Beruflich Dokumente
Kultur Dokumente
Fogang Kingboard
Industry Ltd.
PRC
13 July 1993
PRC
100% Manufacture
of copper
foil
145,331
Note:
CPG is incorporated in the British Virgin Islands to facilitate the transfer of copper foil among related facilities for further
conversion into finished goods in the PRC.
8. Trade Payables
Group Company
HK$000 HK$000
Outside parties 8,362
9. Other Payables and Accrued Charges
Group Company
HK$000 HK$000
Outside parties 3,666
69
H. NOTES TO THE PROFORMA STATEMENT OF GROUP NET ASSETS AS AT 31 MARCH 1999
(continued)
10. Bank Borrowings
Group Company
HK$000 HK$000
Trust receipt loans 41,699
The bank borrowings are unsecured and bear interest at market rates.
The bank facilities are guaranteed by the Kingboard Group .
11. Loans from Related Parties
Group Company
HK$000 HK$000
Loans from related parties (note 2) 140,000
The loans are unsecured and interest free.
12. Guaranteed Convertible and Exchangeable Notes
Group Company
HK$000 HK$000
Principal amount of the notes issued during the
year 108,444
Accrued interest 2,268
110,712
Issue costs:
Amount incurred (3,024)
Amount amortised during the year 252
(2,772)
Balance at end of year 107,940
On 3 April 1998, HKCF(BVI) and KCHL entered into a subscription agreement with several
independent third parties pursuant to which HKCF(BVI) issued to the subscribers guaranteed
convertible and exchangeable notes in the aggregate principal amount of US$14 million
(equivalent to HK$108,444,000) in denomination of US$100,000 each. An interest of 4% per
annum will be payable semi-annually in arrears on the principal amount of the notes
outstanding subject to a grace period from the date of completion of the transaction to 30 June
1999 (both dates inclusive). During such grace period, there will be neither payment nor
accrual of interest.
70
H. NOTES TO THE PROFORMA STATEMENT OF GROUP NET ASSETS AS AT 31 MARCH 1999
(continued)
12. Guaranteed Convertible and Exchangeable Notes (continued)
KCHL intends to spin-off HKCF(BVI) within six years on an approved stock exchange. Each of
the notes carries with it a right of conversion into shares of HKCF(BVI) or its holding company
which may be set up for the purpose of an initial public offering. If the initial public offering does
not take place within three years, the Noteholders have the option within the succeeding three
years to exchange half of the consideration, after adjusting for interest in accordance with the
agreement, at a price equal to 95% of the average of the closing prices of KCHLs shares
quoted on The Stock Exchange of Hong Kong Limited on the 30 trading days immediately
preceding the date of the exchange, and to receive the other half in cash. If the initial public
offering does not take place within six years, there will be automatic exchange and redemption
under the same terms. The obligations of HKCF(BVI) under the notes are guaranteed by
KCHL.
13. Contingent Liabilities
GROUP
HK$000
Maximum liabilities in respect of:
Cross guarantees to financial institutions to secure credit
facilities for related parties 254,000
Corporate guarantees to financial institutions to secure credit
facilities granted to related parties 200,000
Total 454,000
At 31 March 1999, the extent of credit facilities utilised by related parties amounted to
approximately HK$246,967,000.
14. Commitments
As at 31 March 1999, the Group had the following commitments:
(a) Capital expenditure contracted for but not provided in this report in respect of acquisition
of property, plant and machinery amounting to HK$13,375,000;
(b) Capital expenditure contracted for on behalf of a related party but not provided in this
report amounting to HK$3,009,000; and
(c) Copper future contracts for the purchase of 3,500 tonnes of copper at prices ranging
from approximately HK$11,860 (equivalent to US$1,530) to approximately HK$12,750
(equivalent to US$1,645) per tonne.
15. Segment Information
The operations of the KBCF Group are in the manufacturing and sale of copper foil in the PRC
and most of the assets of the KBCF Group are deployed in these operations. Accordingly, the
income and profits of the KBCF Group are derived substantially from this industry segment.
71
H. NOTES TO THE PROFORMA STATEMENT OF GROUP NET ASSETS AS AT 31 MARCH 1999
(continued)
16. Subsequent Events
Pursuant to written resolutions of the shareholders of the Company dated 3 December 1999,
the shareholders of the Company approved, inter alia, the following:
(a) the sub-division of each of the ordinary shares of US$1.00 each in the capital of the
Company into 10 ordinary shares of US$0.10 each in the capital of the Company;
(b) an increase in the authorised share capital of the Company from US$12,000 divided into
120,000 ordinary shares of US$0.10 each to US$200,000,000 divided into 2,000,000,000
ordinary shares of US$0.10 each by the creation of 1,999,880,000 ordinary shares of
US$0.10 each;
(c) the Restructuring Exercise;
(d) the adoption of a new set of Bye-Laws of the Company; and
(e) the issue of 170,000,000 new ordinary shares of US$0.10 each in the capital of the
Company which, together with the 45,000,000 Vendor Shares, are the subject of the
Invitation.
A resolution was also passed by the shareholders authorising the directors of the Company to
issue further shares from time to time, provided the aggregate number of shares of the
Company issued pursuant to such authority shall not exceed the maximum limit permitted
under the relevant laws of Singapore and Bermuda (including the rules of the Singapore
Exchange Securities Trading Limited) prevailing at that time.
I. NET TANGIBLE ASSETS BACKING
The net tangible assets backing of the KBCF Group for each ordinary share of US$0.10 is based on
the net tangible assets of the KBCF Group as at 31 March 1999 and after taking into account the
following:
Net Tangible Assets
HK$000
Net tangible assets as at 31 March 1999 145,331
Capitalisation of loans from the Kingboard Group amounting to
HK$140,000,000 (equivalent to US$18,064,516) 140,000
Capitalisation of loans from the Noteholders amounting to
HK$108,444,000 (equivalent to US$13,992,774) 108,444
Net tangible assets before the Invitation 393,775
Proceeds from the issue of New Shares at S$0.53 per share which is the
subject of the Invitation 413,370
Less: Estimated issue expenses (18,352)
Adjusted net tangible assets 788,793
72
I. NET TANGIBLE ASSETS BACKING (continued)
Issued Share Capital
Number of shares
At incorporation
Issue of ordinary shares of US$1.00 each, nil-paid 12,000
12,000
Sub-division of 1 ordinary share of US$1.00 each to 10 ordinary shares of
US$0.10 each 120,000
New Shares issued pursuant to the Restructuring Exercise 499,880,000
Pre-flotation ordinary shares of US$0.10 each 500,000,000
New Shares which are the subject of the Invitation 170,000,000
Post-invitation ordinary shares of US$0.10 each 670,000,000
Net Tangible Assets Backing Per Issue and Fully Paid Share of
US$0.10 each
Pre-flotation 78.76 HK cents
Post-flotation 117.73 HK cents
J. DIVIDENDS
The Company has not paid or proposed any dividend since incorporation. However, during the
periods under review, the following companies in the KBCF Group had declared dividends to their
then shareholders:
1995 1996 1997 1998 1999
HK$000 HK$000 HK$000 HK$000 HK$000
Hong Kong Copper Foil Limited 15,000 5,000 70,000
Capital Project Group Ltd. 16,000 11,000 60,000
Fogang Kingboard Industry Ltd.
(see note below) 16,822
31,000 16,000 146,822
Less: Elimination of intra-group
dividend (16,000) (11,000) (76,822)
Total 15,000 5,000 70,000
Note:
The dividend declared in the financial year ended 31 March 1999 is equivalent to RMB18,000,000.
73
K. AUDITED FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company or any of its subsidiaries in
respect of any period subsequent to 31 March 1999.
Yours faithfully
Deloitte & Touche
Certified Public Accountants
Singapore
Chaly Mah Chee Kheong
Partner-in-charge
74
GENERAL AND STATUTORY INFORMATION
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS
1. The names, ages, addresses and current occupations of the Directors of the Company and
Executive Officers of the KBCF Group are set out on page 44 of this Prospectus.
2. Information on the business and working experience of the Directors is set out below:
Dr Chan Wing Kwan is an Executive Director and Executive Chairman of the KBCF Group. He is
also the managing director and co-founder of the Kingboard Group. Dr Chan has over 22 years
experience in the sale and distribution of electronic components, as well as upstream products such
as PCBs, laminates and copper foil. Dr Chan is responsible for the overall implementation of the
strategic plans and goals of the KBCF Group and supervises the management in the day to day
operations of the KBCF Group.
Mr Chang Wing Yiu, an Executive Director and the Managing Director of the KBCF Group, joined
the Kingboard Group in 1989. He has over 10 years experience in laminates and copper foil
production. Mr Chang is responsible for the day-to-day management and operations of the KBCF
Group (including the purchasing function, market development and all technical aspects of product
development).
Mr Cheung Kwok Wing is an Executive Director in the KBCF Group. He is also the group chairman
and co-founder of the Kingboard Group and has over 20 years experience in the production and
sales of laminates for use by manufacturers of PCBs and electronic products. Mr Cheung is
responsible for the overall strategic planning of the KBCF Group and sets the general direction and
goals for the KBCF Group. He was awarded the Young Industrialist Award of Hong Kong 1993 by the
Federation of Hong Kong Industries.
Mr Ho Yin Sang, an Executive Director and Factory Manager of FKI, joined the Kingboard Group in
1989. He has over 10 years experience in copper foil production. He became the General Manager
of HKCF(BVI) in 1995 and is in charge of overall operations and enterprise management in the KBCF
Group.
Mr Zhang Guanghui, an Executive Director, joined the Kingboard Group in 1989 and has over
10 years experience in laminates and copper foil production. He was involved in the establishment
of the KBCF Group and is currently the General Manager of Kingboard Group Long Hua factory. Mr
Zhang assists in the strategic planning of the KBCF Group.
Mr Lee Joo Hai was appointed as a non-executive independent Director of the Company on
29 November 1999. He is a Certified Public Accountant of Singapore and is a member of the Institute
of Chartered Accountants in England and Wales. He has more than 20 years of experience in
accounting, auditing, taxation and company secretarial work. Mr Lee is currently a partner in a public
accounting firm.
Mr Teo Kiang Kok was appointed as a non-executive independent Director of the Company on
29 November 1999. He is a partner of Shook Lin & Bok, a firm of advocates and solicitors. His main
areas of practice are corporate finance, international finance and securities.
Mr Lai Chung Wing, Robert was appointed as a non-executive independent Director of the
Company on 29 November 1999. He is currently the General Manager (Business Development) of
L&M Group Investments Ltd. He was previously the Managing Director and Chief Executive Officer
of Scaunion Holdings Limited (now known as Sen Hong Resources Ltd), an oil and gas company
which is listed on the SEHK.
75
3. The list of present and past directorships of each Director for the last five years is set out below:
Name Present Directorships Past Directorships
Chan Wing Kwan Group Companies
KBCF
FKI
Group Companies
Nil
Other Companies
KCHL
Hong Kong Fibre Glass
Company Limited
Jamplan (BVI) Limited
Jamplan Marketing Limited
King Board (Panyu) Chemical
Co., Ltd
Kingboard Investments Limited
Kingboard Laminates Limited
Kingboard Laminates Shenzhen
Co., Ltd
Kingboard (Taicang) Chemical
Co. Ltd
Kunshan Yattao Chemical Co.,
Ltd
Shanghai Jamplan Chemical
Industry & Insulated Material
Development Co., Ltd
Yat Tao Chemical Holdings
(H.K.) Limited
Sun Hing Optical Manufacturing
Limited
Hallgain Management Limited
Other Companies
Nil
Chang Wing Yiu Group Companies
KBCF
FKI
Group Companies
Nil
Other Companies
KCHL
Hong Kong Fibre Glass
Company Limited
King Board (Panyu) Chemical
Co., Ltd
Kingboard Laminates Shenzhen
Co., Ltd
Other Companies
Nil
76
Name Present Directorships Past Directorships
Cheung Kwok Wing Group Companies
KBCF
FKI
Group Companies
Nil
Other Companies
KCHL
Hong Kong Fibre Glass
Company Limited
Jamplan (BVI) Limited
Jamplan Marketing Limited
King Board (Panyu) Chemical
Co., Ltd
Kingboard Investments Limited
Kingboard Laminates Limited
Kingboard Laminates Shenzhen
Co., Ltd
Kingboard (Taicang) Chemical
Co. Ltd
Kunshan Yattao Chemical Co.,
Ltd
Shanghai Jamplan Chemical
Industry & Insulated Material
Development Co., Ltd
Yat Tao Chemical Holdings
(H.K.) Limited
Gattopardo Company Limited
Hallgain Management Limited
Other Companies
Victory Group Limited
Ho Yin Sang Group Companies
KBCF
Group Companies
Nil
Other Companies
Nil
Other Companies
Nil
Zhang Guanghui Group Companies
KBCF
Group Companies
Nil
Other Companies
Nil
Other Companies
Nil
Lee Joo Hai Group Companies
KBCF
Group Companies
Nil
Other Companies
IPC Corporation Ltd
Kian Ho Bearings Limited
Lung Kee Metal Holdings Limited
PSL Holdings Limited
Teamsphere Limited
Other Companies
Solid Resources Investment Ltd
77
Name Present Directorships Past Directorships
Teo Kiang Kok
(1)
Group Companies
KBCF
Group Companies
Nil
Other Companies
Asean Emerging Companies
Growth Fund Ltd
Circuit Plus Holdings Ltd
Mayfran International Ltd
Praxair Surface Technologies
Pte Ltd
SLAB Services Private Limited
SM Summit Holdings Limited
The Vittoria Fund Limited
Teamsphere Limited
The Vittoria One Limited
Other Companies
GRP Limited
IPC Corporation Ltd
Malaysian Emerging
Companies Growth Fund Ltd
Solid Resources Investment Ltd
Lai Chung Wing, Robert Group Companies
KBCF
Group Companies
Nil
Other Companies
Nil
Other Companies
Seaunion Holdings Limited
Chancery Saigon Hotel Vietnam
Note:
(1) Companies in which Mr Teo Kiang Kok was appointed as directors for the purposes of incorporation or as nominee
directors only and in the course of their professional practive have not been included.
