Guangnan : General Mandates for the Repurchase of Shares and the Issue of Shares, Re-Election of Directors and Notice of Annual General Meeting

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

(Incorporated in Hong Kong with limited liability)

(Stock Code: 1203)

Executive Directors:	Registered Office:
TAN Yunbiao (Chairman)	22nd Floor
HE Jinzhou (General Manager)	Tesbury Centre
LAU Kin Man (Chief Financial Officer)	No. 24-32 Queen's Road East
	Hong Kong
Non-Executive Director:
LIANG Jianqin
Independent Non-Executive Directors:
Gerard Joseph McMAHON
LI Kar Keung, Caspar
WONG Yau Kar, David
	25 April 2019
To the shareholders
Dear Sir or Madam,

GENERAL MANDATES FOR THE REPURCHASE OF SHARES AND

THE ISSUE OF SHARES, RE-ELECTION OF DIRECTORS AND

NOTICE OF ANNUAL GENERAL MEETING

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1.INTRODUCTION

The purpose of this circular is to give you notice of the annual general meeting of Guangnan (Holdings) Limited ("Company") to be held on Wednesday, 5 June 2019 at 11:00 a.m. ("AGM"), and information on matters to be dealt at the AGM, inter alia:

(a)the grant of general mandates ("General Mandates") to the directors of the Company ("Directors") to issue and repurchase ordinary shares in the share capital of the Company ("Shares"); and

(b)the re-election of the retiring Directors.

2.GENERAL MANDATES

At the last annual general meeting of the Company held on 6 June 2018, resolutions were passed giving general mandates to the Directors (i) to allot, issue and otherwise deal with new Shares of up to 20% of the issued share capital of the Company as at 6 June 2018; (ii) to repurchase Shares on The Stock Exchange of Hong Kong Limited ("Stock Exchange") of up to 10% of the issued share capital of the Company as at 6 June 2018; and (iii) to extend the general mandate to allot and issue Shares granted to the Directors by adding to it the number of Shares that has been repurchased by the Company.

Pursuant to the Companies Ordinance, Chapter 622 of the Laws of the Hong Kong Special Administrative Region of the People's Republic of China ("Hong Kong") ("Companies Ordinance") and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended from time to time ("Listing Rules"), these general mandates will lapse at the conclusion of the AGM, unless renewed at the AGM. In order to provide continual flexibility to the Directors, resolutions will be proposed at the AGM to renew these mandates.

(a)Repurchase Mandate

At the AGM, an ordinary resolution, set out as Ordinary Resolution No. 6 in the notice convening the AGM as set out in Appendix III to this circular ("AGM Notice"), will be proposed to grant a new general and unconditional mandate to the Directors to exercise the powers of the Company to repurchase, at any time during the Relevant Period (as defined in Ordinary Resolution No. 6), Shares of up to a maximum of 10% of the issued share capital of the Company on the date of the passing of Ordinary Resolution No. 6 ("Repurchase Mandate"). An explanatory statement setting out the requisite information regarding the Repurchase Mandate as required under the Listing Rules is set out in Appendix I to this circular.

As at 17 April 2019 (the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular) ("Latest Practicable Date"), the number of Shares in issue was 907,593,285 Shares. Subject to the passing of the proposed resolution for approving the Repurchase Mandate and on the basis that no further Shares are issued or repurchased by the Company prior to the date of the AGM, the Company would be allowed under the Repurchase Mandate to repurchase up to a limit of 90,759,328 Shares.

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(b)Issue Mandate

At the AGM, an ordinary resolution, set out as Ordinary Resolution No. 5 in the AGM Notice, will be proposed to grant a new general and unconditional mandate to the Directors to issue, at any time during the Relevant Period (as defined in Ordinary Resolution No. 5), Shares representing up to 20% of the issued share capital of the Company on the date of the passing of Ordinary Resolution No. 5 ("Issue Mandate"). In addition, an ordinary resolution, set out as Ordinary Resolution No. 7 in the AGM Notice, will be proposed to extend the Issue Mandate which would increase the limit of the Issue Mandate by adding to it the number of Shares repurchased under the Repurchase Mandate.

As at the Latest Practicable Date, the number of Shares in issue was 907,593,285 Shares. Subject to the passing of the proposed resolution for approving the Issue Mandate and on the basis that no further Shares are issued or repurchased by the Company prior to the date of the AGM, the Company would be allowed under the Issue Mandate to issue up to a limit of 181,518,657 Shares.

3.RE-ELECTIONOF DIRECTORS

Pursuant to Article 101 of the Articles of Association of the Company, Mr. He Jinzhou ("Mr. He") and Mr. Li Kar Keung, Caspar, ("Mr. Li") will retire by rotation at the AGM and shall be eligible for re-election.

