0001213900-25-057225
F-1
36
20250624
20250624
Generation Essentials Group
0002053456
2721
000000000
E9
1231
F-1
33
333-288278
251068923
PO BOX 2681, HUTCHINS DRIVE
CRICKET SQUARE, GRAND CAYMAN
GEORGE TOWN
E9
KY1-1111
330142364597
PO BOX 2681, HUTCHINS DRIVE
CRICKET SQUARE, GRAND CAYMAN
GEORGE TOWN
E9
KY1-1111
World Media & Entertainment Universal Inc.
20250124
F-1
1
ea0246543-f1_generation.htm
REGISTRATION STATEMENT
As filed with the Securities and Exchange Commission
on June 24, 2025
Registration
No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
The Generation Essentials Group
(Exact name of Registrant as specified in
its charter)
Not Applicable
(Translation of Registrant’s name into English)
Cayman Islands
2721
Not Applicable
(State or Other Jurisdiction of
Incorporation or Organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
66 rue Jean-Jacques Rousseau
75001 Paris, France
+33 (0) 1 7673 2800
(Address, including zip code, and telephone number, including area code, of Registrant’s
principal executive offices)
Puglisi & Associates
850 Library Avenue, Suite 204
Newark, Delaware 19711
+1 (302) 738-6680
(Name, address, including zip code, and telephone number, including area code, of agent
for service)
Copies to:
Shu Du, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
c/o 42/F, Edinburgh Tower, The Landmark
15 Queen’s Road Central
Hong Kong
Tel: +852 3740-4700
Approximate date of commencement
of proposed sale to the public: As soon as practicable after this registration statement becomes effective.
If any of the securities
being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 (as amended, the “Securities Act”), check the following box. ☒
If this Form is filed
to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration
number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether
the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company ☒
If an emerging growth company
that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of
the Securities Act. ☐
The Registrant hereby
amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act, as amended, or until the registration statement shall become effective on such date as the U.S. Securities and Exchange
Commission, or “SEC,” acting pursuant to said Section 8(a), may determine.
†The term “new or revised financial accounting standard” refers to any update issued by the
Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
The
information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration
statement filed with the U.S. Securities and Exchange Commission, or “SEC,” is effective. This preliminary prospectus is
not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 24,
2025
PRELIMINARY PROSPECTUS
The Generation Essentials Group
PROSPECTUS FOR UP TO 51,381,944 CLASS A ORDINARY
SHARES, 11,120,000 WARRANTS, AND
11,120,000 CLASS A ORDINARY SHARES UNDERLYING WARRANTS OF
THE GENERATION ESSENTIALS GROUP
This prospectus relates to
the issuance by The Generation Essentials Group of up to 16,220,000 of its Class A ordinary shares, par value US$0.0000000264856557377049 per
share (“Class A Ordinary Shares”), including (i) 5,100,000 Class A Ordinary Shares issuable upon the exercise
of warrants to purchase Class A Ordinary Shares at an exercise price of US$11.50 per share, which were issued on June 3, 2025
(the “Closing Date”) in exchange for the public warrants of Black Spade Acquisition II Co. (“Black Spade II”)
that were issued in the initial public offering of Black Spade II (the “Public Warrants”); and (ii) 11,120,000 Class A
Ordinary Shares issuable upon the exercise of warrants to purchase Class A Ordinary Shares at an exercise price of US$11.50 per share,
which were issued to Black Spade Sponsor LLC II the “Sponsor”) on the Closing Date (the “Sponsor Warrants”,
and collectively with the Public Warrants, the “Warrants”) in exchange for the private placement warrants purchased by the
Sponsor for a total consideration of approximately US$5.6 million in a private placement concurrent with the initial public offering of
Black Spade II at a price of US$0.50 per warrant.
This prospectus also relates
to the potential offer and sale from time to time by the selling securityholders named in this prospectus or their pledgees, donees, transferees,
assignees or other successors in interest (that receive any of the securities as a gift, distribution, or other non-sale related transfer)
(collectively, the “Selling Securityholders”) of up to (A) 57,401,944 Class A Ordinary Shares, which include (i) 3,235,714
Class A Ordinary Shares beneficially owned by South Horizon Oceans (Group) Co. Inc. and 1,464,944 Class A Ordinary Shares beneficially
owned by Radisson Everton Venture Fund (collectively, the “Legacy Shares”), which were originally acquired at a price of approximately
(after accounting for the Recapitalization Factor (as defined below)) US$15.70 and US$15.70 per share prior to the Closing Date, respectively;
(ii) 18,425,068 Class A Ordinary Shares beneficially owned by AMTD IDEA Group, 45,307 Class A Ordinary Shares beneficially owned by AMTD
Group Inc. and 19,285,911 Class A Ordinary Shares issuable upon the conversion of 19,285,911 Class B Ordinary Shares beneficially owned
by AMTD Digital Inc. (collectively, the “AMTD Shares”), which were originally acquired at a price of approximately (after
accounting for the Recapitalization Factor (as defined below)) US$7.98, US$7.50, and US$8.72 per share prior to the Closing Date, respectively;
(iii) 3,825,000 Class A Ordinary Shares (the “Sponsor Shares”) issued to the Sponsor, Black Spade II’s directors
and officers and certain of the Sponsor’s affiliates and employees on the Closing Date in exchange for the Class B ordinary shares
of Black Spade II, which were purchased by them at a price of approximately US$0.0065 per share; and (iv) 11,120,000 Class A Ordinary
Shares issuable upon the exercise of the Sponsor Warrants; and (B) 11,120,000 Sponsor Warrants.
These securities are being
registered pursuant to the requirements of the Warrant Agreement (as defined below) and to satisfy certain registration rights The Generation
Essentials Group has granted to permit the Selling Securityholders to sell securities from time to time, in amounts, at prices and on
terms determined at the time of offering.
Subject to the AMTD Lock-up
Obligations, AMTD Digital, AMTD IDEA Group, AMTD Group Inc. can sell all Ordinary Shares beneficially owned by them under this prospectus,
being 37,756,286 Class A Ordinary Shares (including (i) 18,470,375 Class A Ordinary Shares and (ii) 19,285,911 Class A Ordinary Shares
issuable upon the conversion of 19,285,911 Class B Ordinary Shares beneficially owned by AMTD Digital Inc.), and constituting approximately
58.4% of our issued and outstanding Ordinary Shares and represented 93.8% of the aggregate voting power of our total issued and outstanding
share capital as of the date of this prospectus (assuming exercise of all outstanding Warrants), so long as the registration statement
of which this prospectus forms a part is available for us. These shares were acquired at prices significantly below the current trading
price of the Class A Ordinary Shares. The sales of these securities could result in a significant decline in the public trading price
of the Class A Ordinary Shares and could impair our ability to raise capital through the sale of additional equity securities. See “Risk
Factors — Risks Relating to Our Securities — Future resales of Ordinary Shares issued to our shareholders
and other significant shareholders may cause the market price of the Class A Ordinary Shares to drop significantly, even if our business
is doing well.” The “AMTD Lock-up Obligations” refers the obligations of AMTD Digital, AMTD IDEA Group and AMTD Group
Inc. (each, a “Lock-Up Obligor”) not to transfer or sell, during a period of three (3) years from and after the Closing
Date, subject to customary exceptions, (i) any Ordinary Shares or other equity securities of The Generation Essentials Group held
by such Lock-Up Obligor immediately after the Closing (including the Earnout Shares), excluding any Ordinary Shares acquired in open market
transactions after the Closing, (ii) any Ordinary Shares received by such Lock-Up Obligor upon the exercise, conversion or settlement
of options or warrants held by such Lock-Up Obligor immediately after Closing (along with such options or warrants themselves), and (iii) any
equity securities of The Generation Essentials Group issued or issuable with respect to any securities referenced in clauses (i) through
(ii) by way of share dividend or share split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization
or similar transaction, pursuant to the TGE Shareholders Support Agreement.
The Selling Securityholders
may offer, sell or distribute all or a portion of these securities from time to time through public or private transactions, at either
prevailing market prices or at privately negotiated prices. The Selling Securityholders may sell these securities through ordinary brokerage
transactions, in underwritten offerings, directly to market makers of our securities or through any other means described in the section
entitled “Plan of Distribution” herein. In connection with any sales of securities offered hereunder, the Selling Securityholders,
any underwriters, agents, brokers or dealers participating in such sales may be deemed to be “underwriters” within the meaning
of the Securities Act of 1933, as amended, or the “Securities Act.”
The Class A Ordinary
Shares are listed on the New York Stock Exchange (“NYSE”) under the trading symbol “TGE” and the Warrants are
listed on the New York Stock Exchange American (“NYSE American”) under the trading symbol “TGE WS.” On June 23,
2025, the closing price for the Class A Ordinary Shares on NYSE was US$7.79. On June 23, 2025, the closing price for the Warrants
on NYSE American was US$0.45.
The securities registered herein are identified in this prospectus
as the “Registered Securities.” In connection with the Business Combination, holders of 13,120,874 BSII Public Shares exercised
their right to redeem their shares for cash at a redemption price of approximately US$10.30 per share, for an aggregate redemption amount
of approximately US$135.2 million, representing approximately 85.8% of the total BSII Class A Shares outstanding as of the record date
of May 5, 2025 (the “Record Date”). Subject to the AMTD Lock-up Obligations, the Selling Securityholders can sell, under this
prospectus, up to (i) 57,401,944 Class A Ordinary Shares constituting approximately 88.7% of the total issued and outstanding Ordinary
Shares (assuming exercise of all outstanding Warrants), and (ii) 11,120,000 Warrants, representing approximately 68.6% of our outstanding
Warrants, as of the date of this prospectus. Sales of a substantial number of Registered Securities, or the perception that those sales
might occur, could result in a significant decline in the public trading price of our securities and could impair our ability to raise
capital through the sale or issuance of additional equity securities. We are unable to predict the effect that such sales may have on
the prevailing market price of our securities. Despite such a decline in the public trading price, certain Selling Securityholders may
still experience a positive rate of return on the Registered Securities due to the lower price at which they acquired the Registered Securities
compared to other public investors and may be incentivized to sell the Class A Ordinary Shares or Warrants when others are not. For example,
based on the closing price of the Class A Ordinary Shares and Warrants as referenced above, holders of the Sponsor Shares may experience
a potential profit of up to US$7.7835 per share on the Sponsor Shares; holders of the AMTD Shares may experience a potential profit of
up to US$0.29 per share; South Horizon Oceans (Group) Co. Inc. and Radisson Everton Venture Fund may experience a potential profit on
their Legacy Shares if the price of the Class A Ordinary Shares exceeds US$15.70 per share and US$15.70 per share, respectively;
and the Sponsor may experience a potential profit on the Sponsor Warrants if the price of the Class Ordinary Shares exceeds US$11.50 per
share;. Public investors may not experience a similar rate of return on the securities they purchase due to differences in the purchase
prices that they paid and the current trading price.
We will not receive any proceeds
from any sale of the Registered Securities by the Selling Securityholders. We will receive proceeds from the exercise of Warrants if the
Warrants are exercised for cash. The likelihood that warrant holders will exercise the Warrants and any cash proceeds that we would receive
are dependent upon the market price of the Class A Ordinary Shares, among other things. If the market price for the Class A
Ordinary Shares is less than US$11.50 per share, we believe warrant holders will be unlikely to exercise their Warrants. There is no assurance
that the Warrants will be “in the money” prior to their expiration or that the warrant holders will exercise their Warrants.
Holders of the Sponsor Warrants have the option to exercise the Sponsor Warrants on a cashless basis in accordance with the Warrant Agreement.
To the extent that any Warrants are exercised on a cashless basis, the amount of cash we would receive from the exercise of the Warrants
will decrease. We will pay the expenses associated with registering the sales by the Selling Securityholders, as described in more details
in the section titled “Use of Proceeds” appearing elsewhere in this prospectus.
We are an “emerging
growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) and are therefore eligible
to take advantage of certain reduced reporting requirements otherwise applicable to other public companies.
We are also a “foreign
private issuer,” as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are exempt from
certain rules under the Exchange Act that impose certain disclosure obligations and procedural requirements for proxy solicitations
under Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting
and “short-swing” profit recovery provisions under Section 16 of the Exchange Act. Moreover, we are not required to file
periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered
under the Exchange Act.
In addition, as of the date
of this prospectus, AMTD Group Inc., our Controlling Shareholder, beneficially owns 18,470,375 Class A Ordinary Shares and 19,285,911
Class B Ordinary Shares. These Ordinary Shares represent approximately 97.4% of the aggregate voting power of our total issued and outstanding
share capital. As a result, we qualify as a “controlled company” within the meaning of NYSE Listed Company Manual and have
the option not to comply with certain requirements to which companies that are not controlled companies are subject, including the requirement
that a majority of our board of directors shall consist of independent directors and the requirement that our nominating and corporate
governance committee and compensation committee shall be composed entirely of independent directors.
Investing in our securities
involves a high degree of risk. See “Risk Factors” beginning on page 10 of this prospectus and other risk factors contained
in the documents incorporated by reference herein for a discussion of information that should be considered in connection with an investment
in our securities.
Neither the U.S. Securities
and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
PROSPECTUS DATED ,
2025
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
ii
INDUSTRY AND MARKET DATA
iii
FORWARD-LOOKING STATEMENTS
iv
FREQUENTLY USED TERMS
v
PROSPECTUS SUMMARY
1
THE OFFERING
8
RISK FACTORS
10
CAPITALIZATION AND INDEBTEDNESS
43
SELECTED HISTORICAL FINANCIAL DATA
44
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
47
USE OF PROCEEDS
56
DIVIDEND POLICY
57
BUSINESS
58
GOVERNMENT REGULATIONS
80
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
90
MANAGEMENT
105
PRINCIPAL SHAREHOLDERS
112
SELLING SECURITYHOLDERS
114
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
116
TAXATION
118
DESCRIPTION OF SHARE CAPITAL
124
PLAN OF DISTRIBUTION
137
EXPENSES RELATED TO THE OFFERING
141
LEGAL MATTERS
142
EXPERTS
142
ENFORCEABILITY OF CIVIL LIABILITIES AND AGENT FOR SERVICE OF PROCESS IN THE UNITED STATES
143
WHERE YOU CAN FIND ADDITIONAL INFORMATION
144
i
ABOUT
THIS PROSPECTUS
This prospectus is part of
a registration statement on Form F-1 filed with the SEC by The Generation Essentials Group. The Selling Securityholders named in
this prospectus may, from time to time, sell the securities described in this prospectus in one or more offerings. This prospectus includes
important information about us, the securities being offered by us and the Selling Securityholders and other information you should know
before investing. Any prospectus supplement may also add, update, or change information in this prospectus. If there is any inconsistency
between the information contained in this prospectus and any prospectus supplement, you should rely on the information contained in that
particular prospectus supplement.
This prospectus does not contain
all of the information provided in the registration statement that we filed with the SEC. You should read this prospectus together with
the additional information about us described in the section below entitled “Where You Can Find Additional Information.” You
should rely only on the information contained or incorporated by reference in this prospectus or any supplement. Neither we nor any of
the Selling Securityholders has authorized anyone to provide you with different or additional information, other than that contained in
this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you, and neither we
nor any of the Selling Securityholders takes any responsibility for, or provide any assurance as to the reliability of, any other information
that others may give you. We may also provide a prospectus supplement or post-effective amendment to the registration statement to add
information to, or update or change information contained in, this prospectus. You should not assume that the information in this prospectus
or any supplement is accurate as of any date other than the date on the front of each document. Our business, financial condition, results
of operations and prospects may have changed since that date.
The securities offered by
this prospectus are being offered only in jurisdictions where the offer is permitted. Neither we nor any of the Selling Securityholders
is making an offer to sell the Registered Securities in any jurisdiction where the offer or sale thereof is not permitted, nor have we
or the Selling Securityholders taken any action to permit the possession or distribution of this prospectus in any jurisdiction other
than the United States where action for that purpose is required. Persons outside the United States who come into possession of this prospectus
must inform themselves about and observe any restrictions relating to the Registered Securities and the distribution of this prospectus
outside the United States.
References to “U.S.
Dollars,” “USD,” “US$” and “$” in this prospectus are to United States dollars, the legal currency
of the United States. Discrepancies in any table between totals and sums of the amounts listed are due to rounding. Certain amounts and
percentages have been rounded; consequently, certain figures may add up to be more or less than the total amount and certain percentages
may add up to be more or less than 100% due to rounding.
ii
INDUSTRY
AND MARKET DATA
Unless otherwise indicated,
information contained in this prospectus concerning our industry and the regions in which it operates, including our general expectations
and market position, market size, market opportunity, market share and other management estimates, is based on information obtained from
industry publications and reports and forecasts provided to us. In some cases, we do not expressly refer to the sources from which this
information is derived. This information is subject to significant uncertainties and limitations and is based on assumptions and estimates
that may prove to be inaccurate. You are therefore cautioned not to give undue weight to this information.
We have not independently
verified the accuracy or completeness of any such information. Similarly, internal surveys, industry forecasts and market research, which
we believe to be reliable based upon our management’s knowledge of the industry, have not been independently verified. While we
believe that the market data, industry forecasts and similar information included in this prospectus are generally reliable, such information
is inherently imprecise. In addition, assumptions and estimates of our future performance and growth objectives and the future performance
of our industry and the markets in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety
of factors, including those discussed under the headings “Risk Factors,” “Forward-Looking Statements” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operation” in this prospectus.
iii
FORWARD-LOOKING
STATEMENTS
This prospectus contains statements
that are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements
are based on management’s beliefs and expectations as well as on assumptions made by and data currently available to management,
appear in a number of places throughout this document and include statements regarding, amongst other things, results of operations, financial
condition, liquidity, prospects, growth, strategies and the industry in which we operate. The use of words “expects,” “intends,”
“anticipates,” “estimates,” “predicts,” “believes,” “should,” “potential,”
“may,” “preliminary,” “forecast,” “objective,” “plan,” or “target,”
and other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees
of future performance and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including,
but not limited to statements regarding our intentions, beliefs or current expectations concerning, among other things, results of operations,
financial condition, liquidity, prospects, growth, strategies, future market conditions or economic performance and developments in the
capital and credit markets and expected future financial performance, and the markets in which we operate.
Forward-looking statements
involve a number of risks, uncertainties and assumptions, and actual results or events may differ materially from those projected or implied
in those statements. Important factors that could cause such differences include, but are not limited to:
●The regulatory environment and changes in laws, regulations or policies in the jurisdictions in which
we operate;
●The overall economic environment and general market and economic conditions in the jurisdictions in which
we operate;
●Our relationships with customers, suppliers, other business partners, and stakeholders;
●Our ability to successfully compete in highly competitive industries and markets;
●Our ability to continue to adjust our offerings to meet market demand, attract customers to choose our
products and services and grow our ecosystem;
●Our ability to execute strategies, manage growth and maintain corporate culture as we grow;
●Our anticipated investments in new products, services, collaboration arrangements, technologies and strategic
acquisitions, and the effect of these investments on our results of operations;
●Changes in the needs for capital and the availability of financing and capital to fund these needs;
●The price-competitiveness, quality and breadth of our products and services;
●The loss of key personnel and the inability to replace such personnel on a timely basis or on acceptable
terms;
●Failure to realize the anticipated benefits of the Business Combination;
●Man-made or natural disasters, health epidemics, and other outbreaks including war, acts of international
or domestic terrorism, civil disturbances, occurrences of catastrophic events and acts of God such as floods, earthquakes, wildfires,
typhoons and other adverse weather and natural conditions that affect our business or assets;
●Exchange rate fluctuations;
●Changes in interest rates or rates of inflation;
●Legal, regulatory and other proceedings;
●Our ability to maintain the listing of our securities on applicable stock exchanges;
●The results of future financing efforts; and
●All other risks and uncertainties described in “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operation.”
We would like to caution you
not to place undue reliance on these forward-looking statements and you should read these statements in conjunction with the risk factors
disclosed in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation”
of this prospectus. Those risks are not exhaustive. We operate in a rapidly evolving environment. New risks emerge from time to time and
it is impossible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent
to which any factor, or combination of factors, may cause actual results to differ from those contained in any forward-looking statement.
We do not undertake any obligation to update or revise the forward-looking statements except as required under applicable law.
iv
FREQUENTLY
USED TERMS
Unless otherwise stated or
unless the context otherwise requires in this document:
“Adjustment Factor”
means the number resulting from dividing the Per Share TGE Equity Value by $10.00;
“Amended Articles”
means the fourth amended and restated memorandum and articles of association of The Generation Essentials Group;
“AMTD Digital”
means AMTD Digital Inc., a Cayman Islands exempted company;
“Assignment, Assumption
and Amendment Agreement” means the assignment, assumption and amendment agreement, dated June 3, 2025, by and among The Generation
Essentials Group, Black Spade II and Continental Stock Transfer & Trust Company;
“Black Spade II’s
IPO” means Black Spade II’s initial public offering, which was consummated on August 29, 2024;
“Black Spade II
Public Shareholders” means the holders of BSII Class A Ordinary Shares issued as part of the Units issued in Black Spade II’s
IPO;
“Black Spade II
Shareholder” means the holder of BSII Shares;
“BSII” or “Black
Spade II” means Black Spade Acquisition II Co, a Cayman Islands exempted company;
“BSII Class A Ordinary
Shares” or “BSII Public Shares” means the Class A ordinary shares of Black Spade II, par value $0.0001 per
share;
“BSII Class B Ordinary
Shares” means the Class B ordinary shares, par value $0.0001 per share, of Black Spade II;
“BSII Dissenting Share”
means each issued and outstanding BSII Class A Ordinary Share that is held by any person who has validly exercised and not effectively
withdrawn or lost their right to dissent from the Merger in accordance with Section 238 of the Cayman Islands Companies Act;
“BSII Ordinary Share”
means a BSII Class A Ordinary Share or a BSII Class B Ordinary Share;
“BSII Private Warrants”
means the warrants sold to the Sponsor in the private placement consummated concurrently with the Black Spade II’s IPO, each
entitling its holder to purchase one BSII Public Share at an exercise price of $11.50 per share, subject to adjustment;
“BSII Public Warrants”
means the redeemable warrants issued in Black Spade II’s IPO, each entitling its holder to purchase one BSII Public Share at
an exercise price of $11.50 per share, subject to adjustment;
“BSII Shares”
means the shares of Black Spade II, including the BSII Ordinary Shares;
“BSII Warrant Agreement”
means the warrant agreement, dated August 27, 2024, by and between Black Spade II and Continental Stock Transfer &
Trust Company;
“BSII Warrants”
means the BSII Public Warrants and the BSII Private Warrants;
“Business Combination”
means all transactions contemplated by the Business Combination Agreement, including the Merger;
“Business Combination
Agreement” means the Business Combination Agreement dated as of January 27, 2025, by and among Black Spade II, The Generation
Essentials Group and Merger Sub, as may be amended, supplemented or otherwise modified from time to time, and attached hereto as Annex A;
“Cayman Islands Companies
Act” means the Companies Act (As Revised) of the Cayman Islands;
v
“Class A Ordinary Shares”
means Class A ordinary shares of The Generation Essentials Group, par value US$0.0000000264856557377049 per share;
“Class B Ordinary Shares”
means Class B ordinary shares of The Generation Essentials Group, par value US$0.0000000264856557377049 per share;
“Closing” means
the closing of the Business Combination contemplated by the Business Combination Agreement;
“Closing Date”
means June 3, 2025, the day on which the Closing occurs;
“Controlling Shareholder”
means AMTD Group Inc.;
“Dissenting Black Spade II
Shareholders” means Black Spade II Shareholders who shall have validly exercised and have not effectively withdrawn or lost
their dissenter’s rights for their BSII Shares in accordance with Section 238 of the Cayman Islands Companies Act and otherwise
complied with all of the provisions of the Cayman Islands Companies Act relevant to the exercise and perfection of dissent rights in respect
of the Merger pursuant to Section 238 of the Cayman Islands Companies Act;
“Earnout Shares”
means the Class A Ordinary Shares that may be issued, or caused to be issued, by The Generation Essentials Group to AMTD Digital, AMTD
IDEA Group, and AMTD Group Inc., in accordance with their respective pro rata share based on the number of Class A Ordinary Shares held
by them inter se, if any of the specified events pursuant to the Business Combination Agreement occur following Closing and prior to the
first anniversary of the Closing Date, representing in aggregate 3% of the total number of Class A Ordinary Shares outstanding as of the
date such event occurs;
“Exchange Act”
means the Securities Exchange Act of 1934, as amended;
“IFRS” are to
International Financial Reporting Standards as issued by the International Accounting Standards Board;
“JOBS Act” means
the Jumpstart Our Business Startups Act of 2012, as amended;
“Lock-Up Obligor”
means each of AMTD Digital, AMTD IDEA Group, and AMTD Group Inc. pursuant to the TGE Shareholders Support Agreement;
“Merger” means
the merger between Merger Sub and Black Spade II, with Black Spade II surviving as a wholly-owned subsidiary of The Generation
Essentials Group in accordance with the Business Combination Agreement;
“Merger Effective Time”
means the effective time of the Merger;
“Merger Sub” means
WME Merger Sub Limited, a Cayman Islands exempted company;
“Non-Redemption Payment
Amount” means the cash payment made by The Generation Essentials Group equal to $1.25 multiplied by the number of BSII Class A
Ordinary Shares held by eligible Black Spade II Public Shareholders on the Closing Date immediately before the Merger Effective Time,
to provide additional consideration to Black Spade II Public Shareholders;
“Ordinary Shares”
means, prior to the Re-Designation, the ordinary shares of The Generation Essentials Group, and following the Re-Designation, Class A
Ordinary Shares and Class B Ordinary Shares collectively;
“Per Share TGE Equity
Value” means the number obtained by dividing (a) the equity value of The Generation Essentials Group (being $488,000,000) by
(b) the aggregate number of ordinary shares of The Generation Essentials Group issued and outstanding immediately prior to the Recapitalization;
“Plan of Merger”
means the Plan of Merger, by and among Black Spade II, Merger Sub and The Generation Essentials Group, substantially in the form
attached hereto as Annex B;
vi
“Preferred Shares”
means the non-voting redeemable preferred shares of The Generation Essentials Group;
“Public Warrants”
means warrants to purchase Class A Ordinary Shares at an exercise price of US$11.50 per share, which were issued on the Closing Date
in exchange for the public warrants of Black Spade II that were issued in the Black Spade II’s IPO;
“Recapitalization”
means the recapitalization of the share capital of The Generation Essentials Group immediately following the Re-Designation and immediately
prior to the Merger Effective Time by way of a share consolidation or subdivision such that (i) each pre-Recapitalization Class A
Ordinary Share will be consolidated or divided into a number of Class A Ordinary Shares, (ii) each pre-Capitalization Class B Ordinary
Share will be consolidated or divided into a number of Class B Ordinary Shares, and (iii) each pre-Recapitalization Preferred Share
will be consolidated or divided into a number of Preferred Shares, in each case, equal to the Adjustment Factor;
“Re-Designation”
means the re-designation of the share capital of The Generation Essentials Group immediately prior to the Recapitalization as follows:
(A) each Ordinary Share (other than non-voting ordinary shares) not held by AMTD Digital shall be re-designated and re-classified
into one Class A Ordinary Share, where each Class A Ordinary Share shall entitle its holder to one vote on all matters subject to vote
at general meetings of The Generation Essentials Group; (B) each Ordinary Share (other than non-voting ordinary shares) held by AMTD
Digital shall be re-designated and re-classified into one Class B Ordinary Share, where each Class B Ordinary Share shall entitle its
holder to 20 votes on all matters subject to vote at general meetings of The Generation Essentials Group; and (C) each non-voting
redeemable ordinary share in the share capital of The Generation Essentials Group shall be re-designated and re-classified into one non-voting
redeemable preferred share in the share capital of The Generation Essentials Group;
“Registration Rights
Agreement” means the registration rights agreement, dated June 3, 2025, by and among certain shareholders of The Generation
Essentials Group, the Sponsor and certain affiliates of the Sponsor;
“SEC” means the
U.S. Securities and Exchange Commission;
“Shares” means,
collectively, Ordinary Shares and Preferred Shares;
“Sponsor” means
Black Spade Sponsor LLC II, a Cayman Islands limited liability company;
“Sponsor Shareholders”
means the Sponsor, Black Spade II’s directors and officers and certain employees of the Sponsor’s affiliates;
“Sponsor Warrants”
means warrants to purchase Class A Ordinary Shares at an exercise price of US$11.50 per share, which were issued to the Sponsor on
the Closing Date in exchange for the private placement warrants purchased by the Sponsor for a total consideration of approximately US$5.6
million in a private placement concurrent with the Black Spade II’s IPO at a price of US$0.50 per warrant;
“TGE,” “we,”
“us,” “our company,” and “our” mean The Generation Essentials Group and its subsidiaries. References
to the share capital, securities, shareholders, directors, board of directors, auditors of “TGE” are to the share capital,
securities (including shares, options and warrants), shareholders, directors, board of directors, and auditors of The Generation Essentials
Group, respectively;
“TGE Securities”
means, collectively, Ordinary Shares, Preferred Shares and Warrants;
“TGE Shareholders Support
Agreement” means the shareholder support and lock-up agreement and deed dated as of January 27, 2025 by and among Black Spade
II, TGE and all shareholders of TGE;
“Transactions”
means the Business Combination and other transactions contemplated by the Business Combination Agreement;
“Trust Account”
means the trust account established for the purpose of holding the net proceeds from Black Spade II’s IPO;
“Unit Separation”
means the automatic detachment of each Unit outstanding immediately prior to the Merger Effective Time, as a result of which the holder
thereof shall be deemed to hold one BSII Class A Ordinary Share and one-third of an BSII Warrant in accordance with the terms of
the applicable Unit;
“Units” means
the units issued in the Black Spade II’s IPO, each consisting of one BSII Class A Ordinary Share and one-third of a BSII Public
Warrant;
“U.S. Dollars,”
“USD,” “US$,” and “$” means United States dollars, the legal currency of the United States;
“Warrant Agreement”
means the Warrant Agreement dated as of August 27, 2024, between Black Spade II and Continental Stock Transfer &
Trust Company as assigned and assumed pursuant to the Assignment, Assumption and Amendment Agreement; and
“Warrants” means,
collectively, the “Sponsor Warrants” and the “Public Warrants”.
