OVERVIEW
Immediately following the completion of the [REDACTED] and the [REDACTED], and taking no account of any Shares which may be allotted and issued pursuant to the exercise of the [REDACTED] and any options which may be granted under the Share Option Scheme, Great Prospering and Luck Rock will directly hold [REDACTED] Shares and [REDACTED] Shares respectively, representing approximately [REDACTED] and [REDACTED] of the total issued share capital of our Company. The entire issued share capital of each of Great Prospering and Luck Rock is held by Ms. Zhao Jie.
Accordingly, for the purposes of the Listing Rules, Ms. Zhao Jie, Great Prospering and Luck Rock are the Controlling Shareholders of our Company.
DELINEATION OF BUSINESS
We focus on the development and sales of quality properties predominantly for residential use in Shandong Province. See “Business” in this document for further details.
In addition to the interests in our Group, our ultimate Controlling Shareholder, Ms. Zhao Jie, through other companies owned and/or controlled by her, invests in other businesses. These businesses include, among others, (i) property management services; (ii) hotel management services and operation of a resort hotel; and (iii) investment management (the “Non-[REDACTED] Businesses”), which do not directly or indirectly compete or likely to compete with the business of our Group. In order to streamline our Group’s corporate structure and to focus our resources on property development in the PRC, as part of the Reorganization, we disposed of the entire interest in Create Business, being the holding company of the entities carrying out the property management services, and certain entities which primarily engage in investment management business. See “Our history and Reorganization – The Reorganization – Streamlining of our corporate structure and disposal of non-core business” in this document for further details. Our Directors are of the view that the Non-[REDACTED] Businesses have not given and are unlikely to give rise to any direct or indirect competition with the business of our Group.
Details of the material Non-[REDACTED] Businesses are as follows:
Property management services
Create Business, a company incorporated in the BVI and indirectly wholly-owned by Ms. Zhao Jie, indirectly holds the entire equity interest of Qingdao Tentimes Property Services Group, which in turn holds various subsidiaries (collectively, the “Property Management Group”), which are PRC entities primarily engaged in the provision of property management services for residential properties in the PRC. The Property Management Group provides, among others, property management services such as (i) security, car park management, cleaning, gardening, repair, maintenance and operation of common area and shared facilities;
services to display units and on-site sales offices. During the Track Record Period, the Property Management Group has been providing these property management services to our property projects and will continue to do so after [REDACTED]. See “Continuing connected transactions” in this document for further details.
Hotel management and operation of a resort hotel
Tentimes Commerce, a company established in the PRC and indirectly wholly-owned by Ms. Zhao Jie, directly holds Tentimes Hotel Co., which principally engages in hotel management services and operates a resort hotel in Qingdao (“Tentimes Hotel”) to provide hotel services including but not limited to accommodation, food and beverage, and supply of consumer goods to guests who stayed at Tentimes Hotel. The property where Tentimes Hotel located is an investment property owned by our Group. During the Track Record Period, the said property was leased to Tentimes Commerce. Furthermore, Tentimes Hotel Co. has been providing the abovementioned hotel services to business partners and guests of our Group during Track Record Period. We expect the said transactions between us with Tentimes Commerce and Tentimes Hotel Co. will continue after [REDACTED]. See “Continuing connected transactions” in this document for further details.
Our Directors are of the view that the abovementioned Non-[REDACTED] Businesses do not compete or are unlikely to compete, either directly or indirectly, with our business, as it is our Group’s strategy to focus on property development and sales and the Non-[REDACTED] Businesses require different skillset, industry knowledge and expertise from those required for our Group’s business. Notwithstanding that some of such businesses may be related to our core business, our Group’s business activities are fundamentally distinct to the nature of the Non-[REDACTED] Businesses.
Our Controlling Shareholders have confirmed that they and their respective close associates are not interested in any business that competes or is likely to compete, either directly or indirectly, with that of our Group.
As such, we believe that there is a clear delineation and no overlap between our Group’s business and the Non-[REDACTED] Businesses.
In addition, as of the Latest Practicable Date, none of our Directors had any interest in any business which competed or was likely to compete, either directly or indirectly, with our Company’s business which would require disclosure under Rule 8.10 of the Listing Rules.
INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
Having considered the following factors, our Directors are satisfied that our Group is capable of carrying on our business independently from our Controlling Shareholders and their respective close associates after the [REDACTED].
Financial independence
Our Group has an independent financial system and makes financial decisions according to our Group’s own business needs and neither our Controlling Shareholders nor their close associates intervene with our use of funds. We have an independent internal control and accounting system, accounting department and financial management department. In addition, we have been and are capable of obtaining financing from Independent Third Parties without relying on any guarantee or security provided by our Controlling Shareholders and/or their close associates.