4. Information on the business and working experience of the Executive Officers of the KBCF Group is
given below:
Lo Ka Leong, the Accounting Manager, joined the Kingboard Group in May 1999. Prior to that, he
was an accountant at an international accounting firm. He holds a Bachelor in Professional
Accountancy from the Chinese University of Hong Kong. He is in charge of the financial
management of the KBCF Group.
Chen Xiping joined the KBCF Group in 1997 and was appointed as a Quality Control Manager of
FKI. He is responsible for the quality control processes and systems at the copper foil plant in
Fogang. Mr Chen graduated from Hubei University in China with a chemical engineering degree.
He Beiyang is a Production Manager and has been with the KBCF Group since 1994. He is
specialised in the technical aspects of copper foil production, and is responsible for ensuring that the
KBCF Groups products meet the specifications required by customers.
Liu Zhigang is a Production Manager of the KBCF Group and is responsible for planning the
operations of the plant and ensuring the stability of the technical processes. Mr Liu was trained at the
Harbin Technological University in Applications Chemical and Electrical Engineering.
Liu Min joined the KBCF Group in 1998 and is currently the Plant Manager for Phase I of the copper
foil production. He is overall in charge of the operational functions of the KBCF Group, including the
planning, design and technological development of the production capabilities of the plant. Mr Liu
holds an engineering degree from Harbin University and was working in a copper foil plant before
joining the KBCF Group.
78
Deng Shijun is the Plant Manager for Phase II of the copper foil production of the KBCF Group.
He is mainly responsible for the technical and day to day operations of the plant and coordinates
the different functions of the technical and operations departments. Mr Deng holds an engineering
degree from Hubei University in China.
Li Weiming is a Quality Control Manager and is responsible for the technical operations of the
quality assurance department. He joined the KBCF Group in 1997 after graduating from Hubei
University with a degree in chemical engineering.
5. None of the above Executive Officers hold any present or past directorships for the past five years.
6. None of the Directors or Executive Officers are or were involved in any of the following events:
(a) a petition under any bankruptcy laws filed in any jurisdiction against him or any partnership in
which he was a partner or any corporation of which he was a director or an executive officer;
(b) a conviction of any offence, other than a traffic offence, or a judgement, including findings in
relation to fraud, misrepresentation or dishonesty, given against him in any civil proceedings
in Singapore or elsewhere, or any proceedings now pending which may lead to a conviction
or judgement, or any criminal investigation pending against him; or
(c) the subject of an order, judgment or ruling of any court, tribunal or government body
permanently or temporarily enjoining him from acting as an investment adviser, dealer in
securities, director or employee of a financial institution and engaging in any type of business
practice or activity.
7. The aggregate emoluments (including remuneration) paid to the then existing Directors for services
rendered in all capacities to the Company and its subsidiaries in FY1999 amounted to
approximately HK$1,700,000. The aggregate emoluments payable to the present Directors in
FY2000 under the arrangements in force at the date of this Prospectus, including the service
agreements referred to on page 45 of this Prospectus, is approximately HK$2,974,000.
8. Save as disclosed on page 45 of this Prospectus, there are no existing or proposed service
contracts between the Directors and the Company or its subsidiaries.
9. Save as disclosed on page 27 of this Prospectus, the Directors and Executive Officers are
unrelated by blood or marriage to one another nor are they so related to any substantial
shareholder of the Company.
10. No option to subscribe for shares in, or debentures of, the Company or its subsidiaries has been
granted to, or was exercised by, any Director or Executive Officer within the last financial year.
11. Save for the C-Notes held by the Noteholders, no person has been, or is entitled to be, given an
option to subscribe for any shares in or debentures of the Company or its subsidiaries.
12. Save as disclosed on page 42 of this Prospectus, no Director or expert is interested, directly or
indirectly, in the promotion of, or in any assets acquired or disposed of by, or leased to, the
Company or its subsidiaries within two years preceding the date of this Prospectus, or in any
proposal for such acquisition or disposal or lease as aforesaid.
13. Save as disclosed on page 41 of this Prospectus, no Director has any interest in any existing
contract or arrangement that is significant in relation to the business of the KBCF Group taken as
a whole.
14. No Director, substantial shareholder or Executive Officer has any interest, direct or indirect, in any
business carrying on a similar trade as the Company or its subsidiaries.
79
15. There is no shareholding qualification for Directors in the Bye-laws of the Company.
16. The interests of the Directors and substantial shareholders in the Shares at the date of this
Prospectus and as recorded in the Register of Directors Shareholdings and the Register of
Substantial Shareholders maintained by the Company are as follows:
Name
Number of Shares
registered in
the names of
Directors and
substantial shareholder %
Number of Shares
in which the Directors
and substantial
shareholders are deemed
to have an interest %
Directors
Cheung Kwok Wing 426,500,000 85.3
Chan Wing Kwan
Chang Wing Yiu
Ho Yin Sang
Zhang Guanghui
Lee Joo Hai
Teo Kiang Kok
Lai Chung Wing, Robert
Holders of 5% or more
Jamplan (BVI) 426,500,000 85.3
KCHL 426,500,000 85.3
HML 426,500,000 85.3
Save as disclosed above, no Director has any interest in the Shares, including the Invitation
Shares, which are the subject of this Invitation.
17. No sum has been paid or has been agreed to be paid to any Director or to any firm in which a
Director is a partner in cash or in shares or otherwise by any person to induce him to become a
Director in connection with the promotion or formation of the Company.
Mr Teo Kiang Kok is a partner of Messrs Shook Lin & Bok, which will be receiving a fee from the
Company for legal services rendered in connection with the Invitation. It is envisaged that the KBCF
Group may continue to engage the services of Shook Lin & Bok as and when the need arises. The
Directors are of the view that the provision by Shook Lin & Bok of such services will not interfere
with Mr Teo Kiang Koks exercise of independent judgement in his role as a member of the Audit
Committee.
Messrs John C.R. Collis and Anthony D. Whaley, the Companys Bermuda resident representative
and deputy representative respectively, are partners of Conyers Dill & Pearman, legal advisers to
the Company on Bermuda law. Conyers Dill & Pearman will receive usual professional fees in
connection with the incorporation of the Company and the Invitation. Mr Ira Stuart Outerbridge III,
the secretary of the Company, is an employee of the Codan Services Limited, a company affiliated
with Conyers Dill & Pearman.
80
SHARE CAPITAL
18. As at the date of this Prospectus, there is only one class of shares in the capital of the Company.
The rights and privileges attached to the Shares are stated in the Bye-laws of the Company. There
are no founder, management or deferred shares.
19. Save as disclosed herein, there were no changes in the issued and paid-up share capital of the
Company or its subsidiaries within the three years preceding the date of this Prospectus.
Date of Issue
Number of Shares
Issued/Increase
in Registered
Capital
Issue Price
per share
Purpose of Issue/
Consideration
Resultant Issued
Share Capital/
Registered Share
Capital
The Company
15 September 1999 12,000 US$1.00 Issued nil paid upon
establishment and
credited as fully paid
pursuant to the
Restructuring Exercise
US$12,000
3 December 1999 499,880,000 US$0.10 Acquisition of the
KBCF Group pursuant
to the Restructuring
Exercise
US$50,000,000
HKCF(BVI)
20 April 1998 14,999,999 US$1.00 Working capital US$15,000,000
3 December 1999 32,057,290 US$1.00 Capitalisation of loans
from the Kingboard
Group and issue of
Shares to Noteholders
US$47,057,290
FKI
7 October 1997 RMB 98.917 million Working capital RMB248.917 million
20. Save as disclosed in this Prospectus, no shares or debentures were issued or were agreed to be
issued by the Company or its subsidiaries for cash or for a consideration other than cash during the
last three years preceding the date of this Prospectus.
BYE-LAWS
21. The provisions in the Bye-laws relating to the Directors remuneration, voting rights on proposals
and contracts in which the Directors are interested, borrowing powers of the Directors, voting rights
of the Members, consents necessary for the variation of class rights and restrictions on
transferability of shares are set out in Appendix II.
BANK BORROWINGS AND WORKING CAPITAL
22. Save as disclosed on page 47 of this Prospectus and in the Accountants Report, the Company and
its subsidiaries had as at 31 March 1999, no other borrowings or indebtedness in the nature of
borrowings including bank overdrafts and liabilities under acceptances (other than normal trading
bills) or acceptances credits, mortgages, charges, hire purchase commitments, guarantees or other
material contingent liabilities.
81
23. In the opinion of the Directors and for purposes of Section 28 of the Bermuda Act, there are no
minimum amounts which must be raised by the issue of the New Shares in order to provide for the
following items:
(a) The purchase price of any assets or properties purchased or to be purchased which is to be
defrayed in whole or in part out of the proceeds of the issue;
(b) Estimated preliminary and issue expenses (including underwriting commission) for this
Invitation payable by the Company;
(c) The repayment of any money borrowed by the KBCF Group in respect of any of the foregoing
matters; and
(d) Working capital.
24. The Directors are of the opinion that, after taking into account the present banking facilities, the
KBCF Group has adequate working capital for its present requirements.
MATERIAL CONTRACTS
25. The following contracts not being contracts entered into in the ordinary course of business of the
Company and its subsidiaries (as the case may be) have been entered into by the Company and
its subsidiaries (as the case may be) within the two years preceding the date of this Prospectus and
are or may be material:
(a) Subscription Agreement dated 3 April 1998 relating to guaranteed convertible and
exchangeable notes made between HKCF(BVI), KCHL and the Noteholders.
(b) Supplies Agreement dated 29 November 1999 made between KCHL and the Company
pursuant to which the Company agrees to sell and KCHL agrees to purchase copper foil
produced by the KBCF Group on the terms and conditions set out therein.
(c) Restructuring Agreement dated 3 December 1999 made between the Company, Jamplan
(BVI) and the Noteholders pursuant to which the Company acquired the entire issued share
capital of HKCF(BVI).
(d) The Management and Underwriting Agreement dated 6 December 1999 made between the
Company and DBS Bank referred to in paragraph 27 on page 83 below.
(e) The Placement Agreement dated 6 December 1999 made between HKCF and DBS Bank
referred to in paragraph 27 on page 83 below.
(f) The agreement constituted by the letter referred to on page 84 of this Prospectus.
(g) Depository Agreement dated 3 December 1999 between the Company and CDP pursuant to
which CDP agreed to act as share depository for the Company.
LITIGATION
26. Neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration either as
plaintiff or defendant in respect of any claims or amounts which may have or have had during the
previous 12 months a significant effect on the KBCF Groups financial position. The Directors have
no knowledge of any proceeding, litigation or claim of material importance which are pending or
threatened against the Company or any of its subsidiaries or of any facts likely to give rise to any
such litigation, arbitration or claim.
82
MANAGEMENT AND UNDERWRITING ARRANGEMENTS
27. (a) Pursuant to the Management and Underwriting Agreement dated 6 December 1999, the
Company appointed DBS Bank to manage the Invitation and the Underwriter to underwrite the
Offer Shares. The Underwriter has also appointed the Co-Underwriters to co-underwrite the
Offer Shares.
DBS Bank will receive a management fee from the Company and the Vendors in proportion
in which the number of Invitation Shares offered by each of them pursuant to the Invitation
bears to the total number of Invitation Shares, for its services rendered in connection to the
Invitation.
(b) Pursuant to the Management and Underwriting Agreement, the Underwriter agreed to
underwrite the Offer Shares for a commission of 1.5% of the Issue Price for each Offer Share,
payable by the Company and the Vendors in the proportion in which the number of Invitation
Shares offered by each of them pursuant to the Invitation bears to the total number of
Invitation Shares, for its services rendered in connection to the Invitation.
(c) Pursuant to the placement agreement (Placement Agreement) dated 6 December 1999, the
Placement Agent agreed to subscribe or procure subscriptions for the Placement Shares for
a placement commission of 1.5% of the Issue Price for each Placement Share, payable by the
Company and the Vendors in proportion in which the number of Invitation Shares offered by
each of them pursuant to the Invitation bears to the total number of Invitation Shares, for its
services rendered in connection to the Invitation. The Placement Agent has also appointed the
Co-Placement Agents as co-placement agents for the Placement Shares.
(d) Brokerage will be paid by the Company to the member companies of the SESTL, merchant
banks and members of the Association of Banks in Singapore in respect of accepted
applications made on Application Forms bearing their respective stamps, or to Participating
Banks in respect of successful applications made through Electronic Applications at the ATMs
of the relevant Participating Banks, at the rate of 1.0% of the Offer Price for each Offer Share
and at a rate of 1.0% of the Placement Price of each Placement Share.
(e) Save as aforesaid, no commission, discount or brokerage, has been paid or other special
terms granted within the two years preceding the date of this Prospectus or is payable to any
Director, promoter, expert, proposed Director or any other person for subscribing or agreeing
to subscribe or procuring or agreeing to procure subscriptions for any shares in or debentures
of the Company.
(f) The Management and Underwriting Agreement may be terminated by the Underwriter at any
time on or before the closing of the Application List on the occurrence of certain events
including, inter alia, changes in political, financial or economic conditions in Singapore or
abroad which result, inter alia, in the Singapore stock market being materially and adversely
affected.
(g) The Placement Agreement is conditional upon the Management and Underwriting Agreement
not having been terminated or rescinded pursuant to the provisions of the Management and
Underwriting Agreement.
MISCELLANEOUS
28. The nature of the business of the Company is stated on pages 31 and 32 of this Prospectus. At the
date of this Prospectus, all the corporations listed below are, by virtue of Section 6 of the
Companies Act (Chapter 50), deemed to be related to the Company:
Holding company of the Company
Jamplan (BVI)
Ultimate holding company of the Company
KCHL
83
Subsidiaries of the Company
HKCF(BVI)
FKI
CPG
Principal subsidiaries of KCHL
Hong Kong Fibre Glass Company Limited
Jamplan (BVI) Limited
Jamplan Marketing Limited
King Board (Panyu) Chemical Co., Ltd
Kingboard Investments Limited
Kingboard Laminates Limited
Kingboard Laminates Shenzhen Co., Ltd
Kingboard (Taicang) Chemical Co. Ltd
Kunshan Yattao Chemical Co., Ltd
Shanghai Jamplan Chemical Industry & Insulated Material Development Co., Ltd
Yat Tao Chemical Holdings (H.K.) Limited
29. The time of opening of the Application List is set out on page 11 of this Prospectus.
30. The amount payable on application is S$0.53 for each Offer Share and each Placement Share.
There has been no previous issue of Shares by the Company or offer for sale of its Shares to the
public within the two years preceding the date of this Prospectus.
