Post on 10-Jan-2023
OUR BUSINESS DEVELOPMENT
Our Group was founded in 2003 through the establishment of SMU by Mr. Fang, our
executive Director, Ms. Zhu and Ms. Zhang, who are Independent Third Parties, and SumZone
Auto. SMU was a limited company established in the PRC with a registered and paid up capital
of RMB 2,000,000 on 16th July, 2003 and its business scope includes the provision of media
investments, design and production of advertisements, corporate management and consultancy
services, PR and event marketing services. Upon the establishment of SMU, Mr. Fang, Ms. Zhu,
Ms. Zhang and SumZone Auto owned 33%, 37%, 20% and 10% equity interests in SMU,
respectively.
During the period between January 1999 and February 2002, Mr. Fang became the chief
operating officer of Auto Weekly (汽車週刊) of Jiefang Daily (解放日報) which is an Independent
Third Party. Jiefang Daily is held by Jiefang Press Group (解放日報報業集團) which is ultimately
controlled by the Publicity Department of the Communist Party of China Shanghai Municipal
Committee (中共上海市委宣傳部). Mr. Fang was familiar with the automobile industry and had
then accumulated experience in advertising business. In August 2002, Auto Report (which was
formerly known as Auto Mobile Time Weekly in English and 車時代週刊 in Chinese) was founded
by SumZone Auto and Mr. Fang was in charge of the overall operation and management of the
magazine. By August 2004, the business operations and relevant staff of Auto Report were
transferred to SMU for nil consideration pursuant to an agreement entered into between SumZone
Auto and SMU on 16th August, 2004. The reason for the nil consideration for the transfer was that
the business operations of Auto Report suffered losses at that time and it was operating on a
limited scale with a small revenue base and that SMU had agreed to assume all rights and
liabilities as well as future financial obligations (including all printing, distribution and staff
costs) of Auto Report.
In May, 2004, SMU launched Auto 007 in pursuance of the entrusted management
arrangement with Shanghai Business Daily (上海商報社) which is an Independent Third Party,
thereby enabling us to extend our print media resources from magazines to newspapers. Auto
007 was then one of the professional automobile media in Yangtze River Delta in the PRC and
it had become the designated information disclosure media for Office of Automobile Profession
of Shanghai Consumer Rights Protection Committee (上海市消費者權益保護委員會汽車專業辦公室), which is an Independent Third Party, in 2005.
Pursuant to an agreement entered into between SMU and Pyramid Media on 1st June, 2004
(the “Auto 007 Supporting Services Agreement”), from June 2004 to December 2010, the content
production, printing and distribution services of Auto 007 were outsourced to Pyramid Media in
view of the relatively limited operating history of SMU at that time and the availability of the more
established media operations and production team of Pyramid Media to support the business of
Auto 007. According to the Auto 007 Supporting Services Agreement, in return for the services
provided by Pyramid Media to Auto 007, we paid service charges representing 70% of the
advertising income from Auto 007 to Pyramid Media during the relevant period which ended on
31st December, 2010.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 90 —
B1 Q20
B2 Q6
B2 Q28
Pyramid Media is a professional media services operator incorporated in the PRC on 3rd
June, 2004. Upon its establishment, Pyramid Media was held by Mr. Fang and Wang Tao (王濤),
a Chinese national who is an Independent Third Party, as to 55% and 45% equity interests
respectively. In preparation for the Listing, during the period from 30th December, 2009 to 7th
January, 2011, the 55% equity interests in Pyramid Media held by Mr. Fang were transferred to
上海口碑廣告傳媒有限公司, an Independent Third Party, through a series of transfers of equity
interests in between Chen Liwen (陳麗雯), He Weiqi (賀維琪) and Cai Shibin (蔡仕彬), who were
employees of our Group, and Wang Tao (王濤), as a transitional arrangement for the disposal of
the 55% interests of Mr. Fang. After these transfers of equity interests, 上海口碑廣告傳媒有限公司and Wang Tao (王濤) owned 55% and 45% equity interests in Pyramid Media, respectively.
The business of Pyramid Media was not injected into SMU as both companies were private
companies controlled by Mr. Fang prior to 1st January, 2011 and as we commenced our listing
preparation process in or about end of 2010, Mr. Fang decided to take up the business of Pyramid
Media through SMU for the purpose of our group restructuring. On 27th December, 2010, SMU
and Pyramid Media entered into a termination agreement under which the Auto 007 Supporting
Services Agreement was terminated and from 1st January, 2011 onwards, we ceased to engage
Pyramid Media to provide any services to our Group. At around the same time, the disposal of
Mr. Fang’s equity interests in Pyramid Media was completed and the remaining business of
Pyramid Media is no longer related to our Group.
Pursuant to the termination agreement referred to above, the primary service resources of
Auto 007, including, amongst other things, editorial and content production teams, printers and
distributors, of Pyramid Media were taken up by us at nil consideration which was determined
on the basis of (i) the satisfactory business cooperation between SMU and Pyramid Media since
2004; (ii) the steady track record of income contributed by SMU to Pyramid Media over the years;
and (iii) SMU’s commitment to retain the key employees of Pyramid Media and continue to
operate Auto 007 at its own risks going forward.
In March 2006, we established East Shanghai SumZone jointly with East Shanghai Media
Group. East Shanghai Media Group, the majority shareholder of East Shanghai SumZone, is a
large-scale media enterprise which possesses significant media resources and local connections
through which East Shanghai SumZone is in an advantageous position to identify and introduce
suitable business partners to SMU. The establishment of East Shanghai SumZone facilitated the
expansion of our media operation resources and client base, such as the entrustment
arrangements of Shanghai Today and Shanghai Scene.
In 2006, we launched www.cnnauto.com which is a website providing automobile
consumption information for automobile consumers and it closely cooperated with our own
automobile media such as Auto Report and Auto 007 in providing Internet advertising services for
brands in the automobile industry and supporting our EPR and event marketing businesses. It
also features an “automobile distributors search engine”. Through continuous testing and
upgrade, we enhanced the content of www.cnnauto.com with comprehensive car reviews, car
comparisons and selections, information on protection of rights of automobile consumers and
online forums in order to provide an interactive digital platform for car consumers.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 91 —
B2 Q20
Upon the invitation by Shanghai Journalist Association (上海市新聞工作者協會), an
Independent Third Party, we assisted it to set up and operate Automobile Journalists Association
of Shanghai (上海汽車記者聯會) (“AJAS”), an Independent Third Party, in 2006. We believe
joining such network will assist our expansion in PR business.
In March, 2007, we strengthened our PR business through the establishment of our
professional PR department which comprised a team of existing staff and PR professionals
recruited by us. We aim to provide more structured and customised PR services to major
automobile brands as our concerted efforts to upgrade our professional service capacity and
offerings.
In January, 2008, with a view to effectively integrating our outstanding sales personnel and
professional planning and execution staff, we established our group operational division which
pooled all the then available resources together to strengthen our sales and marketing team
targeting brands in need of more sophisticated marketing and communication services. This
further set the directions for the future development of our integrated marketing communications
businesses.
In June, 2008, we obtained the right to operate Shanghai Today which was founded in 1996
by the Information Office of Shanghai Municipality and is a comprehensive political and
economic issue promoting the economy, politics and cultural development of Shanghai.
In June, 2008, we obtained the right to operate Shanghai Scene which contains articles on
the traditional customs and interesting stories of old Shanghai. It was first published in 1987
targeting readers like China emigrants or their descendants who are interested in the heritage of
Shanghai.
Our publishing partners, Shanghai Scene Magazine (上海灘雜誌社), Shanghai Today
Magazine (今日上海雜誌社) and Shanghai Business Daily Media Company Limited (上海商報傳媒有限公司) are publishers of periodicals and newspaper under the applicable laws and regulations
in China. Shanghai Scene Magazine, an Independent Third Party, was established as an institution
as legal person (事業單位法人) with the right to operate Shanghai Scene founded in 1987.
According to its legal person certificate, the scope of business of Shanghai Scene Magazine
includes the editing and distribution of Shanghai Scene, and the provision of advertising and
photography services of Shanghai Scene. Shanghai Today Magazine, an Independent Third Party,
was established as an institution as legal person (事業單位法人) with a right to operate Shanghai
Today founded in 1996. According to its legal person certificate, its scope of business includes,
through Shanghai Today, comprehensively introduces the development of Shanghai for the
purpose of providing information in relation to investment in Shanghai, business, sightseeing and
travel. Shanghai Business Daily Media Company Limited, also an Independent Third Party, was
established as an institution as legal person (事業單位法人) and was changed to a domestic
enterprise in 2009. According to its business licence, the scope of business of Shanghai Today
Magazine includes, amongst other things, the publication of Shanghai Business Daily, design,
prepare and release of advertisement and provide advertising agency services.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 92 —
B2 Q20B4 Q20
Since January, 2008, we became one of the PR services providers for the Royal Danish
Consulate General, Shanghai.
In January, 2009, we launched I home which is a professional magazine about lifestyle and
architectural design and decoration and we distributed the magazine to outlets of Red Star
Macalline Home Fashion in the PRC for circulation to potential consumers of home fashion
brands.
In July, 2010, we established our digital marketing division as part of our Group’s strategic
development to increase our product line and scope of services. We transferred internal strategic,
creative and execution staff to such division and recruited external EPR professionals to develop,
amongst other things, our Internet advertising, wireless marketing and EPR businesses.
