Notice of Extraordinary General Meeting
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China Medical System Holdings Ltd.
("CMS" or "the Company")
China Medical System Holdings Limited (AIM: CMSH) announces that an Extraordinary General Meeting ("EGM") of the Company will be convened at 10:00 a.m. (Macau time) on 20 August 2010 at Ballroom 3, Wynn Macau, rua cidade de sintra, Nape, Macau.
On 29 April 2010, the Company announced that it has made an application for the listing of the ordinary shares of nominal value U$0.005 each in the capital of the Company (the "Shares") on the main board of The Stock Exchange of Hong Kong Limited ("Hong Kong Stock Exchange") (the "Hong Kong Listing"). The Company has grown considerably since the Shares were admitted to trading on AIM. The Directors believe that a Hong Kong Listing would provide the Company with access to a capital market which focuses on companies whose operations are in the Asian region. In connection with the Hong Kong Listing, the Company may conduct a share offering. The Company is seeking an approval from the Company's shareholders (the "Shareholders") for the proposals, including a proposal to grant the directors of the Company (the "Directors") authority to issue Shares for cash and a proposal to cancel the admission of the Shares to trading on AIM conditional upon the Hong Kong Listing occurring and on the same day as the Listing Date (the "Delisting").
Based on the current timetable, the Directors expect that the earliest possible date that the Hong Kong Listing may occur is 21 September 2010, which is also the Company's preferred date of Delisting. Once the final date of the Hong Kong Listing and the date of Delisting are confirmed, the Company will announce such dates as soon as practicable and in any event not less than ten London business days (being a day upon which the London Stock Exchange plc is open for business, a "London Business Day") in advance of the final date of Delisting.
2. Background to and reasons for the Hong kong Listing and Delisting
On 29 April 2010, the Company announced that an application for a Hong Kong Listing was made on that day.
Since the admission of the Shares to trading on AIM in June 2007, the Company and the Shareholders have been well served by AIM. The proceeds raised from the placing of Shares as part of the admission of the Shares to trading on AIM enabled the Company and its subsidiaries (the "Group") to implement its expansion plan. Given that the Group operates and generates all of its sales in China, the Directors believe that the Company will be better served by listing its shares on a stock exchange where the potential investors are generally more familiar with the Chinese market and the Company's business environment. Because of its geographical and economic proximity and cultural similarity to China, and its large, liquid and well-maintained securities trading platform, the Directors believe that Hong Kong Stock Exchange would be a suitable choice of stock exchange for the Company to grow further. The Directors also believe that as the Hong Kong Stock Exchange has attracted a broad range of PRC, Asian and other international investors, the liquidity of and access to the Company's Shares is expected to improve following the Hong Kong Listing, which shall in turn improve the Company's profile and valuation in the long term.
The Directors have considered the advantages and disadvantages of maintaining the Company's admission to AIM after its Shares are listed on the Hong Kong Stock Exchange, and concluded that it will not be in the best interests of the Company and the Shareholders to maintain dual listings on two different stock exchanges. The Directors are of the view that a dual-listing is likely to result in division of liquidity of Shares between the two markets, which is likely to partly negate the benefits of the Hong Kong Listing. A dual-listing will also incur additional legal, audit and other maintenance and management fees, and require additional management resources as the Company would have to comply with two sets of regulatory requirements. Accordingly, the Directors believe that the additional time and costs required to maintain a dual-listing will outweigh its benefits. The Company proposes to cancel the admission of Shares to trading on AIM conditional upon the Hong Kong Listing occurring and on the same day as the Listing Date.
The Hong Kong Listing is subject to, among other things, the approval of the listing sub-committee of the board of directors of the Hong Kong Stock Exchange ("Listing Committee"), and may be affected by a number of factors including the related share offering and market conditions. Subject to the approval of the Listing Committee, it is currently expected that the earliest possible date that the Hong Kong Listing may occur is 21 September 2010. The Delisting is conditional on Shareholders' approval and the Hong Kong Listing taking place, and will be effective on the Listing Date. The expected Listing Date and the date of the Delisting are subject to change. Once the final date of Hong Kong Listing and the date of Delisting are confirmed, the Company will make an announcement regarding such dates as soon as practicable and in any event not less than ten London Business Days in advance of the final date of Delisting.
