Guangdong Join Share Financing Guarantee Investment : MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE PROVISION OF GUARANTEE AND FOSHAN COUNTER-GUARANTEE

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Guangdong Join-Share Financing Guarantee Investment Co., Ltd.*

廣 東 中 盈 盛 達 融 資 擔 保 投 資 股 份 有 限 公 司

(A joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1543)

MAJOR AND CONNECTED TRANSACTION

IN RELATION TO THE PROVISION

OF GUARANTEE AND FOSHAN COUNTER-GUARANTEE

THE GUARANTEE AND FOSHAN COUNTER-GUARANTEE

On 14 October 2019, the Company (being guarantor) and Guangdong Yaoda (being warrantee) entered into the Consolidated Guarantees Arrangement Agreement pursuant to which the Group agrees to (i) provide the Guarantee to the Lenders in relation to the Financing; and (ii) provide the Foshan Counter-guarantee to the Foshan Guarantors for Guangdong Yaoda. The aggregated amount of the Guarantee and the Foshan Counter-guarantee provided by the Group is subject to the Maximum Guarantees Limit.

In respect of the Foshan Counter-guarantee as stipulated in the Consolidated Guarantees Arrangement Agreement, on 14 October 2019, the Company (being counter-guarantor) also entered into the Foshan Counter-guarantee Agreement with the Foshan Guarantors to further stipulate the rights and obligations of both signing parties.

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The Service Term will be three years since the day on which Shareholders' approval for the Guarantee Agreements is obtained. Each separate Guarantee or Foshan Counter- guarantee to be provided by the Group is subject to certain conditions precedent, including but not limited to, all necessary approvals, consents or authorisation as required under the relevant laws and regulations, articles of association, regulatory bodies or agreements in relation to the Guarantee Agreements and each Guarantee or Foshan Counter-guarantee to be provided thereunder having been obtained, and all necessary filings and/or registrations (if any) having been completed.

LISTING RULES IMPLICATIONS

Foshan Financial is a substantial shareholder of the Company and hence a connected person of the Company. Guangdong Yaoda is a subsidiary of Foshan Financial and Foshan Public is the holding company of Foshan Financial, and hence are also connected persons of the Company. Therefore, (i) the Guarantee and the Foshan Counter-guarantee to be provided by the Group for Guangdong Yaoda pursuant to the Consolidated Guarantees Arrangement Agreements, as well as (ii) the Foshan Counter-guarantee to be provided to Foshan Financial and Foshan Public contemplated under the Foshan Counter-guarantee Agreement constitute a connected transaction of the Company under Chapter 14A of the Listing Rules.

As the Directors are of the view that the Guarantee and the Foshan Counter-guarantee as contemplated under the Guarantee Agreements (i) are on normal and commercial terms; (ii) shall be provided in proportion to the equity interest directly held by the Group in Guangdong Yaoda; and (iii) shall be given by the Group on a several and not joint basis. Therefore, pursuant to Rule 14A.89 of the Listing Rules, such connected transaction shall be fully exempt from reporting, announcement, circular and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio (as defined in Rule 14.07 of the Listing Rules) of the provision of the Guarantee and Foshan Counter-guarantee contemplated under the Consolidated Guarantees Arrangement Agreement exceeds 25% but is less than 75%, the provision of the Guarantee and Foshan Counter-guarantee contemplated under the Consolidated Guarantees Arrangement Agreement constitutes a major transaction of the Company and therefore, is subject to the reporting, announcement, circular and Shareholders' approval requirements under Chapter 14 of the Listing Rules.

DESPATCH OF CIRCULAR

A circular containing, among others, (i) further details of the Guarantee Agreements and the transactions contemplated thereunder and other information; and (ii) the notice convening the EGM, is expected to be despatched to the Shareholders on or before 4 November 2019.

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INTRODUCTION

On 14 October 2019, the Company and Guangdong Yaoda entered into the Consolidated Guarantees Arrangement Agreement pursuant to which the Group agrees to (i) provide the Guarantee to the Lenders in relation to the Financing; and (ii) provide the Foshan Counter-guarantee to the Foshan Guarantors for Guangdong Yaoda. The aggregated amount of the Guarantee and the Foshan Counter-guarantee provided by the Group is subject to the Maximum Guarantees Limit. Further, in respect of the Foshan Counter- guarantee as stipulated in the Consolidated Guarantees Arrangement Agreement, on 14 October 2019, the Company (being counter-guarantor) also entered into the Foshan Counter-guarantee Agreement with the Foshan Guarantors to further stipulate the rights and obligations of both signing parties.