In July, 2010, as a milestone of our digital marketing business, we commenced our wireless
marketing business by entering into an advertising agency agreement with the exclusive
advertising agency of 12580 Life Journal, a mobile phone magazine distributed through the
network of China Mobile which is an Independent Third Party. We were appointed, on a
non-exclusive basis, as an advertising agency of 12580 Life Journal during the period from 1st
July, 2010 to 31st December, 2010 in relation to the placement of advertisements in 12580 Life
Journal by us for a major international automobile brand.
As our revenue generated from event marketing business gradually increased and in
contemplation of certain large events to be organised by us, in October 2010, we set up our event
marketing division which pooled together existing staff who had been providing event marketing
services to our clients and formed a team of event marketing specialists to tailor integrated
marketing communications services with a primary focus on organising large-scale events on
behalf of our clients. This was an important milestone for us to enhance the professional level
of our event marketing team and our ability to provide a better variety of integrated marketing
communications services.
In 2011, we entered into a strategic partnership agreement with Shanghai Xunqi, the existing
exclusive advertising agency of 12580 Life Journal, for a term of 5 years commencing on 1st
January, 2011. Shanghai Xunqi operates 12580 Life Journal on the mobile communication
platform of China Mobile and disseminates information about lifestyle and spending to more than
40 million subscribers of China Mobile.
On 26th August, 2011, we established SumZone Advertising and SumZone Marketing to
rationalise our advertising, digital marketing and event marketing resources respectively in our
continuous efforts to expand our Group into a major integrated marketing communications
player in the PRC.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 93 —
B2 Q20
B1 Q6B2 Q20B2Q24(i)
B1 Q7(a)B4 Q20
OUR CORPORATE HISTORY
Our Company was established in the Cayman Islands under the Companies Law as an
exempted company with limited liability on 15th March, 2011.
Pursuant to the Reorganisation, our Company became the holding company of our Group on
26th August, 2011. Further information of the Reorganisation is set out in the paragraph
“Reorganisation of Our Group” in this section and the paragraph under “Further Information
about our Company — 4. Corporate reorganisation” in Appendix V to this prospectus.
CORPORATE AND SHAREHOLDING STRUCTURE OF OUR GROUP IMMEDIATELY BEFORE
IMPLEMENTATION OF THE REORGANISATION
Our corporate and shareholding structure immediately before implementation of the
Reorganisation was as follows:
49%
100%
Mr. Fang
SMU(established in the PRC)
East Shanghai SumZone(established in the PRC)
REORGANISATION OF OUR GROUP
Quick Motion was incorporated in BVI on 6th January, 2011 and is an investment holding
company.
Century Linker was incorporated in Hong Kong on 18th January, 2011 and is an investment
holding company. It also carries out certain administrative functions for our Group.
Century Linker established Shanghai SumZone Enterprise, a wholly foreign owned
enterprise, in the PRC on 1st June, 2011 with an initial registered capital of HK$5,000,000, of
which HK$1,000,000 has been paid up.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 94 —
Co.Ord.III(21)
B2 Q23
STRUCTURED CONTRACTS
Introduction
We provide customised advertising, PR and event marketing services for brands by utilising
the capacity and resources of the SMU Publications. During the Track Record Period, SMU
entered into several agreements with East Shanghai SumZone and another publishing partner in
the PRC in connection with the entrustment and transfer of operation and business of the SMU
Publications, details of which are set out in the subsection “Cooperation with our publishing
partners in the PRC” in the section “Business” in this prospectus. According to the terms of the
entrustment agreements and transfer agreements, SMU has been entrusted by its publishing
partners in the PRC to participate in the process of producing the content of the SMU Publications
which are in turn reviewed and approved by the PRC publishing partners of SMU. In addition,
SMU participates in determining the circulation strategy, printing prices and printing costs of the
publications and arranges for printing and distribution of the SMU Publications. Our PRC lawyers
are of the view that on the basis of the various entrusted agreements and transfer agreements,
SMU has been entrusted to participate in content production, printing and distribution of the SMU
Publications, which constitute “publishing activities” under the PRC laws. In accordance with the
PRC laws, publishing of books, newspapers and periodicals is regarded as a category of industry
in which foreign investment is prohibited. In this regard, the operation of the SMU Publications
is subject to prohibition on foreign investment under the PRC laws.
The various entrusted agreements and transfer agreements enable SMU to attain the key
publishing resources to support its business operations, including but not limited to advertising,
PR and event marketing businesses. In relation to our advertising business, SMU participates in
the design, production and release of advertising materials including text advertisements. In
relation to our PR (including EPR) business, SMU is principally involved in the editing,
production and release of PR articles and other promotional materials. In view of the above, the
relevant advertising business relating to content design and production and PR (including EPR)
business in which SMU is engaged, which form part and parcel of our integrated marketing
communications businesses, constitute “publishing activities” and are subject to prohibition on
foreign investment under the PRC laws. Accordingly, the business of SMU, which was the core
operating entity of our Group during the Track Record Period, involves business activities that
are prohibited from foreign investment under PRC laws, which prevents SMU from being included
in our Group directly.
The operation of www.cnnauto.com, our own website which provides an automobile
related information platform for automobile consumers, involve the release of our EPR articles
and for the purpose of supporting our future business expansion, may involve the provision of
value-added telecommunications services in future. As such, the operation of www.cnnauto.com
is a type of business activity subject to prohibition or restriction on foreign investment under the
PRC laws although the operation of the website during the Track Record Period does not fall
within the definition of value-added telecommunications services. We are therefore of the view
that the operation of the SMU Publications and www.cnnauto.com, our relevant advertising
business relating to content design and production as well as our PR (including EPR) business are
Restricted Businesses and they should continue to be operated by SMU after the Listing.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 95 —
B1 Q1(a)B2 Q1
B4 Q1
B6 Q1(ii)
During the Track Record Period, we generated Internet advertising income from advertising
agency activities for www.cnnauto.com, which is not prohibited or restricted under the PRC laws.
As regards our wireless marketing business, as we only acted as an advertising agency of 12580
Life Journal and were not involved in the operation of 12580 Life Journal during the Track
Record Period, our wireless marketing business is not subject to prohibition or restriction on
foreign investment under the PRC laws. Accordingly, advertising agency business arising from the
SMU Publications, www.cnnauto.com, and other advertising media channels and event marketing
businesses are Unrestricted Business and they are being and will be transferred to SumZone
Advertising, SumZone Marketing and, or any other PRC subsidiaries of Shanghai SumZone
Enterprise in pursuance of our Group’s long-term strategic plans.
As the business operations of SMU involve Restricted Businesses, we cannot acquire equity
interest in SMU. As a result, Shanghai SumZone Enterprise, SMU, Mr. Fang and Century Linker
entered into a series of contracts and power of attorney that were designed to provide Shanghai
SumZone Enterprise and thus our Group with effective control over the financial and operational
policies of SMU and (to the extent permitted by PRC laws and regulations) the right to acquire
the equity interests in SMU after the Listing by Century Linker. The Structured Contracts were
entered into on 1st June, 2011 under which all the material business activities of SMU are
instructed and supervised by Shanghai SumZone Enterprise and all economic benefits and risks
arising from the business of SMU are transferred to our Group.
The Structured Contracts currently in force comprise five agreements, namely: (i) the
exclusive consulting and service agreement; (ii) the share pledge agreement; (iii) the exclusive
business operating agreement; (iv) the exclusive option agreement; and (v) the power of
attorney, which were entered into between or amongst SMU, Shanghai SumZone Enterprise, Mr.
Fang and, or Century Linker, and were designed to provide Shanghai SumZone Enterprise and
thus our Group with effective control over the financial and operational policies of SMU and (to
the extent permitted by PRC laws and regulations) the right to acquire the equity interests in SMU
by Century Linker. The PRC legal advisers of our Company have advised that the Structured
Contracts are in compliance with and are enforceable under the existing PRC laws or regulations.
Details of the Structure Contracts are set out below:
• Exclusive consulting and service agreement
Shanghai SumZone Enterprise and SMU entered into an exclusive consulting and service
agreement dated 1st June, 2011, pursuant to which Shanghai SumZone Enterprise will, on an
exclusive basis, provide consulting and other supporting services to SMU.
In consideration of the provision of the aforesaid services provided by Shanghai SumZone
Enterprise to SMU, SMU has agreed to pay to Shanghai SumZone Enterprise service fee on an
annual basis. Service fee payable to Shanghai SumZone Enterprise will be equivalent to the
audited revenue before income tax expenses after deducting, amongst other things, all the
necessary costs, expenses and business tax expenses incurred from the business operation of
SMU. SMU has agreed to pay the service fee before each 31st day of March for service provided
in the preceding year. Nevertheless, Shanghai SumZone Enterprise is entitled to adjust the basis
of service fee according to the scale of service provided to SMU.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 96 —
B1 Q1(d)B2 Q5(ii)
SMU has further agreed to convene board meetings in order to confirm and implement the
payment arrangement of service fee payable to Shanghai SumZone Enterprise, whereas Shanghai
SumZone Enterprise is entitled to and responsible for all economic benefits and risks derived by
SMU. If any operating loss or critical operation adversity occurs, Shanghai SumZone Enterprise
will provide financial support to SMU, and only Shanghai SumZone Enterprise can decide
whether SMU should continue its operation and SMU shall unconditionally accept the decision
made by Shanghai SumZone Enterprise as aforesaid. Our Directors consider that the above
arrangement will ensure the economic benefits generated from the operations of SMU will flow
to Shanghai SumZone Enterprise and hence, our Group as a whole.