vii
PROSPECTUS
SUMMARY
This summary highlights
selected information from this prospectus. It may not contain all of the information that is important to you. You should carefully read
the entire prospectus and the other documents referred to in or incorporated into this prospectus. You should carefully consider, among
other things, our consolidated financial statements and the related notes, “Risk Factors,” “Business,” and “Management’s
Discussion and Analysis of Financial Condition and Result of Operations” included elsewhere in this prospectus. For additional information,
see “Where You Can Find Additional Information” in this prospectus.
Overview
We are a global media and
entertainment ecosystem covering high fashion, arts, lifestyle, cultural, entertainment as well as F&B. Inheriting more than
one hundred years of history and with a worldwide geographical presence, we offer a holistic media and entertainment experience to
an audience of millions around the world.
Our publications L’Officiel
and The Art Newspaper publish print editions in a total of 28 countries and territories and digital contents to an even wider
scope of readers globally.
We operate in the movie production
sector having produced various Asia-focused blockbuster movies. We have partnered with established production companies to present a number
of Asia-focused blockbuster movies globally, which in aggregate notched a box office of more than US$400 million.
We hold premium whole building
properties and provide hospitality services in Hong Kong and Singapore. We focus on and specialize in hospitality and lifestyle concepts
and offers a customer-centric VIP members approach for its business portfolio in the key areas comprising stylish hotels and serviced
apartments, F&B, and club membership services in Hong Kong and Singapore, with plans for further global expansion.
We extend the power of our
brands and extensive library of contents and intellectual property through other media, platforms, products and services, including in
the area of F&B.
We also host a multitude of
cultural events to inspire conversation with traditions and bridge exchanges and we have been recognized for our cultural ambassadorship.
Corporate History and Structure
In April 2022, AMTD IDEA
Group acquired 100% of the equity interests in L’Officiel Inc. SAS, which then owned the business unit of “L’Officiel.”
In January 2023, AMTD Digital Inc. completed the acquisition of 96.1% of the equity interests in WME Assets Group (formerly known
as AMTD Assets Group), which holds premium whole building properties and provide hospitality services in Hong Kong and Singapore.
On February 7, 2023,
The Generation Essentials Group was incorporated as an exempted company with limited liability in the Cayman Islands.
In October 2023, AMTD
IDEA Group acquired 100% of the equity interests in The Art Newspaper SA, which then owned the business unit of “The Art Newspaper.”
From October 2024 through
November 2024, a series of reorganization steps (collectively, the “TGE Reorganization”) were taken to establish The
Generation Essentials Group as the holding company transfer and consolidate the business of L’Officiel, The Art Newspaper, WME Assets
Group and certain movie rights investments into The Generation Essentials Group.
In March 2025, we changed
our corporate name from “World Media and Entertainment Universal Inc.” to “The Generation Essentials Group.”
1
The following diagram illustrates
our corporate structure, including our principal and other subsidiaries as of the date of this prospectus:
Our Holding Company
Structure
The Generation Essentials
Group is not an operating company but a holding company incorporated in the Cayman Islands as an exempted company. We conduct our operations
through our subsidiaries. The securities registered herein are securities of The Generation Essentials Group, not those of our operating
subsidiaries. Therefore, investors in The Generation Essentials Group are not acquiring equity interest in any operating company but instead
are acquiring interest in a Cayman Islands holding company. The holding company structure involves unique risks to investors. As a holding
company, The Generation Essentials Group may rely on dividends from its subsidiaries for cash requirements, including any payment of dividends
to its shareholders. The ability of subsidiaries of The Generation Essentials Group to pay dividends or make distributions to The Generation
Essentials Group may be restricted by laws and regulations applicable to them or the debt they incur on their own behalf or the instruments
governing their debt.
Recent Developments of
TGE
The following sets forth estimates
of our unaudited selected consolidated financial data as of and for the three months ended March 31, 2025 based on available
information to date. This financial data is not a comprehensive statement of our financial results as of and for the three months
ended March 31, 2025. Our actual results may differ materially from these estimates.
Revenues. We estimate
that our revenues for the three months ended March 31, 2025 were in the range of approximately US$25 million to US$26 million,
reflecting the expanded operation of L’Officiel and The Art Newspaper, the additional contribution recognized from
our hotels as well as the fluctuation in the stock market affecting the fair value of the listed shares of Bank of Qingdao and Guangzhou
Rural Commercial Bank which we hold as investments.
Profit for the quarter. We
estimate that our profit for the three months ended March 31, 2025 was in the range of US$10 million to US$11 million.
2
Property, plant and equipment. We
estimate that our property, plant and equipment marginally increased from US$574.7 million as of December 31, 2024 to approximately
US$580 million as of March 31, 2025, primarily due to the expansion of our hotel operation.
Cash and bank balances. We
estimate that our cash and bank balances were in the range of approximately US$9 million to US$10 million as of March 31,
2025 as compared with US$20.0 million as of December 31, 2024, primarily as a result of certain payments to our Controlling
Shareholder and payment of regular expenses.
Our unaudited selected consolidated
financial data set forth above is preliminary in nature. Our independent registered public accounting firm, Assentsure, has not audited,
reviewed, compiled or performed any procedures, and does not express an opinion or any other form of assurance with respect to any of
such data. Our preliminary and unaudited selected consolidated financial data as of and for the three months ended March 31,
2025 may not be indicative of our financial results for future interim periods or for the full year ended December 31, 2025. See
“Management’s Discussion and Analysis of Financial Condition and Results of Operation” and “Risk Factors”
included elsewhere in this prospectus for information regarding trends and other factors that may influence our results of operations
and for recent quarterly operating results.
The Business Combination
and Related Transactions
On June 4, 2025, The
Generation Essentials Group consummated the previously announced business combination with Black Spade II, pursuant to the Business
Combination Agreement.
On the Closing Date and immediately
prior to the Merger Effective Time, the Amended Articles took effect and The Generation Essentials Group re-designated:
●Each ordinary share of The Generation Essentials Group (other than non-voting ordinary shares) that is
not held by AMTD Digital into one Class A Ordinary Share;
●Each ordinary share of The Generation Essentials Group (other than non-voting ordinary shares) that is
held by AMTD Digital into one Class B Ordinary Share; and
●Each non-voting ordinary share of The Generation Essentials Group into one Preferred Share.
Pursuant to the Business Combination
Agreement, immediately after the completion of the re-designation of shares and immediately prior to the Merger Effective Time, The Generation
Essentials Group effected a share consolidation or subdivision such that:
●Each Class A Ordinary Share will be consolidated or divided into a number of Class A Ordinary
Shares equal to the Adjustment Factor;
●Each Class B Ordinary Share will be consolidated or divided into a number of Class B Ordinary
Shares equal to the Adjustment Factor; and
●Each Preferred Share will be consolidated or divided into a number of Preferred Shares equal to the Adjustment
Factor,
(such actions, collectively,
the “Recapitalization”).
At the Merger Effective Time
and as a result of the Merger:
●Each BSII Class B Ordinary Shares that was issued and outstanding immediately prior to the Merger
Effective Time was automatically cancelled in exchange for the right to receive one Class A Ordinary Share;
●Each BSII Class A Ordinary Share that was issued and outstanding immediately prior to the Merger
Effective Time (other than such BSII Class A Ordinary Shares that were treasury shares, validly redeemed shares or BSII Dissenting
Shares was cancelled in exchange for the right to receive one Class A Ordinary Share);
3
●Each BSII Class A Ordinary Share that was held as a treasury share was cancelled and ceased to exist;
●Each issued and outstanding BSII Class A Ordinary Share that was validly redeemed was cancelled in
exchange for the right to be paid a pro rata share of the aggregate amount payable with respect to the exercise of the redemption rights
of Black Spade II Shareholders;
●Each issued and outstanding BSII Class A Ordinary Share that was held by any person who had validly
exercised and not effectively withdrawn or lost their right to dissent from the Merger in accordance with Section 238 of the Cayman
Islands Companies Act was cancelled and carried no right other than the right to receive the payment of the fair value of such BSII Dissenting
Share determined in accordance with Section 238 of the Cayman Islands Companies Act; and
●Each issued and outstanding warrant of Black Spade II exercisable for shares of Black Spade II
was exchanged for a Warrant.
To provide additional consideration
to Black Spade II Public Shareholders, The Generation Essentials Group will make a cash payment equal to $1.25 multiplied by the
number of BSII Class A Ordinary Shares held by eligible Black Spade II Public Shareholders on the Closing Date immediately before
the Merger Effective Time (the “Non-Redemption Payment Amount”). In order to be eligible to receive the Non-Redemption Payment
Amount, you must: (a) have been a Black Spade II Public Shareholder on the Closing Date immediately before the Merger Effective
Time and as of the date falling 60 days after the Closing, (b) never have elected to exercise a redemption right in respect of BSII
Class A Ordinary Shares, and (c) have entered into, and adhered to the terms of, a non-redemption agreement in the form attached
hereto as Annex D to the registration statement on Form F-4 we initially filed with the SEC on April 11, 2025 which includes
Black Spade II’s proxy statement and our prospectus in relation to the Business Combination, by no later than May 28, 2025.
The Non-Redemption Payment Amount will not be paid on any BSII Class A Ordinary Shares that, at any point in time, were BSII Class B Ordinary
Shares. This additional cash payment will be made no earlier than 60 days and no later than 90 days after the Closing Date. The Non-Redemption
Payment Amount is a free option that is available to all eligible Black Spade II Public Shareholders. Black Spade II Public Shareholders
that sign a non-redemption agreement may at any time choose not to adhere to the terms of the agreement without any penalty or liability,
but such shareholder will no longer be eligible to receive the Non-Redemption Payment Amount.
On the Closing Date, The Generation
Essentials Group issued (i) 6,004,126 Class A Ordinary Shares to then holders of Class A ordinary shares of Black Spade II, including
3,825,000 Class A Ordinary Shares issued to the Sponsor Shareholders; 16,220,000 Warrants to then holders of BSII Public Warrants and
BSII Private Warrants; and 23,171,033 Class A Ordinary Shares, 19,285,911 Class B Ordinary Shares and 6,343,056 Preferred Shares to then
existing shareholders of The Generation Essentials Group.
On June 5, 2025, Class
A Ordinary Shares and Warrants commenced trading on the NYSE and NYSE American under the symbols “TGE” and “TGE WS”,
respectively.
Emerging Growth Company
We qualify as an “emerging
growth company” as defined in the JOBS Act, and we will remain an emerging growth company until the earliest of (a) the last
day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (b) the last day of our
fiscal year following the fifth anniversary of the first sale of our Ordinary Shares pursuant to an effective registration statement;
(c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or
(d) the date on which we are deemed to be a “large accelerated filer” under the United States Securities Exchange Act
of 1934, as amended, (the “Exchange Act”), which would occur if the market value of our common equity that are held by non-affiliates
exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter.
As an emerging growth company,
we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure
obligations regarding executive compensation in their periodic reports and proxy statements, and exemptions from the requirements of holding
a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the
prices of our securities may be more volatile.
4
The JOBS Act also provides
that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a
private company is otherwise required to comply with such new or revised accounting standards. Pursuant to the JOBS Act, we have elected
to take advantage of the benefits of this extended transition period for complying with new or revised accounting standards as required
when they are adopted for public companies. As a result, our operating results and financial statements may not be comparable to the operating
results and financial statements of other companies who have adopted the new or revised accounting standards.
Foreign Private Issuer
We are subject to the information
reporting requirements of the Securities Exchange Act of 1934, or “the Exchange Act,” that are applicable to “foreign
private issuers,” and under those requirements we file reports with the SEC. As a foreign private issuer, we are not subject to
the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, we are subject to reporting obligations
that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we are not
required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies,
or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. We also have
four months after the end of each fiscal year to file our annual reports with the SEC and are not required to file current reports
as frequently or promptly as U.S. domestic reporting companies. Furthermore, our officers, directors and principal shareholders are exempt
from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in
Section 16 of the Exchange Act. As a foreign private issuer, we are also not subject to the requirements of Regulation FD (Fair Disclosure)
promulgated under the Exchange Act. These exemptions and leniencies reduce the frequency and scope of information and protections available
to you in comparison to those applicable to shareholders of U.S. domestic reporting companies.
Controlled Company
As of the date of this prospectus,
AMTD Group Inc., our Controlling Shareholder, beneficially owns 18,470,375 Class A Ordinary Shares and 19,285,911 Class B Ordinary Shares.
These Ordinary Shares represent approximately 97.4% of the aggregate voting power of our total issued and outstanding share capital. As
a result, we qualify as a “controlled company” within the meaning of NYSE Listed Company Manual. By virtue of being a controlled
company under listing rules, we may elect not to comply with certain corporate governance requirements, including that:
●a majority of board of directors must be independent directors;
●the compensation and nominating committees composed solely of independent directors;
●the compensation of executive officers determined by a majority of the independent directors or a compensation
committee composed solely of independent directors; and
●director nominees selected or recommended to the board of directors for selection, either by a majority
of the independent directors, or a nominating committee composed solely of independent directors.
We rely on the exemption from
the requirement that a majority of our board of directors must be independent directors available to a “controlled company.”
As a result, our shareholders will not have the same protections afforded to shareholders of companies that are subject to all of corporate
governance requirements.
5
Our Corporate Information
The Generation Essentials
Group was incorporated as an exempted company in accordance with the laws and regulations of the Cayman Islands. The mailing address of
our principal executive office is 66 rue Jean-Jacques Rousseau, 75001 Paris, France, and its phone number is +33 (0) 1 7673 2800. Our
corporate website address is https://www.thegenerationessentials.com. The information contained in, or accessible through, our website
does not constitute a part of this prospectus. The SEC maintains an internet site that contains reports, proxy and information statements,
and other information regarding issuers, such as we, that file electronically, with the SEC at www.sec.gov. Our agent for service of process
in the United States is Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19711.
Summary Risk Factors
Investing in our securities
entails a high degree of risk as more fully described under “Risk Factors” in this prospectus. You should carefully consider
such risks before deciding to invest in our securities.
Risks Relating to
Our Businesses and Industries
●We face significant competition in all aspects of our business.
●We face numerous risks and challenges as we continue to operate and expand our businesses and undertake
new businesses across a broad spectrum of industries, which makes it difficult to effectively assess our future prospects.
●Our success depends on our ability to anticipate trends and respond to changing customer preferences for
fashion, arts and entertainment content and for lodging, which impact demand for our content, products and services and the profitability
of our businesses.
●Our brands and reputation are our key assets. Negative perceptions or publicity of us or our brands could
adversely affect our business, financial condition and results of operations.
●Our business and financial results may be adversely impacted by economic, market, geopolitical and public
health conditions or other events causing significant disruption.
●We operate and use a L’Officiel AMTD composite brand, and not the historic L’Officiel brand.
●Our business may suffer if the intellectual property we use in our business is not protected.
●The media industry is highly competitive, and we may be unable to compete successfully with our current
or future competitors.
●Our ability to grow the size and profitability of our audience base for our print publications and digital
media services depends on many factors, both within and beyond our control, and a failure to do so could adversely affect our results
of operations and business.
●Our advertising revenues are affected by numerous factors, including market dynamics, evolving digital
advertising trends and the evolution of our strategy.
●The entertainment industry is highly competitive.
●The success of our entertainment business segment depends on a limited number of film releases each year
and unpredictable factors in the motion picture industry.
●The production of motion picture is a capital-intensive process, and our capacity to generate cash or
obtain financing on favorable terms may be insufficient to meet our anticipated cash requirements.
6
●We are subject to the business, financial and operating risks inherent to the hospitality industry, any
of which could reduce our revenues and limit opportunities for growth.
●The hospitality market is highly competitive, and we may be unable to compete successfully.
●We own a limited number of hotels and significant adverse changes at one hotel could have a
material adverse effect on our financial performance.
●We make strategic investments using our own capital, and may not be able to realize any profits from these
investments for a considerable period of time, or may lose some or all of the principal amounts of these investments.
●Our results of operations and financial condition may be materially affected by fluctuations in the fair
value of our equity investments in our investee companies.
●Our investments are subject to liquidity, concentration, regulatory, credit and other risks.
Risks Relating to
Our Securities
●The Warrants are exercisable for Class A Ordinary Shares, which would increase the number of shares
eligible for future resale in the public market and result in dilution to our shareholders. The Warrants may never be in the money, and
they may expire worthless.
●We may redeem your unexpired Warrants prior to their exercise at a time that is disadvantageous to you,
thereby making your Warrants worthless.
●If securities or industry analysts do not publish research, publish inaccurate or unfavorable research
or cease publishing research about us, our share price and trading volume could decline significantly.
●Future resales of Ordinary Shares issued to our shareholders and other significant shareholders may cause
the market price of the Class A Ordinary Shares to drop significantly, even if our business is doing well.
●A market for the Class A Ordinary Shares may not develop, which would adversely affect the liquidity
and price of the Class A Ordinary Shares. The price of our securities may be volatile, and the value of our securities may decline.
●There can be no assurance that we will not be a passive foreign investment company for any taxable year,
which could subject U.S. Holders to significant adverse U.S. federal income tax consequences.
●We may have conflicts of interest with our Controlling Shareholder and its affiliates and, because of
our Controlling Shareholder’s controlling ownership interest in our company, we may not be able to resolve such conflicts on terms
favorable to us.
●Our dual-class voting structure will limit your ability to influence corporate matters and could discourage
others from pursuing any change of control transactions that holders of Class A Ordinary Shares may consider beneficial.
For additional detail on these
and other risks, see “Risk Factors” starting on page 10 of this prospectus.
7
THE OFFERING
The summary below describes
the principal terms of the offering. The “Description of Share Capital” section of this prospectus contains a more detailed
description of the Class A Ordinary Shares and Warrants.
Securities being registered
(i) 57,401,944 Class A Ordinary Shares; (ii) 16,220,000 Class A Ordinary Shares issuable upon the exercise of the Warrants; and (iii) 11,120,000 Warrants.
Issuance of Ordinary Shares upon exercise of Warrants
Shares outstanding prior to exercise of Warrants
29,175,159 Class A Ordinary Shares, 19,285,911 Class B Ordinary Shares and 6,343,056 Preferred Shares.
Shares issuable upon exercise of all Warrants
16,220,000 Class A Ordinary Shares.
Use of proceeds
We will receive up to an aggregate of approximately US$186,530,000
from the exercise of all Warrants, assuming the exercise in full of all of the Warrants for cash. The exercise price of the Warrants is
US$11.50 per share, subject to adjustment as described herein, and the closing price of the Class A Ordinary Shares on NYSE on June 23,
2025 was US$7.79 per share. The likelihood that warrant holders will exercise the Warrants and any cash proceeds that we would receive
are dependent upon the market price of the Class A Ordinary Shares, among other things. If the market price for the Class A Ordinary Shares
is less than US$11.50 per share, we believe warrant holders will be unlikely to exercise their Warrants. There is no assurance that the
Warrants will be “in the money” prior to their expiration or that the warrant holders will exercise their Warrants. Holders
of the Sponsor Warrants have the option to exercise the Sponsor Warrants on a cashless basis in accordance with the Warrant Agreement.
To the extent that any Warrants are exercised on a cashless basis, the amount of cash we would receive from the exercise of the Warrants
will decrease. See the section titled “Use of Proceeds.”
Resale of Ordinary Shares and Warrants
Ordinary Shares offered by the Selling Securityholders
Up to 57,401,944 Class A Ordinary Shares,
which includes:
● 3,235,714
Class A Ordinary Shares beneficially owned by South Horizon Oceans (Group) Co. Inc. and 1,464,944 Class A Ordinary Shares beneficially
owned by Radisson Everton Venture Fund, which were originally acquired prior to the Closing Date;
● 18,425,068
Class A Ordinary Shares beneficially owned by AMTD IDEA Group, 45,307 Class A Ordinary Shares beneficially owned by AMTD Group Inc. and
19,285,911 Class A Ordinary Shares issuable upon the conversion of 19,285,911 Class B Ordinary Shares beneficially owned by AMTD Digital
Inc., which were originally acquired prior to the Closing Date;
● 3,825,000
Sponsor Shares issued to the Sponsor Shareholders on the Closing Date in exchange for the Class B ordinary shares of Black Spade
II; and
● 11,120,000
Class A Ordinary Shares issuable upon the exercise of the Sponsor Warrants which warrants subsequently distributed to certain members
of the Sponsor.
8
Warrants offered by the Selling Securityholders
Up to 11,120,000 Sponsor Warrants.
Offering price
The Registered Securities offered by this prospectus may be offered, sold or distributed from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices. See the section titled “Plan of Distribution.”
Use of proceeds
We will not receive any proceeds from the sale of the securities to be offered by the Selling Securityholders.
Dividend Policy
The Generation Essentials Group and our subsidiaries have not declared or paid dividends or made any distributions as of the date of this prospectus. Except for the Non-Redemption Payment Amount, we do not intend to declare dividends or make distributions in the near future. Any determination to pay dividends on our ordinary shares would be at the discretion of our board of directors, subject to applicable laws, and would depend on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our board of directors may deem relevant.