3. The Delisting and its effect on Shareholders and the Company
The rules governing companies with shares admitted to trading on AIM (the "AIM Rules") require that the Company give notice of the preferred date of Delisting by way of announcement to the market and also separately to the London Stock Exchange plc at least 20 London Business Days prior to such preferred date. As such, the Company has notified the London Stock Exchange plc of the proposed Delisting. Once the final date of Delisting is confirmed, the Company will announce such date as soon as practicable and in any event not less than ten London Business Days in advance of the final date of Delisting, and will separately notify the London Stock Exchange plc of such date in accordance with AIM Rules.
The Delisting is conditional upon:
(a) the passing of a resolution by the Shareholders holding not less than 75 per cent of votes cast in accordance with the AIM Rules; and
(b) the Hong Kong Listing taking place within three months from the passing of the resolution approving the Delisting.
The resolution approving the Delisting, if passed at the EGM, will allow the Delisting to occur within a three month period from 20 August 2010 until 19 November 2010. However, it is expected that the earliest possible date that the Hong Kong Listing may occur is 21 September 2010. The Delisting is conditional upon and will only become effective from the Hong Kong Listing. Once the final date of the Hong Kong Listing and the date of Delisting are confirmed, the Company will announce such date as soon as practicable and in any event not less than ten London Business Days in advance of the final date of Delisting.
In the event that Hong Kong Listing does not occur on or before 19 November 2010, and the Directors still believe that it is in the best interests of the Company to list its Shares on the main board of the Hong Kong Stock Exchange and to delist from AIM, the Company will seek a further resolution from the Shareholders in the same form as the abovesaid resolution to approve the cancellation of admission to trading on AIM of the Shares conditional on the Hong Kong Listing taking place.
Subject to the approval of the resolution for the Delisting, the Company will include a statement that the Delisting has been approved in all future announcements made prior to the Delisting.
Following the Hong Kong Listing and the Delisting, all Shareholders will retain the same number of Shares. The issued Shares in the capital of the Company are currently registered on the Company's Jersey share register for the purposes of trading on AIM. Following the Hong Kong Listing and the Delisting, the share register of the Company will be maintained in Hong Kong by Computershare Hong Kong Investor Services Limited (the "Hong Kong Share Registrar"). In order for Shares to be traded on the Hong Kong Stock Exchange, it will be necessary for such Shares to be moved from the Jersey share register to the Hong Kong share register and only certificates for Shares issued by the Hong Kong Share Registrar will be valid for delivery in respect of dealings effected on the Hong Kong Stock Exchange. If you want your Shares to be registered on the Hong Kong share register on the first day of the Hong Kong Listing, you need to return to Computershare Investor Services (Jersey) Limited (the "Jersey Share Registrar") a duly completed form enclosed with the circular issued by the Company on 23 July 2010 for Shareholders to elect to move the Shares to the Hong Kong share register in advance of the Hong Kong Listing (the "Request for Removal of Securities") so as to be received by the Jersey Share Registrar no later than the date falling on or around 15 business days (being a day (other than a Saturday or a Sunday) on which banks in London and Hong Kong are open for normal banking business, a "Business Day") before the expected Listing Date (the "Election Date"). Shares not registered on the Hong Kong share register on the first day of the Hong Kong Listing will not be able to be traded on the Hong Kong Stock Exchange from the first day of the Hong Kong Listing. For further details, please see paragraph 4 below.
Following the Delisting, the Company will cease to have a nominated adviser and it will no longer be required to comply with the AIM Rules. The Company will, however, continue to hold annual general meetings in accordance with the applicable statutory requirements and its articles of association and will continue to send Shareholders copies of the Company's audited accounts and notices of any shareholder meetings.
Upon the Hong Kong Listing, the Company will be subject to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (the "Listing Rules"). Pursuant to the requirements of the Listing Rules, the Company will have three independent non-executive directors. It is proposed that the Company will continue to have an audit committee comprising three independent non-executive directors, a remuneration committee comprising three independent non-executive directors, and a nomination committee comprising three independent non-executive directors and an executive director.