Pursuant to the exclusive consulting and service agreement, Shanghai SumZone Enterprise
shall provide advice and recommendations to SMU in respect of its (i) assets and business
operation; (ii) claims and indebtedness; (iii) negotiation of material contracts; (iv) mergers and
acquisitions; and (v) daily business management and staff training. In connection with the above
arrangement, SMU shall not, without the prior written consent of Shanghai SumZone Enterprise
and except in the case of ordinary course of business, amongst other things, deal with SMU’s
assets and interest in business; incur or take up any guarantee or indebtedness; alter its registered
capital or capital structure; or enter into any material contract for an amount more than RMB1
million unless with the prior consent of Shanghai SumZone Enterprise or a director or general
manager of SMU nominated by Shanghai SumZone Enterprise.
The exclusive consulting and service agreement has become effective on 1st June, 2011 and
shall continue to be in full force and effect until it is terminated by Shanghai SumZone Enterprise
by giving SMU a 30 days’ prior written notice of termination. SMU shall have no right to terminate
the exclusive consulting and service agreement in any event.
• Irrevocable powers of attorney
Mr. Fang executed an irrevocable power of attorney dated 1st June, 2011, which enables
Shanghai SumZone Enterprise to exercise all the powers of the shareholder of SMU through the
chairman of its board of directors.
The irrevocable power of attorney has become effective on 1st June, 2011 and shall be in
full force and effect during the term of the Structured Contracts.
Pursuant to the power of attorney, Mr. Fang, being the sole shareholder of SMU, shall in the
interest of and, or as instructed by Shanghai SumZone Enterprise exercise his rights (including
but not limited to rights of voting, dividend, sale or transfer of all or part of his interests in SMU,
distribution of surplus assets in liquidation, and designation or appointment of director(s)); and
in the event of his ceasing to be the chairman of Shanghai SumZone Enterprise, Mr. Fang shall
designate and authorise his successor nominated by Shanghai SumZone Enterprise as the
chairman of Shanghai SumZone Enterprise to assume all his shareholder’s rights and obligations
arising from his interest in SMU pursuant to the power of attorney. Furthermore, Mr. Fang or the
nominated chairman if Mr. Fang ceases to be the chairman of Shanghai SumZone Enterprise shall
transfer all distributible dividends, capital dividend and other asset receivable by him at nil
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 97 —
R11.13(2)
consideration to Shanghai SumZone Enterprise as soon as practicable but in any event no later
than three days upon receipt of the same by Mr. Fang or the nominated chairman (as the case may
be). The Directors consider that the above rights granted under the power of attorney have
strengthened the control of SMU by Shanghai SumZone Enterprise.
• Exclusive business operating agreement
Shanghai SumZone Enterprise, SMU and Mr. Fang entered into an exclusive business
operating agreement dated 1st June, 2011, which took effect upon its signing and remaining in
full force and effect unless it is terminated in accordance with the terms of the exclusive business
operating agreement or other agreements entered among the parties pursuant to which: (a) at the
request of SMU and on condition that SMU has complied with the terms of the exclusive business
operating agreement, Shanghai SumZone Enterprise may (but was not obliged to) act as a
guarantor for SMU in its business-related agreements or transactions; (b) as a counter-guarantee,
SMU agreed to pledge its trade receivables and all its assets to Shanghai SumZone Enterprise; (c)
SMU should not, without the written approval of Shanghai SumZone Enterprise, enter into any
transaction which might affect its assets, rights, obligations or operations; and (d) SMU should
appoint a candidate nominated by Shanghai SumZone Enterprise as director(s) of SMU, and SMU
should appoint a candidate nominated by Shanghai SumZone Enterprise to be a member of the
senior management of SMU.
Pursuant to the exclusive business operating agreement, without the prior written approval
from Shanghai SumZone Enterprise, SMU shall not enter into any transactions that may affect its
assets, obligations, rights or operation, including but not limited to the following matters:
(a) to obtain any advances from third parties or incur any indebtedness;
(b) to dispose of or acquire any assets including but not limited to any intellectual property
rights to or from any third parties;
(c) to provide any guarantee relating to its assets or intellectual property rights to any third
parties; and
(d) to assign any of its rights and obligations under the exclusive business operating
agreement to any third parties.
In addition to the aforesaid, Mr. Fang shall transfer all distributable dividends, capital
dividend and other asset receivable by him at nil consideration to Shanghai SumZone Enterprise
as soon as practicable but in any event no later than three days upon receipt of the same by Mr.
Fang.
Mr. Fang, being the chairman of our Company, has been appointed as the sole director of
SMU and has taken up the leading role in the governance of implementation of the financial and
operating policies in respect of SMU in order to ensure that SMU will be managed and operated
according to our Group’s policies and the terms of the Structured Contracts.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 98 —
R11.13(1)
The exclusive business operating agreement has become effective on 1st June, 2011 and
shall continue to be in full force and effect until it is terminated by Shanghai SumZone Enterprise
by giving each of SMU and Mr. Fang a 30 days’ prior written notice of termination. Pursuant to
the exclusive business operating agreement, Shanghai SumZone Enterprise is also entitled to but
not obliged to terminate all agreements between itself and SMU if any agreement entered into
between them is terminated or expired. In any event, neither SMU nor Mr. Fang has the right to
terminate the exclusive business operating agreement.
• Exclusive option agreement
Century Linker, Mr. Fang and SMU entered into an exclusive option agreement dated 1st
June, 2011, pursuant to which Mr. Fang, being the sole equity holder of SMU, agreed to grant an
irrevocable option to Century Linker to acquire from him all or any of the equity interests he held
in SMU, on condition that such acquisition should comply with the PRC laws and regulations, at
nil consideration or at nominal price if permissible under the PRC law and regulations.
Otherwise, the consideration will be determined by the parties with reference to the valuation of
SMU at the time of transfer.
Pursuant to the exclusive option agreement, SMU has undertaken to perform certain acts or
refrain from performing certain other acts unless it has obtained prior approval from Century
Linker, or Shanghai SumZone Enterprise, or a director or general manager nominated by
Shanghai SumZone Enterprise (as the case may be), including but not limited to the following
matters:
(a) SMU shall not alter its constitutional documents or its registered capital;
(b) SMU shall prudently and effectively operate its business and transactions in accordance
with the good financial and business standards and conventions;
(c) SMU shall not sell, transfer, create encumbrances or otherwise dispose of its any assets,
business, legal or beneficial interest of its income or allow any guarantee or security
to be created on its assets;
(d) SMU shall operate its business in order to maintain its asset value or not allow any acts
or omission which adversely affects its business or assets value;
(e) SMU shall not enter into any material contracts which constitute capital reorganisation,
division, spin-off, bankruptcy, acquisition, merger, joint venture, partnership and other
major issues, other than in the ordinary course of business and the amount is less than
RMB1 million;
(f) SMU shall not incur, take up, guarantee or allow any indebtedness other than those in
the ordinary course of business and having been disclosed to and consented by
Century Linker;
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 99 —
R11.13(2)
(g) as requested by Century Linker, SMU shall provide its operational and financial
information;
(i) SMU shall not engage in any mergers or acquisitions or make investment in any
entities;
(j) SMU shall immediately inform Century Linker if its assets or business involved in any
disputes, litigations, arbitrations or administrative proceedings;
(k) at the request by Shanghai SumZone Enterprise, SMU shall appoint such persons
nominated by Shanghai SumZone Enterprise to act as directors of SMU; and
(l) to maintain all rights in assets owned by SMU, SMU shall sign such documents and take
such actions as necessary or appropriate, and initiate or defend such claims as
necessary or appropriate.
Pursuant to the exclusive option agreement, Mr. Fang and SMU have undertaken that,
amongst other things, the performance of any of their obligations under the exclusive option
agreement will not result in breach of any applicable PRC laws and any contract or agreement to
which either of them is a party or which has a binding effect on either of them.
The exclusive option agreement has become effective on 1st June, 2011 and shall continue
to be in full force and effect until the transfer of all the equity interests in SMU by Mr. Fang to
Century Linker or a transferee as designated by Century Linker (based on the date of registration
of such transfer) or otherwise terminated by Century Linker unilaterally by written confirmation.
• Share pledge agreement
Shanghai SumZone Enterprise and Mr. Fang entered into a share pledge agreement dated 1st
June, 2011, pursuant to which Mr. Fang agreed to pledge his entire equity interests in SMU to
Shanghai SumZone Enterprise to secure the fees and other payables that SMU might be liable to
pay to Shanghai SumZone Enterprise under the exclusive consulting and service agreement from
time to time.
Pursuant to the share pledge agreement, Mr. Fang has undertaken to Shanghai SumZone
Enterprise, amongst other things:
(a) not to transfer the interest in his shares in SMU (save and except transfers of shares to
Century Linker and, or other designated persons) and not to create or allow any pledge
thereon that may affect the rights and interest of Shanghai SumZone Enterprise without
the prior written consent from Shanghai SumZone Enterprise;
(b) to comply with and implement the requirements under all applicable PRC laws and
regulations, and on the receipt of any notice, order or proposal issued by any
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 100 —
R11.13(2)
competent authority in relation to the share pledge, to deliver the same to Shanghai
SumZone Enterprise not later than 5 days after such receipt and to comply with such
notice, order or proposal, or raise objections and comments according to Shanghai
SumZone Enterprise’s reasonable instructions or its consents;
(c) to promptly notify Shanghai SumZone Enterprise any event or notice of event that may
affect Mr. Fang’s equity interest in SMU or the validity of the warranties and
representations made by Mr. Fang under the share pledge agreement; and
(d) to comply with his warranties, undertakings, agreements, representations and
obligations under the share pledge agreement and to compensate Shanghai SumZone
Enterprise in the event that Mr. Fang fails to perform or fully fulfill such warranties,
undertakings, agreements, representations and obligations.