Market for the Class A Ordinary Shares and Warrants
The Class A Ordinary Shares are listed on the NYSE under the trading symbol “TGE” and the Warrants are listed on the NYSE American under the trading symbol “TGE WS.”
Risk factors
Prospective investors should carefully consider the “Risk Factors” for a discussion of certain factors that should be considered before buying the securities offered hereby.
9
RISK
FACTORS
You should carefully consider
the following risk factors, together with all of the other information included in this prospectus, before making an investment decision.
The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events
or circumstances, may have a material adverse effect on our business, financial condition, results of operations, prospects and trading
price. The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by us, which later may prove
to be incorrect or incomplete. We may face additional risks and uncertainties that are not presently known to us, or that are currently
deemed immaterial, but which may also ultimately have an adverse effect on us. The trading price and value of our Class A Ordinary
Shares and Warrants could decline due to any of these risks, and you may lose all or part of your investment. This prospectus and any
prospectus supplement or related free writing prospectus also contain forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this prospectus and any prospectus supplement or related free writing
prospectus.
Risks Relating to Our Businesses
and Industries in General
We face significant
competition in all aspects of our business.
We compete for market share
in luxury and fashion, arts, motion picture production and other media and entertainment content. The proliferation of choices available
to customers for entertainment and information results in audience fragmentation and negatively affects the overall customer demand for
our content and products. Our competitors include conventional magazine publishers, digital publishers, social media platforms, search
platforms, portals, digital marketing services and other movie producers, among others. Competition among these companies is robust, and
new competitors can quickly emerge. We also face intense competition in the hospitality sector. Our principal competitors in this sector
are other operators of luxury, full-service and focused-service hotels, including other major hospitality chains with well-established
and recognized brands. We also compete against smaller hotel chains, independent and local hotel owners and operators, home and apartment
sharing services and timeshare operators.
Some of our current and potential
competitors provide better content, products or services and or more pre-competitive alternatives to our content, products or services,
or have greater resources than we do, which may allow them to compete more effectively than us. In particular, companies with compelling
media and entertainment resources may provide free content or control how content is discovered, displayed and monetized in some of the
primary environments in which we develop relationships with our customers, and therefore can affect our ability to compete effectively.
In the hospitality sector, our competitors may have greater commercial, financial and marketing resources and more efficient technology
platforms, which could allow them to improve their properties and expand and improve their marketing efforts in ways that could affect
our ability to compete for guests effectively, or they could offer a type of lodging product that customers find attractive but that we
do not offer.
If we cannot compete successfully,
our business, liquidity, financial condition, and results of operations could be materially adversely affected.
We face numerous
risks and challenges as we continue to operate and expand our businesses and undertake new businesses across a broad spectrum of industries,
which makes it difficult to effectively assess our future prospects.
We expanded into fashion,
arts and luxury media advertising and marketing services after the recent acquisition of L’Officiel and The Art Newspaper. Our hotel
operations and hospitality and VIP services were also consolidated into us recently. You should consider our business and prospects in
light of the risks and challenges we encounter or may encounter given the various industries in which we operate and our relatively short
operating history in some of these industries. As a new owner and operator of these businesses, we face risks associated with our limited
operating history in managing these operations. The successful integration and operation of these businesses requires significant management
attention, operational expertise and financial resources. Any failure to effectively manage the transition, retain key personnel, maintain
business relationships or achieve anticipated synergies could adversely affect our financial condition, operational performance and growth
prospects. Additionally, we may encounter unforeseen challenges in aligning the acquired businesses within our group operations, corporate
culture and strategic objectives. These risks are heightened by the complexity and diversities of the industries in which the acquired
businesses operate and their respective competitive landscape. Our business initiatives and expansion plans across these business lines
may put us into direct or indirect contact with individuals and entities that are not within our traditional client and counterparty base,
and may expose us to new asset classes, new markets and new challenges. If we fail to address any or all of these risks and challenges,
our business may be materially and adversely affected.
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As our business develops and
as we respond to competition, we may continue to assume new businesses, introduce new product and service offerings, make adjustments
to our existing product and service offerings, or make adjustments to our business operations in general. Any significant change to our
business operation or model that does not achieve expected results could materially and adversely affect our financial condition and results
of operations. It is therefore difficult to effectively assess our future prospects.
Our success depends
on our ability to anticipate trends and respond to changing customer preferences for fashion, arts and entertainment content and for lodging,
which impact demand for our content, products and services and the profitability of our businesses.
We create media and entertainment
content, products and services. We also provide hospitality and VIP services. Our success depends substantially on customer tastes and
preferences that rapidly change in often unpredictable ways.
Our continued success in our
media and entertainment sectors depends in part on our ability to originate and define trends and consistently create compelling content
and offer attractive products and services in a timely manner. Our content may be distributed, among other ways, through magazines, theaters,
internet or mobile technology. Such distribution must meet or anticipate the changing preferences of the broad customer market and respond
to competition from an expanding array of choices facilitated by technological developments in the delivery of content. The success of
our printed and digital media content, as well as our theatrical releases, depends on demand for traditional print publications and fashion,
arts and entertainment experiences in general. Moreover, we often deploy substantial resources in content production and acquisition,
acquisition of movie rights or customer facing platforms before we know the extent to which these products and services will earn customer
acceptance, and these products and services may be introduced into a significantly different market or economic or social climate from
the one we anticipated at the time of the investment decisions. Generally, our revenues and profitability may be adversely impacted when
our fashion, arts and entertainment offerings and products, as well as our methods to make our offerings and products available to customers,
do not achieve sufficient customer acceptance. Customer tastes and preferences impact, among other items, revenue from advertising sales,
subscription fees, theatrical motion picture receipts, the license of rights to other distributors, sales of merchandises, sales of licensed
customer products or sales of our other customer products and services. Although we attempt to stay abreast of emerging customer trends
affecting our content, products and services, any failure to identify and respond to such trends could have significant adverse effects
on our business, financial condition and results of operations.
The tastes, preferences and
demands of our hotel guests also evolve with time. New lodging supply in individual markets, including the introduction of home and apartment
sharing services and timeshare operators, could hamper our ability to maintain or increase room rates or occupancy in those markets. Our
ability to remain competitive and attract and retain business, group, leisure travelers and other guests depends on our success in distinguishing
and driving preference for our hospitality products and services. If we fail to catch up with any change in customer preference or to
offer hospitality products and services that customers find attractive, our business, liquidity, financial condition, and results
of operations could be materially adversely affected.
In addition, many of our businesses
depend on acceptance of our content, products and services by customers from an increasing number of countries and regions worldwide.
The success of our businesses therefore depends on our ability to successfully predict and adapt to changing customer tastes and preferences
in these various countries and regions.
Our brands and reputation
are our key assets. Negative perceptions or publicity of us or our brands could adversely affect our business, financial condition and
results of operations.
Our brands and reputation
are our key assets and play an important role in earning and maintaining the trust and confidence of our existing and prospective customers.
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In respect of our media business,
we believe our brands are powerful and trusted with the reputation for high-quality editorial and content independence. Our brands, including,
among others, L’Officiel and The Art Newspaper, might be damaged by incidents that erode customer trust such as negative publicity,
a perception that our content is not timely or unreliable, or a decline in the perceived value of editorial independent or general trust
in the media, which may be in part as a result of changing political and cultural environments worldwide or active campaigns by commercial
participants. We may introduce new products or services that are not well received and that may negatively affect our brands. Our brands
and reputation could also be adversely impacted by negative claims or publicity regarding us or our operations, personnel, products, employees,
practices, including social, data privacy and environmental practices, or business affiliates, including advertisers, as well as our potential
inability to adequately respond to such negative claims or publicity, even if such claims are untrue. Furthermore, our brands and reputation
could be damaged if we fail to provide adequate customer service, or by failures of third-party vendors we rely on in many contexts. We
invest in defining and enhancing our brands. These investments are considerable and may not be successful. We license L’Officiel
and The Art Newspaper trademarks and domain names and other intellectual properties we use in our business from AMTD Group Inc. If any
of the foregoing were to be experienced by AMTD Group Inc. or any of its affiliates, the L’Officiel and The Art Newspaper brands
could also be adversely affected. To the extent our brands and reputation are damaged, our ability to attract and retain readers, audiences,
advertisers and talented employees could be adversely affected, which could in turn have an adverse impact on our business, revenues and
operating results. The prestige and reputation of our publications are critical to our success in attracting premium advertisers. If we
fail to uphold the standard of content and design that our audience and advertisers expect, or if our brand perception diminishes for
any reason, we may lose the appeal that makes our platform attractive for luxury and high-end advertising and thereby experience a decline
in advertising revenue, reduced market share and long-term damage to our brand equity.
For our hospitality business,
many factors can affect the reputation and value of our company or one or more of our properties or brands, including our ability to protect
and use our brands and trademarks; our properties’ adherence to service and other brand standards; our approach to, or incidents
involving, matters related to food quality and safety, guest and associate safety, health and cleanliness, sustainability and climate
impact, supply chain management, inclusion and belonging, human rights, and support for local communities; and our compliance with applicable
laws.
In addition, as a holding
company with multiple business lines, adverse events or reputational damage suffered by one of our business lines could harm the overall
perception of our company and ripple across all our other business lines. Brands and reputation are our critical assets across all our
business lines and the success of each of our business lines is interdependent to that extent. This interdependence increases the risk
that the reputational damage to one segment could be carried through and amplify across the broader operation of our company.
Reputational value is also
based on perceptions, and broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions
of us and our brands, and it may be difficult to control or effectively manage negative publicity, regardless of whether it is accurate.
While reputations may take decades to build, negative incidents can quickly erode trust and confidence, particularly if they result in
adverse mainstream and social media publicity, governmental investigations, proceedings or penalties, or litigation. Negative incidents
could lead to tangible adverse effects on our business, including lost sales, boycotts, reduced customers, loss of business opportunities,
adverse government attention, or associate retention and recruiting difficulties. Any material decline in the reputation or perceived
quality of our brands or corporate image could affect our market share, reputation, business, financial condition, or results of operations.
Our business and
financial results may be adversely impacted by economic, market, geopolitical and public health conditions or other events causing significant
disruption.
We and the companies with
which we do business are subject to risks and uncertainties caused by factors beyond our control, including economic, geopolitical and
public health conditions. These include economic weakness, instability, uncertainty and volatility, including the potential for a recession;
a competitive labor market and evolving workforce expectations; inflation; supply chain disruptions; rising interest rates; political
and sociopolitical uncertainties and conflicts; and public health crises. These factors may result in declines or volatility in our results.
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Advertising spending is sensitive
to economic, geopolitical and public health conditions, and our advertising revenues could be adversely affected as advertisers respond
to such conditions by reducing their budgets or shifting spending patterns or priorities. Economic, geopolitical and public health conditions
may also lead to fluctuations in the size and engagement of our audience, which can impact our ability to attract, engage and retain audience,
and thereby affecting our business, financial condition and results of operations. Our costs may also be adversely affected by economic
and geopolitical conditions. For example, if inflation increases for an extended period, our employee-related costs are likely to increase.
Our printing and distribution costs may be impacted by inflation and higher costs, including those associated with raw materials, delivery
costs and utilities.
Similarly, consumer demand
for our hospitality services is closely linked to the performance of the general economy and is sensitive to business and personal discretionary
spending levels. Decreased global or regional demand for hospitality products and services can be especially pronounced during periods
of economic contraction or low levels of economic growth, and the recovery period in our industry may lag overall economic improvement.
In addition, many of the expenses associated with our hospitality services, including personnel costs, interest, rent, property taxes,
insurance and utilities, are relatively fixed. During a period of overall economic weakness, if we are unable to meaningfully decrease
these costs as demand for our services decreases, our business operations, financial performance, results and prospects for future growth
may be adversely affected.
To the extent economic conditions
lead customers to reduce spending on discretionary activities, our customers may increasingly shift to lower-priced options and our ability
to retain current and obtain new customers or implement price increases could be hindered, which would adversely impact our revenue.
Any events causing significant
disruption or distraction to the public or to our workforce, or impacting overall macroeconomic conditions, such as supply chain disruptions,
political instability or crises, economic instability, war, public health crises, social unrest, terrorist attacks, natural disasters
and other adverse weather and climate conditions, or other unexpected events, could also disrupt our operations or the operations of one
or more of the third parties on which we rely. Further, if a significant portion of our workforce or the workforces of the third parties
with which we do business is unable to work due to power outages, connectivity issues, illness or other causes that impact individuals’
ability to work, our operations and financial performance may be negatively impacted.
Because we have a worldwide
business presence spanning Europe, Asia, and the U.S., we are subject to economic, market, geopolitical and other macro risks and uncertainties
in multiple regions. If any of the risks described above materializes in any of the geographies in which we operate, our business and
financial condition could be adversely affected. In addition, these risks could vary significantly across different regions, presenting
greater challenge for or requiring more significant resources from us to effectively address them.
The future impact that economic,
geopolitical and public health conditions will have on our business, operations and financial results is uncertain and will depend on
numerous evolving factors and developments that we are not able to reliably predict or mitigate. It is also possible that these conditions
may accelerate or worsen the other risks discussed in this section.
If we are unable
to successfully develop and execute our strategic growth initiatives, or if they do not adequately address the challenges or opportunities
we face, our business, financial condition and prospects may be adversely affected.
Our success is dependent in
part on our ability to identify, develop and execute appropriate strategic growth initiatives that will enable us to achieve sustainable
growth in the long-term. The implementation of our strategic initiatives is subject to both the risks affecting our business generally
and the inherent risks associated with implementing new strategies. These strategic initiatives may not be successful in generating revenues
or improving operating profit and, if they are, they may take longer than anticipated. As a result and depending on evolving conditions
and opportunities, we may need to adjust our strategic initiatives and such changes could be substantial, including modifying or terminating
one or more of such initiatives. Termination of such initiatives may require us to write down or write off the value of our investments
in them. Transition and changes in our strategic initiatives may also create uncertainty in our employees, customers and partners that
could adversely affect our business and revenues. In addition, we may incur higher than expected or unanticipated costs in implementing
our strategic initiatives, attempting to attract revenue opportunities or changing our strategies. There is no assurance that the implementation
of any strategic growth initiative will be successful, and we may not realize anticipated benefits at levels we project or at all, which
would adversely affect our business, financial condition and prospects.
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Acquisitions, investments
and other transactions could adversely affect our costs, revenues, profitability and financial position.
In order to position our business
to take advantage of growth opportunities, we intend to continue to engage in discussions, evaluate opportunities and enter into agreements
for possible additional acquisitions, investments and other transactions. We may also consider the acquisition of, or investment in, specific
properties, businesses or technologies that fall outside our traditional lines of business and diversify our portfolio, including those
that may operate in new and developing industries, if we deem such properties sufficiently attractive.
Acquisitions may involve significant
risks and uncertainties, including difficulties in integrating acquired businesses, including cultural challenges associated with transitioning
employees from the acquired company into our organization; failure to correctly anticipate liabilities, deficiencies or other claims or
costs; diversion of management attention from other business concerns or resources; use of resources that are needed in other parts of
our business; possible dilution of our brands or harm to our reputation; the potential loss of key employees; risks associated with strategic
relationships; risks associated with integrating operations and systems, such as financial reporting, internal control, compliance and
information technology systems, including those related to cybersecurity and data privacy, in an efficient and effective manner; legal
proceedings initiated as a result of or in connection with an acquisition or investment; omission or failure of our due diligence processes
to identify significant issues with the acquired assets or company; and other unanticipated problems and liabilities. Our acquisitions
have and could in the future also involve acquisitions of companies in event-driven special situations, such as bankruptcies, corporate
and financial restructurings and recapitalizations. Acquisitions of this type involve substantial financial and business risks. For example,
we may be forced to relinquish or otherwise lose intellectual property or other assets, write down or write off assets, suspend, terminate
or restructure our operations or incur significant losses subsequent to the acquisition and may be faced with claims and disputes. Competition
for certain types of acquisitions is significant. We may not be able to find suitable acquisition candidates, and we may not be able to
complete acquisitions or other strategic transactions on favorable terms, or at all. Even if successfully negotiated, closed and integrated,
certain acquisitions or investments may prove not to sufficiently advance our business strategy or provide the anticipated benefits, may
cause us to incur unanticipated costs or liabilities, may result in write-offs of impaired assets, and may fall short of expected return
on investment targets, which could adversely affect our business, results of operations and financial condition.
Our history can be traced
back to AMTD IDEA’s acquisition of L’Officiel in April 2022 and The Art Newspaper in October 2023. These acquisitions
are subject to all the risks described above and their success depends, in part, on our ability to successfully manage these risks, and
to apply our editorial, subscription, advertising, marketing and operational expertise and to help grow L’Officiel and The Art Newspaper
in an efficient and profitable manner. The success of these acquisitions also depends, in part, on factors outside of our control, such
as actions taken or may be taken by other parties interested or involved in these acquisitions or the acquired businesses, the development
of other circumstances relating to these acquisitions, and the markets in which the acquired companies operate in. We may not be able
to achieve our intended strategy or manage L’Officiel and The Art Newspaper successfully, or doing so may be more costly than we
anticipate, and we may experience difficulty in realizing the expected benefits of the acquisitions.
In addition, we have made
investments, minority or otherwise, in companies and we may make similar investments in the future. Such investments subject us to the
operating and financial risks of these businesses and to the risk that, as far as minority investment is concerned, we do not have sole
control over the operations of these businesses. Our investments may be illiquid, and the absence of a market may inhibit our ability
to dispose of them. In addition, if the book value of an investment were to exceed its fair value, we would be required to recognize an
impairment charge related to the investment.
We may be unable
to obtain any additional capital required in a timely manner or on acceptable terms, or at all.
To grow our business and remain
competitive, we may require additional capital from time to time for our daily operations. Our ability to obtain additional capital is
subject to a variety of uncertainties, including:
●our market position and competitiveness in the industries in which we operate;
●our future profitability, overall financial condition, results of operations and cash flows;
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●general market conditions for capital-raising activities by our competitors; and
●economic, political and other conditions internationally.
We may be unable to obtain
additional capital in a timely manner or on acceptable terms, or at all. In addition, our future capital or other business needs could
require us to sell additional equity or debt securities or to obtain a credit facility. The sale of additional equity or equity-linked
securities could dilute our shareholders’ shareholdings. Any incurrence of indebtedness will also lead to increased debt service
obligations, and could result in operating and financing covenants that may restrict our operations or our ability to pay dividends to
our shareholders.
Specifically, we must periodically
spend money to fund new hotel investments, as well as to refurbish and improve existing hotels. The availability of funds for new investments,
and improvement of existing hotels depends in large measure on our ability to access the capital markets. Obtaining financing on attractive
terms has been, and may in the future be further, constrained by the capital markets for hotel and real estate investments.
We face risks associated
with debt obligations that are scheduled to mature in the near term
Some of our existing debt
obligations are scheduled to mature within the next 12 months. iclub AMTD Sheung Wan Hotel is mortgaged to The Bank of East Asia,
Limited in relation to loan facilities in the aggregate principal amount of HK$396,100,000 and Dao by Dorsett AMTD Singapore is mortgaged
to RHB Bank Berhad in relation to loan facilities in the aggregate principal amount of SGD217,000,000. Our ability to refinance or repay
these obligations will depend on various factors, including our financial condition, cash flow generation, creditworthiness and prevailing
market conditions at the time of refinancing. If we are unable to refinance our maturing debt on favorable terms, or at all, we may face
liquidity constraints, increased financing costs or default risks, which could materially and adversely affect our financial position
and operations.
The availability and terms
of refinancing are subject to macroeconomic conditions, interest rate fluctuations and the overall health of credit markets. We could
be challenged with more stringent borrowing terms, higher interest rates or additional collateral requirements, or an unwillingness to
extend credit in general. Additionally, our ability to refinance our debt may be influenced by our credit ratings, financial performance
and leverage ratios. Any deterioration in our financial metrics, operational performance or market perception could negatively impact
our access to capital and increase the cost of refinancing. Furthermore, covenants associated with existing or new debt agreements may
restrict our ability to pursue certain refinancing options or require compliance with specific financial thresholds, which could further
complicate the refinancing process.
Failure to refinance maturing
debt obligations could force us to utilize available cash reserves or other liquidity sources to repay our debts, which could reduce our
ability to fund working capital, capital expenditures or strategic initiatives. The inability to refinance could also lead to default,
acceleration of debt obligations or insolvency proceedings, any of which could have a material adverse effect on our business, reputation
and financial condition.
We operate and use
a L’Officiel AMTD composite brand, and not the historic L’Officiel brand.
The historic L’Officiel
brand originated from a magazine published in Paris since 1921 (the “Old Brand”). While we operate a new L’Officiel
AMTD brand (the “New Brand”) which in our opinion (upon advice of counsel) is distinct and distinguishable from all others
(including the Old Brand), there have been and may be usage of or matters relating to the Old Brand which we are unaware of or do not
control, such as the publication of magazines using the Old Brand. This has and may result in certain claims or assertions being made
in respect of the Old Brand or New Brand that we may need to defend ourselves against, and may require us to take action, including legal
action, to protect the New Brand (including from claims the New Brand is not distinguishable from the Old Brand). While others have separate
rights to the Old Brand, taking into account advice from counsel, we believe that these do not impede on our key operations, notably where
we have secured rights in the New Brand by way of obtaining comprehensive trademark registrations around the world.
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Our business may
suffer if the intellectual property we use in our business is not protected.
Our business depends on our
intellectual property, including the valuable trademarks and copyrighted content we own or is licensed to us. We believe the protection
and monetization of our trademarks and copyrighted content, as well as other intellectual property, is critical to our continued success
and our competitive position.
Trademark laws and registration
requirements vary significantly across countries, and we may face challenges in securing trademark protection in all relevant markets.
This could result in the inability to enforce our rights against third-party infringers, leading to brand dilution, consumer confusion,
or loss of market share. In some jurisdictions, trademark registration may be denied due to pre-existing claims, conflicting marks or
local legal restrictions. Additionally, the process of registering trademarks can be time-consuming, costly and subject to administrative
or legal hurdles, particularly in regions with complex or underdeveloped intellectual property systems. The inability to secure trademark
rights in key markets increases the risk of unauthorized use of our brands by competitors, counterfeiters and other third parties. This
could harm our reputation, erode customer trust, diminish the value of our brands, and limit our ability to expand our operations or pursue
strategic opportunities.
Our ability to protect our
intellectual property is also subject to the inherent limitation in protections available under intellectual property laws in the jurisdictions
where we operate our business. Unauthorized parties may unlawfully misappropriate our brands, content, technology and other intellectual
property and the measures we have taken to protect and enforce our rights may not be sufficient to fully address or prevent all third-party
infringement.
Advancements in technology,
including advancements in generative AI technology, have made unauthorized copying and wide dissemination of unlicensed content easier,
including by anonymous foreign actors. At the same time, detection of unauthorized use of our intellectual property and enforcement of
our intellectual property rights have become more challenging, in part due to the increasing volume and sophistication of attempts at
unauthorized use of our intellectual property, including from generative AI developers or users. As our business and the presence and
impact of bad actors become more global in scope, we may not be able to protect our proprietary rights in a cost-effective manner in other
jurisdictions. In addition, intellectual property protection may not be available in every country in which our products and services
are distributed or made available through the internet.
While it is our policy to
protect and defend and have protected and defended vigorously our rights to our intellectual property, we cannot predict whether our steps
taken to protect and enforce, or to require our licensors to protect and enforce, our intellectual property rights will be adequate to
prevent infringement, dilution, misappropriation or other violation of these rights. If we are unable to protect and enforce our intellectual
property rights, we may not succeed in realizing the full value of our assets, our business and profitability may suffer, and our brands
may be tarnished by misuse of our intellectual property.
We and the AMTD Group Inc.
(see “Business — Intellectual Property — Intellectual Property License Agreement with AMTD Group
Inc.” regarding how we license domain names we use in our business from AMTD Group Inc.) are the registrants for numerous domain
names for websites that we use in our business. The allocation and registration of domain names are generally overseen by not-for-profit
organizations (including but not limited to the Internet Corporation for Assigned Numbers and Names, the Internet Assigned Numbers Authority
and regional internet registries such as the Réseaux IP Européens Network Coordination Centre and Asia Pacific Network Information
Centre), and these non-for-profit organizations may continue to establish additional top-level domains, appoint additional domain name
registrars or modify the requirements for holding domain names. We may not be able to, or it may not be cost effective to, acquire or
maintain all domain names that utilize our business brands in all of the countries in which we currently conduct or intend to conduct
business. Further, we may be unable to prevent competitors or other third parties from acquiring or using domain names that are similar
to, infringe upon, or diminish the value of our domain names. We note that if a competitor or third party acquires or uses a domain name
that is similar to or diminishes the value of our domain names, if such third party domain name incorporates any of the trademarks that
we have registered in the relevant jurisdiction then we may be able to bring a claim of trademark infringement (see risks related to enforcement
of intellectual property rights above). If we lose the ability to use a domain name or have to contend with the existence of confusingly
similar domain names held by third parties, we could incur additional expenses to market our brand within that country. This could substantially
harm our business, results of operations, financial condition and prospects.
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In addition, we license L’Officiel
and The Art Newspaper trademarks and domain names and other intellectual properties we use in our business from AMTD Group Inc. See “Business —
Intellectual Property — Intellectual Property License Agreement with AMTD Group Inc.” The license agreement has
an initial term of 20 years and will automatically renew for terms of five years each unless either us or AMTD Group Inc. notifies
the other party no later than six months prior to the expiration of the then-current term. We may not be able to and AMTD Group Inc.
may refuse to renew this license agreement, due to change in our relationship or otherwise. The license agreement is also terminable by
either part if there is a material breach on the part of the other party that is not cured within the prescribed period. The termination
or lack of renewal of this license agreement, or if it is renewed on less favorable terms, could have a material adverse effect on our
business, financial condition and results of operations. Our success is also partially dependent on the reputation of AMTD Group Inc.
and their intellectual properties, and the ability of AMTD Group Inc. to protect and maintain the intellectual property rights that we
use in connection with our business, all of which may be harmed by factors outside our control, including unfavorable publicity or negative
news regarding us, AMTD Group Inc. and the respective directors, officers and employee and business partners, that could adversely affect
our reputation and our results of operations.
