Plan to Repurchase Shares

Ming Yang Smart Energy Group Ltd

04 May 2023

 

MING YANG SMART ENERGY GROUP LIMITED

(GDR under the symbol: "MYSE")

(a joint stock company established under the laws of the People's Republic of China with limited liability)

Announcement on the Plan to Repurchase Shares through Centralized Competitive Trading

Important Notice

l     Purpose of repurchased shares: The repurchased shares this time will be used for equity incentives of the Company.

l     Scale of repurchased shares: The total funds for repurchased shares this time will not be more than RMB1 billion (inclusive) while not be less than RMB500 million (inclusive).

l     Price of repurchased shares: The price of repurchased shares this time will not be more than RMB20 per share (inclusive), which shall not be higher than 150% of the average trading price of the Company's stocks during the 30 trading days prior to the deliberation and adoption of this repurchase plan by the Board of Directors.

l     Source of repurchase funds: The self-owned funds of the Company.

l     Repurchase period: It will be no more than 12 months from the date of deliberation and adoption of this repurchase plan by the Board of Directors.

l     Whether there is an underweight plan for relevant shareholders: Upon inquiry, the directors, supervisors and executives, controlling shareholders, actual controllers and shareholders holding more than 5% of the shares of the Company have no plans to underweight their shares in the Company in the next 3 or 6 months.

l     Tips on relevant risks: 1. During repurchase, the stock price of the Company continues to exceed the price range disclosed in the repurchase plan, resulting in the risk that the repurchase plan cannot be implemented; and 2. Due to significant changes in the operation, financial position and external conditions of the Company, there may be a risk of changing or terminating this repurchase plan, and the Company will make repurchase decisions and implement them subject to market conditions during the period. Therefore, investors are kindly advised to attach importance to investment risks.

I. Deliberation and Implementation Procedures of the Repurchase Plan

On 4 May 2023, the Company held its 39th meeting of the second session of the Board of Directors, deliberating and adopting the "Proposal on the Plan to Repurchase Corporate Shares through Centralized Competitive Trading". Independent directors have all expressed their independent opinions on the matter with clear consent.

According to Articles 24, 25 and 27 of the Articles of Association of the Company, the repurchased shares this time are used for equity incentives, so the repurchase plan can be implemented after being deliberated and adopted by a board meeting as attended by more than two-thirds of the directors of the Company, and does not need to be submitted to the general meeting for deliberation.

The above implementation procedures are in compliance with the laws, regulations and normative documents such as the Rules for Share Repurchase of Listed Companies and the Guidelines for Self-regulation of Listed Companies on Shanghai Stock Exchange No.7 - Share Repurchase.

II. Main Contents of the Repurchase Plan

(A) Purpose of share repurchase

Based on its confidence in the future development prospects of the industry and the Company and its recognition of the intrinsic investment value, combined with its own operating conditions as well as aiming at safeguarding the interests of investors, enhancing investor confidence and boosting healthy and sustainable development of the Company, the Company intends to repurchase some of its corporate shares through centralized competitive trading for its own equity incentives.

(B) Type of the shares to be repurchased

The shares to be repurchased this time refer to the RMB common shares (A shares) issued by the Company.

(C) Method of the shares to be repurchased

The share repurchase this time is planned to be conducted through the trading system of Shanghai Stock Exchange by means of centralized competitive trading.

(D) Repurchase period and start and ending dates of the shares to be repurchased

The period of this share repurchase will not exceed 12 months from the date of deliberation and adoption of this repurchase plan by the Board of Directors.

The repurchase period will expire ahead of schedule in case one of the following conditions is satisfied:

1. In the event that the number or amount of repurchased shares reaches the upper limit during the repurchase period, the repurchase plan will be completed and the repurchase period will expire ahead of schedule from that date;

2. In the event that the Board of Directors of the Company resolves to terminate this repurchase plan, the repurchase period will expire ahead of schedule from the date when the Board of Directors resolves to terminate this repurchase plan.

During the implementation of the repurchase plan, if stocks of the Company are suspended for more than 10 consecutive trading days due to significant planning events, the repurchase plan will be postponed and disclosed in time after the stock resumes trading.

