Consultancy Fang Yuan Bao Hai Yuan Bao CAPITALISATION ISSUE AND SHARE OFFER Our Company will issue certain new Shares under the Share Offer, and certain new Shares to the existing Shareholders pursuant to the Capitalisation Issue, resulting in not less than 25% of the enlarged issued share capital of our Company being offered under the Share Offer and the remaining 75% held by Mansion Green and the Pre-IPO Investors. 91
The following chart sets out the shareholding and corporate structure of our Group immediately after completion of the Capitalisation Issue and the Share Offer (without taking into account any Shares to be issued upon the exercise of the options that have been or may be granted under the Share Option Scheme): Mr. Fong Widethrive Investment Fineland Real Estate Hero Dragon Ms. Tse Stand Smooth Aspiring Vision 70% 30% Mansion Green The Pre-IPO Investors (Note) Public 54% 21% 25% Our Company Fineland Holdings Fineland Real Estate Services Off-shore On-shore Guangzhou Fineland Property Consultancy Fang Yuan Bao Hai Yuan Bao Note: The relevant Shares held by the Pre-IPO Investors (excluding Metropolitan Dawn, Totoro and Adwan Orient Holdings Limited), being approximately 11.625% of the entire issued share capital of our Company, will be counted as part of the public float under Rule 11.23 of the GEM Listing Rules. COMPLIANCE WITH PRC LAWS Our PRC Legal Advisers have confirmed that all relevant approvals and permits in respect of the equity transfers of our PRC operating subsidiary as described above have been obtained and the procedures and steps involved are in compliance with relevant laws and regulations in the PRC. 92
THE M&A RULES The PRC Legal Adviser has advised that Guangzhou Fineland Property Consultancy was established before the effective date of the Provisions on Merger and Acquisition of Domestic Enterprises by Foreign Investors ( 關於外國投資者併購境內企業的規定 )(the M&A Rules ) and has been a sino-foreign joint venture enterprise or a wholly foreign-owned enterprise since then. Accordingly, the M&A Rules are not applicable to the Reorganisation and the Listing is not subject to the approval from the China Securities Regulatory Commission ( 中國證券監督管理委員會 ). According to SAFE Circular No. 37 and SAFE Circular No.13, before a domestic resident contributes its legally owned onshore or offshore assets and equity into an overseas special purpose vehicle, the domestic resident shall apply for foreign exchange registration for offshore investment with a qualified bank. The PRC Legal Adviser confirmed that all the necessary foreign exchange registration with local foreign exchange authority under SAFE Circular No. 37 have been completed. 93