We may be subject
to claims of intellectual property infringement that could adversely affect our business.
We may receive claims from
third parties alleging violations of their intellectual property rights. Specifically, third parties may hold intellectual property rights,
such as copyrights, trademarks, or other proprietary claims in the content which we use in our publication and other businesses, such
as text, images, audio, video, and other media. Content, and particularly historical content, often presents unique challenges in determining
ownership or rights holders due to factors such as incomplete records, the passage of time or the complexity of inheritance or transfer
of rights. Additionally, the digitization and republication of historical materials may inadvertently expose us to infringement risks
if the original rights holders or their successors have not been properly identified or consulted. Failure to identify and secure the
necessary permissions or licenses for the use of such content could result in claims of infringement, litigation, or financial liabilities.
As we publish more content in a variety of media both on our own platforms and third-party platforms such as social media, the likelihood
of receiving claims of infringement may rise. Defending against intellectual property infringement claims can be time consuming, expensive
to litigate or settle, and a diversion of management and newsroom attention. In addition, litigation regarding intellectual property rights
is inherently uncertain due to the complex issues involved, and we may not be successful in defending ourselves in such matters.
If we are unsuccessful in
defending against third-party intellectual property infringement claims, these claims may require us to enter into royalty or licensing
agreements on unfavorable terms, alter how we present content to our audience, alter certain of our operations or otherwise incur substantial
monetary liability. The occurrence of any of these events as a result of these claims could result in substantially increased costs or
otherwise adversely affect our business. For claims against us, insurance may be insufficient or unavailable, and for claims related to
actions of third parties, either indemnification or remedies against those parties may be insufficient or unavailable. Intellectual property
claims may also harm our brands and reputation, even if they are vexatious or do not result in liability.
Attracting and maintaining
a talented and diverse workforce, which is vital to our success, is challenging and costly. Failure to do so would have a negative impact
on our competitive position, reputation, business, financial condition and results of operations.
Our ability to attract, develop,
retain and maximize the contributions of talent from diverse backgrounds, and to create the conditions for our people to do their best
work, is vital to the continued success of our business and central to our long-term strategy. Our employees and the individuals we seek
to hire, particularly, in respect of our media and entertainment business, our executive officers, editorial staff, creative directors
and other professionals, are highly sought after by our competitors and other companies, some of which have greater resources than we
have and may offer compensation and benefits packages that are perceived to be better than ours. As a result, we may incur significant
costs to attract new employees and retain our existing employees and we may lose talent through attrition or be unable to hire new employees
quickly enough to meet our needs. Our continued ability to attract and retain highly skilled talent from diverse backgrounds for all areas
of our organization depends on many factors, including the compensation and benefits we provide; career development opportunities that
we provide; our reputation; workplace culture; and progress with respect to diversity, equity and inclusion efforts. Our employee-related
costs may increase, including as a result of a competitive labor market, evolving workforce expectations and inflation. We must also continue
to adapt to ever-changing workplace and workforce dynamics and other changes in the business and cultural landscape, including, for example,
as they relate to in-office, hybrid and remote work. Additionally, we are subject to complex, technical and rapidly evolving laws and
regulations related to labor, employment and benefits, and any non-compliance, or alleged non-compliance, could cause us reputational
harm and adversely impact our ability to attract and retain a talented and diverse workforce.
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Our success is also heavily
reliant on the continued service and performance of our key management personnel, including our founder, who play a critical role in shaping
our strategic direction, operational execution and overall growth.
If we were unable to attract
and retain a talented and diverse workforce, or if we were to lose the service or commitment of our key management or our founder, it
would disrupt our operations; would impact our competitive position and reputation; and could adversely affect our business, financial
condition or results of operations. Effective succession planning is also important to our long-term success, and a failure to effectively
ensure train and integrate new employees could hinder our strategic planning and execution.
We make strategic
investments using our own capital, and may not be able to realize any profits from these investments for a considerable period of time,
or may lose some or all of the principal amounts of these investments.
We derive a meaningful portion
of our revenue from strategic investment business. For the years ended December 31, 2022, 2023 and 2024, dividend and gain from
disposed financial assets at fair value through profit or loss and settled derivative financial assets accounted for 23.6%, 142.1% and
33.0%, and net fair value changes on financial assets at fair value through profit or loss accounted for 41.6%, (88.8)% and 34.2%, of
our total revenue, respectively. Our strategic investment portfolio primarily consists of investments in equity securities of public and
private companies. Making a sound investment decision requires us to carefully identify and select a target company based on its business,
financial condition, operations, and the industry in which it operates. In general, this process involves analytical assessment and estimation
of the target company’s profitability and sustainability. We may make unsound investment decisions due to fraudulent and concealed,
inaccurate or misleading statements from a target company in the course of our due diligence, which could lead us to mistakenly estimate
the value of the target company and affect our ability to derive profit from such investments. In addition, our understanding of and judgment
on the target company’s business and prospects, and the industry in which the target company operates may deviate and result in
inaccurate investment decisions.
Our investments are concentrated
in relatively few industries or sectors and our investment portfolio may be concentrated in certain geographic regions, individual investments,
or types of securities that may or may not be listed. Any significant decline in the value of our investment portfolio may therefore adversely
impact our business, results of operations, and financial condition.
In addition, we have limited
control over our investee companies. We do not have the necessary power to mandate or block material corporate actions. If these investee
companies fail to carry out business in a compliant manner, incur overly excessive amount of debt or go bankrupt, or the business operations
decline, the fair value of our investment in these companies may deteriorate or, in extreme cases, decrease to zero. We are subject to
the risk that the majority shareholders or the management of these investee companies may act in a manner that does not serve the investee
companies’ interests. The general operational risks, such as inadequate or failing internal control of these investee companies,
the compliance risks, such as any lack of requisite approvals for investee companies’ businesses, and legal risks, such as violation
of laws and regulations or fraudulent or otherwise improper activities, may also expose our investments to risks. Furthermore, these investee
companies may fail to abide by their agreements with us, for which we may have limited or no recourse. These investee companies may not
declare dividend, or even if they do, we may not be able to secure liquidity conveniently until we receive such dividend. If any of the
foregoing were to occur, our business, reputation, financial condition and results of operations could be materially and adversely affected.
In recent years, there
has been increasing competition for private equity investment opportunities, which may limit the availability of investment opportunities
or drive up the price of available investment opportunities, and, as a result, our financial condition and results of operations may be
materially and adversely affected.
18
Our results of operations
and financial condition may be materially affected by fluctuations in the fair value of our equity investments in our investee companies.
We have made significant equity
investments in public and private companies and recognize dividend and gain related to disposed investments and net fair value changes
on investments and derivatives on our combined statements of profit or loss and other comprehensive income. For the years ended December 31,
2022, 2023 and 2024, dividend and gain from disposed financial assets at fair value through profit or loss and settled derivative financial
assets accounted for 23.6%, 142.1% and 33.0%, and net fair value changes on financial assets at fair value through
profit or loss accounted for 41.6%, (88.8)% and 34.2%, of our total revenue, respectively. Since we intend to hold
our investments on a long-term basis, fair value of our equity investments is subject to market fluctuations due to changes in the market
prices of securities, interest rates, or other market factors, such as liquidity, or regulatory factors, such as changes in policies affecting
the businesses of our investee companies. As of December 31, 2024, the aggregate fair value of our strategic investment portfolio
was US$420.5 million. Although we do not intend to make frequent trades on investments for profit, the nature of investment and significance
of our investment holdings could adversely affect our results of operations and financial condition.
Our investments
are subject to liquidity, concentration, regulatory, credit and other risks.
Our portfolio is concentrated
in a limited number of portfolio companies. As a result, the aggregate returns we realize may be significantly affected adversely if any
of the investment performs poorly or if we need to write down its value. Additionally, our investments are concentrated in relatively
few industries or sectors. As a result, a downturn in any particular industry or sector in which we are invested could significantly impact
the aggregate returns we realize and therefore materially and adversely affect our results of operations and financial condition.
The prices of the listed equities
of our investee companies, such as Guangzhou Rural Commercial Bank, Bank of Qingdao and AMTD Digital, may experience significant fluctuations
due to market and broader economic conditions, changes in regulatory and policy framework, geopolitical events, or changes in investor
sentiment and price volatility can be exacerbated by factors such as interest rate changes, inflation, currency fluctuations or sector-specific
developments. Dividend and other distributions by our investee companies are at the discretion of their management and depend on the economic
condition as well as their financial performance, cash flow, capital allocation priorities and regulatory constraints. If these companies
determine to reduce, suspend, or eliminate dividend payments, our expected income from these investments will be materially and adversely
affected.
Some of our strategic investments
are and may be in the form of securities that are not publicly traded. Investments in private businesses involve a high degree of business
and financial risk. In many cases, there may be prohibition by contract or by applicable laws from selling such securities for a period
of time or there may not be a public market for such securities. We may have no or limited ability to dispose of these investments at
times when it may be otherwise advantageous for us to liquidate such investments. In addition, if we were forced to immediately liquidate
some or all of the investments in a portfolio company, the proceeds of such liquidation could be significantly less than the current value
thereof. Furthermore, there is generally no publicly available information about the private companies in which we invest. If we are unable
to identify all material information about these companies, among other factors, we may fail to receive the expected return on investment
or lose some or all of the money invested in these companies. In addition, these businesses may have shorter operating histories, narrower
product lines, smaller market shares and less experienced management than their larger competitors and may be more vulnerable to customer
preferences, market conditions, and loss of key personnel, or economic downturns, which may adversely affect the return on, or the recovery
of, investments in such businesses.
In addition, our investment
in real estate properties located in New York City are subject to illiquidity risk, which may impact our ability to access capital or
realize the full value of these investments. Real estate investments are inherently illiquid due to the time and complexity involved in
buying or selling properties. The process of finding a buyer, negotiating terms, and completing the applicable legal and regulatory requirements
can result in substantial delays and a prolonged sale process. If a property is leased, the timing of a sale may be further constrained
by lease agreements or tenant occupancy. The value and liquidity of these properties are highly dependent on real estate market conditions,
which can be influenced by factors such as changes in general economic conditions, interest rates, housing supply and demand, and regulatory
policies. A change in the foregoing factors could reduce the properties’ appeal and market value and make it more difficult for
us to sell them at a desirable price or at the time that is favorable to us.
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Our operating results
are subject to seasonal fluctuations.
Our revenues and results of
operation are subject to seasonal fluctuations.
The hospitality industry is
subject to fluctuations in revenues due to seasonality. The periods during which our properties experience higher revenues vary from property
to property, depending principally upon their location, type of property and competitive mix within the specific location. Generally,
the third quarter, in which the summer holidays fall, accounts for a higher percentage of our annual revenues in the hotel operation,
hospitality and VIP services segment than the other quarters of the year. In addition, certain special events, such as large-scale exhibition,
concerts or sports events, may increase the demand for our hotels significantly as such special events may attract travelers into and
within the regions where we operate hotels.
Environmental, social
and governance matters, and any related reporting obligations, may impact our businesses.
Regulators, investors and
other stakeholders around the world are increasingly focused on environmental, social and governance, or ESG, matters. New domestic and
international laws and regulations relating to ESG matters, including environmental sustainability and climate change, human capital management,
privacy and cybersecurity, are under consideration or have recently been adopted. These laws and regulations include specific, target-driven
disclosure requirements or obligations. Our response to such requirements or obligations requires additional investments, increased attention
from management and the implementation of new practices and reporting processes, and involves additional compliance risk. In addition,
our ability to implement ESG-related initiatives is dependent on external factors. For example, our ability to carry out sustainability
initiatives may depend in part on third-party collaboration, mitigation innovations and the availability of economically feasible solutions
at scale. Furthermore, factors such as changes in methodologies and processes for reporting ESG data, improvements in third-party data
and the evolving standards for identifying, measuring and reporting ESG metrics, including disclosures that may be required by regulators,
could impact our reporting of and progress toward our own ESG goals and commitments. Any failure, or perceived failure, by us to comply
with complex, technical and rapidly evolving ESG-related laws and regulations, or to meet our own ESG targets and commitments, may negatively
impact our reputation and result in penalties or fines.
Any negative publicity
with respect to us, our founder, directors, officers, employees, shareholders or other beneficial owners, our peers, business partners
or our industries in general, may materially and adversely affect our reputation, business and results of operations.
Our reputation and brand recognition
play an important role in earning and maintaining the trust and confidence of our existing and prospective customers. Our reputation and
brands are vulnerable to many threats that can be difficult or impossible to control and costly or impossible to remediate. Negative publicity
about us, such as alleged misconduct, other improper activities or negative rumors or investigations relating to our business, shareholders
or other beneficial owners, founder, affiliates, directors, officers or other employees, can harm our reputation, business and results
of operations, even if they are baseless or otherwise have been satisfactorily addressed. There have been media reports pointing to certain
regulatory issues relating to such individual’s past work approximately 10 years ago at a financial firm unrelated to us. The foregoing
may lead to additional inquiries, market attentions or other legal or regulatory actions against us, our shareholders, founder, affiliates,
directors, officers or other employees by any regulatory or government authorities. Any such regulatory inquiries, investigations or actions,
as well as perceptions of conflicts of interest, our inappropriate business conduct or perceived wrongdoing by any key member of our management
team, board of directors or founder, among other things, could substantially damage our reputation regardless of their merits and cause
us to incur significant costs to defend ourselves. In addition, any negative market perception or publicity on our business partners that
we closely cooperate with, or any regulatory inquiries or investigations and lawsuits initiated against them, may also have an impact
on our brands and reputation or subject us to regulatory inquiries or investigations or lawsuits. Moreover, any negative media publicity
about our industries in general or product or service quality problems of other firms in our industries, including our competitors, may
also negatively impact our reputation and brands. If we are unable to maintain a good reputation or further enhance our brand recognition,
our ability to attract and retain customers, third-party partners and key employees could be harmed and, as a result, our business, financial
position and results of operations would be materially and adversely affected.
20
Fraud or misconduct
by our directors, officers, employees, shareholders, business partners, customers or other third parties could harm our reputation and
business and may be difficult to detect and deter.
It is not always possible
to detect and deter fraud or misconduct by our directors, officers, employees, shareholders, business partners, customers or other third
parties. The precautions that we take to detect and prevent such activity may not be effective in all cases, and we may suffer significant
reputational harm and financial loss for any fraud misconduct by any of these individuals. The potential harm to our reputation and to
our business caused by such fraud or misconduct is impossible to quantify.
There is a risk that our directors,
officers, employees, shareholders, business partners, customers or other third parties could engage in fraud or misconduct that materially
and adversely affects our business. We are subject to a number of obligations and standards arising from our businesses. The violation
of these obligations and standards by any of our directors, officers, employees, shareholders, business partners, customers or other third
parties could materially and adversely affect us and our investors. If any of our directors, officers, employees, shareholders, business
partners, customers or other third parties were to engage in fraud or misconduct or were to be accused of such fraud or misconduct, our
business and reputation could be materially and adversely affected.
The international
scope of our business exposes us to risks inherent in global operations.
We conduct our business on
a global scale and we are focused on further expanding the international scope of our business and face the inherent risks associated
with doing business on a global scale, including:
●varied culture, trends and customer tastes in different countries and regions;
●government policies and regulations that restrict our operations, including restrictions on access to
our content and products;
●effectively staffing and managing global operations;
●navigating local customs and practices;
●protecting and enforcing our intellectual property and other rights under varying legal regimes;
●complying with applicable laws and regulations;
●restrictions on the ability of our group companies to do business in foreign countries, including restrictions
on foreign ownership, foreign investment or repatriation of funds;
●higher-than-anticipated costs of entry; and
●currency exchange rate fluctuations.
Adverse developments in any
of these areas could have an adverse impact on our business, financial condition and results of operations.
The effects of,
or our failure to comply with, applicable laws, regulations and government policies may disrupt our business, lower our revenues, increase
our costs, reduce our profits, limit our growth, or damage our reputation.
Because we operate internationally
and in various business sectors, we are subject to or affected by a variety of laws, regulations and government policies around the globe,
including, among others, those related to censorship, real estate, hospitality services, intellectual property; defamation; publishing
certain types of information; labor, employment and immigration; tax; payment and payment processing; anti-bribery, anti-corruption, and
anti-money laundering; economic sanctions; marketing and advertising efforts; cybersecurity, data privacy, data localization, data transfers,
and the handling of personal information; competition; climate and the environment; and health and safety. These laws, regulations, and
government policies may be complex and change frequently and could have a range of adverse effects on our business. The compliance programs,
internal controls, and policies we maintain and enforce may need to be updated regularly to keep pace with changing laws, regulations
and government policies and may not prevent our associates, contractors, or agents from materially violating applicable laws, regulations,
and government policies. The requirements of applicable laws, regulations, and government policies, our failure to meet such requirements
(including investigations and publicity resulting from actual or alleged failures), or actions we take to comply with such requirements
or investigations could have significant adverse effects on our results of operations, reputation, or ability to grow our business.
21
We may be subject
to risks relating to litigation and regulatory investigations and proceedings, which could adversely affect our business, prospects, results
of operations and financial condition.
From time to time we may be
subject to lawsuits and arbitration claims in the ordinary course of our business brought by external parties or disgruntled current or
former employees, inquiries, investigations and proceedings by regulatory and other governmental agencies. We cannot assure you that we
will not be subject to similar disputes, complaints or legal proceedings in the future, which may damage our reputation, evolve into litigations
or otherwise have a material adverse impact on our reputation and business. Actions brought against us, with or without merits, may result
in administrative measures, settlements, injunctions, fines, penalties, negative publicities or other results adverse to us that could
have material adverse effect on our reputation, business, financial condition, results of operations and prospects. The outcomes of actions
we institute may not be successful or favorable to us. Adverse outcomes in lawsuits or investigations could result in significant monetary
damages or injunctive relief that could adversely affect our results of operations or financial condition as well as our ability to conduct
our business as it is presently being conducted. Even if we are successful in defending ourselves against these actions, the defense may
have an adverse impact on us as a result of legal costs and diversion of the attention of management and other personnel.
Lawsuits against us may also
generate negative publicity that significantly harms our reputation, which may adversely affect our customer base. We may also need to
pay damages or settle lawsuits with a substantial amount of cash. While we do not believe that any currently pending proceedings are likely
to have a material adverse effect on us, if there were adverse determinations in legal proceedings against us, we could be required to
pay substantial monetary damages or adjust our business practices, which could have a material and adverse effect on our business, financial
condition and results of operations.
Our success depends
on our ability to effectively improve and scale our technical and data infrastructure.
Our ability to attract and
retain customers is dependent upon the reliable performance and increasing capabilities and integration of our products and services and
our underlying technical and data infrastructure. As our business grows in size, scope and complexity, and as legal requirements and customer
expectations continue to evolve, we must continue to invest significant resources to maintain, integrate, improve, upgrade, scale and
protect our products and technical and data infrastructure, including some legacy systems. Our failure to do so quickly and effectively,
or any significant disruption in our service, could damage our reputation, result in a potential loss of customers or ineffective monetization
of products or other missed opportunities, subject us to fines and civil liability or adversely affect our financial results.
We may experience disruptions
or difficulties that could adversely affect our operations, the management of our finances and the effectiveness of our internal control
over financial reporting, which in turn may negatively impact our ability to manage our business and to accurately forecast and report
our results, which could harm our business.
Security incidents
and other network and information systems disruptions could affect our ability to conduct our business effectively and damage our reputation.
Our systems store and process
confidential customer and employee and other sensitive personal and company data, and therefore maintaining our network security is of
critical importance. In addition, we rely on the technology, systems and services provided by third-party vendors, including cloud-based
service providers, for a variety of operations, including encryption and authentication technology, employee email, domain name registration,
content delivery, administrative functions, including payroll processing and certain finance and accounting functions and other operations.
22
There could be attempts by
malicious actors to breach our security and compromise our information technology systems. These actors, whether internal or external
to us, may use a blend of technology and social engineering techniques, including denial of service attacks, phishing or business email
compromise attempts intended to induce our employees, business affiliates and users to disclose information or unwittingly provide access
to systems or data, ransomware and other techniques, to disrupt service or exfiltrate data. Information security threats are constantly
evolving in sophistication and volume and attackers have used generative AI and machine learning to launch more automated, targeted, sophisticated
and coordinated attacks against targets, increasing the difficulty of detecting and successfully defending against them. We and the third
parties with which we work may be more vulnerable to the risk from activities of this nature as a result of factors such as the high-profile
nature of our business operations and the various jurisdictions in which we and our third-party providers operate; significant increases
in remote and hybrid working; employee use of personal devices, which may not have the same level of protection as our devices and networks;
and use of legacy software systems, among others. To date, no incidents have had a material adverse effect on our business, financial
condition or results of operations.
In addition, our systems,
and those of the third parties with which we work and on which we rely, may be vulnerable to interruption or damage that can result from
the effects of power, systems or internet outages; natural disasters may occur more frequently or with more severity as a result of climate
change; fires; rogue employees; public health conditions; acts of terrorism; or other similar events.
We have implemented controls
and taken other preventative measures designed to strengthen our systems and to improve the resiliency of our business against such incidents
and attacks, including measures designed to reduce the impact of a security incident at our third-party vendors. There can also be no
assurance that the actions, measures and controls we have implemented will be effective against future attacks or that they will be sufficient
to prevent a future security incident or other disruption to our network or information systems, or those of our third-party vendors,
and our disaster recovery planning cannot account for all eventualities. Such an event could result in a disruption of our services, unauthorized
access to or improper disclosure of personal data or other confidential information, or theft or misuse of our intellectual property,
all of which could harm our reputation, require us to expend resources to respond to and recover from such a security incident or defend
against further attacks, divert management’s attention or subject us to liability, or otherwise adversely affect our business. The
costs relating to certain kinds of security incidents could be substantial, and our insurance may not be sufficient to cover all losses
related to any future incidents involving our data or systems.
Failure to comply
with laws and regulations with respect to privacy, data protection and customer marketing and subscriptions practices could adversely
affect our business.
Our business is subject to
various laws and regulations with respect to the processing, privacy and security of personal data, as well our customer marketing and
subscriptions practices.
Various laws and regulations
of the jurisdictions in which we operate our business, govern the processing, privacy and security of the data we receive from and about
individuals (personal data), including the European General Data Protection Regulation (GDPR) and ePrivacy Directive; California’s
Customer Privacy Act and Customer Privacy Rights Act, the Personal Data Protection Commission of Singapore, the Personal Data (Privacy)
Ordinance of Hong Kong, and others. Failure to protect personal data in accordance with these requirements, provide individuals with
adequate notice of our privacy policies, respond to customer-rights related requests or obtain required valid consent where applicable,
for example, could subject us to liabilities imposed by these jurisdictions.
In Europe and the UK, we are
subject to the GDPR, which comprehensively regulates our use of personal data, including cross-border transfers of personal data out of
the EEA and the UK. In relation to such cross border transfers of personal data, we expect the existing legal complexity and uncertainty
regarding international personal data transfers to continue. As the regulatory guidance and enforcement landscape in relation to data
transfers continue to develop, we could suffer additional costs, complaints and/or regulatory investigations or fines; we may have to
stop using certain tools and vendors and make other operational changes; we may have to implement alternative data transfer mechanisms
under the GDPR and/or take additional compliance and operational measures; and/or it could otherwise affect the manner in which we provide
our services, and could adversely affect our business, operations and financial condition.
In addition, various laws
and regulations of the jurisdictions in which we operate our business, govern the manner in which we market our products, including with
respect to subscriptions, billing, automatic renewals and cancellation. These laws and regulations differ across jurisdictions and continue
to evolve. These laws, as well as any changes in these laws or how they are interpreted, could adversely affect our ability to attract
and retain customers.
23
There has been increased focus
on and regulatory scrutiny related to laws and regulations governing privacy, data protection, customer marketing and subscriptions practices.
These laws continue to evolve and are subject to potentially differing interpretations. Various legislative and regulatory bodies of the
jurisdictions in which we operate our business, may expand such current laws or enact new laws in these areas. Existing and newly adopted
laws and regulations with respect to the processing, privacy and security of personal data, and customer marketing practices or new interpretations
of existing laws and regulations, have imposed and may continue to impose obligations that affect our business, place increasing demands
on our technical infrastructure and resources, require us to incur increased compliance costs and cause us to further adjust our advertising,
marketing, security or other business practices. As we continue these projects over the next several years, we may experience disruptions
or difficulties that could adversely affect our business.
Any failure, or perceived
failure, by us or the third parties upon which we rely to comply with laws and regulations that govern our business operations and our
policies, could expose us to penalties or civil or criminal liability and result in claims against us by governmental entities, classes
of litigants or others, regulatory inquiries, negative publicity and a loss of confidence in us by our users and advertisers. Each of
these consequences could adversely affect our business and results of operations. From time to time, we are party to litigation and regulatory
inquiry relating to these laws.
We are subject to
payment processing risk.