The Company may not repurchase shares during the following periods:

1. If the announcement date is postponed due to special reasons within 10 trading days before the annual report, semi-annual report or quarterly report of a listed company is made public, it shall commence from 10 trading days before the original scheduled announcement date to one day prior to the announcement;

2. Within 10 trading days prior to the announcement of the performance forecast or performance express of a listed company;

3. From the date of significant events that may have a significant impact on the trading price of the stocks of the Company or during the decision-making process to the date of disclosure according to law; and

4. Other circumstances stipulated by China Securities Regulatory Commission and Shanghai Stock Exchange.

(E) Repurchase period and start and ending dates of the shares to be repurchased

The total funds for repurchased shares this time will not be more than RMB1 billion (inclusive) while not be less than RMB500 million (inclusive); according to the repurchase price ceiling of RMB20 per share, the number of shares to be repurchased will be 25 to 50 million, accounting for 1.10% to 2.20% of the total share capital of the Company; the repurchased shares this time will be used for equity incentives, and the repurchase period will be no more than 12 months from the date of deliberation and adoption of this repurchase plan by the Board of Directors.

In the event of any ex-right or ex-dividend matter like dividend distribution, share bonus, capital reserve conversion to share capital, share reduction, share allotment, etc. during the repurchase period, the repurchase quantity will be adjusted accordingly in line with relevant regulations. In the course, the specific repurchase quantity and its proportion to the total share capital of the Company shall be subject to the actual repurchase of the Company when the repurchase is completed or the repurchase implementation period expires.

(F) Price or price range of the shares to be repurchased

The price of repurchased shares this time will not be more than RMB20 per share (inclusive), whose ceiling shall not be higher than 150% of the average trading price of the Company's stocks during the 30 trading days prior to the adoption of this share repurchase resolution by the Board of Directors. The specific repurchase price will be determined by the management of the Company as authorized by the Board of Directors in combination with market conditions, as well as the stock price, financial condition and operating status of the Company during the repurchase implementation period.

In the event of any ex-right or ex-dividend matter like capital reserve conversion to share capital, share bonus, cash dividend, share allotment, etc. during the repurchase period, the repurchase price ceiling shall be adjusted accordingly pursuant to relevant laws and regulations of China Securities Regulatory Commission and Shanghai Stock Exchange from the date of ex-right or ex-dividend.

(G) Total amount and source of funds for the shares to be repurchased

The total funds for repurchased shares this time will not be more than RMB1 billion (inclusive) while not be less than RMB500 million (inclusive). The specific total funds for repurchase will be subject to the total funds actually used to repurchase shares at the expiration of the repurchase period. The source of repurchase funds is self-owned funds of the Company.

(H) Expected changes in the shareholding structure of the Company after the repurchase

1. According to the total repurchase fund ceiling of RMB1 billion, the repurchase price ceiling of RMB20 per share and the ceiling number of repurchased shares of 50 million, it is estimated that the changes in the shareholding structure of the Company will be as follows, if all the repurchased shares are used for the equity incentive plan and be subject to lock-up:

Share Category	Before the Implementation of This Plan		After the Implementation of This Plan
	Number of Shares (in Share)	Proportion to Total Number of Shares	Number of Shares (in Share)	Proportion to Total Number of Shares
Outstanding shares with restricted selling conditions	163,088,794	7.18%	213,088,794	9.38%
Outstanding shares without restricted selling conditions	2,108,996,912	92.82%	2,058,996,912	90.62%
Total	2,272,085,706	100%	2,272,085,706	100%

Note: The above changes in share capital structure shall be subject to the statement of share capital structure released by China Securities Depository and Clearing Corporation Limited after the grant of equity incentives is completed.

2. According to the total repurchase fund floor of RMB500 million, the repurchase price ceiling of RMB20 per share and the floor number of repurchased shares of 25 million, it is estimated that the changes in the shareholding structure of the Company will be as follows , if all the repurchased shares are used for the equity incentive plan and be subject to lock-up:

Share Category	Before the Implementation of This Plan		After the Implementation of This Plan
	Number of Shares (in Share)	Proportion to Total Number of Shares	Number of Shares (in Share)	Proportion to Total Number of Shares
Outstanding shares coming with restricted selling conditions	163,088,794	7.18%	188,088,794	8.28%
Outstanding shares without restricted selling conditions	2,108,996,912	92.82%	2,083,996,912	91.72%
Total	2,272,085,706	100%	2,272,085,706	100%

Note: The above changes in share capital structure shall be subject to the statement of share capital structure released by China Securities Depository and Clearing Corporation Limited after the grant of equity incentives is completed.

