China Taisan Tech : Response to SGX Queries

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CHINA TAISAN TECHNOLOGY GROUP HOLDINGS LIMITED

(Company Registration Number: 200711863D)

CHANGE IN SHAREHOLDING INTEREST

China Taisan Technology Group Holdings Limited (the "Company") has received the following queries from the Singapore Exchange Securities Trading Limited ("SGX-ST"), and sets out its responses below:

SGX-ST Query 1

In the "Change of Shareholding Interest" (the "Announcement") announced by the Company on 23 June 2016, it was stated that "Pursuant to an agreement between Mr Choi and Mr Lin, and Zhengdaxingye Investment Holdings Ltd ( 正大兴业投资控股有限公司) ("Zhengda") owned and/or

managed by a Mr Yeh Mao Yuan ("Mr Yeh"), Mr Choi and Mr Lin opened accounts with Credit Agricole, and the Collateral Shares were deposited in their accounts in or around 2010-2011, and transferred to Zhengda's account in or around 2011-2102 with Credit Agricole as collateral to obtain a loan for their personal investments".

Please provide further disclosure on the following:

1. Specific dates of the agreement(s) and specific dates of transfer of shares from Mr. Choi and Mr. Lin to Mr. Yeh/Zhengda/Credit Agricole;

2. Details of Zhengda including the business operations of Zhengda and why is an agreement signed with Zhengda involving Credit Agricole. What is Zhengda's role?

Comp any's resp o n se

The Company has sought clarification from Mr Choi and Mr Lin, who have informed the Company that:

1. Mr Choi and Mr Lin entered into a non-recourse loan agreement with Zhengda dated 17 September 2010. Under the agreements, Zhengda was to provide or to procure the loans to Mr Choi and Mr Lin on the collateral of the Company's shares. The loans by Mr Choi and Mr Lin were to be subsequently used for their personal investments.

   To effect this, the following shares were deposited in Mr Choi's account with Credit Agricole on the following dates:

   Date	Number of shares (before consolidation of the Company's shares as announced on 11 June 2015)
   8 Feb 2011	100,000,000
   10 Feb 2011	80,000,000
   30 March 2011	55,000,000

   The Company also wishes to correct certain inadvertent errors made in the Announcement due to the time constraints under which the Announcement was made, in particular, the statements that "the Collateral Shares were…transferred to Zhengda's account in or around 2011-[2012] with Credit Agricole as collateral to obtain a loan for their personal investments", "Mr Choi and Mr Lin understood the Collateral Shares to remain in Zhengda's account with Credit Agricole" and "the Collateral Shares have been transferred out of Zhengda's account".

   Mr Choi has informed the Company that upon further review of the records of his account with Credit Agricole, which were obtained by Mr Choi from Credit Agricole only on 23 June 2016,

   the shares deposited in Mr Choi's account with Credit Agricole were not at any point in time transferred to Zhengda's account with Credit Agricole or to any other person's / entity's account with Credit Agricole.

   In fact, these shares were transferred from Mr Choi's account with Credit Agricole to beneficiary bank, Mellon Bank, N.A., for further credit to "Equities First Holdings LLC" on the following dates, upon the instructions of Mr Yeh pursuant to a Power of Attorney executed by Mr Choi in favour of Mr Yeh on 3 November 2010:

   Date	Number of shares (before consolidation of the Company's shares as announced on 11 June 2015)
   11 Feb 2011	30,000,000
   23 Feb 2011	30,000,000
   4 March 2011	35,000,000
   17 March 2011	35,000,000
   29 March 2011	35,000,000
   11 April 2011	35,000,000
   3 May 2011	25,611,395
   Total	225,611,395

   Further, as Zhengda did not at any point in time disburse any loan to Mr Choi pursuant to the non-recourse loan agreement, to the best of Mr Choi's belief and knowledge, the shares deposited in Mr Choi's account with Credit Agricole were never used as collateral for any loan, and continued to be owned by him. As no loan was disbursed to Mr Choi, Mr Choi subsequently revoked the Power of Attorney on 12 October 2011.

   The specific dates of deposit and/or transfer of shares from Mr Lin to Credit Agricole / any other third parties are currently unavailable, as Mr Lin does not have records of his account with Credit Agricole. Mr Lin is making arrangements to obtain these records as soon as possible, and the Company will follow up with further announcements upon receipt of such information from Mr Lin.

2. At the time of entering into the agreements with Zhengda, Mr Choi understood that Zhengda, mainly engaged in business investments, was owned and/or managed by Mr Yeh. Credit Agricole was Mr. Yeh's / Zhengda's bankers and Mr Yeh was the one who introduced Credit Agricole to Mr Choi and Mr Lin, and informed them that their shares could be deposited with Credit Agricole to facilitate the execution of the agreements with Zhengda.

SGX-ST Query 2

In an announcement of change in shareholding interest dated 26 October 2010, the Company disclosed that Mr. Lin had on 19 October 2010 transferred 31.16 million shares from his direct interest to Credit Agricole (Suisse) SA as his nominee. The 31.16 million shares was equivalent to 2.81% of the Company's share capital. He disclosed that there was no change to another 74.23 million shares or 6.69% shares held indirectly by him.

