CTI.L Regulatory News (CTI)

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DEFINED TERMS USED BUT NOT DEFINED IN THIS ANNOUNCEMENT HAVE THE MEANINGS SET OUT IN THE CIRCULAR (AS SUCH TERM IS DEFINED BELOW)

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

Cathay International Holdings Limited

("Cathay" or the "Company" or the "Group")

Proposed transfer of listing category on the Official List from Premium to Standard

and

Notice of General Meeting

Hong Kong, 28 May 2020 - Cathay International Holdings Limited (LSE: CTI.L), an operator and investor in the healthcare sector in the People's Republic of China, announces that it will shortly post a circular to Shareholders setting out the proposed transfer of Common Shares out of the category of the Premium Listing and into the category of the Standard listing ("Circular").

The Circular will be available on the investor section of the Company's website: http://www.cathay-intl.com.hk

1 INTRODUCTION TO THE PROPOSED TRANSFER

On 24 April 2020, the Company announced proposals and issued a prospectus ("Prospectus") in relation to certain matters, including a major equity financing to enable Cathay to invest in its businesses and reduce its borrowings, a further disposal of Starry Shares and for the transfer of the Common Shares out of the category of the Premium Listing and into the category of the Standard listing. A special general meeting was held on 15 May 2020 at which resolutions seeking authority for those proposals were put to Shareholders.

At the special general meeting on 15 May 2020, all of the resolutions were approved other than Resolution 1 regarding the transfer of listing category.

In the Prospectus, the Company had explained that "in the event that Resolution 1, the Transfer Resolution, is not approved by Shareholders, the Company will issue a further circular to Shareholders for a further SGM at which Shareholders would be asked for a second time to approve a resolution for a transfer of listing category, failing which the FCA may use its powers to cancel the admission of the Common Shares to listing. Failure to approve the Transfer Resolution would present a serious risk that trading in the Common Shares would be cancelled in which circumstances Shareholders would no longer be able to trade in the Common Shares on the London Stock Exchange which would severely limit liquidity."

Therefore, the Company is issuing the Circular and calling a further special general meeting at which a resolution for the transfer of the Company's listing category from premium to standard will be put to Shareholders.

2 BACKGROUND TO AND REASONS FOR THE PROPOSED TRANSFER

The Proposed Transfer is a result of discussions with the FCA in relation to the appropriate categorisation of the Company under the Listing Rules with respect to technical considerations related to, inter alia, the Group's structure which may be considered to be incompatible with the Premium Listing. The discussions with the FCA arose from the Enforcement Case and the Starry Share Disposal in June 2018.

In May 2019, Cathay announced the outcome of an investigation by the FCA which had commenced in 2016 (the "Enforcement Case"). The FCA had issued a Decision Notice to Cathay for breaches of the Listing Principles and DTRs, as a result of which Cathay received a fine of GBP411,000. The FCA found, inter alia, that Cathay breached Listing Principle 1 by failing to take reasonable steps to establish and maintain adequate procedures, systems and controls to enable it to comply with its obligations as a listed company and breached DTR 2.2.1R and Premium Listing Principle 6 by failing to disclose to the market as soon as possible inside information relating to its expected financial performance for the year ended 31 December 2015. In addition, in August 2018, the FCA wrote to the Company to raise a concern that Cathay may not be able to demonstrate that it continues to carry on an independent business and that it continues to exercise operational control over its business.

The concern stems from the Group's structure relating to its ownership of Lansen, a 52.83 per cent. owned subsidiary which was listed on the Hong Kong Stock Exchange in 2010. Although Lansen is Cathay's subsidiary, it has operated and been managed independently since its listing in 2010, as required by the Hong Kong Listing Rules. Cathay has board representation and a high degree of influence, and there is very significant integration of policies and procedures between Cathay and Lansen for the management of operations and strategy, finance functions and corporate governance functions. As listed entities, Cathay and Lansen seek to cooperate to ensure that the requirements of the UK and Hong Kong Listing Rules are met.

In June 2018, Cathay announced that Lansen had disposed of 2,400,000 Starry Shares for gross proceeds of USD 10.2 million, of which USD 2.8 million was recognised as a net gain by Cathay. This disposal constituted a Class 1 disposal for Cathay under the Listing Rules and Cathay should have sent an explanatory circular to Shareholders and obtained their prior approval in a general meeting. As such, this disposal represented a breach by Cathay of its obligations under the Listing Rules.