(I) Analysis of the possible impact of this share repurchase on the Company's daily operation, finance, research and development, profitability, debt performance, future development, maintenance of the status of listed company, etc.

As at 31 March 2023, the Company had the total assets of RMB71.256 billion and the current assets of RMB37.273 billion. In case the maximum repurchase amount of RMB1 billion is fully used up, the repurchase funds will represent approximately 1.40% of the Company's total assets and 2.68% of its current assets based on financial data as at 31 March 2023.

Such a share repurchase is conducive to enhancing investor confidence, maintaining the Company's share price and upgrading its capital market image, thus creating favorable conditions for its future development. Based on its current operation, finance and future development, the Company believes that the share repurchase amount no more than RMB1 billion (inclusive) while no less than RMB500 million (inclusive) will not pose a significant impact on its operation, finance and future development, and that the implementation of the share repurchase plan will neither lead to changes in its control, nor lead to its equity distribution not meeting the listing conditions.

(J) Opinions of independent directors on compliance, necessity, rationality, feasibility, etc. of this share repurchase plan

1. This repurchase plan of the Company complies with the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Opinions on Supporting Share Repurchase by Listed Companies, the Stock Listing Rules of Shanghai Stock Exchange, the Rules for Share Repurchase of Listed Companies, the Guidelines for Self-regulation of Listed Companies on Shanghai Stock Exchange No.7 - Share Repurchase as well as other relevant laws and regulations and relevant provisions of the Articles of Association of the Company; and the voting by the Board of Directors complies with relevant laws and regulations and relevant provisions of the Articles of Association of the Company;

2. The implementation of the Company's share repurchase is conducive to safeguarding the interests of the Company and its investors, stabilizing investor expectations, enhancing market confidence and promoting a reasonable return of the Company's stock value, so such a share repurchase plan of the Company is necessary;

3. The total funds to be used for this repurchase accounts for a relatively low proportion of the total assets and current assets of the Company in the latest period, and the source of funds is its self-owned funds. Such a share repurchase will neither pose a significant impact on the Company's operation, finance and future development, nor cause the Company's equity distribution to fail to meet the listing conditions, so such a share repurchase plan of the Company is feasible;

4. This repurchase is carried out by means of centralized competitive trading, and there is no harm to the interests of the Company and all its shareholders, especially small and medium-sized shareholders

To sum up, independent directors believe that this share repurchase by the Company is legal, compliant and in line with the interests of the Company and all its shareholders, and there is no harm to the legitimate rights and interests of shareholders, so the repurchase plan is feasible and necessary.

(K) Explanation of whether the directors, supervisors and executives, controlling shareholders and actual controllers of the listed company have bought or sold shares of the Company within 6 months before the Board of Directors made a resolution to repurchase shares, whether there was a conflict of interest with this repurchase plan, whether there were any insider trading and market manipulation, and whether there was a plan to overweight or underweight their holdings during the repurchase period

On 2 December 2022, the Company disclosed the "Announcement of Shareholders' Share Underweight Plan" (Announcement No.: 2022-119), according to which Keycorp Limited, a shareholder controlled by the actual controller, as well as Lucky Prosperity Company Limited (hereinafter referred to as "Lucky Prosperity") and Eternity Peace Company Limited (hereinafter referred to as "Eternity Peace") controlled by Mr. Shen Zhongmin, a director and senior executive, plan to underweight the corporate shares by means of centralized bidding and block trading within 6 months after 15 trading days from the disclosure date of this Announcement.

On 26 December 2022, the Company received a "Letter on Early Termination of the Underweight Plan" from Shareholder Keycorp Limited and then issued the "Announcement on Early Termination of the Underweight Plan by Shareholders and the Share Underweight Results" (Announcement No.: 2022-123). During the period from the release of the underweight plan to the early termination, Keycorp Limited did not underweight its shares in the Company.

From the release date of the underweight plan to the release date of this Announcement, Lucky Prosperity has cumulatively under-weighted its 3,200,400 shares in the Company, accounting for 0.14% of the total share capital of the Company; and Eternity Peace has cumulatively under-weighted its 797,475 shares in the Company, accounting for 0.04% of the total share capital of the Company. The reason why Lucky Prosperity and Eternity Peace under-weighted their shares in the Company was the capital needs of shareholders, and there was no conflict of interest with this repurchase plan, nor was there any insider trading or market manipulation. Lucky Prosperity and Eternity Peace will not reduce their shareholdings during the period planned.

