Tianli : DISCLOSEABLE TRANSACTION - PURCHASE CONTRACT

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TIANLI HOLDINGS GROUP LIMITED

天利控股集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 117)

DISCLOSEABLE TRANSACTION

PURCHASE CONTRACT

PURCHASE CONTRACT

On 23 April 2020, Shenzhen Eyang (an indirect wholly-owned subsidiary of the Company) entered into the Purchase Contract with Yodogawa, pursuant to which Shenzhen Eyang agreed to acquire from Yodogawa the Machinery at a total consideration of JPY249,000,000 (equivalent to approximately RMB16,340,000).

IMPLICATION UNDER THE LISTING RULES

As one of the applicable percentage ratios calculated by reference to Rule 14.07 of the Listing Rules in respect of the Acquisition exceeds 5% but is less than 25%, the entering into of the Purchase Contract constituted a discloseable transaction of the Company and is subject to the notification and announcement requirements but exempt from the Shareholders' approval requirement under Chapter 14 of the Listing Rules.

The Company acknowledges that the notification and announcement in respect of the Acquisition as required under Chapter 14 of the Listing Rules had been delayed due to its unintentional oversight regarding the size of the Acquisition and the temporary fluctuation in the price of the Shares at the relevant time. The Company will closely monitor the effectiveness and efficiency of its compliance system and the relevant corporate governance measures, particularly in the areas of, among other things, notifiable transactions, so as to prevent occurrence of any similar incidents in the future.

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PURCHASE CONTRACT

On 23 April 2020, Shenzhen Eyang (an indirect wholly-owned subsidiary of the Company) entered into the Purchase Contract with Yodogawa, pursuant to which Shenzhen Eyang agreed to acquire from Yodogawa the Machinery at the Consideration.

Principal terms of the Purchase Contract are set out below:

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1. on 20 July 2020, a further payment of JPY124,500,000, being 50% of the Consideration was paid; and
2. a final payment of JPY24,900,000, being 10% of the Consideration and payable within three months after receipt and inspection of the Machinery by Shenzhen Eyang.

The Consideration was arrived at after arm's length negotiations between the parties to the Purchase Contract based on normal commercial terms, taking into account the prevailing market price of similar machinery at the time of the Acquisition. The Consideration was satisfied by internal resources of the Group.

Shipment and Inspection: The Machinery was shipped to Shenzhen Eyang on 28 July 2020 and to be inspected at the factory of Shenzhen Eyang in Dongguan.

REASONS FOR AND BENEFITS OF ENTERING INTO THE PURCHASE CONTRACT

The principal activity of the Company is investment holding. The principal activities of the Group are (i) manufacturing and sale of MLCC, and (ii) investment and financial services.

Yodogawa is a company incorporated in Japan with limited liability and is principally engaged in manufacturing and sale of precision equipment, provision of processing technology and development and production of fluorine materials and polymer materials.

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The Machinery are intended to be used at the factory of Shenzhen Eyang to increase our production capacity, to expand our existing product lines, and to improve its technological capabilities of the production facilities of the MLCC segment. After assessing the Consideration with reference to the prevailing market price of similar machinery, the Directors were of the view that it would be best to seize the opportunity to acquire the Machinery from Yodogawa pursuant to the Purchase Contract. The terms of the Purchase Contract had been arrived at after arm's length negotiations between the parties. The Directors (including the independent non-executive Directors) have confirmed that the terms of the Purchase Contract and the transactions contemplated thereunder are fair and reasonable, on normal commercial terms or better and in the interests of the Company and its Shareholders as a whole.

IMPLICATION UNDER THE LISTING RULES

As one of the applicable percentage ratios calculated by reference to Rule 14.07 of the Listing Rules in respect of the Acquisition exceeds 5% but is less than 25%, the entering into of the Purchase Contract constituted a discloseable transaction of the Company and is subject to the notification and announcement requirements but exempt from the Shareholders' approval requirement under Chapter 14 of the Listing Rules.

The Company should have complied with the relevant notification and announcement requirements under Rule 14.34 of the Listing Rules in respect of the Acquisition, as and when such obligation arose. Regrettably, the Company acknowledges that the notification and announcement in respect of the Acquisition as required under Chapter 14 of the Listing Rules had been delayed due to its unintentional oversight regarding the size of the Acquisition and the temporary fluctuation in the price of the Shares at the relevant time. The Company will closely monitor the effectiveness and efficiency of its compliance system and the relevant corporate governance measures, particularly in the areas of, among other things, notifiable transactions.

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REMEDIAL ACTIONS

To prevent occurrence of any similar incidents mentioned above and to ensure proper compliance with the Listing Rules in the future, the following remedial measures have been or will be taken by the Group:

1. all acquisitions and/or disposals with value over RMB10 million to which any member of the Group is expressed as a party are required to be approved by the Board before they may be entered into and a notice regarding the approval procedure will be circulated to all senior management, accounting and financial personnel of the Group (including the legal representatives and directors of the Company's subsidiaries in the PRC) and a monthly checklist is required to be completed by the relevant staff to ensure compliance with the relevant procedures;
2. training will be provided to the relevant staff (including the legal representatives and directors of the Company's subsidiaries in the PRC) in relation to the regulatory and compliance matters under the Listing Rules, particularly those concerning notifiable transactions;
3. disciplinary actions will be taken against those involved in the breaches of procedures (if applicable); and
4. the Company has sought, and will seek legal advice from time to time as and when necessary.

DEFINITIONS

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

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For the purpose of this announcement, unless otherwise indicated, conversion of JPY into RMB is calculated at the approximate exchange rate of JPY1.00 to RMB0.0656. This exchange rate is for illustration purpose only and does not constitute a representation that any amounts have been, could have been, or may be exchanged at this or any other rate at all.

By order of the Board

Tianli Holdings Group Limited

Zhou Chunhua

Chairman

Hong Kong, 15 April 2021

As at the date of this announcement, the Board comprises four executive Directors, namely Mr. Zhou Chunhua (Chairman), Mr. Pan Tong (Chief Executive Officer), Mr. Chou, Benjamin Bang Yi, and Ms. Du Weilin; and three independent non-executive Directors, namely Mr. Chu Kin Wang, Peleus, Mr. David Tsoi and Mr. Xu Xuechuan.

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