Liability to taxation and any taxation effect of the Hong Kong Listing or the Delisting will depend upon the individual circumstances of, and the tax jurisdiction applicable to, each Shareholder. The Company cannot advise you on tax or other consequences if your Shares are moved to the Hong Kong share register. If you are in any doubt as to your own tax position, you should consult an appropriate independent professional adviser. You should also consult an appropriate independent professional adviser as to whether you require any governmental or other consents or need to observe any applicable legal requirement or other formalities to enable you to continue to hold your Shares after the Hong Kong Listing and the Delisting becoming effective.
4. ACTIONS TO BE TAKEN IF YOU WISH YOUR SHARES TO BE REGISTERED ON THE HONG KONG SHARE REGISTER ON THE FIRST DAY OF THE HONG KONG LISTING
The issued Shares in the capital of the Company are currently registered on the Company's Jersey share register for the purposes of trading on AIM. In order for Shares to be traded on the Hong Kong Stock Exchange, it will be necessary for such Shares to be moved from the Jersey share register to the Hong Kong share register, and only certificates for Shares issued by the Hong Kong Share Registrar will be valid for delivery in respect of dealings effected on the Hong Kong Stock Exchange. If you want your Shares to be registered on the Hong Kong share register on the first day of the Hong Kong Listing, you need to complete and return the Request for Removal of Securities to the Jersey Share Registrar so as to be received by the Jersey Share Registrar no later than the Election Date.
The Request for Removal of Securities is enclosed with the circular issued by the Company on 23 July 2010. The Delisting is conditional on Shareholders' approval and the Hong Kong Listing taking place, and will be effective on the Listing Date. Should the application for the Hong Kong Listing be approved by the Listing Committee, the Company will set the date for the Election Date which is currently expected to be a date falling on or around 15 Business Days before the expected Listing Date. An announcement of the Election Date, once determined, will be made as soon as practicable.
If your Shares are held through Depository Interests in CREST
If you hold your Shares (through Depository Interests) in CREST and want your Shares to be registered on the Hong Kong share register on the first day of the Hong Kong Listing, you will need to complete the Request for Removal of Securities and return it to the Jersey Share Registrar so as to be received by the Jersey Share Registrar no later than the Election Date. Further, you should arrange with your broker for a stock withdrawal instruction to be sent through the CREST system requesting the number of Shares to be withdrawn from CREST and confirming the person to be registered as the holder of such Shares on the Hong Kong share register (for which the same name should appear on the Request for Removal of Securities).
If your Shares are held in certificated form
If you currently hold your Shares in certificated form and want your Shares to be registered on the Hong Kong share register on the first day of the Hong Kong Listing, you will need to complete and return to the Jersey Share Registrar by the Election Date the Request for Removal of Securities along with the share certificates representing the Shares to be moved.
If you want your Shares to be registered on the Hong Kong share register on the first day of the Hong Kong Listing, you need to complete and return the Request for Removal of Securities so as to be received by the Jersey Share Registrar no later than the Election Date. If you return the completed Request for Removal of Securities to the Jersey Share Registrar by the Election Date, your Hong Kong share certificates will be despatched to you by ordinary post at your own risk on the day being two Hong Kong business days (being a day (other than a Saturday or a Sunday) on which banks in Hong Kong are open for normal banking business, a "Hong Kong Business Day") immediately prior to the Listing Date. You should note that Hong Kong share certificates despatched by post may or may not reach Shareholders on the date of the Hong Kong Listing. Alternatively, Hong Kong Share Certificates will be available for collection in person from the office of the Hong Kong Share Registrar at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong starting from the day being two Hong Kong Business Days immediately prior to the Listing Date. If you wish to collect your Hong Kong Share Certificates in person from the Hong Kong Share Registrar, you should contact the Hong Kong Share Registrar no later than the date being four Hong Kong Business Days before the Listing Date by email to the following address: hkinfo@computershare.com.hk, specifying the subject as "Collection of CMS Hong Kong Share Certificate". If you are an individual who opts for personal collection, you may authorise another person to make collection on your behalf and such person shall bear a letter of authorisation from you. If you are a corporate Shareholder which opts for personal collection, you must attend by your authorised representative bearing a letter of authorisation from your corporation stamped with your corporation's chop. Both individuals and authorised representatives (if applicable) must produce, at the time of collection, evidence of identity acceptable to the Hong Kong Share Registrar. Any Hong Kong Share Certificates not collected by 4:30 p.m. (Hong Kong time) on the dispatch date being two Hong Kong Business Days immediately prior to the Listing Date will be despatched to you by ordinary post at your own risk.