31. Application moneys received by the Company in respect of successful applications (including
successful balloted applications which are subsequently rejected) will be placed in separate
non-interest bearing accounts with DBS Bank (the Receiving Bank). In the ordinary course of
business, the Receiving Bank will deploy these moneys in the interbank money market. Pursuant
to an agreement contained in a letter dated 6 December 1999, the Company and the Receiving
Bank have agreed that the Company will receive for its own account an aggregate of a 50% share
of any net revenue in excess of S$50,000 earned by the Receiving Bank from the deployment of
such monies in the interbank money market. Any refund of all or part of the application monies to
unsuccessful or partially successful applicants will be made without any interest or any share of
such revenue or any other benefits.
32. No property has been purchased or acquired or proposed to be purchased or acquired by the
Company or its subsidiaries which is to be paid for wholly or partly out of the proceeds of the
Invitation or the purchase or acquisition of which has not been completed at the date of the issue
of this Prospectus other than property the contract for the purchase or acquisition whereof was
entered into in the ordinary course of business of the Company or its subsidiaries, the contract not
being made in contemplation of the Invitation nor the Invitation in consequence of the contract.
33. The estimated amount of the expenses of this issue and of the application for listing, including
underwriting and placement commission, brokerage, management fee and all other incidental
expenses in relation to this Invitation is approximately S$4.0 million will be borne by the Company
and the Vendors in the proportion of the number of Invitation Shares to be offered by them in the
Invitation. The listing fee and other fees payable to the SESTL for the listing are payable by the
Company.
84
34. No amount of cash or securities or benefit has been paid or given to any promoter within the two
years preceding the date of this Prospectus or is proposed or intended to be paid or given to any
promoter at any time.
35. Save as disclosed in this Prospectus, the Directors are not aware of any relevant material
information including trading factors or risks not mentioned elsewhere in this Prospectus which is
unlikely to be known or anticipated by the general public and which could materially affect the
profits of the Company and its subsidiaries.
36. Save as disclosed in this Prospectus, the financial condition and operations of the KBCF Group are
not likely to be affected by any of the following:
(a) known trends or known demands, commitments, events or uncertainties that will result in or
are reasonably likely to result in the KBCF Groups liquidity increasing or decreasing in any
material way;
(b) material commitments for capital expenditures;
(c) unusual or infrequent events or transactions or any significant economic changes that
materially affected the amount of reported income from operations; and
(d) known trends or uncertainties that have had or that the KBCF Group reasonably expects to
have a material favourable or unfavourable impact on revenues or operating income.
CONSENTS
36. The Auditors and Reporting Accountants have given and have not withdrawn their written consent
to the issue of this Prospectus with the inclusion herein of the Accountants Report and their letters
in relation to the limited review of the unaudited proforma consolidated profit and loss account for
the six months ended 30 September 1999 and proforma consolidated balance sheet as at 30
September 1999 and relating to the profit forecast for the year ending 31 March 2000, in the form
and context in which they appear in this Prospectus and references to their name in the form and
context in which it appears in this Prospectus and to act in such capacity in relation to this
Prospectus.
37. The Manager, Underwriter and Placement Agent, the Co-Underwriters, the Co-Placement Agents,
the Solicitors to the Invitation, the Solicitors to the Manager, Underwriter and Placement Agent, the
legal advisers to the Company, the Principal Bankers and the Share Registrars have given and
have not withdrawn their consent to the issue of this Prospectus with the inclusion herein of their
names in the formand context in which they appear in this Prospectus and to act in those capacities
in relation to this Prospectus.
DOCUMENTS AVAILABLE FOR INSPECTION
38. Copies of the following documents may be inspected at the registered office of the Company and
at the offices of Shook Lin & Bok, 1 Robinson Road #18-00, AIA Tower, Singapore 048542 during
normal business hours for a period of six months from the date of this Prospectus:
(a) the Memorandum of Association and Bye-laws of the Company;
(b) the Accountants Report (including the Statement of Adjustments),
(c) the material contracts referred to on page 82 of this Prospectus;
(d) the letters of consent referred to above;
(e) the audited accounts of the companies within the KBCF Group for the last two financial years
ended 31 March 1998 and 31 March 1999; and
(f) the Companies Act 1981 of Bermuda.
85
STATEMENT BY DIRECTORS OF THE COMPANY
39. This Prospectus has been seen and approved by the Directors and they collectively and individually
accept full responsibility for the accuracy of the information given in this Prospectus and confirm,
having made all reasonable enquiries, that to the best of their knowledge and belief, there are no
other facts the omission of which would make any statements herein misleading, and that this
Prospectus constitutes full and true disclosure of all material facts about the Invitation and the
Company and its subsidiaries.
STATEMENT BY THE VENDORS
40. This Prospectus has been seen and approved by the Vendors and each of the Vendors accepts full
responsibility for the accuracy of the information given herein, except that such information shall be
limited to the information contained under the headings Definitions, Corporate Information,
Purchase by Company of its own shares, Details of the Invitation, Prospectus Summary,
Risk Factors, Issue Statistics, Summary of Proforma Group Financial Information, Share
Capital, Shareholders, Moratorium, Restructuring Exercise, Group Structure, General
and Statutory Information and information with respect to the name of and the number of the
Vendor Shares held and to be sold by the Vendors, and confirm, having made all reasonable
enquiries, that to the best knowledge and belief of the Vendors, there is no other material facts the
omission of which would make any statement herein (for which they are responsible) misleading.
STATEMENT BY DBS BANK
41. DBS Bank acknowledges that, to the best of its knowledge and belief, based on information
furnished to it by the KBCF Group, this Prospectus constitutes a full and true disclosure of all the
material facts about the Invitation and the Company and its subsidiaries and it is not aware of any
other facts the omission of which would make any statements herein misleading. It is also satisfied
that the profit forecast for the financial year ending 31 March 2000 has been stated by the Directors
after due and careful enquiry.
86
TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATIONS
Applications are invited for the subscription and/or purchase of the Invitation Shares at the Issue Price
subject to the following terms and conditions:
1. Applications for the Offer Shares may be made by way of the printed Offer Shares Application Forms
or by way of Electronic Applications through ATMs of the Participating Banks. Applications for
Placement Shares may only be made by way of printed Placement Shares Application Forms.
Applicants may not use their CPF Funds to apply for the Invitation Shares.
2. Only one application may be made for the benefit of one person for either the Offer Shares
or the Placement Shares in his own name. A person submitting an application for the Offer
Shares by way of a printed Application FormMAY NOT submit a separate application for Offer
Shares by way of Electronic Application and vice versa. Such separate applications shall be
deemed to be multiple applications and shall be rejected.
A person, other than an approved nominee company, who is submitting an application in his
own name should not submit any other applications for Offer Shares, whether on a printed
Application Form or through an Electronic Application, for any other person. Such separate
applications shall be deemed to be a multiple applications and shall be rejected.
An applicant who has been procured by the Placement Agent to subscribe for and/or to
purchase Placement Shares shall not make any separate application for the Offer Shares
either through an Electronic Application or by way of a printed Application Form. Such
separate applications shall be deemed to be multiple applications and shall be rejected.
Conversely, an applicant who has made an application for the Offer Shares either through an
Electronic Application or by way of a printed Application Form shall not make any separate
application for the Placement Shares. Such separate applications shall be deemed to be
multiple applications and shall be rejected.
Joint or multiple applications will be rejected. Persons submitting or procuring submissions
of multiple share applications (whether for Offer Shares, Placement Shares or both Offer and
Placement Shares) may be deemed to have committed an offence under the Penal Code
(Chapter 224) of Singapore and the Securities Industry Act (Chapter 289) of Singapore. Such
applications may be referred to the relevant authorities for investigation. Multiple
applications or those appearing to be or suspected of being multiple applications will be
liable to be rejected at the discretion of the Company.
3. Applications will not be accepted from any person under the age of 21, undischarged bankrupts, sole
proprietorships, partnerships, chops or non-corporate bodies, joint Securities Account holders of
CDP and applicants whose addresses (furnished in their printed Application Forms or, in the case of
Electronic Applications, contained in the records of the relevant Participating Banks, as the case may
be) bear post office box numbers.
4. The existence of a trust will not be recognised. Any application by a trustee or trustees must be made
in his/her/their own name(s) and without qualification or, where the application is made by way of a
printed Application Form, in the name(s) of a nominee or nominees after complying with paragraph
5 below.
5. Only approved nominee companies may make nominee applications. Approved nominee
companies are defined as banks, merchant banks, finance companies, insurance companies,
licensed securities dealers in Singapore and nominee companies controlled by them. Applications
made by persons acting as nominees other than approved nominee companies will be rejected.
87
6. For non-nominee applications, each applicant must maintain a Securities Account with CDP
in his own name at the time of the application. An applicant without an existing Securities
Account with CDP in his own name at the time of application will have his application rejected (in
the case of an application by way of an Application Form) or will not be able to complete his
Electronic Application (in the case of an Electronic Application). An applicant with an existing
Securities Account who fails to provide his Securities Account number or who provides an incorrect
Securities Account number in section B of the Application Form or in his Electronic Application, as
the case may be, is liable to have his application rejected. Subject to paragraph 7 below, an
application may be rejected if the applicants particulars such as his name, NRIC/passport number,
nationality and permanent residence status provided in his Application Form or in the records of the
relevant Participating Bank at the time of his Electronic Application, as the case may be, differ from
those particulars in his Securities Account as maintained with CDP. If the applicant possesses more
than one individual direct Securities Account, his application will be rejected.
7. If the address of an applicant stated on the Application Form or, in the case of an Electronic
Application, contained in the records of the relevant Participating Bank, as the case may be,
is different from the address registered with CDP, the applicant must inform CDP of his
updated address promptly, failing which the notification letter on successful allotment
and/or allocation will be sent to his address last registered with CDP.
8. The Company reserves the right to reject or accept, in whole or in part, or to scale down or ballot,
any application without assigning any reason therefor, and no enquiry and/or correspondence on
the decision of the Company will be entertained. This right applies to applications made by way of
printed Application Forms and by way of Electronic Applications. In deciding the basis of allotment,
at the discretion of the Company, due consideration will be given to the desirability of allocating the
Invitation Shares to a reasonable number of successful applicants with a view to establishing an
adequate market for the Shares.
9. The Company reserves the right to reject any application which does not conform strictly to the
instructions set out in the Application Form and this Prospectus or which does not comply with the
instructions for Electronic Applications or with the terms and conditions of this Prospectus or, in the
case of applications by way of printed Application Forms, which is illegible, incomplete, incorrectly
completed or which is accompanied by an improperly drawn remittance. The Company further
reserves the right to treat as valid any applications not completed or submitted or effected in all
respects in accordance instructions set out in this printed Application Forms, the instructions for
Electronic Applications or the with the terms and conditions of this Prospectus and also to present
for payment or other processes all remittances at any time after receipt and to have full access to
all information relating to, or deriving from, such remittances or the processing thereof.
10. Share certificates will be registered in the name of CDP and will be forwarded only to CDP. It is
expected that CDP will send to each successful applicant at his own risk, within 15 Market Days
after the close of the Application List, a statement stating that the applicants Securities Account has
been credited with the number of Invitation Shares allotted and/or allocated to him. This will be the
only acknowledgement of application moneys received and is not an acknowledgement by the
Company or the Vendors.
11. Each applicant irrevocably authorises CDP to complete and sign on his behalf as transferee or
renouncee any instrument of transfer and/or other documents required for the issue or transfer of
the Invitation Shares allotted and/or allocated to the applicant. This authorisation applies for
applications made by way of printed Application Forms and by way of Electronic Applications.
88
12. By completing and delivering an Application Form and, in the case of an Electronic Application, by
pressing the Enter or OK or Confirm or Yes key on the ATM in accordance with the
provisions herein, each applicant:
(a) irrevocably offers to subscribe for and/or purchase the number of Invitation Shares specified
in his application (or such smaller number for which the application is accepted) at the Issue
Price and agrees that he will accept such Shares as may be allotted and/or allocated to him,
in each case on the terms of, and subject to the conditions set out in, this Prospectus and the
Memorandum of Association and Bye-laws of the Company; and
(b) warrants the truth and accuracy of the information in his application.
13. Applications must be made in lots of 1,000 Invitation Shares and integral multiples thereof.
Applications for any other number of Invitation Shares will be rejected.
14. No Shares will be allotted and/or allocated on the basis of this Prospectus later than six months
after the date of this Prospectus.
15. In the event of an under-subscription for the Offer Shares as at the close of the Application List, that
number of Offer Shares under-subscribed shall be made available to satisfy applications for the
Placement Shares to the extent there is an over-subscription for the Placement Shares as at the
close of the Application List.
16. In the event of an under-subscription for the Placement Shares as at the close of the Application
List, that number of Placement Shares under-subscribed shall be made available to satisfy
applications for the Offer Shares to the extent there is an over-subscription for the Offer Shares as
at the close of the Application List.
17. In the event of an over-subscription for the Offer Shares as at the close of the Application List and
the number of Placement Shares are fully subscribed or over-subscribed as at the close of the
Application List, the successful applications for Offer Shares will be determined by ballot, or
otherwise as determined by the Directors and approved by SESTL.
18. Acceptance of applications will be conditional upon the Company being satisfied that:
(a) permission has been granted by the SESTL to deal in, and quotation of, all the existing Shares
and the Invitation Shares on a when issued basis on the Official List of the SESTL; and
(b) the Management and Underwriting Agreement and Placement Agreement referred to on
page 83 of this Prospectus have become unconditional and have not been terminated.
19. Each applicant irrevocably authorises CDP to disclose the outcome of his application, including the
number of Invitation Shares allotted and/or allocated to the applicant pursuant to his application, to
authorised operators.
20. Any reference to the applicant in this section shall include a person applying for the Offer Shares
by way of Electronic Application or by way of printed Application Forms and applying for the
Placement Shares through the Placement Agent.
21. Additional terms and conditions for applications by way of printed Application Forms are set out on
pages 90 to 92 of this Prospectus.