[As of the Latest Practicable Date, all loans, advances and balances due to and from our Controlling Shareholders and/or their close associates which did not arise out of the ordinary course of business will be, before [REDACTED], fully repaid or settled and all security and guarantee by them in connection with our Group’s borrowings will be fully released.]
Based on the above, our Directors are satisfied that we are able to maintain financial independence from our Controlling Shareholders.
Operational independence
We have full rights to make all decisions regarding, and to carry out, our own business operations independently from our Controlling Shareholders and their close associates and will continue to do so after [REDACTED].
We have established an organization structure that is made up of individual departments, each with specific responsibilities and are expected to continue to operate separately and independently from our Controlling Shareholders. Our Group has also established a number of internal control procedures independent from our Controlling Shareholders to facilitate the effective operation of our business.
We hold all licenses necessary to carry on our business, and have sufficient capital, equipment and employees to operate our business independently from our Controlling Shareholders. We have our own employee headcount for our operations and our own management of human resources, cash and accounting, invoicing and billing. As of the Latest Practicable Date, substantially all of our full-time employees were recruited independently and primarily through recruitment websites, on-campus recruitment programs, advertisements in newspapers, recruiting firms and internal referrals. All of the properties, facilities and materials necessary for our business operations are independent from our Controlling Shareholders and their respective close associates. In addition, during the Track Record Period, none of our Controlling Shareholders and Directors or their respective close associates has been (i) our major supplier, which provides any critical services or materials for our operation; and (ii) our major customers the transactions of which had contributed to our revenue during the relevant reporting periods to a material extent.
Although we have entered into certain continuing connected transactions which will continue after [REDACTED], such transactions have been entered into and will continue to be entered into on normal commercial terms or better and in the ordinary course of business of our Company. See “Continuing connected transactions” in this document for further details.
Based on the above, our Directors are satisfied that we have been operating independently from our Controlling Shareholders during the Track Record Period and will continue to operate independently after [REDACTED].
Management independence
Our Board consists of two executive Directors, one non-executive Director and three independent non-executive Directors. See “Directors and senior management” in this document for further details. Our management and operational decisions are made by our executive Directors and members of the senior management, most of whom have served our Group for a long time and have substantial experience in the industry in which we are engaged in.
Our Directors consider that our Board and senior management will function independently of our Controlling Shareholders because:
• each Director is aware of his/her fiduciary duties as a director which require, among other things, that he/she acts for the benefit and in the interest of our Company and does not allow any conflict between his/her duties as a Director and his/her personal interests;
• in the event that there is a potential conflict of interest arising out of any transaction to be entered into between our Group and our Directors or their respective associates, the interested Director(s) is required to declare the nature of such interest before voting at the relevant Board meetings of our Company in respect of such transactions. In addition, the interested Director shall not vote (nor be counted in the quorum) on any resolution of our Board approving any contract or arrangement or any other proposal in which he or she or any of his/her close associates (as defined in the Listing Rules) is materially interested except for certain circumstances as set out in the Articles. See “Summary of the constitution of our Company and Cayman Islands Company Law” in Appendix IV to this document for further details; • even though some of our executive Directors may have overlapping directors and/or
management roles in companies in which they are interested which are not within our Group, each of our executive Directors confirms that their respective involvement and/or interests in these companies which mainly comprised of investment holding companies will not affect the discharge of their respective duties to our Group;
• we have adopted a series of corporate governance measures to manage conflicts of interest, if any, between our Group and our Controlling Shareholders which would support our independent management. See “Relationship with our Controlling Shareholders – Corporate governance measures” below in this section for details; and we have three independent non-executive Directors and certain matters of our Company must always be referred to the independent non-executive Directors for review.
Based on the above, our Directors are satisfied that our Board as a whole together with our senior management team are able to perform the managerial role in our Group independently.
DEED OF NON-COMPETITION UNDERTAKING
Each our Controlling Shareholders [has] confirmed that none of them is engaged in, or interested in any business (other than our Group) which, directly or indirectly, competes or may compete with the business of our Group. To protect our Group from any potential competition, each of our Controlling Shareholders [has] executed the Deed of Non-competition dated [●] in favour of our Company, pursuant to which each of our Controlling Shareholders has, among other matters, unconditionally and irrevocably undertakes to our Group on a joint and several basis, that at any time during the Relevant Period (as defined below), each of them shall, and shall procure that their respective close associates and/or companies controlled by them (other than our Group) shall:
(a) not, directly or indirectly, be interested or involved or engaged in or carry on or concern with or acquire or hold any right or interest (in each case whether as a shareholder, partner, agent or otherwise and whether for profit, reward or otherwise) in any business which is or is about to be engaged in any business which competes or is likely to compete directly or indirectly with the business currently and from time to time engaged by our Group in Hong Kong, the PRC and any other country or jurisdiction in which the Group and/or in which any member of our Group carries on business mentioned above currently and from time to time (the “Restricted Activity”);
(b) not solicit any existing employee or then existing employee of our Group for employment by its/her close associates (excluding our Group);
(c) not, without the consent from the Company, make use of any information pertaining to the business of our Group which may have come to its/her knowledge in the capacity as our Controlling Shareholder or otherwise for any purpose of engaging, investing or participating in any Restricted Activity;
(d) if there is any project or new business opportunity that relates to the Restricted Activity, refer such project or new business opportunity to our Group for
(e) not invest or participate in or carry on any project or business opportunity of the Restricted Activity; and
(f) procure its/her close associates (excluding our Group) not to invest or participate in or carry on any project or business opportunity of the Restricted Activity.