Cathay had sought prior approval of such Starry Share Disposal and had submitted a number of drafts of a circular to the FCA. Cathay's sponsor in connection with that circular resigned before the circular could be published and during the Enforcement Case. During Cathay's circular vetting process, Lansen had sought board approval of further disposal of Starry Shares. Although Cathay's representatives on the board of Lansen had voted against the disposal as Cathay had not yet obtained shareholder approval, the other directors of Lansen had been of the view that the disposal would be in the interests of Lansen and its shareholders, and Lansen's board resolution was passed by a majority of votes. Unfortunately, the Starry Share Disposal in June 2018 occurred before Cathay obtained its shareholders approval.

Since 2018, Cathay has put in place policies and procedures to address the issues identified during the course of the Enforcement Case. Furthermore, the Company believes that the circumstances leading to the breach relating to the Starry Shares Disposal in June 2018 was an unusual isolated incident. However, Cathay cannot overcome the requirement that Lansen is managed independently and there remains a risk that Lansen could make decisions in the future which would cause breaches of the Listing Rules by the Company, as a result of which the Company's shareholders would not benefit from the protections afforded to shareholders of companies with Premium Listings. In such circumstances, the Listing Rules require that a listed company considers applying for a transfer of its listing category or seeking a cancellation of listing.

Having discussed with the FCA and with its advisers, the Board has concluded that it should seek a transfer of listing category from premium to standard. A Standard Listing category would remove many obligations relating to transactions by premium listed companies (such as the Starry Shares Disposal in June 2018), but would retain the disclosure requirements which apply to all listing categories.

If the Company did not pursue the Proposed Transfer and the shares were to remain in the Premium Listing category, there is a risk that the Company could not meet its continuing obligations under the Listing Rules, as described above, leading to the FCA using its powers to cancel the admission of the Company's shares to the Official List. If the FCA were to cancel admission, the Common Shares would no longer trade on the London Stock Exchange and Shareholders ability to buy and sell the Common Shares would be severely impaired.

3 IMPLICATIONS FOR THE GROUP AND ANTICIPATED CHANGES FOLLOWING THE TRANSFER

A standard listing category would remove the many of the obligations relating to transactions by premium listed companies (such as the disposal of Starry Shares in June 2018), but would retain the disclosure requirements which apply to all listing categories.

A summary of the key differences between a standard and premium listing is set out at the end of this announcement.

Trading arrangements

Pursuant to the Listing Rules, the date of transfer of listing category must not be less than 20 business days after the passing of the Resolution. The Board proposes to apply as soon as possible for the transfer to be effected and so, subject to the passing of the Resolution and the FCA confirming that the Company meets the eligibility requirements for such a listing, it is anticipated that the date of transfer will be 14 July 2020.

The Common Shares will, on completion of the transfer, continue to be traded on the Main Market, but under the designation "Listed: Standard".

The trading arrangements for the Company's Common Shares on the London Stock Exchange will remain unchanged.

The Company's Common Shares are not included in the UK series of the FTSE indices and the transfer is not expected to result in any impact on the indexation of the Company's Common Shares.

4 RESOLUTION PROPOSED AT THE SPECIAL GENERAL MEETING

The Circular contains a notice convening a Special General Meeting to be held at 9.30 a.m. on 15 June 2020 at Suites 1203-4, 12/F, Li Po Chun Chambers, 189 Des Voeux Road Central, Hong Kong at which the Resolution will be proposed.

The Resolution is proposed as a special resolution to approve the transfer of listing category on the Official List from premium to standard. Pursuant to the Listing Rules only the votes attaching to Common Shares will be counted for the purposes of deciding the voting on the Resolution.

Under the Listing Rules, the Proposed Transfer requires the Company to obtain the prior approval of a resolution for such transfer from:

(i) a majority of not less than 75 per cent. of the votes attaching to the Common Shares voted on the resolution; and

(ii) a simple majority of the votes attaching to the Common Shares of independent shareholders (being all Common Shareholders other than the Controlling Shareholder) voted on the resolution.

The Company holds irrevocable intentions to vote in favour of the Resolution from Shareholders representing 91.99 per cent. of the Common Shares entitled to vote on (i) above and from 72.14 per cent. of the Common Shares entitled to vote on (ii) above. These irrevocable intentions include the interests of the Controlling Shareholder, being 71.99 per cent. of the Common Shares entitled to vote on (i) above only.

Therefore, the Directors expect that the Resolution will be approved at the Special General Meeting and that the Proposed Transfer will proceed.

5 IMPORTANCE OF THE VOTE

The Resolution must be passed by Shareholders at the SGM in order for the Proposed Transfer to proceed.

In the event that the Resolution is not approved by Shareholders and the Proposed Transfer does not take place, the Company may be unable to meet its continuing obligations under the Listing Rules. In such circumstances there is a risk that the FCA would use its powers to suspend or cancel the admission of the Company's shares to the Official List.