22. Additional terms and conditions for Electronic Applications are set out on pages 92 to 97 of this
Prospectus.
23. No application will be held in reserve.
89
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED APPLICATION
FORMS
Applications by way of printed Application Forms shall be made on, and subject to, the terms and
conditions of this Prospectus, including but not limited to the terms and conditions appearing below and
those set out under the section on Terms and Conditions and Procedures for Application found on
pages 87 to 89 of this Prospectus, as well as the Memorandum of Association and Bye-laws of the
Company.
1. Applications for the Offer Shares must be made using the WHITE Application Forms and official
envelopes A and B and applications for the Placement Shares must be made using BLUE
Application Forms accompanying and forming part of this Prospectus. Care must be taken to follow
the instructions set out in the respective Application Forms and this Prospectus for the completion
of the respective Application Forms. Applications which do not conform strictly to these instructions
or to the terms and conditions of this Prospectus or which are illegible, incomplete, incorrectly
completed or which are accompanied by improperly drawn remittances may be rejected.
2. The Application Forms must be completed in English. Please type or write clearly in ink using
BLOCK LETTERS. All spaces in the Application Form except those under the heading FOR
OFFICIAL USE ONLY must be completed and the words NOT APPLICABLE or N.A. should be
written in any space that is not applicable.
3. Individuals, corporations, approved nominee companies and trustees must give their names in full.
Applications must be made, in the case of individuals, in their full names as appearing in their identity
cards (if applicants have such identification documents) or in their passports and, in the case of
corporations, in their full names as registered with a competent authority. Applicants, other than
individuals, completing the Application Form under the hand of an official must state the name and
capacity in which that official signs. Acorporation completing the Application Form is required to affix
its Common Seal (if any) in accordance with its Memorandum of Association and Bye-laws or the
equivalent constitutive documents of the corporation. If an application by a corporate applicant is
successful, a copy of its Memorandum of Association and Bye-laws or its equivalent constitutive
documents must be lodged with the Companys Share Registrar. The Company reserves the right to
require any applicant to produce documentary proof of identification for verification purposes.
4. (a) All applicants must complete Sections A and B and sign page 1 of the Application Form.
(b) All applicants are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application
Form. Where paragraph 7(a) is deleted, the applicant must also complete Section C of the
Application Form with particulars of the beneficial owner(s).
(c) Applicants who fail to make the required declaration in Paragraph 7(a) or 7(b) (as the case may
be) on page 1 of the Application Form are liable to have their applications rejected.
5. Applicants may apply for the Invitation Shares using cash only. In the case for an application for Offer
Shares, each application must be accompanied by a remittance in Singapore currency for the full
amount payable, in respect of the number of Invitation Shares applied for, in the form of a BANKERS
DRAFT, CASHIERS ORDER or POSB CASHIERS ORDER drawn on a bank in Singapore, made
out in favour of KBCF SHARE ISSUE ACCOUNT crossed A/C PAYEE ONLY, or in the form of
a DBSAUTOBANK CASHIERS ORDER EQUIVALENT, with the name and address of the applicant
written clearly on the reverse side. Applications not accompanied by any payment or accompanied
by any other form of payment will not be accepted. Remittances bearing Not Transferable or
Non Transferable crossings will be rejected. No acknowledgement of receipt will be issued by the
Company, the Vendors or the Manager for applications and application moneys received.
90
6. Individual applicants and corporate applicants, whether incorporated or unincorporated and
wherever incorporated or constituted, will be required to declare whether they are citizens or
permanent residents of Singapore or corporations in which citizens or permanent residents of
Singapore or any body corporate constituted by any statute of Singapore have an interest in the
aggregate of more than 50% of the issued share capital of or interests in such corporations.
Approved nominee companies are required to declare whether the beneficial owner of the Invitation
Shares is a citizen or permanent resident of Singapore or a corporation, whether incorporated or
unincorporated and wherever incorporated or constituted, in which citizens or permanent residents
of Singapore or any body corporate constituted by any statute of Singapore have an interest in the
aggregate of more than 50% of the issued share capital of or interests in such corporation.
7. It is expected that unsuccessful applications and those not successfully balloted or accepted will be
returned to the applicants by ordinary post at the risk of the applicants within three Market Days
after the close of the Application List without interest or any share of revenue or other benefit arising
therefrom. Where an application is rejected or accepted in part only, the full amount or the balance
of the application moneys, as the case may be, will be refunded to the applicant by ordinary post
at his own risk (without interest or any share of revenue or other benefit arising therefrom) within
14 days after the close of the Application List provided that the remittance accompanying such
application which has been presented for payment or other processes has been borrowed and the
application moneys received in the designated share issue account.
Unsuccessful applicants using DBS Autobank Cashiers Order Equivalent will have the full amount
of their application moneys (without interest or any share of revenue or other benefit arising
therefrom) automatically credited to their accounts maintained with DBS Bank.
8. Capitalised terms used in the Application Forms and defined in this Prospectus shall bear the
meanings assigned to them in this Prospectus.
9. In consideration of the Company having distributed the Application Form to the applicant and
agreeing to close the Application List at 12.00 noon on 14 December 1999 or such later time or date
as the Directors may in their absolute discretion decide and by completing and delivering the
Application Form, each applicant agrees that:
(a) his application is irrevocable;
(b) his remittance will be honoured on first presentation and that any moneys returnable may be
held pending clearance of his payment and he will not be entitled to any interest or any share
of revenue or other benefit arising therefrom;
(c) in respect of the Invitation Shares for which his application has been received and not rejected,
acceptance of his application shall be constituted by written notification by or on behalf of the
Company and not otherwise, notwithstanding any remittance being presented for payment by
or on behalf of the Company;
(d) he will not be entitled to exercise any remedy of rescission for misrepresentation at any time
after acceptance of his application; and
(e) all applications, acceptances and contracts resulting therefrom under the Invitation shall be
governed by and construed in accordance with the laws of Singapore and that he irrevocably
submits to the non-exclusive jurisdiction of the Singapore courts.
10. Applications for Offer Shares
(a) Applications for Offer Shares must be made using the WHITE Offer Shares Application Forms
and WHITE official envelopes A and B.
(b) The applicant must:
(i) enclose the Offer Shares Application Form, duly completed, together with the correct
remittance in the WHITE envelope A which is provided;
91
(ii) in the appropriate spaces on the WHITE envelope A:
(A) write his name and address;
(B) state the number of Offer Shares applied for;
(C) tick the box if cash payment is by DBS Autobank Cashiers Order Equivalent; and
(D) affix adequate Singapore postage;
(iii) SEAL WHITE ENVELOPE A;
(iv) write, in the special box provided on the larger WHITE envelope B addressed to
DBS BANK, 6 SHENTON WAY #28-00, DBS BUILDING TOWER ONE, SINGAPORE
068809, the number of Offer Shares for which the application is made; and
(v) insert WHITE envelope A into WHITE envelope B. The applicant must seal WHITE
envelope B, affix adequate Singapore postage on envelope B (if despatching by
ordinary post) and thereafter DESPATCH BY ORDINARY POST OR DELIVER BY
HAND at his own risk to DBS BANK, 6 SHENTON WAY #28,00, DBS BUILDING
TOWER ONE, SINGAPORE 068809, so as to arrive by 12.00 noon on 14 December
1999 or such later time or date as the Directors may, in their absolute discretion, decide.
Local Urgent Mail or Registered Post must NOT be used.
Applications that are illegible, incompleted or incorrectly completed or accompanied by an
improperly drawn remittance are liable to be rejected.
(c) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
receipt will be issued for any application or remittance received.
11. Applications for Placement Shares
(a) Applications for Placement Shares must be made using the BLUE Application Forms.
(b) The completed Placement Shares Application Form and the applicants remittance in
accordance with the terms of this Prospectus must be enclosed and sealed in any envelope
to be provided by the applicant. The sealed envelope must be despatched by ORDINARY
POST OR DELIVERED BY HAND at the applicants own risk to DBS BANK, 6 SHENTON
WAY #28-00, DBS BUILDING TOWER ONE, SINGAPORE 068809, so as to arrive by 12.00
noon on 14 December 1999 or such later time or date as the Directors may, in their absolute
discretion, decide. Local Urgent Mail or Registered Post must NOT be used.
(c) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
receipt will be issued for any application or remittance received.
ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS
The procedures for Electronic Applications at ATMs of the Participating Banks are set out on the ATM
screens of the relevant Participating Banks (the Steps). For illustration purposes, the procedure for
Electronic Applications at ATMs of DBS Bank is set out in the Steps for Electronic Applications
appearing on page 97 of this Prospectus. Please read carefully the terms of this Prospectus, the Steps
and the terms and conditions for Electronic Applications set out below before making an Electronic
Application. Any reference to the Applicant in these terms and conditions for Electronic Applications
and the Steps shall mean the applicant who applies for the Offer Shares through an ATM of a
Participating Bank.
The Steps set out the actions that the Applicant must take at ATMs of DBS Bank to complete an
Electronic Application. The actions that the Applicant must take at the ATMs of the other Participating
Banks are set out on the ATM screens of the relevant Participating Banks. Upon the completion of his
Electronic Application transaction, the Applicant will receive an ATM transaction slip (Transaction
Record), confirming the details of his Electronic Application. The Transaction Record is for retention by
the Applicant and should not be submitted with any printed Application Form.
92
An Applicant must have an existing bank account with, and be an ATM cardholder of, one of the
Participating Banks before he can make an Electronic Application at an ATMs of that Participating
Bank. An ATMcard issued by one Participating Bank cannot be used to apply for the Offer Shares
at an ATM belonging to any of the other Participating Banks. An Applicant who fails to use his
own ATM card or who does not key in his own Securities Account number will have his
application rejected.
An Applicant, including one who has a joint bank account with a Participating Bank, must ensure
that he enters his own Securities Account number when using the ATM Card issued to him in his
own name. Using his own Securities Account number with an ATM Card which is not issued to
him in his own name will render his application liable to be rejected.
An Electronic Application shall be made on, and subject to, the terms and conditions of this Prospectus
including but not limited to the terms and conditions appearing below as well as those set out under the
section on Terms and Conditions and Procedures for Application found on pages 87 to 89 of this
Prospectus, as well as the Memorandum of Association and Bye-laws of the Company.
1. In connection with his Electronic Application for the Offer Shares, the Applicant is required to confirm
statements to the following effect in the course of activating the ATM for his Electronic Application:
(a) that he has received a copy of this Prospectus and has read, understood and agreed to
all the terms and conditions of application for the Offer Shares and this Prospectus prior
to effecting the Electronic Application and agrees to be bound by the same;
(b) that he consents to the disclosure of his name, NRIC/passport number, address,
nationality and permanent residence status, CDP Securities Account number, CPF
Investment Account number (if applicable) and share application amount (the Relevant
Particulars) from his account with that Participating Bank to the Share Registrars,
SCCS, CDP, CPF, the Company and the Manager (the Relevant Parties); and
(c) that this application is his only application for the Offer Shares and it is made in his name
and at his own risk.
His application will not be successfully completed and cannot be recorded as a completed
transaction in the ATM unless he presses the Enter or OK or Confirm or Yes key. By doing
so, the Applicant shall be treated as signifying his confirmation of each of the three statements. In
respect of statement 1(b) above, his confirmation, by pressing the Enter or OK or Confirm or
Yes key, shall signify and shall be treated as his written permission, given in accordance with the
relevant laws of Singapore, including Section 47(4) of the Banking Act (Chapter 19) of Singapore, to
the disclosure by that Participating Bank of the Relevant Particulars of his account(s) with that
Participating Bank to the Relevant Parties.
2. An applicant may make an Electronic Application at an ATM of any Participating Bank for the Offer
Shares using cash only by authorising such Participating Bank to deduct the full amount payable
from his account with such Participating Bank.
3. The Applicant irrevocably agrees and undertakes to subscribe for and/or purchase and to accept the
number of Offer Shares applied for as stated on the Transaction Record or any lesser number of
Offer Shares that may be allotted and/or allocated to him in respect of his Electronic Application. In
the event that the Company decides to allot any lesser number of such Offer Shares or not to allot
and/or allocate any Offer Shares to the Applicant, the Applicant agrees to accept the decision as
final. If the Applicants Electronic Application is successful, his confirmation (by his action of pressing
the Enter or OK or Confirm or Yes key on the ATM) of the number of Offer Shares applied for
shall signify and shall be treated as his acceptance of the number of Offer Shares that may be
allotted to him and his agreement to be bound by the Memorandum of Association and Bye-laws of
the Company.
93
4. The Applicant irrevocably requests and authorises the Company to:
(a) register the Offer Shares allotted and/or allocated to him in the name of CDP for deposit into his
Securities Account;
(b) send the relevant Share certificate(s) to CDP;
(c) return or refund (without interest or any share of revenue or other benefit arising therefrom) the
application moneys, should his Electronic Application not be accepted, by automatically
crediting the Applicants bank account with his Participating Bank with the relevant amount
within three Market Days after the close of the Application List; and
(d) return or refund (without interest or any share of revenue or other benefit arising therefrom) the
balance of the application moneys, should his Electronic Application be accepted in part only,
by automatically crediting the Applicants bank account with his Participating Bank with the
relevant amount within 14 days after the close of the Application List.
5. BY MAKING AN ELECTRONIC APPLICATION, THE APPLICANT CONFIRMS THAT HE IS NOT
APPLYING FOR THE OFFER SHARES AS NOMINEE OF ANY OTHER PERSONAND THAT ANY
ELECTRONIC APPLICATION THAT HE MAKES IS THE ONLY APPLICATION MADE BY HIMAS
BENEFICIAL OWNER.
THE APPLICANT SHALL MAKE ONLY ONE ELECTRONIC APPLICATION AND SHALL NOT
MAKE ANY OTHER APPLICATION FOR THE INVITATION SHARES WHETHER AT THE ATMs
OF ANY PARTICIPATING BANK OR ON THE PRESCRIBED PRINTED APPLICATION FORMS.
