Legal and Regulatory Issues in Hong Kong PIPE Transactions

Introduction - Private investment in public equity (or PIPE) transactions are an increasingly common source of funding for companies listed on The Stock Exchange of Hong Kong Limited (the HKEx). For listed issuers, PIPEs are filling a gap created by the unavailability of traditional funding sources in the current economic climate and a disinclination to issue new common shares at prices below their perceived value. For investors, PIPEs offer the opportunity to invest in a structured manner in companies that are already public with an established trading market for their equity, a combination that may compare favorably to pre-IPO investments in companies whose prospective IPOs may not occur in a timely manner or at all. This memorandum highlights some of the key features and issues in structuring and executing PIPE transactions for companies listed on the HKEx.

Structural and Relevant Considerations -

Structuring Alternatives. The range of securities that may be issued in Hong Kong

PIPEs is quite broad, and includes:

• ordinary shares;

• convertible preference shares;

• convertible bonds;

• convertible notes;

• warrants; or

• a combination of any of the foregoing.

Please see full memorandum below for more information.

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