We accept payments through
third parties using a variety of different payment methods, including credit and debit cards and direct debit, as well as alternative
payment methods. We rely on third parties’ systems to process payments. Acceptance and processing of these payment methods are subject
to differing domestic and foreign certifications, rules, regulations, industry standards, including credit card and banking policies,
and laws concerning subscriptions, billing and payment, which continue to evolve. To the extent there are disruptions in our or third-party
payment processing systems; errors in charges made to customers; material changes in the payment ecosystem such as large reissuances of
payment cards by credit card issuers; or significant changes to certifications, rules, regulations, industry standards or laws concerning
payment processing, our ability to accept payments could be hindered, we could experience increased costs or be subject to fines or civil
liability, which could harm our reputation and adversely impact our revenues, operating expenses and results of operations.
In addition, we may experience
fraudulent use of payment methods for subscriptions to our digital products. If we are unable to adequately control and manage this practice,
it could result in inaccurately inflated customer figures used for internal planning purposes and public reporting, which could adversely
affect our ability to manage our business and harm our reputation. If we are unable to maintain our fraud and chargeback rate at acceptable
levels, our card approval rate may be impacted, and card networks could impose fines and additional card authentication requirements or
terminate our ability to process payments, which would impact our business and results of operations as well as result in negative customer
perceptions of our brands. We have taken measures to detect and reduce fraud, but these measures may not be or remain effective and may
need to be continually improved as fraudulent schemes become more sophisticated. These measures may add friction to our subscription processes,
which could adversely affect our ability to add and retain audience.
The termination of our ability
to accept payments on any major payment method would significantly impair our ability to operate our business, including our ability to
add and retain audience and collect subscription and advertising revenues, and would adversely affect our results of operations.
Defects, delays
or interruptions in the cloud-based hosting services we utilize could adversely affect our reputation and operating results.
We currently utilize third-party
subscription-based software services as well as public cloud infrastructure services to provide solutions for many of our computing and
bandwidth needs. Any interruptions to these services could result in interruptions in service to our customers and our critical business
functions, notwithstanding business continuity or disaster recovery plans or agreements that may currently be in place with these providers.
This could result in unanticipated downtime and harm to our operations, reputation and operating results. A transition of these services
to different cloud providers would be difficult, time consuming and costly to implement. In addition, if hosting costs increase over time
or if we require more computing or storage capacity as a result of audience growth or otherwise, our costs could increase disproportionately.
24
Failure to renew
our current leases or locate desirable alternatives for our facilities could materially and adversely affect our business.
We may not be able to successfully
extend or renew our leases, specifically for our offices, upon expiration of the current term on commercially reasonable terms or at all,
and may therefore be forced to relocate the affected operations. This could disrupt our operations and result in significant relocation
expenses, which could adversely affect our business, financial condition and results of operations. In addition, we compete with other
businesses for premises at certain locations or of desirable sizes. As a result, even though we could extend or renew our leases, rental
payments may significantly increase as a result of the high demand for the leased properties. In addition, we may not be able to locate
desirable alternative sites for our facilities as our business continues to grow, and failure in relocating our affected operations could
adversely affect our business and operations.
If our insurance
coverage is insufficient, we may be subject to significant costs and business disruption.
We cannot assure you that
we have sufficient insurance to cover all aspects of our operations. We cannot assure you that our insurance coverage is sufficient to
prevent us from any loss or that we will be able to successfully claim our losses under our current insurance policies on a timely basis,
or at all. If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our
actual loss, our business, financial condition and results of operations could be materially and adversely affected.
We require comprehensive property
and liability insurance policies for the hotel properties we operate with coverage features and insured limits that we believe are customary.
Market forces beyond our control may nonetheless limit the scope of the insurance coverage we can obtain, or our or their ability to obtain
coverage at reasonable rates. Certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes and floods,
terrorist acts, pandemics, or liabilities that result from incidents involving the security of information systems, may result in high
deductibles, low limits, or may be uninsurable, or the cost of obtaining insurance may be unacceptably high. As a result, we may not be
successful in obtaining insurance without increases in cost or decreases in coverage levels, or may not be successful in obtaining insurance
at all. Further, in the event of a substantial loss, the insurance coverage we carry may not be sufficient to pay the full market value
or replacement cost of any lost investment or in some cases could result in certain losses being totally uninsured. As a result, our operations,
revenues and profits could be adversely affected.
If we do not appropriately
maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002,
we may be unable to accurately report our financial results and the market price of our securities may be adversely affected.
We are subject to reporting
obligations under the U.S. securities laws. The SEC, as required under Section 404 of the Sarbanes-Oxley Act of 2002,
adopted rules requiring every public company to include a management report on such company’s internal control over financial reporting
in its annual report, which contains management’s assessment of the effectiveness of the company’s internal control over financial
reporting. In addition, an independent registered public accounting firm must attest to and report on the effectiveness of the company’s
internal control over financial reporting. An emerging growth company may take advantage of specified reduced reporting and other requirements
that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement
under Section 404 of the Sarbanes-Oxley Act of 2012 relating to internal controls over financial reporting. Our independent
registered public accounting firm, after conducting its own independent testing, may issue an adverse report if it is not satisfied with
our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant
requirements differently from us.
If we fail to maintain effective
internal control over financial reporting in the future, our management and our independent registered public accounting firm may not
be able to conclude that we have effective internal control over financial reporting at a reasonable assurance level. This could in turn
result in the loss of investor confidence in the reliability of our financial statements and negatively impact the trading price of our
securities. Furthermore, we have incurred and may need to incur additional costs and use additional management and other resources in
an effort to comply with Section 404 of the Sarbanes-Oxley Act and other requirements going forward.
25
We face risks related
to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt
our operations.
Natural disasters, including
earthquakes, extreme weather conditions, as well as health scares related to epidemic diseases and any similar event could materially
impact our business. If a disaster or other disruption were to occur in the future that affects the regions where we operate, our operations
could be materially and adversely affected.
In addition, our business
could be affected by public health epidemics, such as the outbreak of avian influenza, severe acute respiratory syndrome or SARS, Zika
virus, Ebola virus, coronavirus or other disease. In recent years, outbreaks of COVID-19 resulted in quarantines, travel restrictions
and the temporary closure of businesses and facilities worldwide. These events are beyond our control, and we cannot assure you that similar
events will not happen in the future and our business and results of operations may not be adversely affected.
Exchange rate fluctuations
could result in significant foreign currency gains and losses and affect our business results.
We earn revenues and incur
expenses in foreign currencies in connection with our operations outside of the U.S. Accordingly, fluctuations in currency exchange
rates may significantly increase the amount of U.S. dollars required for foreign currency expenses or significantly decrease the
U.S. dollars we receive from foreign currency revenues. We are also exposed to currency translation risk because the results of our
non-U.S. business are generally reported in local currency, which we then translate to U.S. dollars for inclusion in our Financial
Statements. As a result, exchange rate changes between foreign currencies and the U.S. dollar affect the amounts we record for our
foreign assets, liabilities, revenues and expenses, and could have a material negative effect on our financial results. To the extent
that our international operations continue to grow, our exposure to foreign currency exchange rate fluctuations will grow.
We have adopted
a share incentive plan and plan to grant options and other types of awards under our share incentive plan, which may result in increased
share-based compensation expenses.
We adopted a share incentive
plan, or the 2025 Share Incentive Plan, at the Closing, for the purpose of granting share-based compensation awards to employees, directors
and consultants to incentivize their performance and align their interests with ours. Under this plan, we will be authorized to grant
options and other types of awards. The maximum number of ordinary shares that may be issued pursuant to all awards under the 2025 Share
Incentive Plan is initially 875,255, being 3% of the total number of Class A Ordinary Shares outstanding as of the Closing Date. See “Management — Share
Incentive Plan.”
We believe the granting of
share-based awards is of significant importance to our ability to attract and retain key personnel and employees, and we plan to continue
to grant share-based compensation to our employees. As a result, our expenses associated with share-based compensation may increase, which
may have a material and adverse effect on our financial condition and results of operations.
Furthermore, perspective candidates
and existing employees often consider the value of the equity awards they receive in connection with their employment. Thus, our ability
to attract or retain highly skilled employees may be adversely affected by declines in the perceived value of our equity or equity awards.
Furthermore, there are no assurances that the number of shares reserved for issuance under our share incentive plans will be sufficient
to grant equity awards adequate to recruit new employees and to compensate existing employees.
Risks Relating to Our Media
Business
The media industry
is highly competitive, and we may be unable to compete successfully with our current or future competitors.
Our ability to compete with
our competitors in the media sector effectively depends on many factors both within and beyond our control, including among other things:
●our ability to continue delivering a breadth of high-quality content that is timely, interesting and inspiring
to our audience;
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●the popularity, usefulness, ease of use, format, performance, reliability and value of our digital media
services, compared with those of our competitors;
●the sustained engagement of our audience directly with our content, products and services;
●our ability to develop, maintain and monetize our content, products and services;
●our ability to provide advertisers with a compelling return on their investments;
●our reputation and brand strength relative to those of our competitors;
●our ability to reach new audience and customers worldwide;
●the pricing model of our content, products and services;
●our visibility on search engines and social media platforms, compared with the visibility of our competitors;
●our ability to effectively protect our intellectual property, including from unauthorized use by generative
AI developers or users in ways that may harm our brands;
●our marketing and selling efforts, including our ability to differentiate our products and services from
those of our competitors;
●our ability to attract, retain and motivate talented employees, including editorial staff and creative
directors, among other things, who are unique and in high demand; and
●our ability to manage and grow our business in a cost-effective manner.
Our ability to grow
the size and profitability of our audience base for our print publications and digital media services depends on many factors, both within
and beyond our control, and a failure to do so could adversely affect our results of operations and business.
The future growth and profitability
for our print publications and digital media services depend upon our ability to retain, grow and effectively monetize our audience base
worldwide.
We have invested and will
continue to invest significant resources in our efforts to do so, including building a community around our magazines, diversifying channel
of access, leveraging social media to publicize our content, attending events to develop relationships and promote our products and services,
but there is no assurance that we will be able to successfully grow our audience base in line with our expectations, or that we will be
able to do so without taking steps such as adjusting our pricing that could adversely affect our revenues, margin and profitability.
Our ability to attract and
grow our audience base depends on the size of our potential audience and its sustained engagement directly with our content and products,
including the breadth, depth and frequency of use. The size and engagement of our audience depends on many factors both within and beyond
our control, including the size and speed of development of the markets for high-quality media and entertainment news and reviews; significant
fashion, media and other events; user sentiment about the quality of our content and products; the free access we provide to our content;
the format and breadth of our offerings; varied and changing customer expectations and behaviors; and our ability to successfully manage
changes implemented by search engines and social media platforms or potential changes in the digital information ecosystem that affect
or could affect the visibility of and traffic to our content, among other factors.
The size and engagement of
our audience also depends in part on referrals from third-party platforms, including social media platforms and search engines, that direct
customers to our content. These third-party platforms increasingly prioritize formats and content that are outside of our primary offerings
and may vary their emphasis on what content to highlight for audience. This has caused, and may continue to cause, referrals from these
platforms to our content to diminish. Additionally, search engine results and digital marketplace rankings are based on algorithms that
are changed frequently, without notice or explanation. Any failure to successfully manage and adapt to changes in how our content, products
and services are marketed, discovered, prioritized, displayed and monetized could cause our audience base to significantly diminish.
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The size of the audience for
our print publications may be affected as the media industry has transitioned from being primarily print-focused to digital and we do
not expect this trend to reverse. We may be limited in our ability to prevent the resulting print revenue declines, particularly as our
print products become more expensive relative to other media alternatives, including our digital products. If we are unable to offset
revenue declines from print publications with other sources of revenue, or if the revenue declines at a faster rate than we anticipate,
our operating results will be materially and adversely affected.
Our advertising
revenues are affected by numerous factors, including market dynamics, evolving digital advertising trends and the evolution of our strategy.
Our advertising revenue is
sensitive to the macroeconomic environment, as advertiser budgets can fluctuate substantially in response to changing economic conditions.
Our advertising revenues could be adversely affected as advertisers, including primarily luxury and fashion brands, respond to such conditions
by reducing their budgets or shifting spending patterns or priorities. See also “—Risks Relating to our Businesses and Industries
in General — Our business and financial results may be adversely impacted by economic, market, geopolitical and public health
conditions or other events causing significant disruption.”
Within the fashion and luxury
advertising markets, our ability to compete successfully for advertising budgets will depend on, among other factors, our ability to engage
and grow our audience base, develop attractive and high-quality content, maintain our influence in the fashion and luxury markets, enhance
our relationship with renowned brands and fashion influencers and demonstrate the value of our advertising and the effectiveness of our
content, products and services to advertisers. In determining whether to buy advertising with us, advertisers may consider factors such
as our brands and reputation, the demand for our content and products, the focus of our coverage, size and demographics of our audience,
advertising rates, targeting capabilities, results observed by advertisers, and perceived effectiveness of advertising offerings and alternative
advertising options. Specifically, the prestige and reputation of our publications are critical to our success in attracting premium advertisers.
If our brand perception diminishes for any reason, we may lose the appeal that makes our platform attractive for luxury and high-end advertising
and thereby experience a decline in advertising revenue. See also “—Risks Relating to our Businesses and Industries in General — Our
brands and reputation are our key assets. Negative perceptions or publicity of us or our brands could adversely affect our business, financial
condition and results of operations.”
The continuing shift in customer
preference from print media to digital media, as well as growing customer engagement with digital media and social platforms, has introduced
significant new competition for advertising. Our revenues from print advertising may decline over time as the media industry has transitioned
from being primarily print-focused to digital. Print advertising revenue may decline more quickly than we anticipate, which could create
additional pressure on our profitability.
We also offer digital advertising
to our customers. We compete with companies with large digital platforms, which have greater audience reach, audience data and targeting
capabilities than we do. These companies may command a large share in the context of digital advertising, and we anticipate that this
will continue. In addition, there is increasing demand for digital advertising in formats that are dominated by these platforms, particularly
vertical short-form video and streaming, and we may not be able to compete effectively in these formats. The remaining market is subject
to significant competition among publishers and other content providers, as well as audience fragmentation. These dynamics have affected,
and will likely continue to affect, our ability to attract and retain advertisers and to maintain or increase our advertising rates.
Significant disruptions
in our printing and distribution channels, or a significant increase in the costs to print and distribute our print publications, would
have an adverse effect on our operating results.
Our print publications are
printed and distributed under contracts with print and distribution partners worldwide. Our print partners rely on suppliers for deliveries
of paper. The price of paper has historically been volatile, and its availability may be affected by various factors, including supply
chain disruptions, transportation issues, labor shortages or unrest, conversion to paper grades other than paper and other disruptions
that may affect production or deliveries of paper. A significant increase in the price of paper, or a significant disruption in our partners’
paper supply chain, would adversely affect our operating results.
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Financial pressures, print
publication industry trends or economics, labor shortages or unrest, changing legal obligations regarding classification of workers or
other circumstances that affect our print and distribution partners and lead to reduced operations or consolidations or closures of print
sites or distribution routes may increase the cost of printing and distributing our print publications, decrease our revenues if printing
and distribution are disrupted and impact the quality of our printing and distribution. The geographic scope and frequency with which
magazines are printed and distributed by our partners at times affects our ability to print and distribute our print publications and
can adversely affect our operating results.
If we experience significant
disruptions in our printing and distribution channels, or a significant increase in the costs to print and distribute our print publications,
our reputation and operating results may be adversely affected. Furthermore, if the audience base to our and other companies’ print
products declines, our and our vendors’ fixed costs to print and deliver paper products are spread over fewer paper copies. We may
be unable to offset these increasing per-unit costs, alongside decreasing print media audience base, with revenue from price increases,
and our operating results may be adversely affected.
We depend on certain
franchisees to produce and distribute our print publications.
We depend on our franchisees
to produce and distribute print publications in many geographies and receive royalties from these licenses. We rely on these franchisees
to maintain operational and financial control over their businesses. Should these franchisees fail to monitor and control their operations
adequately or if our relationship with them is disrupted or changed to our detriment, our income from royalties will decline.
The agreements with our franchisees
typically allow either party to terminate the relationship under certain conditions, including breaches of contractual obligations, failure
to meet performance standards, or other specified events. If our franchisees choose to terminate these agreements, we could experience
a loss of revenue, disruption in operations and damage to our brand reputation in the affected markets. Conversely, if we terminate the
franchise agreements, we may face legal disputes and reputational harm. If circumstances required that an existing franchisee be replaced,
we could face challenges in finding replacement franchisees and there can be no assurance that a replacement franchisee would be able
to contribute the same resources as the prior franchisee in terms of management, production and distribution. The necessity to replace
a franchisee and, in particular, an inability to replace a franchisee for any period of time would adversely affect our financial performance
both directly, from reduced royalties received, and indirectly, from reduced sales of our products. Our brands may also suffer if, as
a result, there is any delay or failure in the distribution of our content and products. Additionally, the termination of franchise relationships,
whether initiated by us or our franchisees, could result in the closure of locations, reduced market presence and increased operational
costs associated with transitioning ownership or management.
Although we regularly implement
royalty reviews of our franchisees, there can be no assurance that they will properly report royalty income or that such reviews will
reveal any non-compliance with the terms of the relevant franchisees. Even if errors are revealed, the resolution of such errors may prove
to be time-consuming and expensive.
We may face business
challenges and increased costs in our transition from a franchise business model to a direct ownership model in respect of our media business.
We operate our media business
in a hybrid model of direct ownership and franchise business and we are in the process of transitioning from a franchise business model
to a direct ownership model in certain countries and regions and expanding our network. While we believe that the direct ownership model
can drive significant revenue growth for us in the future, the transition to the direct ownership model will require substantial financial
resources for operational restructuring, developing or acquiring new expertise in managing operational risks, employee retention and training,
building up knowledge base of local markets and development of marketing initiatives, among other things. There is no assurance that we
will be successfully navigating through this transition and mitigating the gaps in operational capabilities, marketing expertise and customer
relationship. Failure to transition successfully may lead to loss of our brand value, customer loyalty and market share, and therefore
could have significant adverse effects on our business, financial condition and results of operations.
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Risks Relating to Our Entertainment
Business
The entertainment
industry is highly competitive.
The entertainment industry
is highly competitive. It is also partially dependent on the availability of potential viable projects and necessary funding to successfully
complete such projects. Accordingly, we will need to locate promising projects and be able to secure necessary funding, in what may be
uncertain markets.
Further, we believe the successful
production and distribution of any movie project involves being able to secure qualified personnel to produce, finalize and market the
project. Production requires qualified directors, writers, performers and a variety of technical persons to produce a final product. Once
produced, it is necessary to distribute and market the project to a receptive public. We may not have the experience, history and reputation
to attract qualified persons, who may be more inclined to work for a larger and more established company. It is also necessary to work
with a distributor that will be capable of distributing the finished project to a suitable and receptive audience. The inability to locate
and secure qualified professionals to produce, distribute and market our projects would have a severe, negative affect our business and
ability to generate revenues.
The success of our
entertainment business segment depends on the success of a limited number of film releases each year and unpredictable factors in the
motion picture industry.
We generally participate in
the production of a limited number of motion pictures each year. As such, the success or failure of a small number of these motion pictures
could have a significant impact on our entertainment business segment and our results of operations in both the year of release and in
subsequent years. The film industry is inherently unpredictable, and the success of any given film can be influenced by factors beyond
our control, such as changing consumer preferences, competition from other entertainment offerings and broader economic conditions. In
general, the economic success of a motion picture is largely determined by the appeal of the motion picture to a broad audience and by
the effectiveness of the marketing of the motion picture. We cannot precisely predict the economic success of any of the motion pictures
we produce because we cannot predict with certainty a motion picture’s acceptance by the public. If we do not accurately judge audience
acceptance in selecting the motion pictures for production, or if the motion pictures are not effectively marketed, we may not recoup
our costs or realize our anticipated profits. In addition, the economic success of a motion picture depends upon the public’s acceptance
of competing motion pictures, the availability of alternative forms of entertainment and leisure-time activities, general economic conditions
and other tangible and intangible factors, all of which can change and none of which can be predicted with certainty. Additionally, delays
in production or release schedules, which may arise due to, among other things, creative, technical, or regulatory challenges, can further
impact the timing and financial contribution of films. Accordingly, our results may fluctuate significantly from year to year based on
the box office performance, timing of releases and market reception of the limited number of films we produce at any given time and such
factors render our historical financial results not indicative of our future performance.
Due to the inherent
nature of producing motion pictures, we provide advances and funding for motion pictures in advance and assume the risk of not being able
to recoup these investments.
We incur significant costs
and cash expenditures to acquire movie rights. Many of our agreements to acquire movie rights require up-front payments. We determine
the amount of the payments or funding we are willing to make based on our estimate of the economic success of the motion picture. Although
these estimates are based on our knowledge of industry trends, market conditions and the market potential of the motion picture, actual
results may ultimately differ from our estimates.
The production of motion pictures
is subject to a number of uncertainties, including delays and increased expenditures due to creative differences among key cast members
and other key creative personnel or other disruptions or events beyond our control. Risks such as illness, disability or death of star
performers, technical complications with special effects or other aspects of production, shortages of necessary equipment, damage to negatives,
master tapes and recordings or adverse weather conditions may cause cost overruns and delay or frustrate completion of a production. In
addition, directors tend to hold substantial control over the production of motion pictures, and this may affect the producers’
ability to control the production schedule and budget. Further, when we co-produce in a motion picture, we generally have less control
over the development and production processes.
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We may be required to provide
additional funding or advances to complete production of our motion pictures, for example if a motion picture incurs budget overruns during
production. Such additional funding could have an adverse effect on our business, financial condition and results of operations. In addition,
we may not be able to recoup our funding as a result of increased costs from budget overruns. Increased costs may also delay the release
of a motion picture to a less favorable time, which could negatively affect its box office performance and thus our revenue arising out
of the motion picture and its overall financial success.
If a motion picture fails
to perform to our original estimates or expectations, we may not be able to realize the expected economic return from that motion picture,
fail to recoup advances we paid or funding we made or record accelerated amortization or fair value write downs of capitalized motion
picture production costs. Any of these events may adversely impact our business, financial condition and results of operations.
Risks associated
with our capacity as a co-producer of or financial investor in our films.
We co-produce (in a non-controlling
position) or invest in film production, which exposes us to several risks. As a co-producer, we generally rely on the lead producer to
manage key aspects of the movie production, including creative decisions, budgeting, casting, scheduling and distribution. We generally
have a limited ability to influence or control critical elements of a movie project, and accordingly production outcomes for our co-produced
movies may not fully align with expectations or objectives. Our strategic or financial interests may not align with those of the lead
producers of our movies. The lead producer’s priorities, resources or decision-making processes may diverge from those of ours,
which could potentially give rise to a misalignment or conflict of interests. Furthermore, we may have limited recourse in the event of
mismanagement, delays or disputes with the lead producer, which could adversely impact the quality, timing and commercial success of the
film. These could lead to increased uncertainty, reduced profitability and greater exposure to operational and financial risks in respect
of our entertainment business.
The production of
motion picture is a capital-intensive process, and our capacity to generate cash or obtain financing on favorable terms may be insufficient
to meet our anticipated cash requirements.
The costs to develop and produce
a motion picture are substantial. We are required to fund our costs for motion picture-related activities and other commitments with cash
retained from operations, as well as from bank and other borrowing and participation by other producers. If our motion pictures fail to
perform, we may be forced to seek substantial sources of outside financing. Such financing may not be available in sufficient amounts
for us to continue to make substantial funding in the production of new motion pictures or may be available only on terms that are disadvantageous
to us, either of which could have a material adverse effect on our growth or our business.
Moreover, the costs of producing
motion pictures have increased in recent years and may further increase in the future, which may make it more difficult for a motion
picture we produce to generate a profit. Also, compensation for star performers and other key creative personnel has been on the rise.
As a result, there can be no assurance that revenue from our motion picture production would be sufficient to offset increases in the
cost of production and distribution.
Industry changes
in the entertainment industry may have a negative impact on our operations.
The entertainment industry,
in general, is continually undergoing significant changes, primarily due to technological developments. These developments have resulted
in the availability of alternative forms of leisure time entertainment, including expanded on demand services, independent productions,
streaming and video games. The level of theatrical success remains a critical factor in generating revenues in these ancillary markets.
It is difficult to accurately predict the effect that these and other new technological developments may have on the film industry. These
uncertainties, among others, may have a negative impact on our business, financial condition, and results of operations.
Risks Relating to Our Hospitality
Business
We are subject to
the business, financial and operating risks inherent to the hospitality industry, any of which could reduce our revenues and limit opportunities
for growth.
Our business is subject to
a number of business, financial and operating risks inherent to the hospitality industry, including:
●significant competition from hospitality providers in all parts of the world;
●changes in the supply and demand for hotel services, including rooms, food and beverage and other products
and services;
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●the financial condition of and relationships with hotel management companies and joint venture partners,
including the risk that they may terminate or fail to comply with the relevant management or joint venture contracts or arrangements;
●decreases in the frequency of business travel that may result from alternatives to in-person meetings,
including virtual meetings hosted online or over private teleconferencing networks;
●increases in operating costs, including employee compensation and benefits, energy, insurance, food and
beverage and other supplies;
●the ability of third-party internet and other travel intermediaries who sell our hotel rooms to guests
to attract and retain customers;
●delays in or cancellations of planned or future development or refurbishment projects at hotels in our
system;
●cyclical over-building in the hospitality industry; and
●changes in desirability of geographic regions of the hotels in our business, geographic concentration
of our operations and customers and shortages of desirable locations for development.
Any of these factors could
(i) increase our costs or (ii) limit or reduce the prices we are able to charge, or (iii) otherwise affect our ability
to maintain or operate existing properties or develop new properties. As a result, any of these factors can reduce our revenues and limit
opportunities for growth.
The hospitality
market is highly competitive, and we may be unable to compete successfully.