6. The Applicant irrevocably agrees and acknowledges that his Electronic Application is subject to risks
of electrical, electronic, technical and computer-related faults and breakdowns, fires, acts of God and
other events beyond the control of the Participating Banks, the Company, the Vendors and the
Manager and if, in any such event, the Participating Banks and/or the Company and/or the Vendors
and/or the Manager do not record or receive the Applicants Electronic Application, or data relating
to the Applicants Electronic Application or the tape containing such data is lost, corrupted, destroyed
or not otherwise accessible, whether wholly or partially for whatever reason, the Applicant shall be
deemed not to have made an Electronic Application and the Applicant shall have no claim
whatsoever against the Participating Banks, the Company, the Vendors or the Manager for the Offer
Shares applied for or for any compensation, loss or damage.
7. Electronic Applications shall close at 12.00 noon on 14 December 1999 or such other time as the
Directors may in their absolute discretion decide.
8. All particulars of the Applicant in the records of his Participating Bank at the time he makes his
Electronic Application shall be deemed to be true and correct and the relevant Participating Bank and
the Relevant Parties shall be entitled to rely on the accuracy thereof. If there has been any change
in the particulars of the Applicant after the time of the making of his Electronic Application, the
Applicant shall promptly notify his Participating Bank.
9. The Applicant must have sufficient funds in his bank account(s) with his Participating Bank at the
time he makes his Electronic Application, failing which his Electronic Application will not be
completed or accepted. Any Electronic Application made at ATMs of DBS Bank which does not
strictly conform to the instructions set out in the Steps will be rejected. Any Electronic Application
made at the ATMs of the other Participating Banks which does not strictly conform to the instructions
set out on the ATM screens of such Participating Banks will be rejected.
94
10. No reserve application will be kept. Where an Electronic Application is not accepted, it is
expected that the full amount of the application moneys will be refunded (without interest or any
share of revenue or other benefit arising therefrom) to the Applicant by being automatically credited
to the Applicants account with the relevant Participating Bank within three Market Days of the close
of the Application List. Trading on a when issued basis, if applicable, is expected to
commence after such refund has been made. Where an Electronic Application is accepted in
part only, the balance of the application moneys will be refunded (without interest or any share of
revenue or other benefit arising therefrom) to the Applicant by being automatically credited to the
Applicants account with his Participating Bank within 14 days after the close of the Application List.
If the Applicants Electronic Application is made through the ATMs of KTB or UOB Group and is
unsuccessful, it is expected that a computer-generated notice will be sent to the Applicant by the
relevant Participating Bank (at the address of the Applicant as stated in the records of the relevant
Participating Bank at the date of his Electronic Application) by ordinary post at the Applicants own
risk within three Market Days after the close of the Application List. If the applicants Electronic
Application is made through the ATMs of OCBC Group, OUB Group or DBS Bank (including
its POSBank Services division) and is unsuccessful, no notification will be sent by the
relevant Participating Bank.
Applicants who make Electronic Applications through the ATMs of the following banks may check
the provisional results of their Electronic Applications as follows:
Bank Telephone Available at ATM Operating Hours Service expected from
DBS
Bank
1800-222 2222
SPH Hotline
Internet Banking
or Internet Kiosk
24 hours a day 7.00 p.m. on the
balloting day
KTB 222 8228 ATM ATM 24 hours a day
Phone Banking
Mon-Fri 08002200
Sat 08001500
ATM Evening of the
balloting day
Phone Banking
8.00 a.m. on the day
after the balloting day
OCBC 1800-363 3333 ATM ATM 24 hours a day
Phone Banking
Mon-Fri 08002200
Sat 08001500
Evening of the balloting
day
OUB 1800-224 2000
www.oub2000.com.sg
Not Available Phone Banking/Internet
Banking 24 hours a
day
OUB Mobile Buzz*
24 hours a day
Evening of the balloting
day
UOB 1800-533 5533
1800-222 2121
ATM (Other
Transactions
IPO Enquiry)
ATM/Phone Banking
24 hours a day
6.00 p.m. on the
balloting day
*Application who make Electronic Applications through the ATMs of OUB and who have activated their
OUB Mobile Buzz services will be notified of the results of their Electronic Applications via their mobile
phones.
95
11. In consideration of the Company arranging for the Electronic Application facility through the ATMs
of the Participating Banks and agreeing to close the Application List at 12.00 noon on 14 December
1999 or such later time or date as the Directors may in their absolute discretion decide, and by
making and completing an Electronic Application, the Applicant agrees that:
(a) his Electronic Application is irrevocable;
(b) his Electronic Application, the acceptance of his Electronic Application by the Company and
the Vendors and the contract resulting therefrom under the Invitation shall be governed by and
construed in accordance with the laws of Singapore and he irrevocably submits to the
non-exclusive jurisdiction of the Singapore courts;
(c) neither the Company, the Vendors, the Manager nor the Participating Banks shall be liable for
any delays, failures or inaccuracies in the recording, storage or in the transmission or delivery
of data relating to his Electronic Application to the Company or CDP or the Vendors due to a
breakdown or failure of transmission, delivery or communication facilities or any risks referred
to in paragraph 6 on page 94 of this Prospectus or to any cause beyond their respective
controls;
(d) he will not be entitled to exercise any remedy of rescission for misrepresentation at any time
after acceptance of his application; and
(e) in respect of the Offer Shares for which his Electronic Application has been successfully
completed and not rejected, acceptance of the Applicants Electronic Application shall be
constituted by written notification by or on behalf of the Company and the Vendors and not
otherwise, notwithstanding any payment received by or on behalf of the Company and the
Vendors.
12. The Applicant should ensure that his personal particulars as recorded by both CDP and the relevant
Participating Banks are correct and identical. Otherwise his Electronic Application may be liable to
be rejected. The Applicant should promptly inform CDP of any change in his address, failing which
the notification letter on successful allotment and/or allocation will be sent to his address last
registered with CDP.
13. The existence of a trust will not be recognised. Any electronic application by a trustee must be
made in his own name and without qualification. The Company will reject any application by any
person acting as nominee.
96
Steps for Electronic Applications through ATMs of DBS Bank (other than those of its POSBank
Services division)
Instructions for Electronic Applications will appear on the ATM screen of the Participating Banks. For
illustrative purposes, the steps for making an Electronic Application through a DBS Bank or POSBank
ATM are shown below. Certain words appearing on the screen are in abbreviated form (A/c, amt,
appln, &, I/C and No. refer to Account, amount, application, and, NRIC and Number,
respectively). Instructions for Electronic Applications on the ATM screens of Participating Banks (other
than DBS Bank) may differ slightly from those represented below.
Steps for Offer Shares Application
Step 1 : Insert your personal DBS or POSBank ATM Card
2 : Enter your Personal Identification Number
3 : Select CASH CARD & MORE SERVICES
4 : Select ESA IPO SHARE/BOND/RIGHTS
5 : Select ELECTRONIC SECURITY APPLN (IPO-SHARE/BOND) to KBCF
6 : Press the ENTER key again to confirm:
You have read, understood & agreed to all terms of appln & Prospectus
You consent to disclose your name, I/C/passport No., address, nationality, CDP
Securities A/c No., CPF Investment A/c No. & share appln amount from your
Bank Account(s) to share registrars, SCCS, CDP, CPF, issuer/vendor(s)
For FIXED price share appln, this is your only appln and it is made in your own
name and at your own risk
7 : Select the DBS Bank account (Autosave/Current/Savings/Savings Plus) or the POSBank
account (Current/Savings) from which to debit your application moneys
8 : Enter the number of securities you wish to apply for using cash
9 : Select your nationality
10 : Enter your own 12-digit CDP Securities Account number. (Note: This step will be omitted
automatically if your CDP Securities Account number has already been stored in DBS
Banks records)
11 : Check the details of your security application, your I/C/passport number, CDP A/c No. and
no. of securities on the screen and press ENTER key to confirm application
12 : Remove the Transaction Record for your reference and retention only
97
Appendix I
BACKGROUND INFORMATION ON THE KINGBOARD GROUP
PRODUCTS AND PRINCIPAL ACTIVITIES
The Kingboard Group is principally engaged in the manufacture and trading of industrial laminates, glass
cloth, formalin and, before the restructuring of the Kingboard Group involving the formation of the KBCF
Group (the Restructuring), copper foil. The laminates manufactured by the Kingboard Group are sold
mainly to manufacturers of PCBs and electrical and electronic products. The glass cloth produced is
mainly for the Kingboard Groups own use in its manufacture of laminates, as was the copper foil it
produced before the Restructuring. The Kingboard Group also trades in insulating and electroplating
materials.
The holding company of the Kingboard Group, Kingboard Chemical Holdings Limited (KCHL), was
incorporated in the Cayman Islands on 12 January 1993, and its shares have been listed on The Stock
Exchange of Hong Kong Limited since October 1993.
HISTORY AND DEVELOPMENT
The Kingboard Group was founded by Mr Cheung Kwok Wing and Dr Chan Wing Kwan in 1988 with the
establishment of a laminates manufacturing facility in Shenzhen, PRC. Mr Cheung and Dr Chan had
acquired extensive experience in the electronic and electrical components industries and recognized at
that time the potential which electrical components such as copper clad laminates had in a rapidly
expanding market. Whilst major overseas suppliers provided products of high and consistent quality,
delivery time and customer service, as well as quantities of available products were often inflexible owing
to the distances involved. Building on the extensive network of customers and the foundation established
through their trading experience, Mr Cheung and Dr Chan established a local manufacturing facility
which, under appropriate management control and production techniques, produced copper clad
laminates of high and consistent quality.
Since then, the Kingboard Group has rapidly expanded and its production capacity has increased to
meet the growing demand for its products. The Kingboard Group maintains its head office in Hong Kong
while all its production facilities are located in the PRC. Between 1991 to 1999, the Kingboard Group set
up further laminates production facilities in Shenzhen, Kunshan and Shanghai. Its glass cloth facilities
and formalin plants are located in Shenzhen, Panyu and Taicang respectively.
As part of its vertical integration plans, the Kingboard Group set up its copper foil facility in Fogang,
Guangdong, PRC. The Kingboard Group decided to adopt the vertical integration strategy in order to
keep its material costs at a competitive level and to ensure the availability and consistency in quality of
the copper foil used in its production of laminates. HKCF(BVI), FKI and CPG were the subsidiaries in the
Kingboard Group before the Restructuring which were involved in the manufacture and/or trading of
copper foil.
BUSINESS
The Kingboard Groups base of not less than 400 customers comprises foreign and international
companies as well as PRC state-owned enterprises. Sales of laminates, majority of which are made to
customers in the PRC, including Hong Kong, account for more than 90% of the Kingboard Groups sales
and operating profits. The laminates production plants of the Kingboard Group employ modern
production methods and equipment, and operate at very high utilisation levels. The Directors of KBCF
believe that the Kingboard Group is the largest manufacturer of laminates in the PRC, including Hong
Kong, supplying mainly to large scale PCB and electronics manufacturers located there.
98
The turnover and profit attributable to shareholders for the Kingboard Group for the financial year
ended 31 March 1999 were HK$975 million and HK$128 million respectively. These represent an
increase of 8.5% in turnover and 15.1% in profit attributable to shareholders over the previous
financial year. A comparison table on the Kingbaord Groups performance in FY1998 and FY1999 is
set out in Figure 1, and the charts showing its turnover and profits since establishment are set out in
Figure 2
(1)
.
Note:
(1) Source: Annual Report 1999 of KCHL.
PROSPECTS
According to the Annual Report 1999 of KCHL, with the relocation by many PCB manufacturers
(especially multi-layered PCB manufacturers) of their manufacturing facilities to PRC from countries like
Japan and Taiwan in the past decade and as a result of a growing demand for laminates in the worldwide
market, the monthly production of laminates increased from 12 million sq m in the early 1990s to
25 million sq m at present, with an annual increment of 12%. The Annual Report further stated that the
trend is expected to continue and the Kingboard Groups profit margin in the next few years is expected
to continue to increase.
99
DIRECTORS OF THE KINGBOARD GROUP
The current directors of KCHL are:
Executive directors
Cheung Kwok Wing
(2)
, Chairman
Chan Wing Kwan
(2)
, Managing Director
Lam Ka Po
Lam Gum Wun
Cheung Kwong Kwan
Cheung Kwok Wa
Cheung Kwok Ping
Cheung Kwok Keung
Chang Wing Yiu
(2)
Non-executive director
Fan Chor Wah, Vincent
Independent non-executive directors
Lee Peng Fei, Allen
Tsao Kwang Yung, Peter
Note:
(2) Messrs Cheung Kwok Wing, Chan Wing Kwan and Chang Wing Yiu are also directors of KBCF.
100
APPENDIX II
SELECTED BYE-LAWS OF THE COMPANY
The provisions in the Bye-laws relating to the Directors remuneration, voting rights on proposals and
contracts in which the Directors are interested, borrowing powers of the Directors, voting rights of the
Members, consents necessary for the variation of class rights and restrictions on transferability of shares
are as follows:
DIRECTORS REMUNERATION
Directors Fees and Expenses
Bye-law 95
The ordinary remuneration of the Directors shall from time to time be determined by the Company in
general meeting, shall not be increased except pursuant to an ordinary resolution passed at a general
meeting where notice of the proposed increase shall have been given in the notice convening the general
meeting, and shall (unless otherwise directed by the resolution by which it is voted) be divided amongst
the Board in such proportions and in such manner as the Board may agree or, failing agreement, equally,
except that any Director who shall hold office for part only of the period in respect of which such
remuneration is payable shall be entitled only to rank in such division for a proportion of remuneration
related to the period during which he has held office. Such remuneration shall be deemed to accrue from
day to day.
Bye-law 96
Each Director shall be entitled to be repaid or prepaid all travelling, hotel and incidental expenses
reasonably incurred or expected to be incurred by him in attending meetings of the Board or committees
of the Board or general meetings or separate meetings of any class of shares or of debentures of the
Company or otherwise in connection with the discharge of his duties as a Director.
Bye-law 97
(1) Any Director who, upon request by the Board, goes or resides abroad for any purpose of the
Company or who performs services which in the opinion of the Board go beyond the ordinary duties
of a Director may be paid such extra remuneration (whether by way of salary, commission,
participation in profits or otherwise) as the Board may determine and such extra remuneration shall
be in addition to or in substitution for any ordinary remuneration provided for by or pursuant to any
other Bye-law.