THE GUARANTEE AND FOSHAN COUNTER-GUARANTEE

The Consolidated Guarantees Arrangement Agreement

The principal terms of the Consolidated Guarantees Arrangement Agreement are set out as follows:

Date	:	14 October 2019
Parties	:	(a)	The Company, as guarantor; and
		(b)	Guangdong Yaoda, as warrantee
Service term of the	: Three years since the day on which Shareholders'
Guarantee		approval for the Consolidated Guarantees Arrangement
		Agreement is obtained. Any unused amount under the
		Maximum Guarantees Limit will lapse automatically after
		the Service Term.
Guarantee and	: During the Service Term, the Company and/or Join-Share
Foshan Counter-		Financial shall, upon written application by Guangdong
guarantee		Yaoda, provide the Guarantee to the Lenders in relation
		to	the Financing and provide the Foshan Counter-

guarantee to Foshan Guarantors with the Maximum Guarantees Limit to secure the repayment obligations of Guangdong Yaoda.

Upon clearance of any obligations of the Group arising from the Financing by way of settlement by Guangdong Yaoda with the lender(s) or compensation by Guangdong Yaoda to the Group, such settled amount of the Financing can be added back into the balance of the Maximum Guarantees Limit.

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Details of each individual guarantee and counter- guarantee shall be separately determined by the parties.

Subject to the Maximum Guarantees Limit, each individual guarantee and counter-guarantee to be provided by the Group for Guangdong Yaoda shall be in proportion to their respective shareholdings in Guangdong Yaoda as at the date of the provision of each individual guarantee and counter-guarantee, and such guarantee and counter-guarantee shall be given on a several and not joint basis.

Conditions precedent	: Each guarantee and counter-guarantee to be provided by
	the Group for Guangdong Yaoda is conditional upon
	fulfillment of all of the following conditions precedent
	(unless otherwise waived by the Company in writing):
	(a) the	Consolidated	Guarantees	Arrangement
	Agreement having become effective;

1. the outstanding balance of the Financing covered by the Guarantee and the Foshan Counter-guarantee not having exceeded the balance of the Maximum Guarantees Limit;
2. Guangdong Yaoda not having breached any obligations under the Consolidated Guarantees Arrangements Agreement;
3. the provision of the Guarantee and the Foshan Counter-guarantee by the Group not having led to any breaches of any laws and regulations, the articles of association of Company and/or Join-Share Financial or the requirements of any regulatory bodies by the Company and/or Join-Share Financial;
4. all necessary approvals, consents or authorisation as required under the relevant laws and regulations, articles of association, regulatory bodies or agreements in relation to the Consolidated Guarantees Arrangement Agreement and each guarantee and counter-guarantee to be provided thereunder having been obtained, and all necessary filings and/or registrations (if any) having been completed; and

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1. other conditions precedent that may be required under the relevant laws and regulations, articles of association or bodies.

THE FOSHAN COUNTER-GUARANTEE

The Foshan Counter-guarantee Agreement

The principal terms of the Foshan Counter-guarantee Agreement are set out as follows:

Date	: 14 October 2019
Parties	: (a) Foshan Financial, as guarantor of Guangdong
	Yaoda;
	(b) Foshan Public, as guarantor of Guangdong Yaoda;
	and
	(c) the Company, as counter-guarantor
Service term of the	: Three years since the day on which Shareholders'
Foshan Counter-	approval for the Foshan Counter-guarantee Agreement
guarantee	is obtained (expected to be same as the Service Term).
	Any unused amount under the Maximum Guarantees
	Limit will lapse automatically after the service term.
Foshan Counter-	: During the service term of the Foshan Counter-guarantee,
guarantee	upon written application by Guangdong Yaoda, the
	Group shall provide counter-guarantee to the Foshan
	Guarantors subject to the Maximum Guarantees Limit.
	Such counter-guarantee shall be provided in the form of a
	counter-guarantee and/or pledge of the shareholdings of
	the Group in Guangdong Yaoda to Foshan Financial
	and/or Foshan Public.
	Upon clearance of any counter-guarantee obligations of
	the Group arising from the Financing by way of
	settlement by Guangdong Yaoda with the lender(s) or
	compensation by Guangdong Yaoda to the Group, such
	settled amount of the Financing can be added back into
	the balance of the Maximum Guarantees Limit.
	Details of each individual counter-guarantee shall be
	separately determined by the parties.