Under the share pledge agreement, Mr. Fang is, among other things, deemed to have
defaulted on the terms of the share pledge agreement if:
(a) Mr. Fang is insolvent or fails to fulfill any of his personal debt or repayment
obligations; or
(b) Mr. Fang’s successors or personal representatives only partially perform or fail to
perform the payment obligations under the exclusive consulting and service
agreement.
If any of the events of default set out in the share pledge agreement occurs, Shanghai
SumZone Enterprise shall be entitled to exercise the following rights:
(a) if service fees payable by SMU to Shanghai SumZone Enterprise under the exclusive
consulting and service agreement has not been fully settled, Mr. Fang shall not transfer
his equity interest in SMU without the written consent of Shanghai SumZone
Enterprise;
(b) Shanghai SumZone Enterprise shall issue notice of default to Mr. Fang when exercising
its rights under the share pledge agreement;
(c) unless Mr. Fang has rectified defaults occurred to the satisfaction of Shanghai SumZone
Enterprise, Shanghai SumZone Enterprise may at the time of or any time after the issue
of notice of default exercise its rights to take remedial actions against Mr. Fang;
(d) Shanghai SumZone Enterprise is in priority to acquire the equity interests in SMU at a
discounted price, or at such price obtained in tender or by sale in accordance with the
PRC statutory procedures until all unpaid service fees payable under the exclusive
consulting and service agreement and all other payables have been fully settled; and
(e) Mr. Fang shall not hinder and shall provide necessary assistance if Shanghai SumZone
Enterprise exercises and implements its rights under the share pledge agreement.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 101 —
B6Q5
According to the terms of the share pledge agreement and the PRC laws, rights and
obligations in the share pledge agreement will be succeeded by the successors of Mr. Fang and
Shanghai Sumzone Enterprise.
The share pledge agreement dated 1st June, 2011 was registered on SMU’s register of
shareholders and with the Administration for Industry and Commerce on 24th October, 2011,
following which the share pledge agreement shall be in full force and effect until the termination
of the exclusive consulting and service agreement and the discharge of all SMU’s obligations
under the exclusive consulting and service agreement.
Diagrammatic representation of the Structured Contracts
The following simplified diagram illustrates how the Structured Contracts effectively
transfer the economic benefits of SMU and pass the risks associated therewith to our Group as
stipulated under the Structured Contracts:
100%
100%
100%
100% (2), (3) and (4) dividend, power of attorney, exclusive business operating arrangements and
share pledge
(5) option to acquire equity interest in
SMU
(1) service fee
(1) provision of consultation and ancillary services
Structured Contracts
Mr. Fang
SMU
Company
Quick Motion
Century Linker
Shanghai SumZone Enterprise
Structured Contracts
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 102 —
B1 Q1(f)
B2 Q5(ii)
B2 Q5(vi)
Notes:
1. Shanghai SumZone Enterprise provides consultation and ancillary services to SMU. In return, SMU shall pay
consultation service fee (being its audited revenue before income tax expenses after deducting, amongst other
things, all the necessary costs, expenses and business tax expenses incurred from the business operation of SMU)
to Shanghai SumZone Enterprise on an annual basis, pursuant to the exclusive consulting and service agreement.
2. Pursuant to the power of attorney and the exclusive business operating agreement, Mr. Fang shall transfer all
distributable dividends, capital dividend and other assets receivable by him at nil consideration to Shanghai
SumZone Enterprise as soon as practicable but in any event no later than three days upon receipt of the same by
Mr. Fang.
3. In the interest of and, or as instructed by Shanghai SumZone Enterprise, Mr. Fang, as sole director of SMU, shall
exercise his rights (including but not limited to the rights of voting, dividend, sale or transfer of all or part of his
interests in SMU, distribution of surplus assets in liquidation, and designation or appointment of director(s)), and
in the event of his ceasing to be the chairman of Shanghai SumZone Enterprise, Mr. Fang shall designate and
authorise his successor nominated by Shanghai SumZone Enterprise as the chairman of Shanghai SumZone
Enterprise to assume all his shareholder’s rights and obligations under the power of attorney.
4. Pursuant to the share pledge agreement, Mr. Fang has pledged the entire equity interest in SMU to Shanghai
SumZone Enterprise as a first priority security for guaranteeing the payment of the service fee under the exclusive
consulting and service agreement.
5. Mr. Fang has irrevocably granted an option to Century Linker to acquire the entire equity interest in SMU on the
terms of the exclusive option agreement.
Conduct of operations in compliance with the Structured Contracts
Our Group has adopted and will adopt the following procedures, systems and controls to
ensure the sound and effective operation of our Group (including SMU) and the implementation
of the Structured Contracts after the Listing:
(a) as part of our internal control measures, major issues arising from implementation of
the Structured Contracts will be reviewed by the Board (including the independent
non-executive Directors) on a regular basis, which will be no less frequent than on a
quarterly basis;
(b) matters relating to compliance and regulatory enquiries from governmental authorities
(if any) will be discussed at such regular meetings or extraordinary meetings of the
Board (including the independent non-executive Directors), if appropriate, which will
be no less frequent than on a quarterly basis;
(c) the relevant business units and operation divisions of our Group will report regularly
(which will be no less frequent than on a monthly basis) to the senior management of
our Company in relation to the compliance and performance conditions under the
Structured Contracts and other related matters and the senior management of our
Company will in turn report any non-compliance issues to the Board (including
independent non-executive Directors) on a regular basis;
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 103 —
B2 Q5(vii)(c)
(d) given that the Structured Contracts will constitute continuing connected transactions of
our Company upon Listing, our Company has applied to the Stock Exchange, and the
Stock Exchange has agreed to grant a waiver, further information on which is set out
in the section “Connected Transactions” in this prospectus. Our Company will comply
with the conditions prescribed under the waiver given by the Stock Exchange in
connection with the continuing connected transactions contemplated under the
Structured Contracts;
(e) (if required) legal advisors and, or other professionals will be retained to assist our
Group to deal with specific issues arising from the Structured Contracts; and
(f) our independent non-executive Directors will review the compliance of the Structured
Contracts on an annual basis and their confirmation will be disclosed in our annual
report.
To ensure that Mr. Fang and SMU will comply with the Structured Contracts, we have
decided to further introduce the following measures:
(i) subject to completion of relevant PRC regulatory and registration procedures, the
number of directors of SMU will be increased from one to three, including Mr. Fang,
an executive Director, and Mr. Lin and Mr. Fan, the non-executive Directors, or such
number of directors or composition of the board of SMU to be determined by the
nomination committee of the Company (comprising all independent non-executive
Directors) from time to time to the effect that Mr. Fang will not be able to control the
majority of the board of SMU. The three independent non-executive Directors will
continue to play an independent role in the Board by reviewing the effective
implementation of the procedures and controls referred to above and compliance of
the Structured Contracts;
(ii) going forward, Mr. Fang shall abstain from voting on any resolutions of SMU in which
he may have conflict of interest, and all resolutions shall be passed unanimously or by
the affirmative vote of a simple majority of the board of SMU (as the case may be), and
if any resolution could not be passed by the board of SMU unanimously or by a simple
majority of votes (as the case may be), such resolution would be considered as
disapproved; and
(iii) our Group has implemented corporate governance measures referred to in the section
“Directors, senior management and employees — Management of conflict of interest
between our Group and Directors” in this prospectus to manage any conflict of interest
between our Group and the Directors.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 104 —
Effect and legality of the Structured Contracts
The PRC legal advisers of our Company are of the opinion that:
1. based on the prevailing laws and regulations in the PRC, the Structure Contracts are in
compliance with, and do not violate the existing rules, regulations and laws in the PRC
including but not limited to “Catalogue of Industries for Guiding Foreign Investment”;
2. each of the above contracts was, unless terminated, legal, valid and binding on the
contracting parties under the PRC laws;
3. the Structured Contracts are in compliance with the respective articles of association of
Shanghai SumZone Enterprise and SMU; and
4. no filings, approvals and licences of any PRC government authorities were or are
required in connection with the execution, delivery and enforceability of each of the
above contracts, except for the share pledge agreement.
In addition, on 20th September, 2011, the Ministry of Commence of the PRC (“MOC”)
clarified, amongst other things, that no laws, regulations and policies have been issued by the
MOC to govern variable interest entities (“VIE” )structures in the PRC. In view of the above and
pursuant to the relevant PRC laws and regulations, in the opinion of our PRC lawyers, the
authority in charge of approving foreign investment has not introduced any specific regulations
and policies to regulate VIE structures. Accordingly, our Group is not required to obtain any
approval from the regulatory authorities in regard to the Structured Contracts. In addition, on the
basis of the principle of non-retrospectivity of laws (法不溯及既往原則) under the Legislation Law
of the People’s Republic of China and other relevant PRC laws and regulations, generally, PRC
laws or regulations take effect towards the future upon promulgation or on the prescribed
effective dates and have no retrospective effect. In this regard, our PRC lawyers are of the
opinion that as the PRC government has not introduced any specific laws, regulations and
policies to regulate VIE structures, we are not required to obtain any approval from the regulatory
authorities in regard to the Structured Contracts, and that even if the PRC government introduces
laws, rules and, or regulations to regulate such structures in future, under the principle of
non-retrospectivity of laws, the status of compliance with applicable laws and regulations
regarding the Structured Contracts and the VIE structure of our Group shall not be affected.
