Yingde Gases : Announcements and Notices - EGM Requisition by Bbh and Btl and Update on Cayman Legal Proceedings Brought by Bbh and Btl

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Yingde Gases Group Company Limited

盈德氣體集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 02168) EGM REQUISITION BY BBH AND BTL AND UPDATE ON CAYMAN LEGAL PROCEEDINGS BROUGHT BY BBH AND BTL

This announcement is made by Yingde Gases Group Company Limited (the "Company") pursuant to Rule 13.09 of the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong).

EGM REQUISITION BY BBH AND BTL

On 10 January 2017, the Company received a notice (the "Requisition Notice") from Bubbly Brooke Holdings Limited ("BBH") and Baslow Technology Limited ("BTL") controlled by Mr. Zhongguo Sun ("Mr. Sun") and Mr. Trevor Raymond Strutt ("Mr. Strutt") (together with Mr. Sun, the "Minority Directors") respectively.

In the Requisition Notice, BBH and BTL required an extraordinary general meeting ("EGM") to be convened for shareholders to consider, if thought fit, to pass the following ordinary resolutions:

1. THAT ZHAO XIANGTI be and is hereby removed as a director of the Company.

2. THAT HE YUANPING be and is hereby removed as a director of the Company.

3. THAT ZHANG YUNFENG be and is hereby removed as a director of the Company.

4. THAT SUO YAOTANG be and is hereby removed as a director of the Company.

5. THAT FENG KE be and is hereby removed as a director of the Company.

6. THAT each other person, if any, who may have been appointed as a director of the Company by the board since the date of the last annual general meeting of the Company be and is hereby removed as a director of the Company.

7. THAT ZHIHE MAH be and is hereby appointed a director of the Company and if and in so far as necessary in order for his appointment to take effect (but other otherwise), the maximum number of directors for the purpose of Article 83 of the Articles of Association of Company be and is hereby increased by one.

8. THAT (until otherwise determined by ordinary resolution) the maximum number of directors of the Company for the purposes of Article 83 of the Articles of Association of the Company be the number (not exceeding 5) of directors in office (including but not limited to that appointed by resolution at this meeting) immediately after any or all of the above resolutions have passed.

The Company is now in the course of obtaining Cayman Islands legal advice in respect of the procedural regularity of the Requisition Notice. Upon obtaining Cayman Islands legal advice, the Company would comply with the relevant requirements under the articles of association of the Company and will make further announcement in due course.

UPDATE ON CAYMAN LEGAL PROCEEDINGS INITIATED BY BBH AND BTL Injunction Summons by BTL and BBH against the Company

In receipt of a summons (the "Injunction Summons") by BTL and BBH for an injunction against the Company holding any board meeting on less than 7 clear days' notice, the Company has raised objection and compromised by agreeing to an undertaking (the "Undertaking") with the consent of BTL and BBH on 11 January 2017 to refrain from:

1. holding any meeting of the board of directors of the Company on less than 3 days' notice (the "Minimum Notice Period") (such notice to include the contents of any proposed resolutions) to all directors where demonstrable

   urgency is shown, and in all other cases on 7 days' notice, and in any event such notice can be abridged with the consent of all directors (such consent not to be unreasonably withheld); or

2. issuing or agreeing to issue any additional shares unless all directors consent (including, for the avoidance of doubt, Messrs. Sun and Strutt) or until further order of the Grand Court of Cayman Islands (the "Cayman Court").

The Undertaking will sustain until a substantive hearing (the "Substantive Hearing") to be fixed by the Cayman Court.

The directors of the Company (the "Majority Board", excluding Minority Directors) are disappointed by the Injunction Summons effectively applied by the Minority Directors which will cause hindrance to the management of the Company and operation of the board as board meetings are, from time to time, required to be held upon short notice and in an efficient and expedient manner.

In light of the approach taken by the Minority Directors, the Majority Board considers that the Minority Directors may in any event challenge the board composition and validity of board meetings even if Minimum Notice Period is satisfied, just as they did immediately prior to the board meetings which were held on 10 January 2017.

Application by BTL and BBH to sue the directors and Originwater

BTL and BBH, by a summons dated 10 January 2017, has applied to the Cayman Court to list, in addition to the Company, Mr. Zhao Xiangti, Mr. He Yuanping, Mr. Zheng Fuya and Dr. Wang Ching (collectively the "Defendant Directors") for breach of their fiduciary duty as director of the Company and Originwater Hong Kong Environmental Protection Co., Limited ("Originwater") for being a party on notice of the unlawfulness and wrongfulness of the proposed placing to Originwater, as defendants in the legal proceedings (the "Cayman Proceedings") of the Cayman Court as initiated by BBH and BTL. The aforesaid application is subject to the approval by the Cayman Court at the Substantive Hearing. The relief sought by BTL and BBH include, among others, (1) a declaration that the business transacted during the board meetings held on 5 November 2016, 18 December 2016 and 10 January 2017 was null, void and of no effect; (2) an injunction against share issue by the Company to Originwater; and (3) the Defendant Directors and Originwater shall pay the costs of proceedings to BTL and BBH.

Majority Board (including the independent non-executive directors) were astonished by the approach taken by the Minority Directors who, despite being well aware that the proposed placing to Originwater has already been terminated on 10 January 2017, still proceeded to list the Defendant Directors (including two independent non-executive directors) and Originwater as co-defendants in the Cayman Proceedings, and apparently chose to take all the actions to the Cayman Court instead of engaging in dialogues at the board level.

Air Products Order

Upon application by Air Products & Chemicals, Inc. ("Air Products", a possible offeror to privatize the Company by way of scheme of arrangement as disclosed in the announcement of the Company on 9 January 2017) on 10 January 2017, the Cayman Court granted the following order:

1. Air Products be joined as an interested party to the Cayman Proceedings.

2. Until further order, (i) all information comprised in or relating to Air Products' communications with the Defendant from 29 December 2016 (the "Information") be kept confidential; and (ii) all affidavits and submissions filed, or to be filed, in the Cayman Court file that refer to the Information be placed in sealed envelopes, and envelopes not be opened without the leave of the Cayman Court, save that the parties may disclose any such Information as has been lawfully put in the public domain or as may be required by law, including, for the avoidance of doubt, Hong Kong law and/or the laws of the United States of America, or pursuant to any proper order or demand or requirement of any competent authority or body where the parties are under a legal obligation to make such disclosure.

LEAKAGE OF INSIDE INFORMATION BY MINORITY DIRECTORS TO BBH AND BTL

The Majority Board wishes to put on record that, during the Cayman Proceedings initiated by BBH and BTL, BBH and BTL have served a number of documents with the Cayman Court against the Company which include affirmations of the Minority Directors that contained inside information received by the Minority Directors in their capacity as director of the Company, including relevant possible offer prices as stated in the letters of interest from Air Products and StellarS Capital (Hong Kong) Limited (collectively the "Letters of Interest") to extend general offer. The particulars of offer prices as stated on the Letters of Interest are highly confidential and have not been disclosed in any public announcement by the Company. The Majority Board also duly noted the unusual trading volume and trading price fluctuation since 10 January 2017.