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Each individual counter-guarantee to be provided by the Group to the Foshan Guarantors shall be in proportion to their respective shareholdings in Guangdong Yaoda as at the date of the provision of each individual counter- guarantee and such counter-guarantee shall be given on a several and not joint basis, independent from counter- guarantee to be provided by Other Guangdong Yaoda Shareholders (if any).

Conditions precedent	: Each counter-guarantee to be provided by the Group to
	the Foshan Guarantors is conditional upon fulfillment of
	all of the following conditions precedent (unless otherwise
	waived by the Company in writing):
	(a)	the Foshan Counter-guarantee Agreement having
		become effective;
	(b)	the outstanding balance of the Financing covered by
		the Foshan Counter-guarantee not having exceeded
		the balance of the Maximum Guarantees Limit;
	(c)	the Foshan Guarantors not having breached any
		obligations under the Foshan Counter-guarantee
		Agreement;
	(d)	the provision of the Foshan Counter-guarantee by the
		Group not having led to any breaches of any laws and
		regulations, the articles of association of Company
		and/or Join-Share Financial or the requirements of
		any regulatory bodies by the Company and/or Join-
		Share Financial;
	(e)	all necessary approvals, consents or authorisation as
		required under the relevant laws and regulations,
		articles of association, regulatory bodies or
		agreements in relation to the Foshan Counter-
		guarantee Agreement and each counter-guarantee to
		be provided thereunder having been obtained, and all
		necessary filings and/or registrations (if any) having
		been completed; and
	(f)	other conditions precedent that may be required
		under the relevant laws and regulations, articles of
		association or bodies.

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INFORMATION OF GUANGDONG YAODA, FOSHAN FINANCIAL AND FOSHAN PUBLIC

Guangdong Yaoda is a limited liability company incorporated in the PRC with a registered capital of RMB425 million. Guangdong Yaoda is principally engaged in the business of finance lease and other leasing business. Guangdong Yaoda is a 24.71% owned subsidiary of Foshan Financial, and is indirectly owned as to 17.65% by Foshan Public. Guangdong Yaoda is owned as to 14.41% and 7.35% by the Company and Join- Share Financial, respectively.

Foshan Financial is a limited liability company incorporated in the PRC with a registered capital of RMB1,910 million. Foshan Financial is principally engaged in property management and investment and finance related business. Foshan Financial is a substantial shareholder of the Company.

Foshan Public is a limited liability company incorporated in the PRC with a registered capital of RMB2,200 million. Foshan Public is principally engaged in investment, construction and operation of public infrastructure and facilities. Foshan Public is the sole shareholder of Foshan Financial.

INFORMATION OF THE GROUP

The Company is a financial guarantee services provider in the PRC. It is principally engaged in the provision of (i) guarantees on behalf of small-and-medium enterprises (''SMEs'') and individual business proprietors to guarantee the repayment of their loans or performance of their certain contractual obligations, (ii) entrusted loans for SMEs and individual business proprietors, and (iii) micro-lending for SMEs, individual business proprietors and individuals.

Join-Share Financial is a direct wholly-owned subsidiary of the Company. It is principally engaged in investment holding.

REASONS FOR THE PROVISION OF GUARANTEE AND FOSHAN COUNTER- GUARANTEE

It is a common practice for banks or any third-party financial institutions requiring guarantee or security to be provided by the borrower before provision of loans or financing.

Guangdong Yaoda is a limited liability company incorporated in the PRC and it is principally engaged in the business of finance leasing and factoring. As at the date of this announcement, it did not have any landed property or fixed assets due to the nature of its business operation. As such, Guangdong Yaoda had to seek alternative solutions to provide security to the Lenders for obtaining funding for its business operation. To enhance the ability of Guangdong Yaoda to obtain Financing, which will be used by Guangdong Yaoda as its general working capital to maintain its daily business operation

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and future business development, it is necessary for Guangdong Yaoda to obtain guarantees from its shareholders as security for obtaining the Financing. In view of the potential business development of Guangdong Yaoda, which will potentially increase in the income generated by Guangdong Yaoda, the Group, as a shareholder of Guangdong Yaoda, in turn will be able to benefit from such arrangement.