(2) The remuneration (including any remuneration under Bye-law 97(1) above) in the case of a Director
other than an executive Director shall be payable by a fixed sum and shall not at any time be by
commission on or percentage of the profits or turnover, and no director whether an executive
Director or otherwise shall be remunerated by a commission on or percentage of turnover.
Bye-law 98
The Board shall obtain the approval of the Company in general meeting before paying pensions or other
retirement, superannuation, death or disability benefits to (or to any person in respect of) any Director for
the time being holding any executive office or for the purpose of providing any such pensions or other
benefits, paying any sum in contribution to any scheme or fund or to pay premiums. The Board shall
obtain the approval of the Company in general meeting before making any payment to any Director or
past Director of the Company by way of compensation for loss of office, or as consideration for or in
connection with his retirement from office (not being payment to which the Director is contractually
entitled).
101
Bye-law 99
A Director may:
(a) hold any other office or place of profit with the Company (except that of Auditor) in conjunction with
his office of Director for such period and, subject to the relevant provisions of the Act and if
applicable any rules or regulations of the Designated Stock Exchange, upon such terms as the
Board may determine. Any remuneration (whether by way of salary, commission, participation in
profits or otherwise) paid to any Director in respect of any such other office or place of profit shall
be in addition to any remuneration provided for by or pursuant to any other Bye-law; and/or
(b) act by himself or his firm in a professional capacity for the Company (otherwise than as Auditor) and
he or his firm may be remunerated for professional services as if he were not a Director;
Executive Directors
Bye-law 90
Notwithstanding Bye-laws 95, 96, 97 and 98, an executive director appointed to an office under Bye-law
89 hereof shall receive such remuneration (whether by way of salary, commission, participation in profits
or otherwise or by all or any of those modes) and such other benefits (including pension and/or gratuity
and/or other benefits on retirement) and allowances as the Board may from time to time determine, and
either in addition to or in lieu of his remuneration as a Director, but he shall not in any circumstances be
renumerated by a commission on or a percentage of turnover.
Alternate Directors
Bye-law 92
An alternate Director shall only be a Director for the purposes of the Act and shall only be subject to the
provisions of the Act insofar as they relate to the duties and obligations of a Director when performing
the functions of the Director for whom he is appointed in the alternative and shall alone be responsible
to the Company for his acts and defaults and shall not be deemed to be the agent of or for the Director
appointing him. An alternate Director shall be entitled to contract and be interested in and benefit from
contracts or arrangements or transactions and to be repaid expenses and to be indemnified by the
Company to the same extent mutatis mutandis as if he were a Director but he shall not be entitled to
receive from the Company any fee in his capacity as an alternate Director except only such part, if any,
of the remuneration otherwise payable to his appointor as such appointor may by Notice to the Company
from time to time direct.
Voting Rights on Proposals, Arrangements and Contracts in which the Directors are interested
Bye-law 102
(1) A Director shall not vote (nor be counted in the quorum) on any resolution of the Board in respect
of any contract or arrangement or any other proposal in which he is interested, but this prohibition
shall not apply to any of the following matters namely:
(a) any contract or arrangement for the giving to such Director any security or indemnity in respect
of money lent by him or obligations incurred or undertaken by him at the request of or for the
benefit of the Company or any of its subsidiaries;
(b) any contract or arrangement for the giving of any security or indemnity to a third party in
respect of a debt or obligation of the Company or any of its subsidiaries for which the Director
has himself assumed responsibility in whole or in part whether alone or jointly under a
guarantee or indemnity or by the giving of security;
(c) any contract or arrangement concerning an offer of shares or debentures or other securities of
or by the Company or any other company which the Company may promote or be interested
in for subscription or purchase, where the Director is or is to be interested as a participant in
the underwriting or sub-underwriting of the offer;
102
(d) any contract or arrangement in which he is interested in the same manner as other holders of
shares or debentures or other securities of the Company or any of its subsidiaries by virtue
only of his interest in shares or debentures or other securities of the Company;
(e) any contract or arrangement concerning any other company in which he is interested only,
whether directly or indirectly, as an officer or executive or a shareholder other than a company
in which the Director together with any of his associates (as defined by the rules, where
applicable, of the Designated Stock Exchange) is beneficially interested in (other than through
his interest (if any) in the Company) five (5) per cent or more of the issued shares or of the
voting rights of any class of shares of such company (or any third company through which his
interest is derived); or
(f) any proposal concerning the adoption, modification or operation of a share option scheme, a
pension fund or retirement, death or disability benefits scheme or other arrangement which
relates both to directors and employees of the Company or of any of its subsidiaries and does
not provide in respect of any Director as such any privilege or advantage not accorded to the
employees to which such scheme or fund relates.
(2) A company shall be deemed to be a company in which a Director owns five (5) per cent. or more
if and so long as (but only if and so long as) he and his associates (as defined by the rules, where
applicable, of the Designated Stock Exchange), (either directly or indirectly) are the holders of or
beneficially interested in (other than through his interest (if any) in the Company) five (5) per cent.
or more of any class of the equity share capital of such company or of the voting rights available to
members of such company (or of any third company through which his interest is derived). For the
purpose of this paragraph there shall be disregarded any shares held by a Director as bare or
custodian trustee and in which he has no beneficial interest, any shares comprised in a trust in
which the Directors interest is in reversion or remainder if and so long as some other person is
entitled to receive the income thereof, and any shares comprised in an authorised unit trust scheme
in which the Director is interested only as a unit holder.
(3) Where a company in which a Director together with his associates (as defined by the rules, where
applicable, of the Designated Stock Exchange) holds five (5) per cent. or more is materially
interested in a transaction, then that Director shall also be deemed materially interested in such
transaction.
(4) If any question shall arise at any meeting of the Board as to the materiality of the interest of a
Director (other than the chairman of the meeting) or as to the entitlement of any Director (other than
such chairman) to vote and such question is not resolved by his voluntarily agreeing to abstain from
voting, such question shall be referred to the chairman of the meeting and his ruling in relation to
such other Director shall be final and conclusive except in a case where the nature or extent of the
interest of the Director concerned as known to such Director has not been fairly disclosed to the
Board. If any question as aforesaid shall arise in respect of the chairman of the meeting such
question shall be decided by a resolution of the Board (for which purpose such chairman shall not
vote thereon) and such resolution shall be final and conclusive except in a case where the nature
or extent of the interest of such chairman as known to such chairman has not been fairly disclosed
to the Board.
Borrowing Powers
Bye-law 109
The Board may exercise all the powers of the Company to raise or borrow money and to mortgage or
charge all or any part of the undertaking, property and assets (present and future) and uncalled capital
of the Company and, subject to the Act, to issue debentures, bonds and other securities, whether outright
or as collateral security for any debt, liability or obligation of the Company or of any third party.
103
Voting rights of Members
Bye-law 65
Subject to any special rights or restrictions as to voting for the time being attached to any shares by or
in accordance with these Bye-laws, at any general meeting on a show of hands every Member present
in person (or being a corporation, is present by a representative duly authorised under Section 78 of the
Act), or by proxy shall have one vote, the chairman of the meeting to determine which proxy shall be
entitled to vote where a Member (other than the Depository) is represented by two proxies and on a poll
every Member present in person or by proxy or, in the case of a Member being a corporation, by its duly
authorised representative shall have one vote for every fully paid share of which he is the holder or which
he represents and in respect of which all calls due to the Company have been paid, but so that no
amount paid up or credited as paid up on a share in advance of calls or instalments is treated for the
foregoing purposes as paid up on the share. A resolution put to the vote of a meeting shall be decided
on a show of hands unless (before or on the declaration of the result of the show of hands or on the
withdrawal of any other demand for a poll) a poll is demanded:
(a) by the chairman of such meeting; or
(b) by at least three Members present in person (or in the case of a Member being a corporation by its
duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or
(c) by a Member or Members present in person (or in the case of a Member being a corporation by its
duly authorised representative) or by proxy , or where such a Member has appointed two proxies
any one of such proxies, or any proxy appointed by the Depository, or any number or combination
of such Members or proxies, holding or representing as the case may be not less than one-tenth of
the total voting rights of all Members having the right to vote at the meeting; or
(d) by a Member or Members present in person (or in the case of a Member being a corporation by its
duly authorised representative) or by proxy, or where such a Member has appointed two proxies
any one of such proxies, or any proxy appointed by the Depository, or any number or combination
of such Members or proxies, holding or representing as the case may be shares in the Company
conferring a right to vote at the meeting being shares on which an aggregate sum has been paid
up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.
A demand by a person as proxy for a Member or in the case of a Member being a corporation by its duly
authorised representative shall be deemed to be the same as a demand by a Member.
Bye-law 66
Unless a poll is duly demanded and the demand is not withdrawn, a declaration by the chairman that a
resolution has been carried, or carried unanimously, or by a particular majority, or not carried by a
particular majority, or lost, and an entry to that effect made in the minute book of the Company, shall be
conclusive evidence of the fact without proof of the number or proportion of the votes recorded for or
against the resolution.
Bye-law 67
If a poll is duly demanded the result of the poll shall be deemed to be the resolution of the meeting at
which the poll was demanded.
Bye-law 68
Apoll demanded on the election of a chairman, or on a question of adjournment, shall be taken forthwith.
A poll demanded on any other question shall be taken in such manner (including the use of ballot or
voting papers or tickets) and either forthwith or at such time (being not later than thirty (30) days after the
date of the demand) and place as the chairman directs. It shall not be necessary (unless the chairman
otherwise directs) for notice to be given of a poll not taken immediately.
104
Bye-law 69
The demand for a poll shall not prevent the continuance of a meeting or the transaction of any business
other than the question on which the poll has been demanded, and, with the consent of the chairman,
it may be withdrawn at any time before the close of the meeting or the taking of the poll, whichever is the
earlier.
Bye-law 70
On a poll votes may be given either personally or by proxy.
Bye-law 71
A person entitled to more than one vote on a poll need not use all his votes or cast all the votes he uses
in the same way.
Bye-law 72
In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of such meeting
shall be entitled to a second or casting vote in addition to any other vote he may have.
Bye-law 73
Where there are joint holders of any share any one of such joint holder may vote, either in person or by
proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint
holders be present at any meeting the vote of the senior who tenders a vote, whether in person or by
proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose
seniority shall be determined by the order in which the names stand in the Register in respect of the joint
holding. Several executors or administrators of a deceased Member in whose name any share stands
shall for the purposes of this Bye-law be deemed joint holders thereof.
Bye-law 74
(1) A Member who is a patient for any purpose relating to mental health or in respect of whom an order
has been made by any court having jurisdiction for the protection or management of the affairs of
persons incapable of managing their own affairs may vote, whether on a show of hands or on a poll,
by his receiver, committee, curator bonis or other person in the nature of a receiver, committee or
curator bonis appointed by such court, and such receiver, committee, curator bonis or other person
may vote on a poll by proxy, and may otherwise act and be treated as if he were the registered
holder of such shares for the purposes of general meetings, provided that such evidence as the
Board may require of the authority of the person claiming to vote shall have been deposited at the
Office, head office or Registration Office, as appropriate, not less than forty-eight (48) hours before
the time appointed for holding the meeting, or adjourned meeting or poll, as the case may be.
(2) Any person entitled under Bye-law 53 to be registered as the holder of any shares may vote at any
general meeting in respect thereof in the same manner as if he were the registered holder of such
shares, provided that forty-eight (48) hours at least before the time of the holding of the meeting or
adjourned meeting, as the case may be, at which he proposes to vote, he shall satisfy the Board
of his entitlement to such shares, or the Board shall have previously admitted his right to vote at
such meeting in respect thereof.
Bye-law 75
No Member shall, unless the Board otherwise determines, be entitled to attend and vote and to be
reckoned in a quorum at any general meeting unless he is duly registered and all calls or other sums
presently payable by him in respect of shares in the Company have been paid.
105
Bye-law 76
If:
(a) any objection shall be raised to the qualification of any voter; or
(b) any votes have been counted which ought not to have been counted or which might have been
rejected; or
(c) any votes are not counted which ought to have been counted;
the objection or error shall not vitiate the decision of the meeting or adjourned meeting on any resolution
unless the same is raised or pointed out at the meeting or, as the case may be, the adjourned meeting
at which the vote objected to is given or tendered or at which the error occurs. Any objection or error shall
be referred to the chairman of the meeting and shall only vitiate the decision of the meeting on any
resolution if the chairman decides that the same may have affected the decision of the meeting. The
decision of the chairman on such matters shall be final and conclusive.
Bye-law 77
(1) Any Member entitled to attend and vote at a meeting of the Company who is the holder of two or
more shares shall be entitled to appoint not more than two proxies to attend and vote instead of him
at the same general meeting provided that if the Member is the Depository:
(a) the Depository may appoint more than two proxies to attend and vote at the same general
meeting and each proxy shall be entitled to exercise the same powers on behalf of the
Depository as the Depository could exercise, including, notwithstanding Bye-law 65, the right
to vote individually on a show of hands;
(b) the Company shall be entitled and bound:
(i) to reject any instrument of proxy lodged if the proxy first named in that instrument, being
the Depositor, is not shown in the records of the Depository as at a time not earlier than
forty-eight (48) hours prior to the time of the relevant general meeting supplied by the
Depository to the Company, to have any shares credited to a Securities Account; and
(ii) to accept as the maximum number of votes which in aggregate all the proxies appointed
by the Depository in respect of a particular Depositor are able to cast on a poll a number
which is the number of shares credited to the Securities Account of that Depositor, as
shown in the records of the Depository as at a time not earlier than forty-eight (48) hours
prior to the time of the relevant general meeting supplied by the Depository to the
Company, whether that number is greater or smaller than the number specified in any
instrument of proxy executed by or on behalf of the Depository; and
(iii) the Company shall accept as valid in all respects the form of proxy approved by the
Depository (the CDP Proxy Form) for use at the date relevant to the general meeting
in question notwithstanding that the same permits the Depositor concerned to nominate
a person or persons other than himself as the proxy or proxies appointed by the
Depository. The Company shall be entitled and bound, in determining rights to vote and
other matters in respect of a completed CDP Proxy Form submitted to it, to have regard
to the instructions given by and the notes (if any) set out in the CDP Proxy Form.
(2) In any case where a form of proxy appoints more than one proxy (including the case where such
appointment results from a nomination by a Depositor), the proportion of the shareholding
concerned to be represented by each proxy shall be specified in the form of proxy.