The market to provide hospitality
services is highly competitive and fragmented. The barriers to entry are low and new competitors may enter the market at any time. Our
current or potential competitors include global hotel brands, regional hotel chains, independent hotels, online travel agencies and home-sharing
and rental services and short term/vacation rental. Additionally, current or new competitors may introduce new business models or services
that we may need to adopt or otherwise adapt to in order to compete, which could reduce our ability to differentiate our business or services
from those of our competitors. Increased competition could result in a reduction in revenue, fewer attractive properties, higher costs
or reduced market share.
Furthermore, some of our current
or potential competitors, such as major hotel brands, are larger and have more resources than we do. Many of our current and potential
competitors enjoy substantial competitive advantages, such as greater name recognition in their markets, well-established loyalty programs,
longer operating histories and larger marketing budgets, as well as substantially greater financial, technical and other resources. Moreover,
the hospitality services industry has experienced significant consolidation, and we expect this trend may continue as companies attempt
to strengthen or hold their market positions in a highly competitive industry. Consolidation amongst our competitors will give them increased
scale and may enhance their capacity, abilities and resources, as well as lower their cost structures. As a result, our competitors may
be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements.
For all of these reasons, we may not be able to compete successfully against current and future competitors.
We own a limited
number of hotels and significant adverse changes at one hotel could have a material adverse effect on our financial performance.
Our hotel portfolio consists
of iclub AMTD Sheung Wan Hotel and Dao by Dorsett AMTD Singapore. Significant adverse changes in the operations of either of these hotels could
have a material adverse effect on our financial performance.
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We may acquire,
renovate and/or re-brand hotels in new or existing geographic markets.
We may develop or acquire
hotels in geographic areas in which our management may have little or no operating experience. Additionally, those and our existing properties
may also be renovated and re-branded. Customers, existing or potential, may not be familiar with our newly renovated hotel or
be aware of the brand change. As a result, we may have to incur costs relating to the opening, operation and promotion of our hotel properties
that are substantially greater than those incurred in other geographic areas. Our hotels may attract fewer customers than expected and
we may choose to increase spending on advertising and marketing to promote the hotel and increase customer demand. Unanticipated
expenses and insufficient demand could adversely affect our financial performance.
Risks relating to
the management of our hotels could hurt our financial performance.
Our hotel managers have the
authority to direct our hotels to be operated in a particular manner and to govern the daily operations of our hotels.
As a result, our financial condition and results of operations are largely dependent on the ability of our hotel managers to operate
our hotel properties successfully. Any failure by our hotel managers to provide quality services and amenities or to maintain
and protect a quality brand name and reputation could have a negative impact on their ability to operate and manage our hotel properties
successfully and could negatively impact our financial condition and results of operations.
We cannot assure you that
our hotel managers will operate and manage our hotel properties in a manner that is consistent with their obligations under
the hotel management agreements, that our hotel managers will not be negligent in their performance or engage in other
criminal or fraudulent activity, or that they will not otherwise default on their management obligations to us. If we are unable to reach
satisfactory results through discussions and negotiations with our hotel managers regarding issues with the management of our hotels,
we may choose to litigate the dispute or submit the matter to third-party dispute resolution or arbitration. We would be able to seek
redress only if a hotel manager violates the terms of the applicable hotel management agreement, and then only to the extent
of the remedies provided for under the terms of the hotel management agreement. Additionally, in the event we need to replace any
of our hotel managers, we may experience significant business disruptions at the affected hotel properties, and may be
liable, under certain circumstances, for significant damages and/or be required to make certain payments to our managers.
Risks Relating to Our Securities
The Warrants are
exercisable for Class A Ordinary Shares, which would increase the number of shares eligible for future resale in the public market
and result in dilution to our shareholders. The Warrants may never be in the money, and they may expire worthless.
Warrants to purchase an aggregate
of 16,220,000 Class A Ordinary Shares are exercisable in accordance with the terms of the Warrant Agreement governing those securities.
The Warrants are exercisable 30 days after the completion of the Business Combination. The exercise price of the Warrants is US$11.50
per share. To the extent the Warrants are exercised, additional Class A Ordinary Shares will be issued, which will result in dilution
to the existing holders of Class A Ordinary Shares and increase the number of shares eligible for resale in the public market. Sales
of substantial numbers of such shares in the public market or the fact that the Warrants may be exercised could adversely affect the market
price of Class A Ordinary Shares. However, there is no guarantee that the Warrants will ever be in the money prior to their expiration,
and as such, the Warrants may expire worthless.
We may redeem your
unexpired Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Warrants worthless.
We have the ability to redeem
outstanding Warrants at any time after they become exercisable and prior to their expiration, at a price of US$0.01 per warrant, provided
that the last reported sales price of Class A Ordinary Shares equals or exceeds US$18.00 per share (as adjusted for share subdivisions,
share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on
the third trading day prior to the date on which we give proper notice of such redemption and there is an effective registration
statement covering the issuance of the Class A Ordinary Shares issuable upon exercise of the Warrants. Redemption of the outstanding
Warrants could force you (i) to exercise your Warrants and pay the exercise price therefor at a time when it may be disadvantageous
for you to do so, (ii) to sell your Warrants at the then-current market price when you might otherwise wish to hold your Warrants,
or (iii) to accept the nominal redemption price, which, at the time the outstanding Warrants are called for redemption, is likely
to be substantially less than the market value of your Warrants.
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If securities or
industry analysts do not publish research, publish inaccurate or unfavorable research or cease publishing research about us, the price
of our securities and their trading volume could decline significantly.
The trading market for Class A
Ordinary Shares the Warrants will depend, in part, on the research and reports that securities or industry analysts publish about us or
our business. We may be unable to sustain coverage by well-regarded securities and industry analysts. If either none or only a limited
number of securities or industry analysts maintain coverage of us, or if these securities or industry analysts are not widely respected
within the general investment community, the demand for our securities could decrease, which might cause their price and trading volume
to decline significantly. In the event that we obtain securities or industry analyst coverage, if one or more of the analysts who cover
us downgrade their assessment of us or publish inaccurate or unfavorable research about our business, the market price and liquidity of
our securities could be negatively impacted.
Future resales of
Ordinary Shares issued to our shareholders and other significant shareholders may cause the market price of the Class A Ordinary
Shares to drop significantly, even if our business is doing well.
Subject to the AMTD Lock-up
Obligations, the Selling Securityholders can sell, under this prospectus, up to (i) 57,401,944 Class A Ordinary Shares constituting
approximately 88.7% of the total issued and outstanding ordinary shares of The Generation Essentials Group as of the date of this prospectus
(assuming exercise of all outstanding Warrants), and (ii) 11,120,000 Warrants, representing approximately 68.6% of our outstanding
Warrants. Subject to the AMTD Lock-up Obligations, AMTD Digital, AMTD IDEA Group, AMTD Group Inc. can sell all Ordinary Shares beneficially
owned by them under this prospectus, being 37,756,286 Class A Ordinary Shares (including (i) 18,470,375 Class A Ordinary Shares and (ii)
19,285,911 Class A Ordinary Shares issuable upon the conversion of 19,285,911 Class B Ordinary Shares beneficially owned by AMTD Digital
Inc.), and constituting approximately 58.4% of our issued and outstanding Ordinary Shares and represented 93.8% of the aggregate voting
power of our total issued and outstanding share capital as of the date of this prospectus (assuming exercise of all outstanding Warrants),
so long as the registration statement of which this prospectus forms a part is available for us. These shares were acquired at prices
significantly below the current trading price of the Class A Ordinary Shares.
Sales of a substantial number
of Registered Securities, or the perception that those sales might occur, could result in a significant decline in the public trading
price of our securities and could impair our ability to raise capital through the sale or issuance of additional equity securities. We
are unable to predict the effect that such sales may have on the prevailing market price of our securities. Despite such a decline in
the public trading price, certain Selling Securityholders may still experience a positive rate of return on the Registered Securities
due to the lower price at which they acquired the Registered Securities compared to other public investors and may be incentivized to
sell the Class A Ordinary Shares or Warrants when others are not. For example, based on the closing price of the Class A Ordinary
Shares and Warrants as referenced above, holders of the Sponsor Shares may experience a potential profit of up to US$7.7835 per share
on the Sponsor Shares; holders of the AMTD Shares may experience a potential profit of up to US$0.29 per share; South Horizon Oceans (Group)
Co. Inc. and Radisson Everton Venture Fund may experience a potential profit on their Legacy Shares if the price of the Class A
Ordinary Shares exceeds US$15.70 per share and US$15.70 per share, respectively; and the Sponsor may experience a potential profit on the
Sponsor Warrants if the price of the Class Ordinary Shares exceeds US$11.50 per share. Public investors may not experience a similar rate
of return on the securities they purchase due to differences in the purchase prices that they paid and the current trading price. Public
investors may not experience a similar rate of return on the securities they purchase due to differences in the purchase prices that they
paid and the current trading price.
Our shareholders may also
sell large amounts of our securities in the open market or in privately negotiated transactions pursuant to Rule 144 under the Securities
Act, if available. Any future resale by our shareholders could have the effect of increasing the volatility in the price of our securities
or putting significant downward pressure on the price of our securities.
34
A market for the
Class A Ordinary Shares may not develop, which would adversely affect the liquidity and price of the Class A Ordinary Shares.
The price of our securities may be volatile, and the value of our securities may decline.
An active trading market for
the Class A Ordinary Shares may never develop or, if developed, may not be sustained. You may be unable to sell your Class A
Ordinary Shares unless a market can be established and sustained.
The trading prices of the
Class A Ordinary Shares and the Warrants may be volatile and may fluctuate due to a variety of factors, some of which are
beyond our control, including, but not limited to:
●actual or anticipated fluctuations in our financial condition or results of operations;
●variance in our financial performance from expectations of securities analysts;
●changes in our projected operating and financial results;
●changes in laws and regulations affecting our business, our customers or our industries;
●announcements of new offerings and expansions by us or our competitors;
●our ability to continue to innovate and bring new offerings to market in a timely manner;
●our involvement in actual or potential disputes, litigation or regulatory investigations;
●negative publicity about us, our offerings or our industries;
●changes in our senior management or key personnel;
●announcements of new investments, acquisitions, strategic partnerships, or joint ventures by us or our
competitors;
●sales of our securities by us, our shareholders or our warrant holders, as well as the anticipation of
lock-up releases;
●general economic, political, regulatory, industry, and market conditions; and
●natural disasters or major catastrophic events.
●other events or factors, including those resulting from war, incidents of terrorism, natural disasters,
pandemics or responses to these events.
These and other factors may
cause the market price and demand for the Class A Ordinary Shares and Warrants to fluctuate substantially, which may limit or prevent
investors from readily selling their shares and may otherwise negatively affect the liquidity of the Class A Ordinary Shares and
Warrants. Following periods of high volatility in the market price of a company’s securities, securities class action litigation
has often been brought against that company. Because of the potential volatility of the Class A Ordinary Shares and Warrants, we
may become the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management’s
attention and resources from our business.
There can be no
assurance that we will not be a passive foreign investment company for any taxable year, which could subject U.S. Holders to significant
adverse U.S. federal income tax consequences.
If we are or become a PFIC
within the meaning of section 1297 of the Code for any taxable year during which a U.S. Holder holds Class A Ordinary Shares
or Warrants, certain adverse U.S. federal income tax consequences may apply to such U.S. Holder. A non-U.S. corporation
will generally be a PFIC for U.S. federal income tax purposes if, in any taxable year, either (1) at least 75% of its gross
income for such year is passive income (such as interest, dividends, rents and royalties (other than rents or royalties derived from the
active conduct of a trade or business) and net gains from the disposition of assets giving rise to passive income) or (2) at least
50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets
that produce or are held for the production of passive income.
35
Based on the current and anticipated
value of the assets and the composition of the income and assets, including goodwill and other unbooked intangibles, of us and our subsidiaries,
we do not currently expect to be a PFIC for the taxable year ending December 31, 2025 or foreseeable future taxable years. However,
this conclusion is a factual determination that must be made annually at the close of each taxable year on the basis of the composition
of the income and assets of us and our subsidiaries and, thus, is subject to change. Accordingly, there can be no assurance that we or
any of our subsidiaries will not be a PFIC for any taxable year.
For a more detailed discussion
of the PFIC rules and the risks and adverse tax consequences of PFIC classification to U.S. Holders of the Class A Ordinary
Shares or Warrants, see “Taxation”
Our issuance of
additional share capital in connection with financings, acquisitions, investments, our equity incentive plans or otherwise will dilute
all other shareholders.
We expect to issue additional
share capital in the future that will result in dilution to all other shareholders. We expect to grant equity awards to key employees
under our equity incentive plan. We may also raise capital through equity financings or equity-linked in the future. As part of our business
strategy, we may acquire or make investments in companies, solutions or technologies and issue equity securities to pay for any such acquisition
or investment. Any such issuances of additional share capital may cause shareholders to experience significant dilution of their ownership
interests and the per share value of the Class A Ordinary Shares to decline.
The requirements
of being a public company may strain our resources, divert our management’s attention and affect our ability to attract and retain
qualified board members.
We are subject to the reporting
requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act, the Dodd-Frank Act, applicable stock exchange
rules and other applicable securities rules and regulations. As such, we will incur additional legal, accounting and other expenses that
we did not incur as a private company. These expenses may increase even more if we no longer qualify as an “emerging growth company,”
as defined in Section 2(a) of the Securities Act. The Exchange Act requires, among other things, that we file annual and
current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain
effective disclosure controls and procedures and internal control over financial reporting. We may need to hire more employees post-Business
Combination or engage outside consultants to comply with these requirements, which will increase our post-Business Combination costs and
expenses.
Changing laws, regulations
and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and
financial compliance costs and making some activities more time-consuming. These laws, regulations and standards are subject to varying
interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time
as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters
and higher costs necessitated by ongoing revisions to disclosure and governance practices. These laws and regulations will increase our
legal and financial compliance costs and to render some activities more time-consuming and costly, although we are currently unable to
estimate these costs with any degree of certainty.
Many members of our management
team have limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly
complex laws pertaining to public companies. Our management team may not successfully or efficiently manage the transition to being a
public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and regulations
and the continuous scrutiny of securities analysts and investors. The need to establish the corporate infrastructure demanded of a public
company may divert the management’s attention from implementing its growth strategy, which could prevent us from improving our business,
financial condition and results of operations. Furthermore, we expect these rules and regulations to make it more difficult and more expensive
for us to obtain director and officer liability insurance, and consequently we may be required to incur substantial costs to maintain
the same or similar coverage. These additional obligations could have a material adverse effect on our business, financial condition,
results of operations and prospects. These factors could also make it more difficult for us to attract and retain qualified members of
its board of directors, particularly to serve on our audit committee, and qualified executive officers.
36
As a result of disclosure
of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible,
which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful,
our business and operating results could be adversely affected, and, even if the claims do not result in litigation or are resolved in
our favor, these claims, and the time and resources necessary to resolve them, could cause an adverse effect on our business, financial
condition, results of operations, prospects and reputation.
We are an “emerging
growth company,” and it cannot be certain if the reduced SEC reporting requirements applicable to emerging growth companies will
make our securities less attractive to investors, which could have a material and adverse effect on us, including our growth prospects.
We are an “emerging
growth company” as defined in the JOBS Act. We will remain an “emerging growth company” until the earliest to occur
of (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Business Combination,
(b) in which we have total annual gross revenue of at least US$1.235 billion or (c) in which we are deemed to be a large
accelerated filer, which means the market value of our shares held by non-affiliates exceeds US$700 million as of
the last business day of our prior second fiscal quarter, and (ii) the date on which we issued more than US$1.0 billion in non-convertible debt during
the prior three-year period. We intend to take advantage of exemptions from various reporting requirements that are applicable to most
other public companies, including, but not limited to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley
Act requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal
control over financial reporting and reduced disclosure obligations regarding executive compensation.
In addition, Section 102(b)(1) of
the JOBS Act exempts “emerging growth companies” from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a
class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies, but any such election to opt out is irrevocable. We have elected not to opt out of such extended
transition period, which means that when a standard is issued or revised and it has different application dates for public or private
companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised
standard. This may make comparison of our financial statements with certain other public companies difficult or impossible because of
the potential differences in accounting standards used.
Furthermore, even after we
no longer qualify as an “emerging growth company,” as long as we continue to qualify as a foreign private issuer under the
Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public
companies.
As a result, our shareholders
may not have access to certain information they deem important or at the same time if we were a non-foreign private issuer. We cannot
predict if investors will find our securities less attractive because we rely on these exemptions. If some investors find our securities
less attractive as a result, there may be a less active trading market and share price for our securities may be more volatile.
We qualify as a
foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions
applicable to United States domestic public companies.
Because we qualify as a foreign
private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States
that are applicable to U.S. domestic issuers, including: (i) the rules under the Exchange Act requiring the filing of quarterly
reports on Form 10-Q or current reports on Form 8-K with the SEC; (ii) the sections of the Exchange Act regulating
the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; (iii) the
sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability
for insiders who profit from trades made in a short period of time; and (iv) the selective disclosure rules by issuers of material
nonpublic information under Regulation FD.
37
We will be required to file
an annual report on Form 20-F within four months of the end of each fiscal year. Press releases relating to financial results
and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or
furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers.
Accordingly, you may receive less or different information about us than you currently receive about Black Spade II or that you would
receive about a U.S. domestic public company.
We could lose our status as
a foreign private issuer under current SEC rules and regulations if more than 50% of our outstanding voting securities become directly
or indirectly held of record by U.S. holders and any one of the following is true: (i) the majority of our directors or executive
officers are U.S. citizens or residents; (ii) more than 50% of our assets are located in the United States; or (iii) our
business is administered principally in the United States. If we lose our status as a foreign private issuer in the future, we will
no longer be exempt from the rules described above and, among other things, will be required to file periodic reports and annual and quarterly
financial statements as if we were a company incorporated in the United States. If this were to happen, we would likely incur substantial
costs in fulfilling these additional regulatory requirements, and members of our management would likely have to divert time and resources
from other responsibilities to ensuring these additional regulatory requirements are fulfilled.
We have no experience
operating as a stand-alone public company.
The Generation Essentials
Group was incorporated in February 2023 as a subsidiary of our Controlling Shareholder. However, we have no experience conducting
our operations as a stand-alone public company. Prior to this offering, our Controlling Shareholder has provided us with financial, administrative,
human resources and legal services, and also has provided us with the services of a number of its executives and employees. We expect
our Controlling Shareholder to continue to provide us with certain support services, but we cannot assure you we will continue to receive
the same level of support from our Controlling Shareholder. To the extent our Controlling Shareholder does not continue to provide us
with such support, we will need to create our own support system. We may encounter operational, administrative and strategic difficulties
as we adjust to operating as a stand-alone public company. This may cause us to react more slowly than our competitors to industry changes
and may divert our management’s attention from running our business or otherwise harm our operations.
In addition, as a public company,
our management team will need to develop the expertise necessary to comply with the numerous regulatory and other requirements applicable
to public companies, including requirements relating to corporate governance, listing standards and securities and investor relationships
issues. As a stand-alone public company, our management will have to evaluate our internal controls system with new thresholds of materiality,
and to implement necessary changes to our internal controls system. We cannot guarantee that we will be able to do so in a timely and
effective manner.
We may have conflicts
of interest with our Controlling Shareholder and its affiliates and, because of our Controlling Shareholder’s controlling ownership
interest in our company, we may not be able to resolve such conflicts on terms favorable to us.
Our Controlling Shareholder
has significant influence in determining the outcome of any corporate actions or other matters that require shareholder approval, such
as mergers, consolidations, change of our name, and amendments of our memorandum and articles of association.
The concentration of ownership
and voting power may cause transactions to occur in a way that may not be beneficial to our securityholders and may prevent us from pursuing
transactions that would be beneficial to our securityholders. Conflicts of interest may arise between our Controlling Shareholder or its
affiliates and us in a number of areas relating to our past and ongoing relationships. Potential conflicts of interest that we have identified
include the following:
●Our board members or executive officers may have conflicts of interest. Our chief executive
officer, Giampietro Baudo, is the chief executive officer of AMTD Digital Inc. Our chief financial officer and director, Samuel Chau,
is the chief financial reporting officer of our Controlling Shareholder. Our independent director, Dr. Feridun Hamdullahpur, is also
a director of our Controlling Shareholder and an independent director of AMTD Digital Inc. and AMTD IDEA Group. Also, Joanne Shoveller
is an independent director of AMTD Digital Inc. As a result, they may not have sufficient capacity to perform their duties in our company.
These overlapping relationships could create, or appear to create, conflicts of interest when these persons are faced with decisions with
potentially different implications for our Controlling Shareholder and us.
38
●Intellectual Property License Agreement. We license L’Officiel and The Art Newspaper
trademarks and domain names and other intellectual properties we use in our business from AMTD Group Inc. under a license agreement with
AMTD Group Inc. The license agreement has an initial term of 20 years and will automatically renew for terms of five years each
unless either us or AMTD Group Inc. notifies the other party no later than six months prior to the expiration of the then-current
term. The license agreement is also terminable by either part if there is a material breach on the part of the other party that is not
cured within the prescribed period. AMTD Group Inc. may refuse to renew this license agreement or elect to terminate it upon our default.
AMTD Group Inc. may not perform its obligations under this agreement in our best interest, or at all, and may act in a way that is detriment
to our business interest.
●Sale of shares or assets in our company. Our Controlling Shareholder may decide to sell all
or a portion of our shares that it holds to a third party, including to one of our competitors, thereby giving that third party substantial
influence over our business and our affairs. In addition, our Controlling Shareholder may decide, or be obligated under any of its applicable
debt covenant, to sell all or a portion of our shares or our assets in the event of default of our Controlling Shareholder or any of its
affiliates under any applicable debt or other obligations or otherwise becomes insolvent. Such a sale of our shares or our assets could
be contrary to the interests of our employees or our other shareholders. In addition, our Controlling Shareholder may also discourage,
delay, or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for
their shares as part of a sale of our company and might reduce the price of our securities.
●Allocation of business opportunities. Business opportunities may arise that both we and our
Controlling Shareholder find attractive, and which would complement our respective businesses. Although we entered into a master transaction
agreement under which our Controlling Shareholder agrees not to pursue investment opportunities without first presenting them to us, our
Controlling Shareholder may discourage, delay, or prevent a profitable investment opportunity before our board of directors or shareholders
and subsequently decide to pursue investment opportunities or take business opportunities for itself, which would prevent us from taking
advantage of those opportunities. These actions may be taken even if they are opposed by our other shareholders.
●Developing business relationships with our Controlling Shareholder’s competitors. So
long as our Controlling Shareholder remains as our controlling shareholder, we may be limited in our ability to do business with its competitors.
This may limit our ability to market our services for the best interests of our company and our other shareholders.
As a company incorporated
in the Cayman Islands and a “controlled company” within the meaning of NYSE Listed Company Manual, we are permitted to adopt
certain home country practices in relation to corporate governance matters that differ significantly from corporate governance listing
standards applicable to domestic U.S. companies or rely on exemptions that are available to a “controlled company”; these
practices may afford less protection to shareholders than they would enjoy.
We are an exempted company
incorporated in the Cayman Islands and as a foreign private issuer. NYSE Listed Company Manual permits a foreign private issuer like us
to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which
is our home country, may differ significantly from corporate governance listing standards applicable to domestic U.S. companies.
The Generation Essentials
Group is a “controlled company” under NYSE Listed Company Manual because the Controlling owns more than 50% of our total voting
power. For so long as The Generation Essentials Group remains a controlled company under that definition, it is permitted to elect to
rely, and may rely, on certain exemptions from applicable corporate governance rules.
39
As a foreign private issuer
and a “controlled company”, The Generation Essentials Group is permitted to elect to rely, and may rely, on certain exemptions
from corporate governance rules, including (i) an exemption from the rule that a majority of our board of directors must be
independent directors; (ii) an exemption from the rule that director nominees must be selected or recommended solely by independent
directors; (iii) an exemption from the rule that the compensation committee must be comprised solely of independent directors and
(iv) an exemption from the requirement that an audit committee be comprised of at least three members under NYSE Listed Company Manual.
We are currently relying on the exemptions under (i) and (iv) and we may rely on additional exemptions available to foreign private issuers
and as a “controlled company.”
As a result, you may not be
provided with the benefits of certain corporate governance requirements of applicable to companies that are subject to these corporate
governance requirements.
You may face difficulties
in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated
under the laws of the Cayman Islands, and we conduct substantially all of our operations, and a majority of our directors and executive
officers reside, outside of the United States.
We are an exempted company
limited by shares incorporated under the laws of the Cayman Islands. Substantially all of our assets are located outside the United States.
A majority of our officers and directors reside outside the United States and a substantial portion of the assets of those persons
are located outside of the United States. As a result, it may be difficult for investors to effect service of process within the
United States upon our directors or officers, or to enforce judgments obtained in the United States courts against our directors
or officers. For more information regarding the relevant laws of the Cayman Islands, see “Enforceability of Civil Liabilities and
Agent for Service Of Process in the United States.”
Our corporate affairs are
governed by the Amended Articles, the Cayman Islands Companies Act and the common law of the Cayman Islands. The rights of our shareholders
to take action against our directors, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands
law are to a large extent governed by the common law of the Cayman Islands. We will also be subject to the federal securities laws of
the United States. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman
Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on
a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are different
from what they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, the Cayman
Islands has a different body of securities laws as compared to the United States and certain states, such as Delaware, may have more
fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate
a shareholders derivative action in a federal court of the United States.
Shareholders of Cayman Islands
exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and
articles of association, list of directors, special resolutions, and the register of mortgages and charges, of such companies) or to obtain
copies of lists of shareholders of these companies. Our directors have discretion under the Amended Articles to determine whether or not,
and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our
shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder
motion or to solicit proxies from other shareholders in connection with a proxy contest.