Taking into account the above, the Directors, including the independent non-executive Directors, are of the view that (i) the provision of the Guarantee and the Foshan Counter-guarantee will facilitate Guangdong Yaoda in meeting its financing needs for its business operations; (ii) the Guarantee and the Foshan Counter-guarantee provided by the Group is proportionate to its shareholding in Guangdong Yaoda; and (iii) the Guarantee Agreements were entered into in the ordinary and usual course of business of the Company and thus consider that the terms of the Guarantee Agreements are on normal commercial terms and are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

LISTING RULES IMPLICATIONS

Foshan Financial is a substantial shareholder of the Company and hence a connected person of the Company. Guangdong Yaoda is a subsidiary of Foshan Financial and Foshan Public is the holding company of Foshan Financial. Pursuant to Rule 14A.13 of the Listing Rules, Guangdong Yaoda and Foshan Public are both associates of Foshan Financial, and hence are also connected persons of the Company. Therefore, (i) the Guarantee and the Foshan Counter-guarantee to be provided by the Group to Guangdong Yaoda pursuant to the Consolidated Guarantees Arrangement Agreement, as well as (ii) the Foshan Counter-guarantee to be provided to Foshan Financial and Foshan Public contemplated under the Foshan Counter-guarantee Agreement constitute a connected transaction of the Company under Chapter 14A of the Listing Rules.

As the Directors are of the view that the Guarantee and the Foshan Counter-guarantee as contemplated under the Guarantee Agreements (i) are on normal commercial terms; (ii) shall be provided in proportion to the equity interest directly held by the Group in Guangdong Yaoda; and (iii) shall be given by the Group on a several and not joint basis, therefore, pursuant to Rule 14A.89 of the Listing Rules, such connected transaction shall be fully exempt from reporting, announcement, circular and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio (as defined in Rule 14.07 of the Listing Rules) of the provision of the Guarantee and Foshan Counter-guarantee contemplated under the Consolidated Guarantees Arrangement Agreement exceeds 25% but is less than 75%, the provision of the Guarantee and Foshan Counter-guarantee contemplated under the Consolidated Guarantees Arrangement Agreement constitutes a major transaction of the Company and therefore, is subject to the reporting, announcement, circular and shareholders' approval requirements under Chapter 14 of the Listing Rules.

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The Company will convene the EGM in accordance with the Listing Rules in a timely manner to consider and, if thought fit, approve the provision of the Guarantees contemplated under the Guarantee Agreements. Foshan Financial and its associates shall abstain from voting at the resolution(s) considering and approving the provision of the Guarantee and the Foshan Counter-guarantee contemplated under the Guarantee Agreements at the EGM.

DESPATCH OF CIRCULAR

A circular containing, among others, (i) further details of the Guarantee Agreements and the transactions contemplated thereunder and other information; and (ii) the notice convening the EGM, is expected to be despatched to the Shareholders on or before 4 November 2019.

DEFINITIONS

The following terms have the following meanings in this announcement unless the context otherwise requires:

''associate(s)''	has the meaning ascribed to it under the Listing Rules
''Board''	the board of Directors of the Company
''Company''	Guangdong Join-Share Financing Guarantee Investment Co.,
	Ltd.* (廣東中盈盛達融資擔保投資股份有限公司), a joint stock
	limited company incorporated in the PRC
''connected	has the meaning ascribed to it under the Listing Rules
person(s)''
''connected	has the meaning ascribed to it under the Listing Rules
transaction''
''Consolidated	the maximum guarantee limit service agreement dated 14
Guarantees	October 2019 and entered into between the Company and
Arrangement	Guangdong Yaoda in relation to the provision of the Guarantee
Agreement''	and the Foshan Counter-guarantee
''Director(s)''	the director(s) of the Company
''EGM''	extraordinary general meeting of the Company to be held for the
	Shareholders to consider and, if thought fit, to (other among
	other matters) approve the Guarantee Agreements
''Financing''	the financing which Guangdong Yaoda intends to apply from
	the Lenders in the amount of RMB5,000 million (equivalent to
	approximately HK$5,618.0 million)

