Luye Pharma : ADOPTION OF EMPLOYEES SHARE AWARD SCHEME

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LUYE PHARMA GROUP LTD.

綠 葉 製 藥 集 團 有 限 公 司

(Incorporated in Bermuda with limited liability)

(Stock Code: 02186)

ADOPTION OF EMPLOYEES SHARE AWARD SCHEME

On 10 January 2017, the Board approved the adoption of the Luye Pharma Share Award Scheme, the purpose of which is to recognise contributions by certain Employees and to provide them with incentives in order to retain them for the continuing operation and development of the Group and to attract suitable personnel for the further development of the Group.

The Scheme does not constitute a share option scheme or an arrangement analogous to a share option scheme for the purpose of Chapter 17 of the Listing Rules.

On 10 January 2017, the Board approved the adoption of the Luye Pharma Share Award Scheme. A summary of the principal terms of the Scheme is set out in this announcement.

PURPOSE

The purpose of the Scheme is to recognise contributions by certain Employees and to provide them with incentives in order to retain them for the continuing operation and development of the Group and to attract suitable personnel for the further development of the Group.

DURATION

Subject to any early termination as may be determined by the Board in accordance with the rules of the Scheme, the Scheme shall be valid and effective for a term of ten years commencing on the Adoption Date.

ADMINISTRATION

The Scheme shall be administered by the Board and the Trustee in accordance with the rules of the Scheme and the Trust Deed. The decision of the Board with respect to any matter arising under the Scheme (including the interpretation of any provision) shall be final and binding. The Trustee will hold the Shares in accordance with the terms of the Trust Deed.

OPERATION OF THE SCHEME

Contribution of funds to the Trust

The Board may from time to time cause to be paid an amount to the Trust by way of settlement or otherwise contributed by the Company or other member of the Group as directed by the Board.

The EBT Committee, a committee appointed and authorised by the Board to administer the Scheme, may from time to time instruct the Trustee in writing to purchase Shares on the Stock Exchange specifying the timing of purchase, maximum amount of funds to be used and the range of prices within which such Shares are to be purchased.

Eligible persons for the Scheme and grant of Awarded Shares

The Board may from time to time select any Employee (excluding any Excluded Employee) for participation in the Scheme as a Selected Employee and grant to such Selected Employee Awarded Shares in such number at a stated Grant Price and on and subject to such terms and conditions as it may in its discretion determine.

Vesting of Awarded Shares

The Board is entitled to impose any conditions as it deems appropriate in its discretion with respect to the vesting of the Awarded Shares on the Selected Employee.

Upon the vesting of the Awarded Shares, the Selected Employee may elect to have the Awarded Shares transferred to him or effect the sale of the Awarded Shares and receive the net proceeds from such sale. In either case, the Selected Employee shall pay the Company the Grant Price for the Awarded Shares.

Rights attached to the Awarded Shares

A Selected Employee will not have any interest or rights (including the right to vote at general meetings of the Company or the right to receive dividends) in the Awarded Shares prior to the Vesting Date.

Non-transferrable

Prior to the Vesting Date, any award of Awarded Shares is personal to the Selected Employee to whom it is made and is not assignable and no Selected Employee may in any way sell, transfer, charge, mortgage, encumber or create any interest in favour of any other person over or in relation to the Awarded Shares referable to him pursuant to such award.

Lapse of Awarded Shares

In the event that a Selected Employee has ceased to be an Employee, the relevant award made to such Selected Employee will automatically lapse and the relevant Awarded Shares will remain part of the funds under the Trust.

Voting rights of the Trustee

The Trustee may not exercise the voting rights in respect of any Shares held under the Trust.

Restrictions

The Trustee may not acquire or sell any Shares at any time when dealings in the Shares are prohibited under any code or requirements of the Listing Rules and all applicable laws.

SCHEME LIMIT

The maximum number of Shares and Awarded Shares which may be held under the Trust and managed by the Trustee may not exceed 2% of issued share capital of the Company at any single point in time during the life of the Trust.

ALTERATION OF THE SCHEME

The Scheme may be altered in any respect by a resolution of the Board provided that no such amendment shall operate to affect materially and adversely any subsisting rights of any Selected Employee.

TERMINATION

The Scheme will terminate on the earlier of (i) the 10th anniversary date of the Adoption Date; and (ii) such date of early termination as determined by the Board provided that such termination shall not materially and adversely affect any subsisting rights of any Selected Employee.

LISTING RULES IMPLICATIONS

The Scheme does not constitute a share option scheme or an arrangement analogous to a share option scheme for the purpose of Chapter 17 of the Listing Rules. No shareholders' approval is required to adopt the Scheme, and this announcement is made on a voluntary basis.

DEFINITIONS

In this announcement, the following expressions have the following meanings unless the context requires otherwise:

''Adoption Date'' the date on which the Scheme is adopted by the Company

''Awarded Shares'' in respect of a Selected Employee, such number of Shares awarded by

the Board

''Board'' the board of Directors

''Company'' Luye Pharma Group Ltd., a company incorporated in Bermuda with

limited liability, the shares of which are listed on the Main Board of the Stock Exchange

''Directors'' the directors of the Company

''EBT Committee'' the committee appointed and authorised by the Board to administer the

Scheme, which shall consist of three members of the senior management of the Company to be appointed by the Board

''Employee'' any employee, including any executive director of any member of the

Group except for the current executive Directors

''Excluded Employee'' any Employee who is resident in a place where the award of the

Awarded Shares and/or the vesting and transfer of the Awarded Shares pursuant to the terms of the Scheme is not permitted under the laws or regulations of such place or where in the view of the Board or the Trustee, compliance with applicable laws or regulations in such place makes it necessary or expedient to exclude such Employee

''Grant Price'' the price at which an Award Share is granted to a Selected Employee

''Group'' the Company and its subsidiaries

''Listing Rules'' the Rules Governing the Listing of Securities on The Stock Exchange

of Hong Kong Limited

''Scheme'' the ''Luye Pharma Share Award Scheme'' constituted by the rules set out in the scheme document and to be adopted by the Company on the Adoption Date

''Selected Employee'' an Employee selected by the Board pursuant to the terms of the Scheme for participation in the Scheme