If admission to the Official List and trading on the London Stock Exchange is cancelled, the Common Shares would no longer trade on the London Stock Exchange and Shareholders' ability to buy and sell the Common Shares would be severely impaired.

As such, it is very important that Shareholders vote in favour of the Resolution at the SGM so that, the Proposed Transfer can proceed.

6 ACTION TO BE TAKEN

A Form of Proxy for use by Shareholders or a Form of Direction for use by DI Holders, as applicable, in connection with the Special General Meeting is enclosed with the Circular. Shareholders and DI Holders are requested to complete, sign and return the Form of Proxy or Form of Direction as applicable, whether or not they intend to be present at the meeting and return it to Link Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF as soon as possible and in any event so as to arrive not later than 9.30 a.m. on 11 June 2020 for Forms of Proxy and not later than 9.30 a.m. on 10 June 2020 for Forms of Direction. Completion of Forms of Proxy and Forms of Direction will not preclude attendance at the Special General Meeting.

7 RECOMMENDATION

The board of Cathay is firmly of the belief that the Proposed Transfer is in the best interests of both the Company and Shareholders as a whole. Accordingly, the Board recommends Shareholders to vote in favour of the Resolution.

The Company holds irrevocable intentions to vote in favour of the Resolution from Shareholders representing 91.99 per cent. of the Common Shares entitled to vote on (i) above and from 72.14 per cent. of the Common Shares entitled to vote on (ii) above. These irrevocable intentions include the interests of the Controlling Shareholder, being 71.79 per cent. of the Common Shares entitled to vote on (i) above only (the Controlling Shareholder represents the interests of Mr Wu, Non-Executive Chairman, and his family).

In addition, the other Directors who in aggregate hold a further 4,000,000 Common Shares representing approximately 0.21 per cent. of the votes entitled to vote on the Resolution, intend to vote in favour of the Resolution.

Therefore, the Directors expect that the Resolution will be approved at the Special General Meeting and that the Proposed Transfer will proceed.

8 INDICATIVE TIMETABLE

The dates given are based on the Company's current expectations and may be subject to change. If any of the times or dates below change, the Company will give notice of the change by issuing an announcement through a Regulatory Information Service. Details of the revised times and/or dates will also be available on www.cathay-intl.com.hk.

All times shown in this timetable are London times unless otherwise stated.

The Circular containing full details of the Resolution is expected to be made available on the Company's website www.cathay-intl.com.hk later today.

The Circular will be submitted to the National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism following publication.

For further enquiries, please contact:

SUMMARY OF THE KEY DIFFERENCE BETWEEN STANDARD AND PREMIUM LISTING CATEGORIES

The following paragraphs set out a summary of the key differences in the regulations applying to the Standard Listing and the Premium Listing, taking into account of their application to the Company.

1. Companies with a Premium Listing are required to retain a sponsor for certain transactions and to consult a sponsor if proposing to enter into certain transactions in which the appointment of a sponsor might be required, in order to obtain guidance as to the application of the UK Listing Rules to such transaction. Companies with a Standard Listing are only required to appoint a sponsor if they wish to transfer their listing to the Premium Listing.

2. Companies with a Standard Listing are required to comply with the two Listing Principles contained in LR 7.2.1, which require companies to (i) establish and maintain adequate procedures, systems and controls to enable them to comply with their obligations; and (ii) deal with the FCA in an open and co-operative manner. However, they are not required to comply with the additional six Premium Listing Principles contained in LR 7.2.1A, which only apply to companies with a Premium Listing.

3. Companies with a Standard Listing are not required to comply with the provisions of Chapter 10 of the Listing Rules in relation to significant transactions. Chapter 10 sets out requirements for shareholders to be provided with certain details in respect of significant transactions which exceed certain class test ratios and to approve certain larger significant transactions which exceed certain class test ratios, commonly referred to as Class 2 Transactions and Class 1 Transactions respectively.

4. Following the transfer to the Standard Listing, the Company would be able to undertake such significant transactions, including Class 1 Transactions without seeking shareholder approval (unless required for some other reason). Companies with a Standard Listing are not required to comply with the provisions of Chapter 11 of the Listing Rules for related party transactions. Chapter 11 sets out requirements for certain transactions with related parties (such as substantial shareholders, directors and their associates) to be reviewed by a sponsor, who must confirm that the terms are fair and reasonable as far as shareholders are concerned, with larger related party transactions also being conditional upon receipt of shareholder approval (any relevant related party and its affiliates must refrain from voting on the relevant resolution). Following the transfer to a Standard Listing, the Company would be able to undertake related party transactions without confirmation from an independent financial adviser that the terms are fair and reasonable or obtaining shareholder approval (unless required for some other reason). The Group will continue to consider the terms of transactions with regards to the interests of the Company and shareholders as a whole and when appropriate. The Group will continue to apply good corporate governance principles in this respect. The Board believes that these principles and the decision-making culture within the Group will continue to ensure that transactions with related parties continue to be fair and reasonable from the perspective of the Company's shareholders.