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''Foshan Counter-	the maximum counter-guarantee limit service agreement dated
guarantee	14 October 2019 and entered into between the Company and the
Agreement''	Foshan Guarantors in relation to the provision of the Foshan
	Counter-guarantee pursuant to the Consolidated Guarantees
	Arrangement Agreement
''Foshan Counter-	the counter-guarantee to be provided by the Group pursuant to
guarantee''	the Guarantee Agreements
''Foshan Financial''	Foshan Financial Investment Holding Co., Ltd.* (佛山市金融投
	資控股有限公司), a limited liability company incorporated in the
	PRC, and which is a substantial shareholder and connected
	person of the Company
''Foshan Guarantors''	collectively, Foshan Financial and Foshan Public
''Foshan Public''	Foshan Public Utilities Holdings Co., Ltd.* (佛山市公用事業控
	股有限公司), a limited liability company incorporated in the
	PRC, and which is the sole shareholder of Foshan Financial
''Group''	collectively, the Company and its subsidiaries
''Guangdong Yaoda''	Guangdong Yaoda Financial Leasing Company Limited* (廣東
	耀達融資租賃有限公司), a limited liability company
	incorporated in the PRC, and which is a connected person of
	the Company
''Guarantee''	the guarantee to be provided by the Group to the Lenders
	pursuant to the Consolidated Guarantees Arrangement
	Agreement
''Guarantee	collectively, the Consolidated Guarantees Arrangement
Agreements''	Agreement and the Foshan Counter-guarantee Agreement
''Independent	shareholder(s) other than Shareholders who have material
Shareholder(s)''	interest in the Guarantee and the Foshan Counter-guarantee
''Join-Share	Join-Share Financial Holdings Co., Limited (中盈盛達金融控股
Financial''	有限公司), a company incorporated in Hong Kong with limited
	liability, and which is a direct wholly-owned subsidiary of the
	Company
''HK$''	Hong Kong dollars, the lawful currency of Hong Kong
''Hong Kong''	the Hong Kong Special Administrative Region of the PRC

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''Lenders''	various entities and financial institutions (such as banks) from
	which Guangdong Yaoda intends to obtain the Financing. To
	the best knowledge and belief of the Directors, save for the
	Foshan Guarantors (who may also be lenders of Guangdong
	Yaoda), the Lenders are independent third parties to Guangdong
	Yaoda and the Group
''Listing Rules''	the Rules Governing the Listing of Securities on the Stock
	Exchange, as amended, supplemented or otherwise modified
	from time to time
''Maximum	being the maximum amount of the Financing covered by the
Guarantees Limit''	Guarantee and the Foshan Counter-guarantee to be provided by
	the Group, which shall be equivalent to the amount
	proportionate to the Group's shareholding in Guangdong
	Yaoda (i.e. approximately RMB1,088 million as at the date of
	this announcement), as agreed under the Guarantee Agreements
''Other Guangdong	the shareholders of Guangdong Yaoda other than the Company,
Yaoda	Join-Share Financial and Foshan Financial
Shareholders''
''PRC''	the People's Republic of China
''RMB''	Renminbi, the lawful currency of the PRC
''Service Term''	three years since the day on which Shareholders' approval for
	the Guarantee Agreements is obtained
''Shareholder(s)''	the holder(s) of share(s) of the Company
''Stock Exchange''	The Stock Exchange of Hong Kong Limited
''substantial	has the meaning ascribed to it under the Listing Rules
shareholder''
''%''	per cent.

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For the purpose of this announcement and for illustrative purpose only, conversion of RMB into HK$ is based on the approximate exchange rate of HK$1 :RMB0.89.

By order of the Board

Guangdong Join-Share Financing Guarantee Investment Co., Ltd.*

Wu Liejin

Chairman

Foshan, the PRC, 14 October 2019

As at the date of this announcement, the executive Director of the Company is Mr. Wu Liejin (Chairman); the non-executive Directors are Mr. Zhang Minming, Ms. Gu Lidan, Mr. Luo Zhenqing, Mr. Huang Guoshen and Mr. Zhang Deben; and the independent non- executive Directors are Mr. Wu Xiangneng, Mr. Leung Hon Man and Mr. Liu Heng.

• for identification purpose only

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