(3) A proxy need not be a Member. In addition, subject to sub-paragraph (1) of this Bye-law, a proxy
or proxies representing either a Member who is an individual or a Member which is a corporation
shall be entitled to exercise the same powers on behalf of the Member which he or they represent
as such Member could exercise.
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Bye-law 78
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney
duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of
an officer, attorney or other person authorised to sign the same or, in the case of the Depository, signed
by its duly authorised officer by some method or system of mechanical signature as the Depository may
deem appropriate. In the case of an instrument of proxy purporting to be signed on behalf of a
corporation by an officer thereof it shall be assumed, unless the contrary appears, that such officer was
duly authorised to sign such instrument of proxy on behalf of the corporation without further evidence of
the fact.
Bye-law 79
The instrument appointing a proxy and (if required by the Board) the power of attorney or other authority
(if any) under which it is signed on behalf of the appointer (which shall, for this purpose, include a
Depositor), or a certified copy of such power or authority, shall be delivered to such place or one of such
places (if any) as may be specified for that purpose in or by way of note to or in any document
accompanying the notice convening the meeting (or, if no place is so specified at the Registration Office
or the Office, as may be appropriate) not less than forty-eight (48) hours before the time appointed for
holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote
or, in the case of a poll taken subsequently to the date of a meeting or adjourned meeting, not less than
twenty-four (24) hours before the time appointed for the taking of the poll and in default the instrument
of proxy shall not be treated as valid. No instrument appointing a proxy shall be valid after the expiration
of twelve (12) months from the date named in it as the date of its execution, except at an adjourned
meeting or on a poll demanded at a meeting or an adjourned meeting in cases where the meeting was
originally held within twelve (12) months from such date. Delivery of an instrument appointing a proxy
shall not preclude a Member from attending and voting in person at the meeting convened and in such
event, the instrument appointing a proxy shall be deemed to be revoked.
Bye-law 80
Instruments of proxy shall be in any usual or common form (including any form approved from time to
time by the Depository) or in such other form as the Board may approve (provided that this shall not
preclude the use of the two-way form) and the Board may, if it thinks fit, send out with the notice of any
meeting forms of instrument of proxy for use at the meeting. The instrument of proxy shall be deemed
to confer authority to demand or join in demanding a poll and to vote on any amendment of a resolution
put to the meeting for which it is given as the proxy thinks fit. The instrument of proxy shall, unless the
contrary is stated therein, be valid as well for any adjournment of the meeting as for the meeting to which
it relates.
Bye-law 81
A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the
previous death or insanity of the principal, or revocation of the instrument of proxy or of the authority
under which it was executed, provided that no intimation in writing of such death, insanity or revocation
shall have been received by the Company at the Office or the Registration Office (or such other place
as may be specified for the delivery of instruments of proxy in the notice convening the meeting or other
document sent therewith) two (2) hours at least before the commencement of the meeting or adjourned
meeting, or the taking of the poll, at which the instrument of proxy is used.
Bye-law 82
Anything which under these Bye-laws a Member may do by proxy he may likewise do by his duly
appointed attorney and the provisions of these Bye-laws relating to proxies and instruments appointing
proxies shall apply mutatis mutandis in relation to any such attorney and the instrument under which
such attorney is appointed.
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Bye-law 83
(1) Any corporation which is a Member may by resolution of its directors or other governing body
authorise such person as it thinks fit to act as its representative at any meeting of the Company or
at any meeting of any class of Members. The person so authorised shall be entitled to exercise the
same powers on behalf of such corporation as the corporation could exercise if it were an individual
Member and such corporation shall for the purposes of these Bye-laws be deemed to be present
in person at any such meeting if a person so authorised is present thereat.
(2) If permitted by the Act, where a Member is the Depository (or its nominee, in each case, being a
corporation), it may authorise such persons as it thinks fit to act as its representatives at any
meeting of the Company or at any meeting of any class of Members provided that the authorisation
shall specify the number and class of shares in respect of which each such representative is so
authorised. Each person so authorised under the provisions of this Bye-law shall be entitled to
exercise the same rights and powers as if such person was the registered holder of the shares of
the Company held by the Depository (or its nominee).
(3) Any reference in these Bye-laws to a duly authorised representative of a Member being a
corporation shall mean a representative authorised under the provisions of this Bye-law.
Variation of Rights
Bye-law 10
Whenever the share capital of the Company is divided into different classes of shares, subject to the
provisions of the Statutes, preference capital other than redeemable preference capital may be repaid
and the special rights attached to any class may be varied or abrogated either with the consent in writing
of the holders of three-quarters in nominal value of the issued shares of the class or with the sanction
of a special resolution passed at a separate general meeting of the holders of the shares of the class (but
not otherwise) and may be so repaid, varied or abrogated either whilst the Company is a going concern
or during or in contemplation of a winding-up. To every such separate general meeting and all
adjournments thereof all the provisions of these Bye-laws relating to general meetings of the Company
and to the proceedings thereat shall mutatis mutandis apply, except that the necessary quorum (other
than at an adjourned meeting) shall be two persons at least holding or representing by proxy at least
one-third in nominal value of the issued shares of the class and at any adjourned meeting of such holder,
two holders present in person or by proxy (whatever the number of shares held by them) shall be a
quorum and that any holder of shares of the class present in person or by proxy may demand a poll and
that every such holder shall on a poll have one vote for every share of the class held by him, provided
always that where the necessary majority for such a special resolution is not obtained at such general
meeting, consent in writing if obtained from the holders of three-quarters in nominal value of the issued
shares of the class concerned within two months of such general meeting shall be as valid and effectual
as a special resolution carried at such general meeting. The foregoing provisions of this Bye-law shall
apply to the variation or abrogation of the special rights attached to some only of the shares of any class
as if each group of shares of the class differently treated formed a separate class the special rights
whereof are to be varied.
Restrictions on Transferability of Shares
Bye-law 46
Subject to these Bye-laws, any Member may transfer all or any of his shares by an instrument of transfer
in the form for the time being approved by the Designated Stock Exchange or where the Company is no
longer listed on the Designated Stock Exchange, in any other form acceptable to the Board.
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Bye-law 47
The instrument of transfer shall be executed by or on behalf of the transferor and the transferee provided
that an instrument of transfer in respect of which the transferee is the Depository shall be effective
although not signed or witnessed by or on behalf of the Depository and provided further that the Board
may dispense with the execution of the instrument of transfer by the transferee in any case which it thinks
fit in its discretion to do so. The Board may also resolve, either generally or in any particular case, upon
request by either the transferor or transferee, to accept mechanically executed transfers. The transferor
shall be deemed to remain the holder of the share until the name of the transferee is entered in the
Register in respect thereof. Nothing in these Bye-laws shall preclude the Board from recognising a
renunciation of the allotment or provisional allotment of any share by the allottee in favour of some other
person.
Bye-law 48
(1) The Board may, in its absolute discretion, refuse to register a transfer of any share (not being a fully
paid up share) to a person of whom it does not approve, or any share issued under any share
incentive scheme for employees upon which a restriction on transfer imposed thereby still subsists,
and it may also, without prejudice to the foregoing generality, refuse to register a transfer of any
share to more than four (4) joint holders or a transfer of any share (not being a fully paid up share)
on which the Company has a lien.
(2) No transfer shall be made to an infant or to a person of unsound mind or under other legal disability.
(3) The Board in so far as permitted by any applicable law may, upon request by a shareholder and in
its absolute discretion, at any time and from time to time transfer any share upon the Register to any
branch register or any share on any branch register to the Register or any other branch register. In
the event of any such transfer, the shareholder requesting such transfer shall bear the cost of
effecting the transfer unless the Board otherwise determines.
(4) Unless the Board otherwise agrees (which agreement may be on such terms and subject to such
conditions as the Board in its absolute discretion may from time to time determine, and which
agreement the Board shall, without giving any reason therefor, be entitled in its absolute discretion
to give or withhold), no shares upon the Register shall be transferred to any branch register nor shall
shares on any branch register be transferred to the Register or any other branch register and all
transfers and other documents of title shall be lodged for registration, and registered, in the case of
any shares on a branch register, at the relevant Registration Office, and, in the case of any shares
on the Register, at the Office or such other place in Bermuda at which the Register is kept in
accordance with the Act.
(5) Save as provided in the Bye-laws, there shall be no restriction on the transfer of fully paid up shares
(except where required by law, or the listing rules of the Designated Stock Exchange).
Bye-law 49
Without limiting the generality of the last preceding Bye-law, the Board may decline to recognise any
instrument of transfer unless:
(a) a fee of such maximum sum as the Designated Stock Exchange may determine to be payable or
such lesser sum as the Board may from time to time require is paid to the Company in respect
thereof;
(b) the instrument of transfer is in respect of only one class of share;
(c) the instrument of transfer is lodged at the Office or such other place in Bermuda at which the
Register is kept in accordance with the Act or the Registration Office (as the case may be)
accompanied by the relevant share certificate(s) and such other evidence as the Board may
reasonably require to show the right of the transferor to make the transfer (and, if the instrument of
transfer is executed by some other person on his behalf, the authority of that person so to do); and
(d) if applicable, the instrument of transfer is duly and properly stamped.
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Bye-law 50
If the Board refuses to register a transfer of any share, it shall, within one (1) month after the date on
which the transfer was lodged with the Company, send to each of the transferor and transferee notice of
the refusal, stating the facts which are considered to justify the refusal.
Bye-law 51
The registration of transfers of shares or of any class of shares may, after notice has been given by
advertisement in an appointed newspaper and, where applicable, any other newspapers in accordance
with the requirements of any Designated Stock Exchange to that effect, be suspended at such times and
for such periods (not exceeding in the whole thirty (30) days in any year) as the Board may determine.
110
APPENDIX III
SUMMARY OF BERMUDA COMPANY LAW
BERMUDA COMPANY LAW
The Company is incorporated in Bermuda and, therefore, operates subject to Bermuda law. The
following sets out a summary of certain provisions of Bermuda company law, although this does not
purport to contain all applicable qualifications and exceptions or to be a complete review of all matters
of Bermuda company law and taxation, which may differ from equivalent provisions in jurisdictions with
which interested parties may be more familiar. Prospective investors should consult their own
professional advisers as to consequences (legal, tax or otherwise) of the acquisition, ownership or
disposition of the Shares, including, in particular, the effect of any foreign state or local laws to which they
are subject.
The statements made herein are based on the laws of Bermuda in force as at the date of this Prospectus
and are subject to changes in such laws, or in the interpretation of these laws, occurring after such date,
which changes could be made on a retroactive basis.
(a) Share capital
The Companies Act provides that where a company issues shares at a premium, whether for cash
or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall
be transferred to an account, to be called the share premium account, to which the provisions of
the Companies Act relating to a reduction of share capital of a company shall apply as if the share
premium account were paid up share capital of the company except that the share premium
account may be applied by the company:
(i) in paying up unissued shares of the company to be issued to members of the company as fully
paid bonus shares;
(ii) in writing off:
(aa) the preliminary expenses of the company; or
(bb) the expenses of, or the commission paid or discount allowed on, any issue of shares or
debentures of the company; or
(iii) in providing for the premiums payable on redemption of any shares or of any debentures of
the company.
However, only premiums arising on the same class of shares can be used to pay up bonus shares
or in providing for the premiums payable on redemption of shares or debentures referred to in (i) and
(iii) above respectively.
In the case of an exchange of shares, the excess value of the shares acquired over the nominal
value of the shares being issued may be credited to a contributed surplus account of the issuing
company.
The Companies Act permits a company limited by shares or any other company having a share
capital to issue preference shares and subject to the conditions stipulated therein, to convert those
preference shares into redeemable preference shares.
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The Companies Act includes certain protections for holders of special classes of shares, such as
requiring their consent to be obtained before their rights may be varied. Where provision is made
by the memorandum of association or bye-laws for authorising the variation of rights attached to
any class of shares in the company, the consent of the specified proportions of the holders of the
issued shares of that class or the sanction of a resolution passed at a separate meeting of the
holders of those shares is required, and where no provision for varying such rights is made in the
memorandum of association or bye-laws and nothing therein precludes a variation of such rights
(unless otherwise provided by the terms of the issue of the shares of that class), the written consent
of the holders of three-fourths of the issued shares of that class or the sanction of a resolution
passed as aforesaid is required.
(b) Financial assistance to purchase shares of a company or its holding company
A company is prohibited from providing financial assistance, directly or indirectly, for the purpose of
an acquisition of its own or its holding companys shares before or at the same time as the
acquisition takes place unless there are reasonable grounds for believing that the company is, and
would after the giving of such financial assistance be, able to pay its liabilities as they become due
and the realisable value of the companys assets, after the giving of such financial assistance, would
not thereby be less than the aggregate of its liabilities, issued share capital and share premium
accounts. However, in certain circumstances, the prohibition from giving financial assistance may
be excluded such as where the assistance is only an incidental part of a larger purpose and the
assistance is given in good faith in the interests of the company. In addition, the Companies Act
expressly permits the grant of financial assistance where (i) the financial assistance does not
reduce the companys net assets or, to the extent the net assets are reduced, such financial
assistance is provided for out of funds of the company which would otherwise be available for
dividend or distribution; (ii) before the date on which the financial assistance is to be given, an
affidavit of solvency is sworn by at least two the directors of the company declaring either that on
that date, after taking into account the giving if the financial assistance, the company will be solvent
or that all the creditors of the company on that date have expressed in writing their concurrence in
the giving of the financial assistance; and (iii) the financial assistance, is approved by resolution of
shareholders of the company.
(c) Purchase of securities by a company and its subsidiaries
A company limited by shares or any other company having a share capital may, if authorised by its
memorandum of association or bye-laws, purchase its own shares. Such purchases may only be
effected out of the capital paid up on the purchased shares or out of the funds of the company which
would otherwise be available for dividend or distribution or out of the proceeds of a fresh issue of
shares made for the purposes of such purchase. Any premium payable on a purchase over the par
value of the shares to be purchased must be provided for out of funds of the company otherwise
which would otherwise be available for dividend or distribution or out of the companys share
premium account. Any purchase by a company of its own shares may be authorised by its board of
directors or otherwise by or in accordance with the provisions of its bye-laws. Such purchase may
only be made if at least two directors of the company o the date on which the purchase is to be made
declare, by affidavit, declare that on the effective date of the purchase and taking into account the
purchase, the company is solvent or that all of the creditors of the company on that date have
consented in writing to the purchase. In the case where a company is listed on an appointed stock
exchange (as defined in the Companies Act), the affidavit may, at the option of the company, be
sworn within thirty days after the end of each calendar quarter giving details of the purchases made
during each quarter and the affidavit shall confirm that the company was solvent at all material times
during the quarter. The shares so purchased will be treated as cancelled and the companys issued,
but not its authorised, capital will be diminished by the nominal value of those shares accordingly.