Please provide further disclosure on the following:

1. Reasons why the substance of the transfer of the shares as collaterals was not disclosed;

2. Reasons why Mr. Lin did not disclose that all his shareholding interest, not just the 31.16 million shares, was transferred to Credit Agricole; and

3. The date of the transfer of the balance 74.23 million shares from Mr. Lin to Credit Agricole.

Co mp any's resp o n se

The Company has sought clarification from Mr Lin, who has informed the Company that:

1. As Zhengda did not at any point in time disburse any loan to Mr Lin, to the best of Mr Lin's belief and knowledge, the shares deposited in Mr Lin's account with Credit Agricole were never used as collateral for any loan, and continued to be owned by him. Thus, Mr Lin did not consider that there was a change of his percentage level of interest in the shares of the Company or that there were any circumstances warranting any specific disclosure.

2. See Answer 2(a) above.

3. See Answer 1(a) above.

SGX-ST Query 3

Noting that Mr. Lin and Mr. Choi had entered into the same agreement and Mr Lin had partially announced his transfer of shares, why did Mr. Choi not deem it necessary to make the corresponding announcement of his transfer of shares under this tripartite agreement? Why was the agreement not disclosed by Mr. Choi and Mr. Lin since it involves the transfer of control of the shares from Mr. Choi and Mr. Lin to Zhengda / Mr. Yeh?

Co mp any's resp o n se

The Company has sought clarification from Mr Choi, who informed the Company that, as Zhengda did not at any point in time disburse any loan to Mr Choi pursuant to the non-recourse loan agreement, to the best of Mr Choi's belief and knowledge, the shares deposited in Mr Choi's account with Credit Agricole were never used as collateral for any loan, and continued to be owned by him. As no loan was disbursed to Mr Choi, Mr Choi subsequently revoked the Power of Attorney on 12 October 2011. Thus, Mr Choi did not consider that there was a change of his percentage level of interest in the shares of the Company or that there were any circumstances warranting any specific disclosure.

SGX-ST Query 4

Did Mr Choi and Mr. Lin seek to vote on the shares purportedly held by them but which had been transferred to Mr. Yeh/Zhengda/Credit Agricole? Who were entitled to the voting rights of these shares and who exercised the votes for the period from 2010 to-date?

Co mp any's resp o n se

The Company has sought clarification from Mr Choi and Mr Lin, who have informed the Company that to the best of their belief and knowledge, the voting rights for these shares were not exercised during the time they were deposited with Credit Agricole. Mr Choi and Mr Lin have also informed the Company that they did not receive any proxy forms from Credit Agricole.

Upon receiving an enquiry from SGX regarding a possible discrepancy in Mr Choi's deemed shareholding interest on 27 April 2016, Mr Choi began to investigate the status of his shares. It was only on 23 June 2016 that Mr Choi discovered from Credit Agricole that his shares have been transferred from his account with Credit Agricole to beneficiary bank, Mellon Bank, N.A., for further credit to "Equities First Holdings LLC". To date, Mr Choi has not been able to trace these shares.

SGX-ST Query 5

What is the status of the personal loan taken by Mr. Choi and Mr. Lin from Credit Agricole/Zhengda/Mr Yeh? Were they in default or were the loans fully repaid? When were the dates of full repayment or default, whichever is applicable. If there were any defaults of any of these loans, why did Mr Choi or Mr Lin not report any disposal of the shares made by their creditor(s)?

Company's resp o n se

The Company has sought clarification from Mr Choi and Mr Lin, who have informed the Company that Zhengda did not at any point in time disburse any loan to them pursuant to the non-recourse loan agreement.

SGX-ST Query 6

For the yearly confirmation of their respective shareholding interest in the Company for the purpose of the reporting in the Company's annual report for the relevant years from FY2010 to FY2015, what steps did Mr. Choi and Mr. Lin take to confirm their shareholding interest which formed the basis of their disclosure in shareholding?

Co mp any's resp o n se

For the yearly confirmation of shareholding interest in the Company, the Company extracts the relevant information from its Register of Substantial Shareholdings. The Company has sought clarification from Mr Choi and Mr Lin, who have informed the Company that insofar as they did not otherwise sell or transfer ownership of their shares or use them as collateral for any loan, they disclosed no change in shareholding interest. See also Answers 2 and 5 above.

SGX-ST Query 7

As Mr. Yeh would have ended up with more than 5% control of the Company as a result of the agreement, why did Mr. Choi and Mr. Lin not deem it necessary for Mr. Yeh / Zhengda, whichever is applicable, to file a notice of change of substantial shareholder interest.

Co mp any's resp o n se

The Company notes that the obligation to disclose a change of substantial shareholder interest is that of the substantial shareholder, i.e. Mr Yeh / Zhengda in the event they became such a substantial shareholder of the Company.

The Company has further sought clarification from Mr Choi and Mr Lin, who have informed the Company that they were not aware that Mr Yeh / Zhengda had become such a substantial shareholder at any point in time. See also Answers 2 and 5 above.