Certain corporate governance
practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other
jurisdictions such as the United States. If we choose to follow home country practice in the future, our shareholders may be afforded
less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
As a result of all of the
above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members
of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.
For a discussion of significant differences between the provisions of the Cayman Islands Companies Act and the laws applicable to companies
incorporated in the United States and their shareholders, see “Differences in Corporate Law.”
40
It is not expected
that we will pay dividends in the foreseeable future.
It is expected that we will
retain most, if not all, of its available funds and any future earnings to fund the development and growth of our business. As a result,
it is not expected that we will pay any cash dividends in the foreseeable future.
Our board of directors will
have discretion as to whether to distribute dividends. Even if the board of directors decides to declare and pay dividends, the timing,
amount and form of future dividends, if any, will depend on the future results of operations and cash flow, capital requirements and surplus,
the amount of distributions, if any, received by us from subsidiaries, our financial condition, contractual restrictions and other factors
deemed relevant by the board of directors. Accordingly, you may need to rely on sales of our securities after price appreciation, which
may never occur, as the only way to realize any future gains on your investment. There is no guarantee that our securities will appreciate
in value or that their market price will not decline.
Our dual-class voting
structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions
that holders of Class A Ordinary Shares may consider beneficial.
We have a dual-class voting
structure such that our ordinary shares will consist of Class A Ordinary Shares and Class B ordinary shares. Holders of Class
A Ordinary Shares and Class B Ordinary Shares have the same rights other than voting and conversion rights. Each holder of Class A Ordinary
Shares will be entitled to one vote per share and each holder of Class B Ordinary Shares will be entitled to 20 votes per share on all
matters submitted to them for a vote. Class A Ordinary Shares and Class B Ordinary Shares will vote together as a single class on all
matters submitted to a vote of our shareholders, except as may otherwise be required by law. Each Class B Ordinary Share will be convertible
into one Class A Ordinary Share, whereas Class A Ordinary Shares will not be convertible into Class B Ordinary Shares under any circumstances.
Upon any transfer of Class B Ordinary Shares by a holder thereof to any person other than Dr. Calvin Choi or any other person
designated by Dr. Calvin Choi, each such Class B Ordinary Share will automatically and immediately convert into one Class A
Ordinary Share.
As of the date of this prospectus,
AMTD Digital holds all of the Class B Ordinary Shares, constituting 39.8% of the total outstanding Ordinary Shares and 93.0% of our total
voting power. AMTD Digital (and therefore Our Controlling Shareholder) has considerable influence over matters requiring shareholder approval,
over matters such as electing directors and approving material mergers, acquisitions or other business combination transactions. This
concentrated control will limit your ability to influence corporate matters and could also discourage others from pursuing any potential
merger, takeover, or other change of control transaction, which could have the effect of depriving the holders of Class A Ordinary Shares
of the opportunity to sell their shares at a premium over the prevailing market price.
Our dual-class voting
structure may render Class A Ordinary Shares and Warrants ineligible for inclusion in certain stock market indices, and thus adversely
affect the trading price and liquidity of such securities.
Certain index providers have
announced restrictions on including companies with multi-class share structures in certain of their indices. For example, S&P Dow
Jones and FTSE Russell have changed their eligibility criteria for inclusion of shares of public companies on certain indices, including
the S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of
total voting power from being added to such indices. As a result, our dual-class voting structure may prevent the inclusion of Class A
Ordinary Shares and Warrants in such indices, which could adversely affect the trading price and liquidity of such securities.
41
The Warrant Agreement designates the courts
of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by holders of the Warrants, which could limit the ability of Warrant holders
to obtain a favorable judicial forum for disputes with us in connection with such Warrants.
The Warrant Agreement provides
that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the agreement,
will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District
of New York, and (ii) we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such
action, proceeding or claim. We have waived any objection to such exclusive jurisdiction and that such courts represent an inconvenient
forum. Notwithstanding the foregoing, these provisions of the Warrant Agreement do not apply to suits brought to enforce any liability
or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America
are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of warrants under the Warrant
Agreement shall be deemed to have notice of and to have consented to the forum provisions thereof. If any action, the subject matter of
which is within the scope the forum provisions of the Warrant Agreement, is filed in a court other than a court of the State of New York
or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any
holder of the warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal
courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an
“enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action
by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
The choice-of-forum provision
limits a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us, which may discourage
such lawsuits. Alternatively, if a court were to find this provision of the Warrant Agreement inapplicable or unenforceable with respect
to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters
in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result
in a diversion of the time and resources of our management and board of directors.
42
CAPITALIZATION
AND INDEBTEDNESS
The following table sets forth
our cash and cash equivalents and capitalization as of December 31, 2024 on a (i) historical basis; and (ii) on a pro forma basis,
as adjusted to give effect to the consummation of the Business Combination and the other transactions contemplated by the Business Combination
Agreement. See “Unaudited Pro Forma Condensed Combined Financial Information” for information regarding the basis of
the pro forma calculation, including the assumptions and adjustments in respect thereof.
The information in this table
should be read in conjunction with our financial statements and the related notes thereto and other financial information included in
this prospectus, any prospectus supplement or incorporated by reference in this prospectus. Our historical results do not necessarily
indicate our expected results for any future periods.
As of
December 31, 2024
US$ in thousands
Actual
Pro Forma
Cash and bank balances
19,978
37,299
Equtiy:
Ordinary shares
-
60,041
Reverses
665,277
605,436
Equtiy attributable to the owners of the Company
665,277
665,477
Non-controlling interets
103,853
103,853
Total equity (A)
769,130
769,330
Long-term debts:
Long-term interest-bearing bank borrowings
219,433
219,433
Long-term lease liabilities
267
267
Long-term amount due to ultimate holding company
102,622
102,622
Total long-term debt (B)
322,322
322,322
Total capitalization (A) + (B)
1,091,452
1,091,652
43
SELECTED
HISTORICAL FINANCIAL DATA
The following tables present
our selected combined financial data. We prepare our combined financial statements in accordance with IFRS. Except for numbers in
U.S. dollars, the selected consolidated statements of profit or loss and other comprehensive income for the years ended December 31,
2022, 2023 and 2024, the selected consolidated statements of financial position as of December 31, 2022, 2023 and 2024 and the selected
consolidated statement of cash flows data for the years ended December 31, 2022, 2023 and 2024 have been derived from our audited
consolidated financial statements, which are included elsewhere in this prospectus. Our historical results for any prior period are not
necessarily indicative of results expected in any future period.
The financial data set forth
below should be read in conjunction with, and is qualified by reference to “Management’s Discussion and Analysis of Financial
Condition and Results of Operation” and the combined financial statements and notes thereto included elsewhere in this prospectus.
Selected Consolidated Statements
of Profit or Loss and Other Comprehensive Income
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
REVENUE
Media advertising and marketing services income
7,670
14,422
18,859
Hotel operation, hospitality and VIP services income
3,201
5,423
23,132
Dividend income and gain related to disposed financial assets at fair value through profit or loss (“FVTPL”)
7,381
60,457
8,681
Net fair value changes on FVTPL and derivative financial instruments
13,011
(37,759)
26,342
31,263
42,543
77,014
Cost of production and cost of hotel operation
(3,239)
(5,886)
(15,612)
Other income
522
1,245
24,815
Gain from a bargain purchase
4,848
4,469
—
Impairment losses under expected credit loss (“ECL”) model on financial assets
(501)
—
—
Other operating expenses
(3,500)
(5,677)
(15,542)
Staff costs
(3,900)
(7,891)
(13,132)
Share of profits (losses) of joint ventures
815
(2,608)
(558)
Finance costs
(2,586)
(7,136)
(10,612)
PROFIT BEFORE TAX
23,722
19,059
46,373
Income tax expense
(599)
(1,811)
(1,643)
PROFIT FOR THE YEAR
23,123
17,248
44,730
OTHER COMPREHENSIVE INCOME (EXPENSES)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
602
(966)
(4,571)
Share of other comprehensive income of joint ventures
53,946
5,269
2,833
Items that will not be reclassified subsequently to profit or loss:
Exchange difference on translation from functional currency to presentation currency
512
(361)
2,463
Surplus on revaluation of properties
20,213
9,041
20,629
OTHER COMPREHENSIVE INCOME FOR THE YEAR
75,273
12,983
21,354
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
98,396
30,231
66,084
Profit for the year attributable to:
Owners of the Company
14,975
8,164
27,751
Non-controlling interests
8,148
9,084
16,979
23,123
17,248
44,730
Total comprehensive income for the year attributable to:
Owners of the Company
75,061
11,144
41,725
Non-controlling interests
23,335
19,087
24,359
98,396
30,231
66,084
Earnings per shares
Basic and diluted (US$)
0.65
0.45
1.64
44
Selected Consolidated Statements
of Financial Position
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
ASSETS
Non-current assets
Property, plant and equipment
173,345
195,109
574,693
Intangible assets
93,042
118,678
119,381
Interests in joint ventures
99,884
95,686
—
Financial assets at FVTPL
102,702
60,243
395,337
Total non-current assets
468,973
469,716
1,089,411
Current assets
Accounts receivable
2,831
5,339
6,457
Prepayments, deposits and other receivables
1,959
2,645
3,042
Financial assets at FVTPL
21,219
17,558
25,207
Derivative financial instruments
185,069
—
30,339
Restricted cash
415
135
—
Cash and bank balances
1,208
6,121
19,978
Total current assets
212,701
31,798
85,023
Total assets
681,674
501,514
1,174,434
EQUITY AND LIABILITIES
Current liabilities
Accounts payable
6,100
5,794
2,785
Other payables and accruals
9,804
17,151
7,309
Contract liabilities
1,303
809
564
Tax payable
—
812
1,554
Borrowings
571
741
176
Lease liabilities
100
185
253
Provisions
4,079
3,866
—
Amounts due to subsidiaries’ non-controlling shareholders
52,611
53,727
63,019
Total current liabilities
74,568
83,085
75,660
Non-current liabilities
Accounts payable
3,746
3,014
—
Provisions
—
—
1,664
Borrowings
51,126
61,563
219,433
Lease liabilities
120
198
267
Deferred tax liabilities
2,661
5,624
5,658
Amount due to ultimate holding company
62,810
70,196
102,622
Total non-current liabilities
120,463
140,595
329,644
Total liabilities
195,031
223,680
405,304
CAPITAL AND RESERVES
Share capital
—*
—*
—*
Reserves
289,265
103,780
665,277
Equity attributable to owners of the Company
289,265
103,780
665,277
Non-controlling interests
197,378
174,054
103,853
Total equity
486,643
277,834
769,130
Total liabilities and equity
681,674
501,514
1,174,434
*The amount is less than US$1,000.
45
Selected Consolidated Statements
of Cash Flows
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
OPERATING ACTIVITIES
Profit before tax
23,722
19,059
46,373
Adjustments for:
Interest income
—
(4)
(17)
Dividend income
(6,412)
(9,935)
(8,681)
Net fair value changes on financial assets at FVTPL and derivative financial instruments
(13,011)
37,759
(26,342)
Gain on disposal of financial assets at FVTPL and derivative financial instruments
(969)
(50,522)
—
Finance costs
2,586
7,136
10,612
Depreciation on property, plant and equipment
1,068
2,824
11,712
Amortization on intangible assets
9
9
9
Gain from a bargain purchase
(4,848)
(4,469)
—
Gain on disposal of subsidiaries
—
—
(24,757)
Share of (profits) losses of joint ventures
(815)
2,608
558
Impairment losses under ECL model on financial assets
501
—
—
Operating cash flows before changes in working capital
1,831
4,465
9,467
Increase in accounts receivable
(929)
(1,834)
(3,727)
Decrease (increase) in prepayments, deposits and other receivables
494
(385)
(2,435)
Decrease (increase) in restricted cash
62
280
(72)
(Decrease) increase in accounts payable
(1,643)
(1,440)
924
(Decrease) increase in other payables and accruals
(1,897)
1,316
434
Increase (decrease) in contract liabilities
756
(913)
(216)
(Decrease) increase in provisions
(95)
(355)
175
Cash (used in) from operations
(1,421)
1,134
4,550
Profits Tax paid
—
(6)
—
Bank interest received
—
4
17
Net cash (used in) from operating activities
(1,421)
1,132
4,567
INVESTING ACTIVITIES
Addition to property, plant and equipment
—
—
(8)
Net cash inflow from acquisition of subsidiaries
247
27
4,273
Net cash outflow from disposal of subsidiaries
—
—
(953)
Net receipt from amounts due from joint ventures
—
6,673
—
Net cash from investing activities
247
6,700
3,312
FINANCING ACTIVITIES
Interests paid
(1,550)
(2,638)
(10,920)
Payment of lease liabilities
—
(81)
(280)
Receipts of bank borrowings
5,303
—
—
Bank borrowings repayment
—
(508)
(1,757)
Repayment to subsidiaries’ non-controlling shareholders
(6,432)
(2,059)
(15,675)
Net receipt of amount due to ultimate holding company
3,743
2,814
34,864
Net cash from (used in) financing activities
1,064
(2,472)
6,232
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(110)
5,360
14,111
Cash and cash equivalents at the beginning of the year
1,268
1,208
6,121
Effect of foreign exchange rate change, net
50
(447)
(254)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
1,208
6,121
19,978
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances
1,208
6,121
19,978
46
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
The following unaudited pro
forma condensed combined financial statements present the combination of the financial information of The Generation Essentials Group
and Black Spade II adjusted to give effect to (i) the Transactions” and (ii) the TGE Reorganization. The following
unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as
amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.”
Defined terms included in these financial statements have the same meaning as terms defined and included elsewhere in this prospectus.
The following unaudited pro
forma condensed combined statement of financial position as of December 31, 2024 combines the audited consolidated statement of financial
position of The Generation Essentials Group as of December 31, 2024 with the audited historical balance sheet of Black Spade II
as of December 31, 2024, as if the Transactions had been completed on December 31, 2024.
The following unaudited pro
forma condensed combined statement of profit or loss and other comprehensive income for the year ended December 31, 2024 combines
the audited statement of profit or loss and other comprehensive income of The Generation Essentials Group for the year ended December 31,
2024 with the audited statements of operations of Black Spade II for the period from May 9, 2024 (inception) to December 31,
2024, as if the Transactions, the TGE Reorganization and Black Spade II’s IPO had been completed on January 1, 2024.
The historical financial information
of Black Spade II was derived from its audited financial statements for period from May 9, 2024 (inception) to December 31,
2024, included elsewhere in this prospectus. The historical financial information of The Generation Essentials Group was derived from
its audited consolidated financial statements for the year ended December 31, 2024, included elsewhere in this prospectus. The unaudited
pro forma condensed combined financial information and the accompanying notes should be read together with The Generation Essentials Group’s
and Black Spade II’s financial statements and related notes, the section titled “Management’s Discussion and
Analysis of Financial Condition and Results of Operation,” and other financial information included elsewhere in this
prospectus.
The pro forma adjustments
related to the Transactions, which we refer to as the “Transactions Adjustments,” the pro forma adjustments related to the
TGE Reorganization, which we refer to as the “TGE Reorganization Adjustments,” and the pro forma adjustments related to the
Black Spade II’s IPO, which we refer to as the “Completion of Initial Public Offering Adjustments,” collectively, are
described in the notes to the unaudited pro forma consolidated financial information.
The unaudited pro forma condensed
combined statements of profit or loss and other comprehensive income (i) are based on information currently available, (ii) are
intended for informational purposes only, (iii) are not necessarily indicative of and do not purport to represent what our operating
results would have been had the Transactions, TGE Reorganization and Black Spade II’s IPO occurred as described or what our future
operating results will be after giving effect to these events, and (iv) do not reflect all actions that may be undertaken by us after
the Transactions, TGE Reorganization and Black Spade II’s IPO.
Description of the Transactions
On January 27, 2025,
Black Spade II entered into the Business Combination Agreement with The Generation Essentials Group and WME Merger Sub Limited, a
wholly owned subsidiary of The Generation Essentials Group (“Merger Sub”). Pursuant to the Business Combination Agreement,
on June 3, 2025, Merger Sub merged with and into Black Spade II, with Black Spade II surviving the Merger. As a result of the Merger,
and upon consummation of the Merger and the other transactions entered into in connection with the Business Combination Agreement, Black
Spade II became a wholly owned subsidiary of The Generation Essentials Group, with the securityholders of Black Spade II becoming
securityholders of The Generation Essentials Group. After the completion of the Transactions, (i) the Class A Ordinary Shares
became listed on the NYSE under the trading symbol “TGE,” (ii) the Warrants became listed on the NYSE American under the trading
symbol “TGE WS,” and (iii) The Generation Essentials Group became a publicly-listed entity.
47
Pursuant to the Business Combination
Agreement at the Merger Effective Time:
●Each Class B ordinary share of Black Spade II, par value $0.0001 per share (“BSII Class B Ordinary
Shares”) that was issued and outstanding immediately prior to the Merger Effective Time was automatically cancelled in exchange
for the right to receive one Class A Ordinary Share;
●Each Class A ordinary share of Black Spade II, par value $0.0001 per share (“BSII Class A Ordinary
Share”) that was issued and outstanding immediately prior to the Merger Effective Time (other than such BSII Class A Ordinary Shares
that were treasury shares, validly redeemed shares or BSII Dissenting Shares (as defined below)) was cancelled in exchange for the right
to receive one Class A Ordinary Share;
●Each BSII Class A Ordinary Share that was held as a treasury share was cancelled and cease to exist;
●Each issued and outstanding BSII Class A Ordinary Share that was validly redeemed was cancelled in exchange
for the right to be paid a pro rata share of the aggregate amount payable with respect to the exercise of the redemption rights of Black
Spade II Shareholders;
●Each issued and outstanding BSII Class A Ordinary Share that was held by any person who had validly exercised
and not effectively withdrawn or lost their right to dissent from the Merger in accordance with Section 238 of the Cayman Islands
Companies Act (“BSII Dissenting Share”) was cancelled and carried no right other than the right to receive the payment of
the fair value of such BSII Dissenting Share determined in accordance with Section 238 of the Cayman Islands Companies Act; and
●Each issued and outstanding warrant of Black Spade II exercisable for shares of Black Spade II was exchanged
for a corresponding warrant exercisable for Class A Ordinary Shares (“Warrants”).
The unaudited pro forma condensed
combined financial information has been prepared to reflect the actual redemption of 13,120,874 shares of Class A ordinary shares in Black
Spade II’s initial public offering by the Black Spade II Public Shareholders prior to the consummation of the Business Combination.
The Business Combination is
accounted for as a recapitalization, with no goodwill or other intangible assets recorded, in accordance with IFRS.
Anticipated Accounting
Treatment
Notwithstanding the legal
form of the Business Combination pursuant to the Business Combination Agreement, the Business Combination is accounted for as a reverse
merger in accordance with IFRS as issued by the IASB. Under this method of accounting, Black Spade II is treated as the “acquired”
company and The Generation Essentials Group is treated as the acquirer for financial statement reporting purposes.
The Business Combination,
which is not within the scope of IFRS 3 since Black Spade II does not meet the definition of a business in accordance with IFRS 3,
is accounted for as a share-based payment transaction within the scope of IFRS 2. The net assets of The Generation Essentials Group will
be stated at their pre-combination carrying amounts, with no goodwill or other intangible assets recorded. Any excess of the fair value
of consideration transferred to Black Spade II shareholders over the fair value of Black Spade II’s identifiable net assets
acquired represents compensation for the service of a stock exchange listing for its shares and is expensed as incurred.
48
Consideration
The following represents the
aggregate consideration from the Transactions, assuming no Warrants have been exercised:
Purchase price
Share issue
US$’000
Share Consideration
60,041
6,004,126
The value of ordinary shares
is reflected at $10 per share, taking into account the TGE Reorganization.
Ownership
The following summarizes the
unaudited pro forma ordinary shares of The Generation Essentials Group outstanding following the completion of the Business Completion
based on the actual redemptions by Black Spade II Public Shareholders, assuming no Warrants have been exercised:
Number of shares(1)
%
Black Spade II Public Shareholders
Public Shares(2)
2,179,126
4.0
2,719,126
4.0
Sponsor and other Initial Shareholder of Black Spade II
Founder Shares(3)
3,825,000
7.0
3,825,000
7.0
Current TGE Shareholders
Voting Ordinary Shareholders
AMTD Digital Inc.
19,285,911
35.2
AMTD IDEA Group
18,425,068
33.6
South Horizon Oceans (Group) Co. Inc.
3,235,714
5.8
Radisson Everton Venture Fund
1,464,944
2.7
AMTD Group Inc.
45,307
0.1
42,456,944
77.5
Non-voting Redeemable Ordinary
Shareholders
AMTD Digital Inc.
6,343,056
11.5
48,800,000
89.0
54,804,126
100.0
Notes:
(1)The share amounts and ownership percentages set forth above are not indicative of voting percentages.
Excludes the potential dilutive effect of any Warrants outstanding, earnout shares that may be issued after the Closing or equity awards
that may be granted under the 2025 Share Incentive Plan. If the actual facts are different from the assumptions set forth above, the share
amounts and percentage ownership numbers set forth above will be different.
(2)Represents the issuance of ordinary shares of The Generation Essentials Group to Black Spade II Public
Shareholders following the completion of the Business Completion.
(3)Represents the issuance of ordinary shares of The Generation Essentials Group to the Sponsor and the other
shareholders of Black Spade II following the completion of the Business Completion.
49
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT
OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2024
IFRS
Conversion
and
Transactions
TGE
Black Spade II
Presentation Alignment
Adjustments
Pro forma Combined
US$’000
US$’000
US$’000
US$’000
US$’000
REVENUE
Media advertising and marketing services income
18,859
—
—
—
18,859
Hotel operation, hospitality and VIP service income
23,132
—
—
—
23,132
Dividend income and gain related to disposed financial assets at fair value through profit or loss (“FVTPL”)
8,681
—
—
—
8,681
Net fair value changes on financial assets at fair value through profit or loss and derivative financial instruments
26,342
—
—
—
26,342
77,014
—
—
—
77,014
Cost of production and hotel operation
(15,612)
—
—
—
(15,612)
Other income
24,815
2,717
—
(2,475)(aa)
25,057
Other operating expenses
(15,542)
(1,485)
—
(2,500)(bb)
(52,814)
(33,287)(cc)
Staff costs
(13,132)
—
—
—
(13,132)
Share of losses of joint ventures
(558)
—
—
—
(558)
Finance costs
(10,612)
—
—
—
(10,612)
PROFIT BEFORE TAX
46,373
1,232
—
(38,262)
9,343
Income tax expense
(1,643)
—
—
—
(1,643)
PROFIT FOR THE YEAR
44,730
1,232
—
(38,262)
7,700
OTHER COMPREHENSIVE INCOME (EXPENSES)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
(4,571)
—
—
—
(4,571)
Share of other comprehensive income of joint ventures
2,833
—
—
—
2,833
Items that may be reclassified subsequently to profit or loss:
Exchange difference on translation from functional currency to presentation currency
2,463
—
—
—
2,463
Surplus on revaluation of properties
20,629
—
—
—
20,629
OTHER COMPREHENSIVE INCOME FOR THE YEAR
21,354
—
—
—
21,354
TOTAL COMPREHENSIVE INCOME (EXPENSES) FOR THE YEAR
66,084
1,232
—
(38,262)
29,054
Profit for the year attributable to:
Owners of the Company
27,751
1,232
—
(38,262)
(9,279)
Non-controlling interests
16,979
—
—
—
16,979
44,730
1,232
—
(38,262)
7,700
Total comprehensive income for the year attributable to:
Owners of the Company
41,725
1,232
—
(38,262)
4,695
Non-controlling interests
24,359
—
—
—
24,359
66,084
1,232
—
(38,262)
29,054
Weighted-average TGE’s ordinary shares outstanding, basic and diluted
16,964,013
48,461,070
Profit (loss) per share attributable to TGE’s
ordinary shareholders, basic and diluted
1.64
(0.19)
Weighted average Black Spade II’s redeemable Class A Ordinary Shares subject to possible redemption, basic and diluted
8,038,983
Profit per share attributable to Black Spade II’s redeemable Class A Ordinary Shares subject to possible redemption, basic and diluted
0.11
Weighted average Black Spade II’s non-redeemable Class B Ordinary Shares outstanding, basic
3,599,168
Profit per share attributable to Black Spade II’s non-redeemable Class B Ordinary Shares outstanding, basic
0.11
Weighted average Black Spade II’s non-redeemable Class B Ordinary Shares outstanding, diluted
3,617,902
Profit per share attributable to Black Spade II’s non-redeemable Class B Ordinary Shares outstanding, diluted
0.11
50
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT
OF FINANCIAL POSITION
As of December 31, 2024
IFRS Conversion and
Transactions
TGE
Black Spade II
Presentation Alignment
Adjustments
Pro forma Combined
US$’000
US$’000
US$’000
US$’000
US$’000
ASSETS
Non-current assets
Property, plant and equipment
574,693
—
—
—
574,693
Intangible assets
119,381
—
—
—
119,381
Financial assets at fair value through profit or loss
395,337
—
—
—
395,337
Total non-current assets
1,089,411
—
—
—
1,089,411
Current assets
Accounts receivable
6,457
—
—
—
6,457
Prepayments, deposits and other receivables
3,042
133
—
—
3,175
Financial assets at fair value through profit or loss
25,207
—
—
—
25,207
Derivative financial instruments
30,339
—
—
—
30,339
Cash held in Trust Account
—
155,345
—
(155,345)(c)
—
Cash and bank balances
19,978
2,117
—
21,194(d)
37,299
(4,302)(e)
(1,688)(f)
Total current assets
85,023
157,595
—
(140,141)
102,477
Total assets
1,174,434
157,595
—
(140,141)
1,191,888
EQUITY AND LIABILITIES
Current liabilities
Accounts payable
2,785
—
—
—
2,785
Other payables and accruals
7,309
1,097
—
10,000(g)
18,406
Amount due to related party
—
41
—
—
41
Deferred underwriting fee
—
4,302
—
(4,302)(e)
—
Contract liabilities
564
—
—
—
564
Tax payable
1,554
—
—
—
1,554
Borrowings
176
—
—
—
176
Lease liabilities
253
—
—
—
253
Amounts due to subsidiaries’ non-controlling shareholders
63,019
—
—
—
63,019
Warrant liabilities
—
—
6,116(b)
—
6,116
Black Spade II ordinary shares subject to redemption
—
—
155,345(a)
(155,345)(h)
—
Total current liabilities
75,660
5,440
161,461
(149,647)
92,914
Non-current liabilities
Provisions
1,664
—
—
—
1,664
Borrowings
219,433
—
—
—
219,433
Lease liabilities
267
—
—
—
267
Deferred tax liabilities
5,658
—
—
—
5,658
Amount due to ultimate holding company
102,622
—
—
—
102,622
Total non-current liabilities
329,644
—
—
—
329,644
Total liabilities
405,304
5,440
161,461
(149,647)
422,558
CAPITAL AND RESERVES
Black Spade II’s Class A share capital
—
155,345
(155,345)(a)
—
—
TGE’s share capital
—
—
—
60,041(i)
60,041
Black Spade II’s Class B share capital
—
—
—
—
Reserves
665,277
(3,190)
(6,116)(b)
(48,847)(j)
605,436
(1,688)(f)
Equity attributable to owners of the Company
665,277
152,155
(161,461)
9,506
665,477
Non-controlling interests
103,853
—
—
—
103,853
Total equity
769,130
152,155
(161,461)
9,506
769,330
Total liabilities and equity
1,174,434
157,595
—
(140,141)
1,191,888
51
NOTES TO THE UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1.Basis of Presentation
The unaudited pro forma condensed
combined financial information has been prepared to illustrate the effect of the TGE Reorganization, Black Spade II’s IPO and the
Transactions and has been prepared for informational purposes only.