In addition, a company may not purchase its own shares if, as a result of the purchase of shares
if, as a result of the purchase of shares in question, the issued share capital of the company would
be reduced below the minimum capital specified for the company in its memorandum of association.
112
A company is not prohibited from purchasing and may purchase its own warrants subject to and in
accordance with the terms and conditions of the relevant warrant instrument or certificate. There is
no requirement under Bermuda law that a companys memorandum of association or its bye-laws
contain a specific provision enabling such purchases and the directors of a company may rely upon
the general power contained in its memorandum of association to buy and sell and deal in personal
property of all kinds.
Under Bermuda law, a subsidiary may hold shares in its holding company and in certain
circumstances, may acquire such shares. The holding company is, however, prohibited from giving
financial assistance for the purpose of the acquisition, subject to certain circumstances provided by
the Companies Act. A company, whether a subsidiary or a holding company, may only purchase its
own shares for cancellation if it is authorised to do so in its memorandum of association or bye-laws
pursuant to section 42A of the Companies Act.
(d) Dividends and distributions
Section 54 of the Companies Act provides that a company shall not declare or pay a dividend, or
make a distribution out of contributed surplus, if there are reasonable grounds for believing that (i)
the company is, or would after the payment be, unable to pay its liabilities as they become due; or
(ii) the realisable value of the companys assets would thereby be less than the aggregate of its
liabilities and its issued share capital and share premium accounts. Contributed surplus is defined
for purposes of section 54 of the Companies Act to include the proceeds arising from donated
shares, credits resulting from the redemption or conversion of shares at less than the amount set
up as nominal capital and donations of cash and other assets to the company.
(e) Protection of minorities
Class actions and derivative actions are generally not available to shareholders under the laws of
Bermuda. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to
commence an action in the name of a company to remedy a wrong done to the company where the
act complained of is alleged to be beyond the corporate power of the company or is illegal or would
result in the violation of the companys memorandum of association and bye-laws. Furthermore,
consideration would be given by the court to acts that are alleged to constitute a fraud against the
minority shareholders or, for instance, where an act requires the approval of a greater percentage
of the companys shareholders than actually approved it.
Any member of a company who complains that the affairs of the company are being conducted or
have been conducted in a manner oppressive or prejudicial to the interests of some part of the
members, including himself, may petition the court for an order under section 111 of the Companies
Act. If on any petition, the Court is of the opinion that the companys affairs are being conducted or
have been conducted or have been conducted as aforesaid and that to wind up the company would
unfairly prejudice that part of the members but that otherwise the facts would justify the making of
a winding up order on just and equitable grounds, the Court may, with a view to bringing an end the
matters complained of, make such order as it thinks fit, whether for regulating the conduct of the
companys affairs in future or for the purchase of shares of any members of the company by other
members of the company or by the company itself and in the case of a purchase by the company
itself, for the reduction accordingly of the companys capital, or otherwise. Bermuda law also
provides that the company may be wound up by the Bermuda court, if, inter alia, the court is of the
opinion that it is just and equitable to do so. Both these provisions are available to minority
shareholders seeking relief from the oppressive conduct of the majority, and the court has wide
discretion to make such orders as it thinks fit.
Except as mentioned above, claims against a company by its shareholders must be based on the
general laws of contract or tort applicable in Bermuda.
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A statutory right of action is conferred on subscribers of shares in a company against persons,
including directors and officers, responsible for the issue of a prospectus in respect of loss or
damage suffered by reason of an untrue statement therein, but this confers no right of action against
the company itself. In addition, a company, as opposed to its shareholders, may take action against
its officers including directors, for breach of their statutory and fiduciary duty to act honestly and in
good faith with a view to the best interests of the company.
(f) Management
The Companies Act contains no specific restrictions on the power of directors to dispose of assets
of a company, although it specifically requires that every officer of a company, which includes a
director, managing director and secretary, in exercising his powers and discharging his duties must
do so honestly and in good faith with a view to the best interests of the company and exercise the
care, diligence and skill that a reasonably prudent person would exercise in comparable
circumstances. Furthermore, the Companies Act requires that every officer should comply with the
Companies Act, regulations passed pursuant to the Companies Act and the bye-laws of the
company.
(g) Accounting and auditing requirements
The Companies Act requires a company to cause proper records of accounts to be kept with respect
to (i) all sums of money received and expended by the company and the matters in respect of which
the receipt and expenditure takes place; (ii) all sales and purchases of goods by the company and
(iii) the assets and liabilities of the company.
Furthermore, it requires that a company keeps its records of account at the registered office of the
company or, subject to the Companies Act, at such other place as the directors think fit and that
such records shall at all times be open to inspection by the directors.
The Companies Act requires that the directors of the company must, at least once a year, lay before
the company in general meeting financial statements for the relevant accounting period. Further, the
companys auditor must audit the financial statements so as to enable him to report to the members.
Based on the results of his audit, which must be made in accordance with generally accepted
auditing standards, the auditor must then make a report to the members. The generally accepted
auditing standards may be those of Bermuda or a country or jurisdiction other than Bermuda or such
other generally accepted auditing standards as may be appointed by the Minister of Finance of
Bermuda under the Companies Act; and where the generally accepted auditing standards used are
other than those of Bermuda, the report of the auditor shall identify the generally accepted auditing
standards used. All members of the company are entitled to receive a copy of every financial
statement prepared in accordance with these requirements, at least seven days before the general
meeting of the company at which the financial statements are to be tabled.
(h) Exchange control
An exempted company is usually designated as non-resident for Bermuda exchange control
purposes by the Bermuda Monetary Authority. Where a company is so designated, it is free to deal
in currencies of countries outside the Bermuda exchange control area which are freely convertible
into currencies of any other country. The permission of the Bermuda Monetary Authority is required
for the issue of securities (including shares, warrants, debentures and bonds) by a company and the
subsequent transfer of such securities. In granting such permission, the Bermuda Monetary
Authority accepts no responsibility for the financial soundness of any proposals or for the
correctness of any statements made or opinions expressed in any document with regard to such
issue. Before a company can issue or transfer any further shares and warrants in excess of the
amounts already approved, it must obtain the prior written consent of the Bermuda Monetary
Authority.
114
Permission of the Bermuda Monetary Authority will normally be granted for the issue and transfer
of securities to and between persons regarded as resident outside Bermuda for exchange control
purposes without specific consent for each issue or as the case may be, transfer for so long as the
securities are listed on an appointed stock exchange (as defined in the Companies Act). Issues to
and transfers involving persons regarded as resident for exchange control purposes in Bermuda
will be subject to specific exchange control authorisation.
(i) Taxation
Under present Bermuda law, no Bermuda withholding tax on dividends or other distributions, nor
any Bermuda tax computed on profits or income or on any capital asset, gain or appreciation will
be payable by an exempted company or its operations, nor is there any Bermuda tax in the nature
of estate duty or inheritance tax applicable to shares, debentures or other obligations of the
company held by non-residents of Bermuda. Furthermore, a company may apply to the Minister of
Finance of Bermuda for an assurance, under the Exempted Undertakings Tax Protection Act 1966
of Bermuda, that no such taxes shall be so applicable until 28th March 2016, although this
assurance will not prevent the imposition of any Bermuda tax payable in relation to any land in
Bermuda leased or let to the company or to persons ordinarily resident in Bermuda.
(j) Stamp duty
An exempted company is exempt from all stamp duties except on transactions involving Bermuda
property. This term relates, essentially, to real and personal property physically situated in
Bermuda, including shares in local companies (as opposed to exempted companies). Transfers of
securities in all exempted companies are exempt from Bermuda stamp duty.
(k) Loans to directors
Bermuda law prohibits the making of loans by a company to any of its directors or director of its
holding company or to (a) their spouse or children or (b) a company (other than a company which
is a holding company or a subsidiary of the company making the loan) which a director, his spouse
or children own or control directly or indirectly more than 20% of the capital or loan debt, without the
consent of any member or members holding in aggregate not less than nine-tenths of the total
voting rights of all members having the right to vote at any meeting of the members of the company.
These prohibitions do not apply to anything done to provide a director with funds to meet the
expenditure incurred or to be incurred by him for the purposes of the company, provided that the
company gives its prior approval at a general meeting at which the purposes of the expenditure and
the amount of the loan are disclosed or, if not, the loan is made on condition that it will be repaid
within six months of the next following annual general meeting if the loan is not approved at or
before such meeting. If the approval of the company is not given for a loan, the directors who
authorised it will be jointly and severally liable for any loss arising therefrom.
(l) Inspection of corporate records
Members of the general public have the right to inspect the public documents of a company
available at the office of the Registrar of Companies in Bermuda which will include the companys
certificate of incorporation, its memorandum of association (including its objects and powers) and
any alteration to the companys memorandum of association. The members of the company have
the additional right to inspect the bye-laws of a company, and the companys audited financial
statements, which must be presented to the annual general meeting. Minutes of general meetings
of a company are also open for inspection by the members or directors of the company without
charge for not less than two hours during business hours each day subject to such reasonable
restrictions as the company may impose. Except where the register of members is closed under the
provisions of the Companies Act, the register of members of a company shall during business hours
(subject to such reasonable restrictions as the company may impose, so that not less than 2 hours
in each day be allowed for inspection) be open for inspection by members without charge and to any
other person for a fee. The company is required to maintain its share register in Bermuda but may,
subject to the provisions of the Companies Act, establish a branch register outside Bermuda.
Bermuda law does not, however, provide a general right for members to inspect or obtain copies of
any other corporate records.
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Acompany is required to maintain a register of directors and officers at its registered office and such
register shall during business hours (subject to such reasonable restrictions as the company may
impose, so that not less than 2 hours in each day be allowed for inspection) be made available for
inspection by members of the public without charge.
(m) Winding up
Acompany may be wound up by the Bermuda court on application presented by the company itself,
its creditors or its contributors. The Bermuda court also has authority to order winding up in a
number of specified circumstances including where it is, in the opinion of the Bermuda court, just
and equitable that such company be wound up.
A company may be wound up voluntarily when the members so resolve in general meeting, or, in
the case of a limited duration company, when the period fixed for the duration of the company by
its memorandum expires, or the event occurs on the occurrence of which the memorandum
provides that the company is to be dissolved. In the case of a voluntary winding up, such company
is obliged to cease to carry on its business from the time of passing the resolution for voluntary
winding up or upon the expiry of the period or the occurrence of the event referred to above. Upon
the appointment of a liquidator, the responsibility for the companys affairs rests entirely in his hands
and no future executive action may be carried out without his approval.
Where, on a voluntary winding up, a majority of directors each make a statutory declaration to the
effect that they have formed the opinion that the company will be able to pay its debts in full within
such period not exceeding 12 months from the commencement of the winding up, the winding up
will be a members voluntary winding up. In any case where such declaration has not been made,
the winding up will be a creditors voluntary winding up.
In the case of a members voluntary winding up of a company, the company in general meeting must
appoint one or more liquidators within the period prescribed by the Companies Act for the purpose
of winding up the affairs of the company and distributing its assets. If the liquidator at any time forms
the opinion that such company will not be able to pay its debts in full within the period specified in
the director statutory declaration (referred to in the preceding paragraph), he shall forthwith
summon a meeting of creditors and shall lay before the meeting a statement of the assets and
liabilities of the company.
Subject to the Companies Act, as soon as the affairs of the company are fully wound up, the
liquidator must make up an account of the winding up, showing how the winding up has been
conducted and the property of the company has been disposed of, and thereupon call a general
meeting of the company for the purposes of laying before it the account and giving an explanation
thereof. This final general meeting requires at least one months notice and shall be called by the
advertisement in an appointed newspaper (as defined in the Companies Act) in Bermuda,
specifying the time, place and object thereof.
In the case of a creditors voluntary winding up of a company, the company must call a meeting of
creditors of the company to be summoned on the day or the next day following the day on which
the meeting of the members at which the resolution for winding up is to be proposed is held. Notice
of such meeting of creditors must be sent by post to the creditors at the same time as notice is sent
to the members of the company. In addition, such company must cause a notice to appear in an
appointed newspaper on at least two occasions.
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The creditors and the members at their respective meetings may nominate a person to be liquidator
for the purposes of winding up the affairs of the company provided that if the creditors or the
members nominate a different person, the person nominated by the creditors shall be the liquidator.
If no person is nominated by the creditors as the liquidator, the person nominated by the members
shall be the liquidator. The creditors at the creditors meeting may also appoint a committee of
inspection consisting of not more than five persons. If such a committee is appointed by the
creditors as the liquidator, the person nominated by the creditors, the members may, wither at the
meeting at which the resolution for voluntary winding up is passed or at any time subsequently in
general meeting, appoint such number of persons as they think fit to act as members of the
committee not exceeding 5 in number. However, the creditors may, if they think fit, resolve that all
or any of the persons so appointed by the members ought not be members of the committee of
inspection. If the creditors so resolve, the persons mentioned in the resolution shall not, unless the
Court otherwise directs, be qualified to act as members of the committee and on any application to
the Court under section 218 of the Companies Act, the Court may, if it thinks fit, appoint other
persons to act as such members in place of the persons mentioned in the resolution.
If a creditors winding up continues for more than one year, the liquidator is required to summon a
general meeting of the company and a meeting of the creditors at the end of each year to lay before
such meetings an account of his acts and dealings and of the conduct of the winding up during the
preceding year. As soon as the affairs of the company are fully wound up, the liquidator must make
an account of the winding up, showing how the winding up has been conducted and the property
of the company has been disposed of, and thereupon shall call a general meeting of the company
and a meeting of the creditors for the purposes of laying the account before such meetings and
giving an explanation thereof.
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