Upon receiving the Hong Kong share certificates, Shareholders who wish to trade in the Shares on the Hong Kong Stock Exchange will need to deposit their share certificates with a Hong Kong broker or nominee. The time required for brokers to process the deposit of share certificates would vary between individual broker or nominee. Shareholders should therefore consult their respective brokers or nominees and make appropriate arrangements.
You will not be able to trade your Shares from the time you return the completed Request for Removal of Securities to the Jersey Share Registrar (subject to the Shareholders' approval of the Delisting) until dealings in Shares commence on the Hong Kong Stock Exchange and you have deposited your Hong Kong share certificates with a Hong Kong broker or nominee in accordance with the arrangements made with your broker or nominee. If the Hong Kong Listing does not occur after you return the completed Request for Removal of Securities, the Company shall notify you and make arrangements for your Shares to be moved from the Hong Kong share register back to the Jersey share register and, if appropriate, have them dematerialised again into CREST (using the depository interest arrangements).
If you fail to return a duly completed Request for Removal of Securities to the Jersey Share Registrar by the Election Date, your Shares will be automatically transferred to the Hong Kong share register following the date of Delisting. The Company has been advised that the moving of Shares from the Jersey share register to the Hong Kong share register is expected to take up to ten Business Days (during which time the Shares being moved will not be able to be traded). Therefore, Shareholders should note that if they elect not to move their Shares to the Hong Kong share register by the Election Date by completing and returning to the Jersey Share Registrar the Request for Removal of Securities by the Election Date, they will not be able to trade their Shares on AIM or the Hong Kong Stock Exchange following the Delisting until the Shares are successfully moved to the Hong Kong share register.
5. upon delisting, shares REMAINING on the jersey share register will be AUTOMATICALLY moved to the Hong KOng share register
Following the Delisting, Shares will no longer be able to be settled in CREST. Further, the Jersey share register will be closed and the Depositary Interests facility will no longer be made available, and Depositary Interests will be cancelled in accordance with the terms of the deed in respect of the Company's Depositary Interests made by the Depositary on 4 May 2007. Shares held in the form of Depositary Interests will be automatically rematerialised on the date of Delisting, and Shares on the Jersey share register will be automatically moved to the Hong Kong share register. The Company will complete the removal of the Shares on the Jersey share register to the Hong Kong share register as soon as practicable and it may take up to ten Business Days to complete the removal. Shareholders should note that until the removal is successfully completed, the Shares will not be able to be traded on the Hong Kong Stock Exchange. Share certificates will be issued and sent to the name and address that appears on the Jersey share register on the date of Delisting. Upon receiving the Hong Kong share certificates, Shareholders who wish to trade in the Shares on the Hong Kong Stock Exchange will need to deposit their share certificates with a Hong Kong broker or nominee. The time required for brokers to process the deposit of share certificates would vary among individual broker or nominee. Shareholders should therefore consult their respective brokers or nominees and make appropriate arrangements.
Shares in respect of which a Request for Removal of Securities is received by the Jersey Share Registrar after the Election Date will only be moved to the Hong Kong share register following the date of Delisting. The Jersey Share Registrar and the Hong Kong Share Registrar will not effect any removal of Shares at any time following the Election Date and before the date of Delisting.
6. Trading of shares on the Hong Kong stock Exchange following Hong Kong Listing
Brokers and nominees
It is emphasised that in order for the Shares to be available for trading on the Hong Kong Stock Exchange, the relevant Hong Kong share certificates must be deposited with a Hong Kong broker or nominee. When moving the Shares to the Hong Kong share register, if you want the Shares to be registered and the relevant Hong Kong share certificates to be issued in the name of your Hong Kong broker or nominee, you should request the Jersey Share Registrar to effect an amendment of title to the Hong Kong broker or nominee to whom you would like the Hong Kong share certificates to be issued. Then the Request for Removal of Securities must also be in the name of such Hong Kong broker or nominee.