The above undertakings (a) and (f) are subject to the exception that any of the close associates of our Controlling Shareholders (excluding our Group) are entitled to invest, participate and be engaged in or carry on any Restricted Activity or any project or business opportunity, regardless of value, which has been offered or made available to our Group, provided always that information about the principal terms thereof has been disclosed to our Company and our Directors. The Company shall have, after review and approval by our Directors (including the independent non-executive Directors without the attendance by any Director with beneficial interest in such project or business opportunities at the meeting, in which resolutions have been duly passed by the majority of the independent non-executive Directors), confirmed its rejection in writing to be involved or engaged, or to participate or carry on, in the relevant Restricted Activity and provided also that the principal terms on which that relevant close associate of the our Controlling Shareholders invests, participates or engages or carries on in the Restricted Activity are substantially the same as or not more favourable than those disclosed to the Company. Subject to the above, if the relevant close associate of our Controlling Shareholders decides to be involved, engaged, participate in or carry on the relevant Restricted Activity, whether directly or indirectly, the terms of such involvement, engagement, participation or carrying on must be disclosed to the Company and the Directors as soon as practicable.
The Deed of Non-competition is conditional on (i) the Stock Exchange granting the [REDACTED] of, and permission to deal in, all the Shares in issue and to be issued under the [REDACTED] and the Shares which may be issued upon the exercise of the [REDACTED] and options that may be granted under the Share Option Schemes; and (ii) the obligations of the [REDACTED] under the [REDACTED] becoming unconditional (including, if relevant as a result of the waiver of any condition(s) by the [REDACTED]) and that the [REDACTED] not being terminated in accordance with their terms or otherwise.
For the above purpose, the “Relevant Period” means from the [REDACTED] until the earlier of:
(a) the date on which our Controlling Shareholders and their associates (individually or taken as a whole) ceases to own 30% of the then issued share capital of the Company directly or indirectly or cease to be the Controlling Shareholders for the purposes of the Listing Rules; or
Each of our Controlling Shareholders [has] unconditionally and irrevocably undertaken under the Deed of Non-competition that she or it shall (i) provide to our Directors, their respective representatives and the auditors of our Group to have sufficient access to the records of each of our Controlling Shareholders and its/her respective close associates; and (ii) provide to our Directors (including our independent non-executive Directors) from time to time provide all information necessary for the annual review to ensure compliance with the terms and conditions of the Deed of Non-competition. Each of our Controlling Shareholders [has] also unconditionally and irrevocably undertaken to make an annual declaration and disclosure as to full compliance with the terms of the Deed of Non-competition in our annual report.
CORPORATE GOVERNANCE MEASURES
Upon [REDACTED], our Company will adopt the following corporate governance measures to avoid any potential conflict of interests between our Company and our Controlling Shareholders:
• A Director with material interests shall make full disclosure in respect of matters that conflict or potentially conflict with our interest and absent himself/herself from meetings of our Board on matters in which such Director or any of his/her associates have a material interest, unless the attendance or participation of such Director at such meeting of our Board is specifically requested by a majority of the independent non-executive Directors;
• We are committed that our Board should include a balanced composition of executive and non-executive Directors (including independent non-executive Directors). We have appointed three independent non-executive Directors whom we believe to possess sufficient experience and are free of any business or other relationship which could interfere in any material manner with the exercise of their independent judgement and will be able to provide an impartial, external opinion to protect the interests of our [REDACTED];
• Any transactions between our Company and our connected persons shall be in compliance with the relevant requirements of Chapter 14A of the Listing Rules, including the announcement, annual reporting and independent shareholders’ approval requirements (if applicable) under the Listing Rules;
• Our Company has appointed Guotai Junan Capital Limited as our compliance adviser, which shall provide us with professional advice and guidance in respect of the compliance with the Listing Rules and applicable laws; and
• Our Directors (including the independent non-executive Directors) will seek independent professional opinions, including financial and legal advice, from external advisers at our cost as and when appropriate in accordance with the Corporate Governance Code.
Our Directors consider that the above corporate governance measures are sufficient to manage any potential conflict of interests between our Controlling Shareholders and their