Further, on 10th November, 2011, our PRC lawyers have consulted the MOFCOM on an
informal basis regarding VIE structures. According to the reply of relevant personnel at the
Department of Foreign Investment Administration of MOFCOM (中華人民共和國商務部外國投資管理司), at present, there are no specific laws, regulations or policies to regulate VIE structures
in the PRC, and the Structured Contracts are subject to the independent opinions of the PRC
lawyers.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 105 —
B1 Q1(g)
B2 Q5(i)
B1 Q1(b)B2 Q4
B3 Q1(b)
B4 Q4
Upon due and reasonable enquiries, our PRC lawyers are of the opinion that during the
Track Record Period and up to the Latest Practicable Date, the PRC subsidiaries of our Group
including SMU have complied with all the relevant laws and regulations relating to their
operations in all material respects before and after implementation of the Structured Contracts.
The Directors and the Sponsor are therefore of the view that there are no recent PRC government
policies restricting the Listing by using VIE contracts and the Structured Contracts are not likely
to be challenged by the relevant authorities until new policies are officially announced by the
MOC in relation to VIE structures.
Since Century Linker and Mr. Fang (other than the business of our Group) currently have no
direct business operating in the PRC and according to our PRC lawyers, they are therefore not
required to obtain any permits, approvals or other certificates of qualifications from the PRC
government. As for Shanghai SumZone Enterprise and SMU, after due and reasonable enquiries,
in the opinion of the PRC lawyers, the two companies have obtained all the necessary permits,
approvals and certificates of qualifications to carry out their existing business activities in the
PRC.
Manner of settlement of disputes which may arise from the Structured Contracts
Pursuant to the Structured Contracts, any dispute arising from the interpretation and
implementation of the Structured Contracts between the parties should first be resolved through
negotiation, failing which any party may submit the said dispute to the China International
Economic and Trade Arbitration Commission with a view to resolving the dispute through
arbitration in accordance with the arbitration rules of the commission. The results of the
arbitration shall be final and binding on all relevant parties.
Our PRC lawyers have confirmed that the abovementioned dispute resolution provisions set
forth in the Structured Contracts are in compliance with the PRC laws, legally valid and binding
on the relevant signatories.
Basis of consolidating the results of SMU (including the revenue and profit
attributable to SMU during the Track Record Period)
The Structured Contracts collectively permitted Shanghai SumZone Enterprise to
consolidate the financial results of SMU as a wholly owned subsidiary of Shanghai SumZone
Enterprise because the above contracts effectively transfer the economic risks and benefits of
SMU to Shanghai SumZone Enterprise commencing from 1st June, 2011.
Since SMU, Century Linker and Shanghai SumZone Enterprise are under common control by
Mr. Fang under the Structured Contracts, the Reporting Accountants of our Company concur with
management’s view to consolidate the results of SMU in the financial statements of Shanghai
SumZone Enterprise before and after the Listing. The basis of consolidating the results of SMU is
disclosed in note 1 to the Accountants’ Report set out in Appendix I to this prospectus.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 106 —
Q4 Q5(ii)
B4 Q5(ii)
B1 Q1(c)
B2 Q5(vii)(b)
B2 Q5(iv)
B4 Q5(i)
THE PROVISIONS OF THE MINISTRY OF COMMERCE ON IMPLEMENTING THE SYSTEM
OF SECURITY REVIEW FOR ACQUISITIONS OF DOMESTIC ENTERPRISES BY FOREIGN
INVESTORS (THE ‘PROVISIONS’)
On 25th August, 2011, the MOFCOM published the Provisions which came into force as of
1st September, 2011.
For the purpose of supporting our future business expansion, including, amongst other
things, value-added services in relation to wireless marketing, for example, Internet information
services, SMU holds a Value-added Telecommunications Service Operating Permit and foreign
investment in value-added telecommunications services is restricted under PRC laws. Foreign
investors are not entitled to control more than 50% equity interest in such business. Nonetheless,
during the Track Record Period and up to the Latest Practicable Date, we have not commenced
to provide value-added telecommunications services or database marketing services. According
to our PRC lawyers, the Internet advertising, EPR and wireless marketing businesses currently
operated by our Group including the operation of www.cnnauto.com during the Track Record
Period, which remains a type of Restricted Businesses, do not fall into the definition of
value-added telecommunications services.
In relation to the Provisions, as confirmed by our PRC lawyers, the businesses conducted by
us during the Track Record Period do not fall within the scope of industries specified in the list
of industries subject to security review by the commerce authorities in the PRC and therefore we
are not subject to the security review under the Provisions.
OUR OPERATING ENTITIES IN THE PRC
SMU
SMU was established under the laws of the PRC as a domestic company with limited liability
on 16th July, 2003 with a registered capital of RMB 2,000,000 by Mr. Fang, Ms. Zhu, Ms. Zhang
and SumZone Auto and its business scope includes the provision of media investments, design,
production of advertisements, corporate management and consultancy services, PR and event
marketing services. Upon the establishment of SMU, Mr. Fang, Ms. Zhu, Ms. Zhang and SumZone
Auto owned 33%, 37%, 20% and 10% equity interests in SMU respectively. At the time of
establishment of SMU, Ms. Zhu and Ms. Zhang were friends and business partners of Mr. Fang.
SumZone Auto was Mr. Fang’s former employer and then became his business partner. Mr. Fang
had worked as the general manager of SumZone Auto prior to the establishment of SMU.
On 18th February, 2004, Mr. Fang and Ms. Zhang entered into an equity transfer agreement,
pursuant to which Ms. Zhang transferred her 20% equity interest in SMU to Mr. Fang at a
consideration in the amount of RMB 400,000 which was determined in proportion to her equity
interest in SMU. Ms. Zhang, as a friend and a business partner of Mr. Fang, agreed to invest in
SMU but did not participate in the management or operation of SMU. Ms. Zhang then decided to
transfer her 20% equity interest to Mr. Fang at the consideration of RMB400,000 which was
equivalent to her original contribution in SMU through friendly negotiations with Mr. Fang. After
the above transfer, Mr. Fang then owned 53% equity interest in SMU. On the same date, the
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 107 —
B1 Q1(a)
B1 Q18(a)
B1 Q18(a)
B2 Q20B2 Q21
shareholders of SMU approved the above transfer and the amendments of the articles of
association of SMU to change its business scope by including “wholesale and retail of advertising
materials, cultural accessories and craft gifts”. On 24th March, 2004, the Songjiang Branch of
Shanghai Administration for Industry and Commerce (上海市工商行政管理局松江分局) issued a
new business licence to SMU.
On 29th September, 2010, Mr. Fang and Ms. Zhu entered into an equity transfer agreement,
pursuant to which Ms. Zhu transferred her 37% equity interest in SMU to Mr. Fang at a
consideration in the amount of RMB 740,000 which was determined in proportion to her equity
interest in SMU. Ms. Zhu, as a friend and a business partner of Mr. Fang, agreed to invest in SMU
but did not participate in the management or operation of SMU. Ms. Zhu then decided to transfer
her 37% equity interest to Mr. Fang at the consideration of RMB740,000 which was equivalent to
her original contribution in SMU through friendly negotiations with Mr. Fang. On 1st December,
2010, Mr. Fang and SumZone Auto entered into an equity transfer agreement, pursuant to which
SumZone Auto transferred its 10% equity interest in SMU to Mr. Fang at a consideration in the
amount of RMB 3,639,000 which was determined with reference to the appraised value of the
entire equity interest of SMU as at 30th September, 2010 in the amount of RMB36,390,000 as
provided in the valuation report issued by 上海集聯資產評估有限公司 (Shanghai Jilian Assets
Appraisal Co., Ltd.) on 8th November, 2010. At the time of establishment of SMU, SumZone Auto
was Mr. Fang’s former employer and later became his business partner. SumZone Auto then
agreed to invest in SMU and cooperated with Mr. Fang in the business and operation of SMU. In
consideration of more involvement and contribution in the business development and operation
of SMU by SumZone Auto, Mr. Fang agreed to acquire the 10% equity interest from SumZone Auto
based on the appraised value of SMU after arm’s length negotiation with Mr. Fang. After the above
transfers, Mr. Fang then owned the entire equity interest in and became the sole beneficial owner
of SMU and remains as the sole beneficial owner of SMU up to the Latest Practicable Date. The
business scope of SMU includes the provision of media investments and design, production,
agency and release of various advertisements, corporate management and consultancy services,
PR in major events, wholesale and retail of advertising materials, cultural accessories and craft
gifts.
SumZone Auto was established on 8th January, 2002, with registered capital of RMB 6
million and a registered address of SumZone Auto at 45/F, 3 Yanshou Road, Litahui Town,
Songjiang District, Shanghai, China. The legal representative was Wang Delai. The company’s
principal business activities include providing four-technical services in computer multimedia,
networking, and automotive information consulting, planning large-scale public relations events,
advertising design and production, and advertising agency (involving, and operated in
accordance with the relevant licences).
SumZone Auto’s founding shareholders include Wang Delai (44% equity interest), Qiu
Yueping (36% equity interest) and Shanghai Jiefang Advertising Limited (上海解放廣告有限公司)
(20% equity interest). All shareholders are Independent Third Parties.