Mr. He and Mr. Li, being eligible, have offered themselves for re-election at the AGM.

Set out below is the information relating to the re-election of Mr. Li as independent non- executive director of the Company (the "Re-electing INED") according to Rule 3.13 and Code Provisions A.4.3 and A.5.5 Appendix 14 of the Listing Rules:

(i)Confirmation of Independence

The Re-electing INED has provided the annual confirmation of independence to the Company pursuant to Rule 3.13 of the Listing Rules. None of the Re-electing INED has any relationship with any substantial shareholder, fellow Directors and management of the Company which would interfere with the exercise of independent judgment.

The Company is therefore of the view that both Mr. Li meets the independence guidelines set out in Rule 3.13 of the Listing Rules and is independent in accordance with the terms of the guidelines.

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(ii)Reasons for recommending the Re-electing INED

(a)Process for selecting directors and attributes of the Re-electing INED

The board of Directors (the "Board") is responsible for recommending Director for re-election by the shareholders of the Company (the "Shareholders") at the general meeting. It has delegated the relevant screening and evaluation process to the Nomination Committee, which identifies suitably qualified Director candidate and recommends him to the Board.

When evaluating Director for nomination, the Nomination Committee mainly takes into account: (i) diversity, (ii) character and integrity, (iii) professional qualifications, skills and knowledge, (iv) experience relevant to the Company's business and corporate strategy, (v) commitment to enhancing shareholder value and (vi) fulfillment of independence requirements (for Independent Non-Executive Directors). The Nomination Committee then makes recommendation to the Board which in turn makes recommendation to the Shareholders in respect of the proposed reelection of Director at the general meeting.

At a meeting of the Nomination Committee held on 29 March 2019 at which the Re-Electing INED had abstained from voting when his own nomination was being considered, the Nomination Committee recommended the Re-Electing INED to the Board. The Nomination Committee considers that the Re-electing INED is highly regarded incumbents with a wealth of expertise and experience relevant to us. For Mr. Li, his financing expertise helps to add great value to the Company's financial oversight for better shareholder interest protection. Being highly accomplished individual in his respective industries, fields and communities, he provides sound and valuable guidance to the Company, enabling the Board to fulfill its responsibilities effectively.

Having regard to the independence confirmation as well as the contributions that the Re-electing INED has made as described herein, the Board considers that the reelection of Mr. Li as Director is in the best interest of the Company and Shareholders as a whole and accepts the Nomination Committee's recommendation.

(b)Other listed company directorship

None of the Re-electing Director is holding seven or more directorships in listed company.

(c)Skills and experience of the Re-electing INED

Mr. Li's sound investment and financial background and expertise arising from his directorship at other listed companies and investment and financial role at different institutions enables him to contribute effectively and to provide a panoramic view to the Board.

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(d)Contribution to diversity of the Board

The Company considers diversity in a broad sense, including but not limited to gender, age, cultural and educational background, professional experience, skills, industry knowledge and length of service. It also takes into consideration its own business model and specific needs from time to time. As explained above, Mr. Li possesses a diverse blend of skills, background, experience and viewpoint that are crucial to drive the Company forward in the ever-evolving competitive landscape. Mr. Li brings a broad perspective to the Board and provides constructive thoughts for the Company's overall strategic planning and business development.

(e)Length of services

Pursuant to A.4.3 of Appendix 14 to the Listing Rules, serving more than nine years could be relevant to the determination of a non-executive director's independence. Any further appointment of an independent non-executive director serving more than nine years should be subject to a separate resolution to be approved by the Shareholders.

Mr. Li has been an Independent Non-Executive Director of the Company for more than nine years. A separate resolution will be proposed for his re-election at the AGM. Mr. Li does not have any management role in the Company and its subsidiaries and he has clearly demonstrated diligence, willingness to exercise independent judgment and has been giving objective views to the Company. There is no evidence that length of tenure is having an adverse impact on his independence.

The Board is satisfied that, as well proven by the valuable independent judgement and advice given by Mr. Li over the years, he has the required character, integrity, independence and experience to fulfill the role of an Independent Non- Executive Director. The Board is not aware of any circumstances that might influence Mr. Li in exercising his independent judgement.

Information relating to Mr. He and Mr. Li as required to be disclosed under Rule 15.51(2) of the Listing Rules is set out in Appendix II to this circular.

4.THE AGM

The AGM Notice is set out in Appendix III to this circular. Shareholders are advised to read the AGM Notice and to complete and return the enclosed form of proxy for use at the AGM in accordance with the instructions printed thereon and deposit the same with the Company's share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong not less than 48 hours before the time fixed for holding the AGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM or any adjourned meeting should you so wish.

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