5. Companies with a Standard listing are not required to comply with Chapter 12 of the Listing Rules, which applies to companies dealing in their own securities; however, any dealings in the Company's securities will continue to be subject to other general restrictions including the Market Abuse Regulation.

6. The Corporate Governance Code does not apply directly to companies with a Standard Listing.

7. A company with a Standard Listing is not required to comply with the more extensive requirements relating to the content of circulars issued to shareholders of companies with a Premium Listing as detailed in Chapter 13 of the Listing Rules.

8. There are a number of miscellaneous continuing obligations imposed by Chapter 9 of the Listing Rules for companies with a Premium Listing which do not apply to companies with a Standard Listing:

a. LR 9.5 contains a set of obligations on companies with a Premium Listing related to particular equity transactions. In particular, it sets out the requirements relating to rights issues, placings and other offers of securities; for example, the restriction whereby listed companies making an open offer, placing or issuing shares out of treasury may not apply a discount of more than 10 per cent. to the middle market price of those shares at the time of announcement of the securities offering (unless shareholder approval has been obtained);

b. companies with a Premium Listing, which are proposing to issue equity securities for cash or proposing to sell from treasury equity shares for cash, must first offer those equity securities to existing shareholders, unless shareholders have authorised the disapplication of such pre-emption rights in accordance with LR 9.3.11R. However, the Company remains subject to similar pre-emption rights requirements under the Bye-Laws;

c. companies with a Premium Listing are required to carry on an independent business as their main activity by virtue of LR 9.2.2A;

d. companies with a Premium Listing which have a "controlling shareholder" (i.e. a person who exercises or controls on their own or together with persons with whom they are acting in concert, 30 per cent. or more of the votes able to be cast on all or substantially all matters at general meetings of the listed company) are subject to various provisions (in LR 9.2.2A - 9.2.2H) designed to ensure that the company can operate independently of the controlling shareholder. These provisions extend and complement the regime applicable to "substantial shareholders" which form part of the rules applicable to related party transactions under Chapter 11 of the Listing Rules;

e. companies with a Premium Listing are required to exercise operational control over the business it carries on as its main activity at all times by virtue of LR 9.2.2L; and

f. companies with a Premium Listing are subject to restrictions set out in LR 9.4.4 on the grant of discounted options to employees and directors except where the grant is pursuant to certain types of employee share scheme or is approved by shareholders.

9. Companies with a Standard Listing are not required to obtain the approval of shareholders for the cancellation of the listing. Companies with a Premium Listing are required to obtain the approval of shareholders; the same 75 per cent. approval threshold applies as for the Transfer Resolution.

10. Companies with a Standard Listing are not eligible for inclusion in the UK series of FTSE indices.

PART III

DEFINITIONS

The following definitions apply throughout this announcement unless the context requires otherwise:

"A Shares" the A shares in the share capital of the Company

"Bermuda Companies Act" the Companies Act 1981 of Bermuda (as amended)

"Board" or "Directors" the directors of the Company whose names are set out at page 5 of the Circular

"Bye-Laws" the Bye-Laws of the Company as adopted and amended from time to time

"Cathay Enterprises" Cathay International Enterprises Limited, a company incorporated in the British Virgin Islands which is a direct shareholder of Circle Finance and Mega Worldwide. Mr. Wu Zhen Tao and members of his family hold the ultimate beneficial interest in Cathay Enterprises

"Cathay" or "Company" Cathay International Holdings Limited an exempted company incorporated in Bermuda with limited liability under the Bermuda Companies Act

"China" or "PRC" the People's Republic of China

"CIEW43" Cathay International EW No. 43 Limited, the immediate parent company of Cathay Enterprises

"Circle Finance" Circle Finance Limited, a company incorporated in the British Virgin Islands which is a direct shareholder of the Company and which is itself directly owned by Cathay Enterprises. Mr. Wu Zhen Tao and members of his family hold the ultimate beneficial interest in Circle Finance

"Common Shares" the common shares in the share capital of the Company

"Controlling Shareholder" the controlling shareholder for the purposes of the Listing Rules, being CIEW 43, the entity through which Mr Wu, the Non-executive Chairman, and his family hold their interests in the Company