Upon self-examination, except for the above-mentioned underweight behaviors of the shareholders, other directors, supervisors and executives, controlling shareholders and actual controllers of the listed company have never bought or sold shares of the Company 6 months before the Board of Directors made a resolution to repurchase shares, there was no conflict of interest with this repurchase plan, and there was no insider trading or market manipulation.

Upon inquiry, the directors, supervisors and executives, controlling shareholders and actual controllers of the Company confirm that they have no plans to underweight their holdings during the repurchase period, and currently they have no plans to overweight their holdings. If they intends to implement underweight plans during the repurchase period, the Company will timely fulfill its information disclosure obligation in accordance with relevant regulations.

(L) Special circumstance about that the listed company inquires the directors, supervisors and executives, controlling shareholders, actual controllers and shareholders holding more than 5% of shares about whether there is a underweight plan in the next 3 or 6 months

The Company has respectively sent inquiries to directors, supervisors and executives, controlling shareholders, actual controllers and shareholders holding more than 5% of shares about whether there is a underweight plan in the next 3 or 6 months. The response received by the Company is as follows:

The directors, supervisors and executives, controlling shareholders, actual controllers and shareholders holding more than 5% of the shares of the Company have no plans to underweight their stocks in the Company in the next 3 or 6 months.

(M) Relevant arrangements for legal cancellation or transfer after share repurchase

This share repurchase will not affect the normal ongoing operation of the Company, and will not lead to insolvency of the Company. All the repurchased shares will be used for equity incentives. If the Company fails to use the repurchased shares for the above-mentioned purpose within 36 months after the completion of this repurchase, the repurchased shares of the Company will be deregistered according to law.

(N) Relevant arrangements for the Company to prevent infringement upon creditors' interests

The repurchased shares are intended to be used as the source of shares for equity incentives of the Company, which will not affect the normal and continuous operation of the Company and will not impair the Company' ability to pay back the debts. In case of subsequent cancellation of the repurchased shares, the Company will timely perform relevant decision-making procedures and notify all creditors according to the Company Law and other relevant regulations, so as to fully protect the legitimate rights and interests of creditors and timely fulfill its information disclosure obligation.

(O) Specific authorization for handling this share repurchase

With a view to successfully, efficiently and orderly completing the work related to this share repurchase, the Board of Directors of the Company authorizes the management of the Company to specifically handle the involved matters, with the authorized contents and scope including but not limited to:

1. Repurchase shares at an opportune time within the repurchase period, including but not limited to specific time, price, quantity, etc. of repurchased shares;

2. Handle relevant approval procedures according to applicable laws, regulations, normative documents and other relevant provisions, including but not limited to authorizing, signing, executing, modifying and completing all necessary documents, contracts and agreements related to such share repurchase;

3. Authorize the management of the Company to make corresponding adjustments to the specific plan for share repurchase and other related matters, if there are changes in the regulatory authorities' policies or market conditions regarding the share repurchase, apart from the matters that require a re-vote by the Board of Directors according to relevant laws, regulations and the Articles of Association;

4. Adjust and modify the internal governance systems of the Company such as the Articles of Association according to relevant laws and regulations (including but not limited to adjusting and modifying the words, chapters, clauses, effective conditions, registered capital, etc. in the Articles of Association), and handle matters such as approval, change of registration and filing with the Administration for Market Regulation and other relevant authorities after the completion of this share deregistration, if the Company fails to use the repurchased shares for the above purpose within 36 months after the completion of this repurchase and deregister them according to law; and

5. Handle other matters not listed above but necessary for such share repurchase according to applicable laws, regulations and relevant provisions of the regulatory authorities.

The above authorization commences from the date of deliberation and adoption of this repurchase plan by the Board of Directors to the date of completion of the above authorization.

III. Uncertainty Risks Associated with the Repurchase Plan

The uncertainty risks associated with this share repurchase plan are as follows:

1. During repurchase, the stock price of the Company continues to exceed the price range disclosed in the repurchase plan, resulting in the risk that the repurchase plan cannot be implemented; and

2. Due to significant changes in the operation, financial position and external conditions of the Company, there may be a risk of changing or terminating this repurchase plan.

Ming Yang Smart Energy Group Limited

4 May, 2023

 

END