Since SumZone Auto had no active business activities for an extended period of time, the
shareholders believe the continuation of SumZone Auto was unnecessary. As a result, the
company was liquidated on 29th July, 2011.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 108 —
B1 Q18(b)
B2 Q20B2 Q21
B2 Q20B2 Q21
B1 Q19
B1 Q19
Mr. Fang, being the chairman of our Company, has been appointed as the sole director of
SMU and has taken up the leading role in the governance of implementation of the financial and
operating policies in respect of SMU in order to ensure that SMU will be managed and operated
according to our Group’s policies and the Structured Contracts.
East Shanghai SumZone
East Shanghai SumZone was established in the PRC with limited liability and a registered
and paid up capital of RMB 2,000,000 on 27th March, 2006. Upon the establishment of East
Shanghai SumZone and up to the Latest Practicable Date, SMU and East Shanghai Media Group,
an Independent Third Party, owned 49%, and 51% equity interests in East Shanghai SumZone
respectively. The business scope of East Shanghai SumZone includes, amongst other things,
design, production, agency and release of various advertisements, corporate management and
consultancy services, technical development and consultancy, PR and event marketing services
and lease of electric equipment.
On 26th August, 2011, we established SumZone Advertising and SumZone Marketing. On the
basis of the Structured Contracts and in pursuance of our Group’s long-term strategic plans,
SMU’s advertising agency business based on traditional and digital media and event marketing
business, which are not subject to prohibition on foreign investment in the PRC, and relevant
contracts and staff as well as intellectual property rights of SMU are being and will be transferred
to SumZone Advertising, SumZone Marketing and, or any other PRC subsidiaries of Shanghai
SumZone Enterprise, as more fully explained in the subsection “Structured Contracts” above and
the section “Business — Transfer of businesses” in this prospectus.
As advised by our PRC lawyers, other than the entities prescribed by the PRC laws and
administrative regulations that are required to apply for advertising operation licences, PRC laws
do not require any other entities or individuals to obtain advertising operation licences for
engaging in advertising business. Accordingly, in connection with the above-mentioned
businesses that are being transferred and will be transferred to the PRC subsidiaries of our Group,
we are not required to obtain any permits, certificates and licences from the PRC government or
go through any other local legal procedures.
Details and timetable in connection with the transfer of our businesses to SumZone
Advertising and SumZone Marketing are set out in the section “Business — Transfer of
businesses” in this prospectus.
SumZone Advertising
SumZone Advertising was established in the PRC with limited liability and a registered and
paid up capital of RMB 1,000,000 on 26th August, 2011. SumZone Advertising is wholly owned
by Shanghai SumZone Enterprise and its business scope includes the provision of design,
production, release and agency for various advertisement, organisation of cultural arts exchange
activities, business information consultation, craft gifts, advertising materials, wholesale of
cultural products (except for exclusive control).
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 109 —
B2 Q5(i)
SumZone Advertising was established with a view to rationalising our advertising resources
and service capabilities as part of our long term business development and expansion plans.
SumZone Marketing
SumZone Marketing was established in the PRC with limited liability and a registered and
paid up capital of RMB 1,000,000 on 26th August, 2011. SumZone Marketing is wholly owned by
Shanghai SumZone Enterprise and its business scope includes the provision of marketing
planning, development in the field of computer technology, technical consultation, technical
service, corporate information consultation, computer network engineering (except for special
approval), public relations in major events, development and sale of computer software and
hardware (except for special products on computer information system safety) and wholesale of
craft gifts and electronic products.
SumZone Marketing was established with a view to rationalising our digital marketing and
event marketing resources and expanding our digital marketing business, which is of strategic
importance to our Group and expected to be the future growth engine of our Group’s business.
INTRODUCTION OF STRATEGIC INVESTORS
(1) Jolly Win Agreement
On 20th April, 2011, our Company entered into the Jolly Win Agreement with (1) Jolly Win
and (2) Mr. Fang, pursuant to which Jolly Win agreed to subscribe for 120 Shares (“Jolly Win
Shares”) in our Company, representing 12% of the enlarged share capital of our Company
immediately upon the subscription of the Jolly Win Shares, for an aggregate subscription price
in Hong Kong dollars equivalent to RMB 20 million (“Subscription Price”) (the “Jolly Win
Investment”). The Subscription Price was arrived at after arm’s length negotiations among Jolly
Win, Mr. Fang and our Company with regard to the historical operating and financial performance
and future business prospects of our Group. The Jolly Win Investment was completed on 25th
May, 2011, the proceeds from which have been and will be utilised for general working capital
and business development pursuant to our Group’s strategic plans.
Jolly Win is a limited company incorporated in BVI on 6th June, 2007 and directly wholly
owned by Mr. Lin, our non-executive Director. Save as disclosed above, Jolly Win has no other
relationship with our Company’s connected persons. It is the offshore investment platform of Mr.
Lin and is principally engaged in securities and equity investments. Mr. Lin has significant
investment appetite for and interest in investing branding services, advertising and media
companies. Mr. Lin shows high regard for our management team with hands-on brand
management experience and extensive media experience. Jolly Win, being Mr. Lin’s investment
platform, invested in our Group because it is optimistic about the future development of the
consumer service industry in the PRC and it believes that it will contribute commercial resources
and bring business opportunities to our Group.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 110 —
SC 2.15(c)
SC 2.15(b)
Pursuant to the Jolly Win Agreement, Mr. Fang has warranted and undertaken to Jolly Win
the audited net profits after tax and minority interests but before listing expenses for the financial
years ending 31st December, 2011, 2012 and 2013 of our Company to be no less than RMB 24
million, or less than RMB 40 million but equal to or more than RMB 24 million, RMB 30 million
and RMB 40 million respectively. If the audited net profits after tax and minority interests but
before listing expenses for the relevant financial years are less than the respective warranted
profits referred to above, Jolly Win will be entitled to a provision of consideration adjustment as
set out below.
The above warranted profit amounts of RMB 24 million or less than RMB 40 million but equal
to or more than RMB 24 million for 2011, RMB 30 million for 2012 and RMB 40 million for 2013
as stipulated in the Jolly Win Agreement were negotiated between Mr. Fang and Jolly Win for
consideration adjustment purpose and arrived at after the discussions between Jolly Win and Mr.
Fang with reference to the historical operating and financial performance and future business
prospects of our Group. The actual amount of our Group’s profit for each of the financial years
ending on 31st December, 2011, 2012 and 2013 will be subject to risks and uncertainty relating
to future events and circumstances some of which may be beyond the control of our Group, and
may differ materially from the above warranted profit amounts. The above warranted profit
amounts do not constitute profit forecasts of our Company under the GEM Listing Rules and such
amounts should not be regarded in any way as an indication of our Group’s projected profits for
the relevant financial years. There is no assurance that our Group can achieve such amounts of
profit for the relevant financial years.
2011 Adjustment
According to the Jolly Win Agreement, in the event that the audited net profit after tax and
minority interests but before listing expenses of our Company for the financial year ending 31st
December, 2011 (“2011 ANP”) is less than RMB 40 million (“2011 Warranted Profit”) but is equal
to or more than RMB 24 million, and provided that all applicable laws and regulations including
but not limited to the GEM Listing Rules are complied with and that there are no objections from
the Stock Exchange or other relevant regulatory authorities, Jolly Win shall be entitled to give
written notice to Mr. Fang requiring Mr. Fang to compensate Jolly Win in cash (the “2011 Cash
Adjustment”). In this instance, the 2011 Cash Adjustment for Jolly Win is equivalent to the sum
of cash compensation (to be determined based on the following formula) plus 10% interest per
annum.
Cash compensation =Hong Kong dollars
equivalent toRMB8,000,000
x(2011 Warranted Profit - 2011 ANP)
16,000,000
In the event that 2011 ANP is less than RMB 24 million, and provided that all applicable laws
and regulations including the GEM Listing Rules are complied with and that there are no
objections from the Stock Exchange or other relevant regulatory authorities, Jolly Win shall be
entitled to give written notice to Mr. Fang to compensate Jolly Win in cash. In this instance, the
2011 Cash Adjustment for Jolly Win is the sum of cash compensation at Hong Kong dollars
equivalent to RMB8,000,000 plus 10% interest per annum.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 111 —
B1 Q21
Any 2011 Cash Adjustment for Jolly Win must be completed within 20 Business Days after
the publication of the audited financial statements of our Company for the year ending 31st
December, 2011 provided that Jolly Win shall serve the relevant written notice upon or within 15
Business Days after the publication of such financial statements, failing which Jolly Win shall be
deemed to have waived its right thereunder.
As disclosed in this prospectus, the (i) net profit after tax and minority interest and (ii) the
listing expenses for the year ended 31st December, 2011 were RMB34,453,305 and RMB5,590,415
respectively. Accordingly, the 2011 ANP amounted to RMB40,043,720, and therefore Mr. Fang
shall not be required to compensate Jolly Win for the year ended 31st December, 2011.
2012 Adjustment
In the event that the audited net profit after tax and minority interests but before listing
expenses of our Company for the financial year ending 31st December, 2012 (“2012 ANP”) is less
than RMB 30 million (“2012 Warranted Profit”), and provided that all applicable laws and
regulations including the GEM Listing Rules are complied with and that there are no objections
from the Stock Exchange or otherrelevant regulatory authorities, Jolly Win shall be entitled to
give written notice to Mr. Fang requiring Mr. Fang to compensate Jolly Win in cash (the “2012
Cash Adjustment”). The 2012 Cash Adjustment for Jolly Win is equivalent to the sum of
compensation (to be determined based on the following formula) plus 10% interest per annum.