"CREST" the United Kingdom paperless share settlement system and system for the holding of shares in uncertificated form in respect of which Euroclear is the operator

"CREST Courier and Sorting Service" the CREST courier and sorting service established by Euroclear to facilitate, among other things, the deposit and withdrawal of securities

"CREST Manual" the rules governing the operation of CREST, consisting of the CREST Reference Manual, CREST International Manual, CREST Central Counterparty Service Manual, CREST Rules, Registrars Service Standards, Settlement Discipline Rules, CCSS Operations Manual, Daily Timetable, CREST Application Procedure and CREST Glossary of Terms (all as defined in the CREST Glossary of Terms promulgated by Euroclear on 15 July 1996, as amended)

"CREST Regulations" the Uncertificated Securities Regulations 2001 (SI 2001 No.3755) as amended from time to time

"Depository" Link Market Services Trustees Limited

"Depository Interests" or "DIs" the dematerialised depository interests in respect of Common Shares issued by the Depository

"DI Holders" holders of Depository Interests

"DTR" the Disclosure and Transparency Rules forming part of the FCA Handbook

"Enforcement Case" the investigation and enforcement case brought by FCA against the Company, as described in paragraph 2 of Part I of the Circular

"Euroclear" Euroclear UK and Ireland Limited, the operator of CREST

"Existing Shares" the Common Shares and A Shares in issue at the Latest Practicable Date

"FCA" the UK Financial Conduct Authority

"FCA Handbook" the FCA's Handbook of Rules and Guidance, as amended from time to time

"Form of Direction" the form of direction accompanying the Circular for use by DI Holders in relation to the Special General Meeting

"Form of Proxy" the form of proxy accompanying the Circular for use by Shareholders in respect of the Special General Meeting

"FSMA" the Financial Services and Markets Act 2000, as amended

"GBP", "£" and "Sterling" the lawful currency of the United Kingdom

"Group" Cathay and its subsidiary undertakings

"Hong Kong Listing Rules" the rules governing the listing of securities on the Stock Exchange of Hong Kong Limited as in force from time to time

"Lansen" Lansen Pharmaceutical Holdings Limited, an exempted company incorporated in the Cayman Islands with limited liability whose shares are listed and traded on the Main Board of the Hong Kong Stock Exchange which is a 50.68 per cent. owned subsidiary of Cathay

"Latest Practicable Date" 27 May 2020, being the latest practicable date prior to publication of the Circular

"Listing Principles" the Listing Principles set out in Listing Rule 7.2.1

"Listing Rules" the listing rules made by the FCA under section 73A of FSMA as amended from time to time

"London Stock Exchange" London Stock Exchange Plc

"Main Market" Main Market of the London Stock Exchange

"Mega Worldwide" Mega Worldwide Services Limited, a company incorporated in the British Virgin Islands which is a direct shareholder of the Company and which is itself directly owned by Cathay Enterprises. Mr. Wu Zhen Tao and members of his family hold the ultimate beneficial interest in Mega Worldwide.

"Notice of SGM" the notice convening the Special General Meeting as set out at the end of the Circular

"Official List" the official list of the FCA

"Premium Listing" the "Premium listing (commercial company)" segment of the Official List

"Premium Listing Principles" the Premium Listing Principles set out in Listing Rule 7.2.1A

"Proposed Transfer" the proposed transfer of the Ordinary Shares out of the category of a "premium listing (commercial company)" on the Official List and into the category of a "standard listing (shares)" on the Official List

"Prospectus" the prospectus referred to in paragraph 1 of Part I of the Circular

"Registrars" Link Market Services Limited

"Resolution" the resolution to be proposed at the Special General Meeting as set out in the Notice of SGM

"RMB" Renminbi, the lawful currency of China

"Shareholder" a holder of Existing Shares but including, where the context permits, DI Holders

"Special General Meeting" or "SGM" the special general meeting of the Company to be held on 15 June 2020, notice of which is set out at the end of the Circular

"Standard Listing" The "Standard listing (shares)" segment of the Official List

"Starry" Zhejiang Starry Pharmaceutical Co., Ltd., a company incorporated in China, the shares of which are listed on the Shanghai Stock Exchange

"Starry Share(s)" each share of RMB 1.00 each in the capital of Starry (which are held by Lansen)

"Starry Share Disposal(s)" disposals of Starry Shares by Lansen

"USD" or "$" US dollars, the lawful currency of the United States

References to page numbers, paragraphs and Parts are references to such page numbers, paragraphs and Parts of the Circular, unless the context requires or indicates otherwise.