Key Resolutions & Voting Outcomes

• Resolution 1: The proposed adoption of the Zixin Performance Share Plan 2025 (PSP 2025) and the authority to issue and allot shares under the plan was not carried. Only 10.43% voted for, while 89.57% voted against.
• Resolution 2: The proposed adoption of the Zixin Employee Share Option Scheme 2025 (ESOS 2025) and authority to issue and allot shares under the scheme was carried with 63.77% for and 36.23% against.
• Resolution 3: Proposed participation by Executive Chairman and CEO, Mr. Liang Chengwang, in the PSP 2025 was not carried, as it was conditional on Resolution 1 passing.
• Resolution 4: Proposed grant of 23,000,000 new shares to Mr. Liang Chengwang under PSP 2025 was not carried, also conditional on Resolution 1.
• Resolution 5: Proposed grant of share options to Mr. Liang Chengwang (as interested person transaction) was carried with 63.81% in favour.
• Resolution 6: Proposed grant of share options and allotment of option shares to other investors was carried with 62.05% in favour.

Shareholder Questions & Management Clarifications

• Criteria for PSP 2025 and ESOS 2025: Awards and Options may be granted for both past and future performance, including achievement of KPIs or years of service. Specific terms and exercise prices will be determined at the time of grant, not fixed in advance, to maintain flexibility and effectiveness.
• Scheme Limits: The aggregate number of shares that may be issued under both PSP 2025 and ESOS 2025 is capped at 15% of total share capital.
• Distinction between PSP and ESOS: PSP awards are fully-paid shares given free, whereas ESOS options require employees to pay a predetermined exercise price.
• Share Option Agreement: The rationale for using a put-and-call option structure, rather than a placement or rights issue, is to allow the company to draw down funds flexibly over a five-year period, with lower costs and faster execution. The exercise price for options was set at S\$0.030, representing a 4.51% discount to the VWAP on the last trading day prior to the announcement.
• Abstention on Voting: Investors involved in Resolution 6 voluntarily abstained from voting due to their interest in the outcome.
• No Preferential Information: Other investors have not been given access to non-public information.
• Capital Raised – Intended Use: Funds raised from the Share Option Agreement will be used to expand the sweet potato cultivation system to Hainan and other provinces in China, as well as expand the business network in Asia and boost sales of sweet potato-related products in Singapore.
• Possible Future Rights Issue: Management indicated openness to consider a future rights issue for all shareholders if additional capital raising is needed.
• Market Comparisons: Management confirmed that similar put-and-call option arrangements have been used by other listed companies, citing Tritech Group Limited as an example.

Potential Price-Sensitive Developments

• Rejection of Performance Share Plan: The failure to pass Resolution 1 (PSP 2025) means that the company will not proceed with this performance share grant framework, potentially impacting long-term employee incentive structures and executive reward policies.
• Approval of Employee Share Option Scheme: The passing of ESOS 2025 introduces new employee incentives that may help retain and motivate key staff, but also carries dilution risk for existing shareholders.
• Grant of Share Options to Investors: Approval of share options for both the CEO and external investors could lead to further dilution if exercised, but also secures funding for expansion and growth initiatives.
• Discounted Option Price: The S\$0.030 option exercise price is below recent market prices, offering investors a potentially attractive entry point and possible arbitrage opportunities, but may also exert downward pressure on share price if large volumes are exercised and sold.
• Strategic Expansion: Plans to deploy capital into expanding cultivation systems in China and growing the business network in Asia could materially impact the company’s growth trajectory and future earnings.
• Potential Future Capital Raising: Management openness to a rights issue for all shareholders could affect future capital structure and valuations.

Important Notes for Shareholders

• Share Dilution Risk: With the approval of ESOS 2025 and Share Option Agreements, shareholders should monitor possible dilution as options are exercised.
• Capital Allocation: Monitor how effectively the funds raised are deployed into expansion projects and whether these investments translate into earnings growth.
• Corporate Governance: The rejection of performance share plans for the CEO and executive chairman may signal shareholder concerns about executive compensation alignment.
• Share Option Terms: The five-year exercise window gives management flexibility in capital deployment; investors should track option exercises and their impact on share price and liquidity.

Conclusion

The EGM outcomes signal significant changes in Zixin Group Holdings Limited’s incentive policies and funding strategies. The introduction of the ESOS and the approval of investor share options, coupled with the rejection of executive performance share awards, set the tone for future capital management, employee incentives, and strategic expansion. Investors should closely watch subsequent developments, option exercises, and the deployment of raised capital, as these could materially influence share price and shareholder value.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult financial advisors before making any investment decisions based on the contents of this article. The author and publisher accept no liability for any losses incurred from investments made in reliance on this article.

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