Cashcompensation
=
Hong Kong dollarsequivalent to(SubscriptionPrice - 2011
Cash Adjustment)
x(2012 Warranted Profit
- 2012 ANP)30,000,000
x
(Subscribed Shares- Disposed Shares)Subscribed Shares
(Notes)
Notes:
(i) Subscribed Shares mean the Jolly Win Shares together with the aggregate Shares to be issued and allotted
to Jolly Win pursuant to the Capitalisation Issue, excluding Shares acquired or disposed of by Jolly Win after
the Listing, if any.
(ii) Disposed Shares mean any of the Subscribed Shares to be disposed of by Jolly Win at any time after the
subscription of the Jolly Win Shares in whole or in part in whatsoever manner.
Any 2012 Cash Adjustment for Jolly Win must be completed within 20 Business Days after
the publication of the audited financial statements of our Company for the year ending 31st
December, 2012 provided that Jolly Win shall serve the relevant written notice upon or within 15
Business Days after the publication of such financial statements, failing which Jolly Win shall be
deemed to have waived its right thereunder.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 112 —
2013 Adjustment
In the event that the audited net profit after tax and minority interests but before listing
expenses of our Company for the financial year ending 31st December, 2013 (“2013 ANP”) is less
than RMB 40 million (“2013 Warranted Profit”), and provided that all applicable laws and
regulations including the GEM Listing Rules are complied with and there are no objections from
the Stock Exchange or other relevant regulatory authorities, Jolly Win shall be entitled to give
written notice to Mr. Fang requiring Mr. Fang to compensate Jolly Win in cash (the “2013 Cash
Adjustment”). The 2013 Cash Adjustment for Jolly Win is equivalent to the sum of cash
compensation (to be determined based on the following formula) plus 10% interest per annum.
Cashcompensation
=
Hong Kong dollarsequivalent to(SubscriptionPrice - 2011
Cash Adjustment- 2012 CashAdjustment)
x(2013 Warranted Profit
- 2013 ANP)2013 Warranted Profit
x(Subscribed Shares- Disposed Shares)Subscribed Shares
Any 2013 Cash Adjustment for Jolly Win must be completed within 20 Business Days after
the publication of the audited financial statements of our Company for the year ending 31st
December, 2013 provided that Jolly Win shall serve the relevant written notice upon or within 15
Business Days after the publication of such financial statements, failing which Jolly Win shall be
deemed to have waived its right thereunder.
All the rights granted to Jolly Win pursuant to the Jolly Win Agreement including but not
limited to the special right to nominate a Director and the right to approve certain reserved
matters, and, amongst other things, to approve issue and allotment of Shares other than those
contemplated under the Listing will only remain valid and subsisting so long as it holds any
Shares and in any event will automatically terminate upon the Listing Date.
Mr. Lin is the non-executive Director nominated by Jolly Win pursuant to the nomination
right under the Jolly Win Agreement, whose appointment is with an initial term of three years
subject to the retirement and re-election requirements under the Articles.
Under the Jolly Win Agreement, Mr. Fang and Jolly Win will be bound by the restrictions of
transfer of the Shares under the GEM Listing Rules, and agree under normal market condition (but
not otherwise) not to deal with their Shares in a disorderly manner which could reasonably be
expected to have a material adverse effect on the price of the Shares. Jolly Win further undertakes
that it will at all times comply with the requirements of the GEM Listing Rules in dealing with its
interest in the Shares including, without limitation, not to deal with or enter into any agreement
to deal with its interest in the Shares during the six months after the Listing Date or any longer
period as may be required by the Stock Exchange.
As a result of the completion of the Jolly Win Investment under the Jolly Win Agreement,
Jolly Win was interested in 12% of the issued share capital of our Company immediately before
completion of the Placing and the Capitalisation Issue. The Jolly Win’s shareholding in our
Company will not be counted towards the public float under the GEM Listing Rules as one of our
non-executive Directors, Mr. Lin, is the sole and ultimate shareholder of Jolly Win.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 113 —
SC 2.15(d)
B2 Q22
B2 Q22(i)
SC 2.15(e)
B2 Q22(ii)
The Directors confirm that the terms of the Jolly Win Agreement were determined on an
arm’s length basis with reference to the financial performance of our Group in 2010.
As confirmed by the PRC legal advisers of our Company, since Mr. Lin, the ultimate
shareholder of Jolly Win, invested in our Group as a financial investor and had not directly or
indirectly owned any interest in our PRC subsidiaries prior to the Jolly Win Investment nor
established or controlled any offshore special purpose vehicle with equity interest of domestic
companies, the requirements of Circular No. 75 were not applicable to the Jolly Win Investment.
(2) Whales Capital Agreement
On 20th April, 2011, our Company entered into the Whales Capital Agreement with (1)
Whales Capital, (2) Lapta International and (3) Mr. Fang, pursuant to which Lapta International
agreed to sell and Whales Capital agreed to purchase 130 Shares (“Whales Capital Shares”),
representing 13% of the enlarged share capital of our Company immediately upon the transfer of
the Whales Capital Shares, for an aggregate purchase price in Hong Kong dollar and, or
Singapore dollar equivalent to RMB 21,666,667 (“Purchase Price”) (the “Whales Capital
Investment”). The Purchase Price was arrived at after arm’s length negotiations between Lapta
International and Whales Capital with regard to the historical operating and financial
performance and future business prospects of our Group. The Whales Capital Investment was
completed on 25th May, 2011.
Whales Capital is a limited company incorporated in BVI on 28th March, 2011 and indirectly
wholly owned by Mr. Fan, our non-executive Director. Save as disclosed above, Whales Capital
has no other relationship with our Company’s connected persons. It mainly invests in growing
PRC enterprises and provides them with financial consultation service. It focuses on sectors such
as cultural media, retailing, modern service and cultural real estate. Whales Capital, being a
strategic investor with asset and equity investment background, invested in our Group pursuant
to its investment policy in selecting good quality companies in industries with growth potential.
Whales Capital invested in our Group because of our Group’s full-service business model,
professional teams and good financial performance and it believes that our Group will achieve
rapid growth on the back of continuous macroeconomic developments and strong growth in
domestic consumption in the PRC.
Pursuant to the Whales Capital Agreement, Mr. Fang has warranted and undertaken to
Whales Capital the audited net profits after tax and minority interests but before listing expenses
for the financial years ending 31st December, 2011, 2012 and 2013 of our Company to be no less
than RMB 24 million, or less than RMB 40 million but equal to or more than RMB 24 million, RMB
30 million and RMB 40 million respectively, which are the same as the warranted profits given to
Jolly Win as discussed above. If the audited net profits after tax and minority interests but before
listing expenses for the relevant financial years are less than the aforesaid respective warranted
profits respectively, Whales Capital will be entitled to a provision of consideration adjustment as
set out below.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 114 —
B1 Q17
SC 2.15(c)
SC 2.15(b)
The above warranted profit amounts of RMB 24 million or less than RMB 40 million but equal
to or more than RMB 24 million for 2011, RMB 30 million for 2012 and RMB 40 million for 2013
as stipulated in the Whales Capital Agreement were negotiated amongst Lapta International, Mr.
Fang and Whales Capital for consideration adjustment purpose and arrived at after the arm’s
length discussions between Whales Capital and Mr. Fang with reference to the historical
operating and financial performance and future business prospects of our Group. The actual
amount of our Group’s profit for each of the financial years ending on 31st December, 2011, 2012
and 2013 will be subject to risks and uncertainty relating to future events and circumstances some
of which may be beyond the control of our Group, and may differ materially from the above
warranted profit amounts. The above warranted profit amounts do not constitute profit forecasts
of our Company under the GEM Listing Rules and such amounts should not be regarded in any
way as an indication of our Group’s projected profits for the relevant financial years. There is no
assurance that our Group can achieve such amounts of profit for the relevant financial years.
2011 Adjustment
According to the Whales Capital Agreement, in the event that the audited net profit after tax
and minority interests but before listing expenses of our Company for the financial year ending
31st December, 2011 of our Company (“2011 ANP”) is less than RMB 40 million (“2011 Warranted
Profit”) but equal to or more than RMB 24 million, and provided that all applicable laws and
regulations including the GEM Listing Rules are complied with and no objections from the Stock
Exchange or other relevant regulatory authorities, Whales Capital shall be entitled to give written
notice to Mr. Fang requiring Mr. Fang to compensate Whales Capital in cash (the “2011 Cash
Adjustment”). In this instance, the 2011 Cash Adjustment for Whales Capital is equivalent to the
sum of cash compensation (to be determined based on the following formula) plus 10% interest
per annum.
Cash compensation =Hong Kong dollars
equivalent toRMB8,666,667
x(2011 Warranted Profit - 2011 ANP)
16,000,000
In the event that 2011 ANP is less than RMB 24 million, and provided that all applicable lawsand regulations including the GEM Listing Rules are complied with and that there are noobjections from the Stock Exchange or other relevant regulatory authorities, Whales Capital shallbe entitled to give written notice to Mr. Fang to compensate Whales Capital in cash. In thisinstance, the 2011 Cash Adjustment for Whales Capital is the sum of cash compensation at HongKong dollars equivalent to RMB8,666,667 plus 10% interest per annum.