Your current UK broker may have nominee and custodial arrangements in Hong Kong and be enabled to trade on the Hong Kong Stock Exchange. If so and you wish to hold your Shares through such broker, you must request that they amend your details on the Jersey share register so that the Hong Kong share certificates are sent to your Hong Kong broker or nominee. You should request the Jersey Share Registrar to effect an amendment of title to the Hong Kong broker or nominee. If you want your Shares to be registered on the Hong Kong share register on the first day of the Hong Kong Listing, you should request your broker to complete and return the Request for Removal of Securities so as to be received by the Jersey Share Registrar no later than the Election Date.
The Directors believe that many Shareholders will be able to trade in the Shares through their current broker (as many UK brokers have a Hong Kong counterparty). However, in order to ensure that all Shareholders have the ability to trade their Shares on the Hong Kong Stock Exchange, the Company has made informal arrangements with the following London based retail brokers who are able to trade on the Hong Kong Stock Exchange and have agreed, subject to their account opening procedures, to act for Shareholders in their trading activities on the Hong Kong Stock Exchange:
Williams de Broe Limited
Austin Friars House, 2-6 Austin Friars, London EC2N 2HD, telephone: 0207 072 7510 (contact name: Alex Philipson, e-mail: alex.philipson@wdebroe.com).
Paul Schweder Miller & Co
46-50 Tabernacle Street London EC2A 4SJ, telephone: 020 7490 5000 (contact name: Andrew Petter, e-mail: andy.petter@schwedermiller.com).
The above brokers will facilitate Shareholders dealing in Shares on the Hong Kong Stock Exchange and will be able to guide Shareholders through the registration process. These brokers will require the relevant Shareholders to go through their internal account opening procedures. These, as well as all commission and other arrangements, will be between the relevant broker and the relevant Shareholder, and the Company will not have any liability in respect of such arrangements.
It is the responsibility of each Shareholder to inform the Jersey Share Registrar, either directly or through his broker, of his correct registration details no later than the Election Date or the Listing Date as applicable.
The transaction costs of dealings in the Shares on the Hong Kong Stock Exchange include a Hong Kong Stock Exchange trading fee of 0.005%, a Hong Kong Securities and Futures Commission transaction levy of 0.004%, a transfer deed stamp duty of HK$5.00 per transfer deed and ad valorem stamp duty on both the buyer and the seller charged at the rate of 0.1% each of the consideration or, if higher, the fair value of the Shares transferred. The brokerage commission in respect of trades of Shares on the Hong Kong Stock Exchange is freely negotiable.
Share trading in Hong Kong is on "T+2 settlement", meaning that share transactions are settled (i.e. paid) two Hong Kong Business Days after the relevant trading date.
Parties trading in shares in Hong Kong must settle their trades executed on the Hong Kong Stock Exchange through their brokers directly or through custodians. For those Shareholders who have deposited their Shares in a Hong Kong broking account or in their designated CCASS (the Central Clearing and Settlement System established and operated by the Hong Kong Securities Clearing Company Limited) participant's stock account maintained with CCASS, settlement is effected in CCASS in accordance with the General Rules of CCASS and CCASS Operational Procedures. For a Shareholder who holds physical certificates, settlement certificates and duly executed transfer forms must be delivered to his broker by the settlement date.
A Shareholder may arrange with his broker on a settlement date in respect of his trades executed on the Hong Kong Stock Exchange. Under the Listing Rules and the General Rules of CCASS and CCASS Operational Procedures, the date of settlement of trades must not be later than the second day following the trade on which the settlement services of CCASS are open for use by CCASS participants (i.e. T+2). For trades settled through CCASS, the General Rules of CCASS and CCASS Operational Procedures provide that the defaulting broker may be compelled to compulsorily buy-in shares by the HKSCC on the day after the date of settlement (i.e. T+3), or if it is not practicable to do so on T+3, at any time thereafter. HKSCC may also impose fines on the broker from T+2 onwards.
The CCASS stock settlement fee payable by each counterparty to a Hong Kong Stock Exchange trade is currently 0.002% of the gross transaction value, subject to a minimum fee of HK$2 and a maximum fee of HK$100 per trade.