Any 2011 Cash Adjustment for Whales Capital must be completed or made within 20Business Days after the publication of the audited financial statements of our Company for theyear ending 31st December, 2011 provided that Whales Capital shall serve the relevant writtennotice upon or within 15 Business Days after the publication of such financial statements, failingwhich Whales Capital shall be deemed to have waived its right thereunder.
As disclosed in this prospectus, the (i) net profit after tax and minority interest and (ii) thelisting expenses for the year ended 31st December, 2011 were RMB34,453,305 and RMB5,590,415respectively. Accordingly, the 2011 ANP amounted to RMB40,043,720, and therefore Mr. Fangshall not be required to compensate Whales Capital for the year ended 31st December, 2011.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 115 —
2012 Adjustment
In the event that the audited net profit after tax and minority interests but before listingexpenses of our Company for the financial year ending 31st December, 2012 of our Company(“2012 ANP”) is less than RMB 30 million (“2012 Warranted Profit”), and provided that allapplicable laws and regulations including the GEM Listing Rules are complied with and that thereare no objections from the Stock Exchange or other relevant regulatory authorities, WhalesCapital shall be entitled to give written notice to Mr. Fang requiring Mr. Fang to compensateWhales Capital in cash (the “2012 Cash Adjustment”). The 2012 Cash Adjustment for WhalesCapital is equivalent to the sum of cash compensation (to be determined based on the followingformula) plus 10% interest per annum.
Cashcompensation
=
Hong Kong dollarsequivalent to
(Purchase Price- 2011 CashAdjustment)
x
(2012 Warranted Profit- 2012 ANP)
x
(Purchased Shares- Disposed Shares)
2012 Warranted Profit PurchasedShares(Notes)
Notes:
(i) Purchased Shares mean Whales Capital Shares together with the aggregate Shares to be issued and allotted
to Whales Capital pursuant to the Capitalisation Issue, excluding any Shares to be acquired or disposed of
by Whales Capital after the Listing, if any.
(ii) Disposed Shares mean any of the Purchased Shares to be disposed of by Whales Capital at any time after the
purchase of the Whales Capital Shares in whole or in part in whatsoever manner.
Any 2012 Cash Adjustment for Whales Capital must be completed within 20 Business Days
after the publication of the audited financial statements of our Company for the year ending 31st
December, 2012 provided that Whales Capital shall serve the relevant written notice upon or
within 15 Business Days after the publication of such financial statements, failing which Whales
Capital shall be deemed to have waived its right thereunder.
2013 Adjustment
In the event that the audited net profit after tax and minority interests but before listing
expenses of our Company for the financial year ending 31st December, 2013 of our Company
(“2013 ANP”) is less than RMB 40 million (“2013 Warranted Profit”), and provided that all
applicable laws and regulations including the GEM Listing Rules are complied with and there are
no objections from the Stock Exchange or other relevant regulatory authorities, Whales Capital
shall be entitled to give written notice to Mr. Fang requiring Mr. Fang to compensate Whales
Capital in cash (the “2013 Cash Adjustment”). The 2013 Cash Adjustment for Whales Capital is
equivalent to the sum of cash compensation (to be determined based on the following formula)
plus 10% interest per annum.
Cashcompensation
=
Hong Kong dollarsequivalent to
(Purchased Price- 2011 Cash
Adjustment - 2012Cash Adjustment)
x(2013 Warranted Profit
- 2013 ANP)2013 Warranted Profit
x(Purchased Shares- Disposed Shares)Purchased Shares
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 116 —
Any 2013 Cash Adjustment for Whales Capital must be completed within 20 Business Days
after the publication of the audited financial statements of our Company for the year ending 31st
December, 2013 provided that Whales Capital shall serve the relevant written notice upon or
within 15 Business Days after the publication of such financial statements, failing which Whales
Capital shall be deemed to have waived its right thereunder.
All the rights granted to Whales Capital pursuant to the Whales Capital Agreement including
but not limited to the special right to nominate a Director and the right to approve certain
reserved matters, and, amongst other things, to approve issue and allotment of Shares other than
those contemplated under the Listing will only remain valid and subsisting so long as it holds any
Shares and in any event will automatically terminate upon the Listing Date.
Mr. Fan is the non-executive Director nominated by Whales Capital pursuant to the
nomination right under the Whales Capital Agreement, whose appointment is of an initial term
of three years subject to the retirement and re-election requirements under the Articles.
Under the Whales Capital Agreement, Mr. Fang, Lapta International and Whales Capital will
be bound by the restrictions on transfer of the Shares under the GEM Listing Rules, and agree
under normal market condition (but not otherwise) not to deal with their Shares in a disorderly
manner which could reasonably be expected to have a material adverse effect on the price of the
Shares. Whales Capital further undertakes that it will at all times comply with the requirements
of the GEM Listing Rules in dealing with its interest in the Shares including without limitation not
to deal with or enter into any agreement to deal with its interest in the Shares during the six
months after the Listing Date or any longer period as may be required by the Stock Exchange.
As a result of the completion of the Whales Capital Investment under the Whales Capital
Agreement, Whales Capital was interested in 13% of the issued share capital of our Company
immediately before completion of the Placing and the Capitalisation Issue. Whales Capital’s
shareholding in our Company will not be counted towards the public float under the GEM Listing
Rules as one of our non-executive Directors, Mr. Fan, is the sole and ultimate Shareholder of
Whales Capital.
The Directors confirmed that the terms of the Whales Capital Agreement were determined
on an arm’s length basis with reference to the financial performance of our Group in 2010.
As confirmed by the PRC legal advisers of our Company, since Mr. Fan, the ultimate
shareholder of Whales Capital, invested in our Group as a financial investor and had not directly
or indirectly owned any interest in our PRC subsidiaries prior to the Whales Capital Investment
nor established or controlled any offshore special purpose vehicle with equity interest of
domestic companies, the requirements of Circular No. 75 were not applicable to the Whales
Capital Investment.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 117 —
SC 2.15(d)
B2 Q22
B2 Q22(i)
SC 2.15(e)
B2 Q22(ii)
B1 Q17
The details of the Jolly Win Investment and the Whales Capital Investment are summarised
as follows:
(1) Jolly Win Investment (completed on 25th May, 2011)
Name of investor : Jolly Win Management Limited
Date of Investment : 20th April, 2011
Amount of consideration paid : being the Hong Kong dollars equivalent to RMB 20
million
Date of payment of
consideration
: 23rd May, 2011
Cost per Share paid : approximately HK$1.32
Shareholding upon Listing : 18,000,000 Shares representing 9% of the issued
share capital of our Company upon Listing
Discount to the Placing Price : approximately 9.59% to 38.32%
Use of proceeds : To be utilised for general working capital and
business development under our Group’s strategic
plans
(2) Whales Capital Investment (completed on 25th May, 2011)
Name of investor : Whales Capital Holdings Limited
Date of Investment : 20th April, 2011
Amount of consideration paid : being the Hong Kong dollars and, or Singapore
dollars equivalent to RMB 21,666,667
Date of payment of
consideration
: 17th May, 2011 — 25th May, 2011
Cost per Share paid : approximately HK$1.35
Shareholding upon Listing : 19,500,000 Shares representing 9.75% of the issued
share capital of our Company upon Listing
Discount to the Placing Price : approximately 7.53% to 36.92%
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 118 —
SC 2.15(a)
CORPORATE AND SHAREHOLDING STRUCTURE BEFORE THE PLACING AND THE
CAPITALISATION ISSUE
Our corporate and shareholding structure before completion of the Placing and the
Capitalisation Issue (taking no account of the Shares that may be issued pursuant to the exercise
of any option that may be granted under the Share Option Scheme) will be as follows:
100%
12% 75% 13%
100%
100%
100%
49%
100% 100%
100%
100% 100%
Lapta International(incorporated in the BVI)
Jolly Win(incorporated in the BVI)
Whales Capital(incorporated in the BVI)
The Company(incorporated in the Cayman Islands)
Quick Motion(incorporated in the BVI)
Century Linker(incorporated in Hong Kong)
Shanghai SumZone Enterprise(established in the PRC)
Offshore
The PRC
SumZone Marketing(established in the PRC)
SumZone Advertising(established in the PRC)
Structured Contracts
SMU(established in the PRC)
East Shanghai SumZone(established in the PRC)
Mr. Fan
(indirectshareholding)
Mr. FangMr. Lin
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 119 —
A1A(29)(1)A1A(29)(2)Co.Ord.III(29)
CORPORATE AND SHAREHOLDING STRUCTURE AFTER THE PLACING AND THE
CAPITALISATION ISSUE
Our corporate and shareholding structure upon completion of the Placing and the
Capitalisation Issue (taking no account of the Shares that may be issued pursuant to the exercise
of any option that may be granted under the Share Option Scheme) will be as follows:
100%
9.75%56.25% 25%
100%
100%
100%
9%
49%
100% 100%
100%100% 100%
Mr. Lin
Lapta International(incorporated in the BVI)
Jolly Win(incorporated in the BVI)
Whales Capital(incorporated in the BVI)
The Company(incorporated in the Cayman Islands)
Quick Motion(incorporated in the BVI)
Century Linker(incorporated in Hong Kong)
Shanghai SumZone Enterprise(established in the PRC)
Offshore
The PRC
SumZone Marketing(established in the PRC)
SumZone Advertising(established in the PRC)
Structured Contracts
SMU(established in the PRC)
East Shanghai SumZone(established in the PRC)
PublicShareholders
Mr. Fang Mr. Fan
(indirect shareholding)
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
— 120 —
A1A(28)(2)
A1A(29)(1)A1A(29)(2)Co.Ord.III(29)