The historical consolidated
financial statements of The Generation Essentials Group have been prepared in accordance with IFRS. The historical financial statements
of Black Spade II have been prepared in accordance with U.S. GAAP.
For accounting purposes, the
financial statements of the combined company will represent a continuation of the consolidated financial statements of The Generation
Essentials Group with the acquisition being treated as the equivalent of The Generation Essentials Group transferring consideration for
the net assets of Black Spade II and the service of a stock exchange listing for its shares. The net assets of The Generation Essentials
Group will be stated at their pre-combination carrying amounts, with no goodwill or other intangible assets recorded.
The Business Combination,
which is not within the scope of IFRS 3 — Business Combinations (“IFRS 3”) since Black Spade II
does not meet the definition of a business in accordance with IFRS 3, is accounted for within the scope of IFRS 2 — Share-based
Payment (“IFRS 2”). Any excess of the fair value of consideration transferred to Black Spade II shareholders
over the fair value of Black Spade II’s identifiable net assets acquired represents compensation for the service of a stock
exchange listing for its shares and is expensed as incurred.
One-time direct and incremental
transaction costs anticipated to be incurred prior to, or concurrent with, the consummation are reflected in the unaudited pro forma
condensed combined statement of profit or loss and other comprehensive income and are recognized as expenses.
The unaudited pro forma adjustments
are based on information currently available, and assumptions and estimates underlying the unaudited pro forma adjustments are described
in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma
condensed combined financial information.
The Generation Essentials
Group and Black Spade II did not have any historical relationship prior to the Transactions. Accordingly, no pro forma adjustments
were required to eliminate activities between the companies.
The unaudited pro forma condensed
combined statement of financial position as of December 31, 2024, assumes that the Transactions occurred on December 31, 2024.
The unaudited pro forma condensed
combined statement of profit or loss and other comprehensive income for the year ended December 31, 2024 presents the pro forma adjustments
of the Transactions, as if they had been completed on January 1, 2024.
The unaudited pro forma condensed
combined statement of financial position as of December 31, 2024 has been prepared using, and should be read in conjunction with,
the following:
●Black Spade II’s audited balance sheet as of December 31, 2024 and the related notes included
elsewhere in this prospectus; and
●The Generation Essentials Group’s audited consolidated statement of financial position as of December 31,
2024 and the related notes included elsewhere in this prospectus.
The unaudited pro forma condensed
statements of profit or loss and other comprehensive income for the year ended December 31, 2024 have been prepared using, and should
be read in conjunction with, the following:
●Black Spade II’s audited statements of operations for the period from May 9, 2024 (inception)
to December 31, 2024 and the related notes included elsewhere in this prospectus; and
●TGE’s audited consolidated statements of profit or loss and other comprehensive income for the year
ended December 31, 2024 and the related notes included elsewhere in this prospectus.
52
Management has made significant
estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information
has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.
The unaudited pro forma condensed
combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings
that may be associated with the Transactions.
The pro forma adjustments
reflecting the consummation of the Transactions are based on certain currently available information and certain assumptions and methodologies
that The Generation Essentials Group believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which
are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is
likely that the actual adjustments will differ from the pro forma adjustments, and it is possible that the difference may be material.
The Generation Essentials Group believes that these assumptions and methodologies provide a reasonable basis for presenting all of the
significant effects of the Transactions based on information available to management at the time and that the pro forma adjustments give
appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed
combined financial information is not necessarily indicative of what the actual results of operations and financial position would have
been had the Transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations
or financial position of the post-Business Combination company. They should be read in conjunction with the historical financial statements
and notes thereto of Black Spade II and The Generation Essentials Group.
2.IFRS Conversion and Presentation Alignment
The historical financial information
of Black Spade II has been adjusted to give effect to the differences between U.S. GAAP and IFRS as issued by the IASB for the
purposes of the unaudited pro forma condensed combined financial information. The only adjustment required to convert Black Spade
II’s financial statements from U.S. GAAP to IFRS for purposes of the unaudited pro forma condensed combined financial
information was to reclassify Black Spade II’s ordinary shares subject to redemption to financial liabilities under IFRS.
Further, as part of the preparation
of the unaudited pro forma condensed combined financial information, certain reclassifications were made to align Black Spade II’s
historical financial information in accordance with the presentation of The Generation Essentials Group’s historical financial information.
The IFRS conversion and presentation
alignment adjustments included in the unaudited pro forma condensed combined statement of financial position as of December 31,
2024 are as follows:
(a)Reflects the reclassification/alignment of Black Spade II’s ordinary shares subject to redemption
from equity to financial liabilities to align with the statement of financial position presentation of The Generation Essentials Group.
(b)Reflects the reclassification of Black Spade II’s private warrant and public warrant from equity
to financial liabilities to align with the statement of financial position presentation of The Generation Essentials Group.
3.Adjustments to Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed
combined financial information has been prepared to illustrate the effect of the Transactions and has been prepared for informational
purposes only. The adjustments presented on the unaudited pro forma combined financial statements have been identified and presented to
provide relevant information necessary for an accurate understanding of The Generation Essentials Group upon consummation of the Transactions.
Black Spade II and The Generation Essentials Group have not had any historical relationship prior to the Transactions. Accordingly,
no pro forma adjustments were required to eliminate activities between the companies.
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The unaudited pro forma combined
provision for income taxes does not necessarily reflect the amounts that would have resulted had the Post-Business Combination company
filed consolidated income tax returns during the period presented.
The unaudited pro forma basic
and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statements of profit or loss and other
comprehensive income are based upon the number of TGE’s shares outstanding, assuming the Transactions occurred on January 1,
2024.
The Transactions
The impacts from The Transactions
have been included in the unaudited pro forma condensed combined statements of profit or loss and other comprehensive income for the year
ended December 31, 2024 as follows:
(aa)Reflects the exclusion of income earned on investments held in Trust Account which will not be incurred
after the Transactions.
(bb)Represents the transaction costs of the Transactions charged to profit or loss.
(cc)Represents US$33.2 million of expense recognized in accordance with IFRS 2, for the difference between
the fair value of equity instruments issued of US$60.0 million and the fair value of Black Spade II’s identifiable assets of US$$26.8
million. These costs are a non-recurring item.
The Transactions adjustments
included in the unaudited pro forma condensed combined statement of financial position as of December 31, 2024, are as follows:
(c)Reflects the reclassification of US$155.3 million of investments held in the Trust Account that becomes
available following the Transactions.
(d)Represents pro forma adjustments to cash and bank balances to reflect the Transactions:
US$’000
Reclassification of Investments held in the Trust Account
155,345
The payment to redeem BSII Public Shares held by Black Spade II Public Shareholders
(128,591)
Transaction bonus paid to Black Spade II
(5,560)
21,194
(e)Reflects the payment of deferred underwriting commission upon the completion of the Transactions.
(f)Reflect the payment of non-redeeming public shareholders of Black Spade II that are eligible to receive
US$1.25 per share.
(g)Reflects the transaction costs of approximately US$10.0 million payable by The Generation Essentials
Group in connection with the Transactions.
(h)Reflects the reclassification of US$155.3 million of Black Spade II’s Class A ordinary
shares to permanent equity after being converted into Class A ordinary share.
(i)Reflects the share consideration of US$60,041,000 from the issuance of 6,004,126 Class A ordinary
shares at US$10 per share.
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(j)Represents pro forma adjustments to reserves to reflect in the Transactions the following:
US$’000
Share consideration of Class A ordinary shares
(60,041)
Net identifiable assets of Black Spade II
17,448
Difference – being IFRS 2 charge for listing expenses
(42,593)
Reversal of net liabilities of Black Spade II
9,306
Transaction costs incurred
(10,000)
Transaction bonus incurred to Black Spade II
(5,560)
Reduction in reserves
(48,847)
4.Earnings per Share
Earnings per share was calculated
using the historical weighted average number of shares outstanding, the Share Consolidation and the issuance of additional shares in connection
with the Transactions, assuming the shares were outstanding since January 1, 2024. As the Transactions are being reflected as if
they had occurred at the beginning of the period presented, the calculation of weighted average number of shares outstanding for basic
and diluted earnings per share assumes that the shares issuable relating to the Transactions have been outstanding for the entire period
presented. If the maximum number of shares are redeemed, this calculation is retroactively adjusted to eliminate such shares for the entire
period.
Year ended December 31, 2024
Pro forma loss attributable to the owners of The Generation Essentials Group
(9,279)
Weighted average shares outstanding
– Basic and diluted
48,461,070
Pro forma loss per share
– Basic and diluted
(0.19)
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USE
OF PROCEEDS
We will receive proceeds of
up to an aggregate of approximately US$186,530,000 from the exercise of the Warrants if all of the Warrants are exercised for cash. We
expect to use the net proceeds from the exercise of Warrants for general corporate purposes. The likelihood that warrant holders will
exercise the Warrants and any cash proceeds that we would receive are dependent upon the market price of the Class A Ordinary Shares,
among other things. If the market price for the Class A Ordinary Shares is less than US$11.50 per share, we believe warrant holders
will be unlikely to exercise their Warrants. There is no assurance that the Warrants will be “in the money” prior to their
expiration or that the warrant holders will exercise their Warrants. Holders of the Sponsor Warrants have the option to exercise the Sponsor
Warrants on a cashless basis in accordance with the Warrant Agreement. To the extent that any Warrants are exercised on a cashless basis,
the amount of cash we would receive from the exercise of the Warrants will decrease.
We will not receive any proceeds
from any sale of the securities registered hereby by the Selling Securityholders. With respect to the registration of the securities being
offered by the Selling Securityholders, the Selling Securityholders will pay any underwriting discounts and commissions incurred by them
in disposing of such securities, and fees and expenses of legal counsel representing the Selling Securityholders. We have borne all other
costs, fees and expenses incurred in effecting the registration of the Registered Securities, such as registration and filing fees and
fees of our counsel and our independent registered public accountants.
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DIVIDEND
POLICY
The Generation Essentials
Group and our subsidiaries have not declared or paid dividends or made any distributions as of the date of this prospectus. Except for
the Non-Redemption Payment Amount, we do not intend to declare dividends or make distributions in the near future. Any determination to
pay dividends on our ordinary shares would be at the discretion of our board of directors, subject to applicable laws, and would depend
on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our board
of directors may deem relevant.
As a holding company, The
Generation Essentials Group may rely on dividends from our subsidiaries for cash requirements, including any payment of dividends to its
shareholders. The ability of our subsidiaries to pay dividends or make distributions to The Generation Essentials Group may be restricted
by laws and regulations applicable to them or the debt they incur on their own behalf or the instruments governing their debt. Under Cayman
Islands Law, while there are no exchange control regulations or currency restrictions, The Generation Essentials Group is also subject
to certain restrictions under Cayman Islands law on dividend distribution to its shareholders, namely that it may only pay dividends out
of profits or share premium account, and provided always that in no circumstances may a dividend be paid if this would result in The Generation
Essentials Group being unable to pay its debts as they fall due in the ordinary course of business.
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BUSINESS
Overview
We are a global media and
entertainment ecosystem covering high fashion, arts, lifestyle, cultural, entertainment as well as F&B. Inheriting more than
one hundred years of history and with a worldwide geographical presence, we offer a holistic media and entertainment experience to
an audience of millions around the world.
Our publications L’Officiel
and The Art Newspaper publish print editions in a total of 28 countries and territories and digital contents to an even wider scope
of readers globally.
We operate in the movie production
sector having produced various Asia-focused blockbuster movies. We have partnered with established production companies to present a number
of Asia-focused blockbuster movies globally, which in aggregate notched a box office of more than US$400 million.
We hold premium whole building
properties and provide hospitality services in Hong Kong and Singapore. We focus on and specialize in hospitality and lifestyle concepts
and offers a customer-centric VIP members approach for its business portfolio in the key areas comprising stylish hotels and serviced
apartments, F&B, and club membership services in Hong Kong and Singapore, with plans for further global expansion.
We extend the power of our
brands and extensive library of contents and intellectual property through other media, platforms, products and services, including in
the area of F&B.
We also host a multitude of
cultural events to inspire conversation with traditions and bridge exchanges and we have been recognized for our cultural ambassadorship.
Competitive Strengths
The following strengths have
enabled us to become who we are today and will support our continued success:
●We are a trusted source of information for fashion, art, lifestyle, entertainment and digital finance
and we have investment in an established Web3 media platform.
●L’Officiel. L’Officiel is one of the oldest and top fashion magazines
in the world. L’Officiel was born in France, the Mecca for fashion lovers, in 1921. It has been referred to as
“the Bible of fashion and of high society.” Since 2022, it has been marketed under and by reference to the
mark. It is internationally present in 28 countries and engages millions of fashion enthusiasts worldwide. The magazine brings
together numerous luxury brands, A-list artists, designers, celebrities and offers extensive contents including high-end to
high-street fashion for both women and men, and covers beauty, culture, watches, arts and lifestyles. Apart from the main
publication titled “L’OFFICIEL” which focuses on fashion, associated publications covering other tranches
include “L’OFFICIEL HOMMES,” “L’OFFICIEL ART” and “LA REVUE DES
MONTRES.” As the only magazine in the world to have never stopped printing even during the Second World War, L’Officiel
hosts an archive of over 150,000 exclusive fashion images and approximately 50,000 articles and interviews, and accumulates
approximately 10,000 videos from more than 100 years of fashion history.
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●The Art Newspaper. First published in 1990 and with offices in London and New York,
The Art Newspaper positions itself as the international publication of record for the art industry and a prominent art world source
with an authoritative roster of global correspondents covering the art market, technology, museums, exhibitions, books, films and social
media. The publication operates as the journal of record for the art world by covering international art events as the designated publication
for many of the largest and most prominent art events such as Frieze, Art Basel, Art Dubai, Art Week Tokyo, Singapore Art Week, etc. The
Art Newspaper covers international news and art and focuses on contemporary and modern art, fine art, decorative art and designs.
It enjoys the reputation as a bible of the art industry. Its yearly issue, “The Year Ahead,” is an authoritative guide to
the must-see art exhibitions, museum openings and art events around the world. It is an important and unique hub of information for those
working in the art world including curators, museum directors, collectors, auctioneers, dealers, as well as individual art enthusiasts.
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●DigFin. Established in 2016, DigFin is a digital media platform in Asia that
provides contents and insights on digital finance, FinTech, and digital assets. Mr. Jame Dibiasio, the Editor-in-Chief of DigFin,
is an award-winning financial journalist and has worked in the field for nearly 30 years. Mr. Dibiasio have taken home the State
Street Institutional Press Awards for “Outstanding Contribution to Institutional Journalism.” He also founded various
financial trade publications for the region. He is a board member of the FinTech Association of Hong Kong and has previously served
as co-chairman of its WealthTech committee. DigFin organized the “DigFin Innovation Awards” to recognize best companies
and solutions in the world of digital finance. The award has been viewed as one of the most prestigious awards in digital finance and
FinTech in Asia.
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●Forkast Labs. We are a seed investor of Forkast Labs (previously
named Forkast.News), which is a global data, media, and web3-infrastructure company.
●With global presence and a huge audience base, we are a dominant force of consumer retail play. We
have established a strong reputation globally and we have built a vast readership. Through L’Officiel and The Art Newspaper,
we issue multiple print publications in a total of 28 countries and territories, covering Asia, Europe, North America, South America,
and Africa. These prints are complemented by digital versions of L’Officiel and The Art Newspaper published online
which cover a much wider range of audience. DigFin is a 24-hour online platform for readers to acquire first-hand information.
We have three podcast brands under DigFin and The Art Newspaper. We also provide live reporting at events and real-time
and interactive information through multimedia platforms including Instagram, LinkedIn, Facebook, Threads and X so that our readers
remain at the forefront of their areas of interests. Our hospitality and VIP services and the voguish hotels, serviced apartments and
clubs we operate provide additional venues where we can engage with our audience. With an online and offline audience of millions and
backed by our technology architecture, we are able to gain invaluable cross-platform insights into their preferences which we believe
is a key competitive advantage for us to create stickier relationships with our audience and purposefully develop existing businesses
or venture into new businesses to match their evolving needs with respect to non-content products and services. For example, we have adopted
the strategy of cross-selling to our advertising customers to incrementally place advertisements in other products and services that we
provide.
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●Inheriting a century-old legacy, we are in possession of rich IP and contents and an extensive network
of designers, artists, brands, galleries, event curators and celebrities, which enable us to generate creative synergies among existing
businesses and organically create new opportunities. As Marcel Duchamp once put it, “it is not what you see that is
art, art is the gap,” and our mission is to bridge the gap and transcend the life experience of our audience with art. We have accumulated
an extensive repertoire of IP and contents which represent a library of inspiration for life. As an example, L’Officiel, the centennial
fashion media house, hosts more than 150,000 exclusive fashion images and approximately 50,000 articles and interviews, and approximately
10,000 videos from more than 100 years of fashion archives. Encapsulating its publication legacy and fashion concept, L’Officiel
successfully launched the L’Officiel Coffee pop-up store during the week of the World Economic Forum Annual Meeting in Davos in
January 2023 and is expected to open L’Officiel Coffee houses in Japan in the near future, showcasing avant-garde fashion concepts.
Through L’Officiel and beyond, we have and intend to continue to extend the ascetic power and historical significance of our archives
to new dimensions including in the hospitality and F&B sectors which we operate, breathing modernity into tradition and allowing these
historic materials to become an invaluable source of originality and creativity for today and tomorrow. In addition, the line between
fashion, art and lifestyle has blurred rapidly in the past few decades where fashion has made its way into prominent museums, and artists
have been enlisted by high-profile fashion houses. On the other hand, the art, fashion and hospitality worlds have long been
amicable bedfellows and there is a growing trend of artists and fashion brands partnering with hospitality groups to craft distinctive
experiences. We plan to launch L’Officiel Hotel in the near future, with London as the first venue. In this regard, our media and
hospitality businesses are naturally complementary to each other and we expect to see great synergies and new dialogues among our different
business segments spanning art, fashion, movie, lifestyle, culture, hospitality and F&B.
●We own a global media, art and entertainment platform with a unique Asian perspective. The
rise of Asian prosperity in the past decades has enhanced the cultural power of the Pacific Rim and enriched the global cultural scene
with a different perspective: Asian filmmakers, actors and actresses have steadily received greater reception and recognition; Asian brands
are gaining tremendous popularity among pop fans around the world; Asian artworks are breaking auction records; and consumers in
Asia have become one of the most important customer bloc in the global luxury industry. Along with this, we have become a global media,
art and entertainment platform in the relevant industries which are largely dominated by perspectives from the U.S. and Europe, offering
a unique Asian perspective. Through our innovative and creative content production capability, we aim at promoting artistic and cultural
contents embodying international values and visions, yet retaining the traditional Asian elements in order to bring together the best
of diverse worlds, to embrace diversity and differences, to appreciate cross-cultural values and beliefs across communities, and to take
down the barriers between the “otherness” in a world that is growing estranged.
●We have adopted a direct ownership model for key geographies to ensure content excellence and achieve
growth, efficiencies and synergies across our platforms while remaining committed to editorial independence. In contrast
to many of the international media brands that adopt primarily the franchising model, we adopt a direct ownership model for our publications,
specifically L’Officiel and The Art Newspaper which feature international editions, in major countries and regions around the world,
while we continue to foster relationships with franchisees in other regions. We believe our direct ownership model improves content creation,
sharing and syndication, enables cross-region content distribution and collaborations between different titles, allows implementation
of best practices across different segments, ensures our missions and visions are carried out in each area of our businesses, and empowers
us to deliver timely and relevant global and local content servicing a wide base of audience, while we continue to uphold editorial independence
as a top priority throughout the content creation process. It also enables us to more effectively pursue our key growth drivers, improve
efficiencies, and harvest greater synergies among the sectors and geographies that we cover, thereby delivering more compelling value
propositions for our audience and customers. For instance, with the synchronized efforts of various key regional offices, a top mandopop
star unprecedently appeared on the covers across six local issues of L’Officiel including China, the U.S., France, Italy, Singapore
and Malaysia in 2023.
●We believe we are well positioned to capture opportunities in the large and fast-growing film industry. Movies
we have invested in and produced have accumulated large box office receipts, demonstrating our ability in identifying and sourcing films
with high box office potential. We have built our reputation and resources in the media and entertainment industries and partnered with
Asian and international film producers, directors and casts. We have and aim to continue to secure film projects with large potential
at early stage. We believe that we will be able to continue to attract promising film projects from established domestic and international
industry participants.
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●Management team and professionals with significant industry expertise, international exposure and
local knowledge. Our management team combine extensive experience in the media, entertainment, art and hospitality
industries with a proven track record in operating and managing our business successfully. Many management team members come with solid
educational backgrounds and seasoned working experience in established and renowned media and entertainment corporations with international
exposure. Leveraging their experience and knowledge, our management team are able to lead us to innovative directions in the media and
entertainment industries, the hospitality industry and beyond. Most importantly, with the insight of our management team, our employees
are prepared to embrace change, maintain flexibility and continue to innovate in the fast-evolving industries. In addition, we are involved
in content production, design, sales and marketing, market research as well as other stages along the film industry value chain. Various
content production team members have received awards and recognitions for their work, and their creative content designs are well recognized
in the publication industry.
Growth Strategies
We believe we are still in
the early stage of realizing our goal to establish a global lifestyle platform covering high fashion, arts, movies, cultural activities,
hospitality, F&B and beyond. Our competitive strengths provide us with multiple avenues for growth and our growth strategies are focused
on the following key elements:
●Strengthening the position of our publications. Our strategy is to maintain
and strengthen the position of L’Officiel, The Art Newspaper and DigFin as one of the leaders in their respective
publication categories. We will continue our commitment to innovative editorial and quality content, maintaining high circulation levels.
●Expanding our geographical coverage and distribution channel. We intend to allocate
resources to expand L’Officiel and The Art Newspaper geographically so we continue to have the front-row view of and
define what is happening in the fashion and art industries around the world. By doing so, we will be able to tell a global story to our
international audience while offering local flavors for readers who are on the lookout for more regional relevance. Most recently, we
launched the digital and print editions of L’Officiel Japan in October 2024 and we launched the digital and print editions
of L’Officiel Hong Kong at the end of 2023 and in March 2024, respectively. We collaborate with global prominent
publishment & distribution companies such as Asahi Shimbun and Hudson Group to improve the distribution coverage and visibility
of our publications. We also collaborate with the hotels under our parent group and our stakeholders as a demonstration and distribution
window. We believe this is an effective strategy to enlarge our readership and geographical coverage, promote our brand recognition, enhance
our influence, and drive monetization of our advertising, subscription and other revenues.
●Expanding our business lines and exploring synergies across different business segments. Leveraging
the power of our global brands and contents, large-scale and growing audience, advertising capabilities, advanced user preference analytics
and subscription marketing, we aspire to build a comprehensive ecosystem that serves as the go-to place for art, culture, entertainment
and lifestyle in general. We have made a foray into non-content areas such as hospitality and F&B. We also plan to deepen our
collaboration with international participants across the film industry chain. We expect to expand our businesses through organic growth
and through mergers and acquisitions. We have a treasure trove of high-quality contents and IP which will see more addition as we expand.
We intend to exploit synergies across our different business segments to spark inspiration and creativity as well as to maximize the commercialization
opportunities of our contents and IP.
●Continuing to adopt direct ownership model in key geographies. In the
past two years, we have converted L’Officiel’s then existing businesses in Singapore, Malaysia and Philippines from a
franchise licensee model to a direct ownership model. In respect of our media business, while we will continue to foster relationships
with franchisees for certain regions, we aim to continue to adopt a direct ownership model for our publications around the world and to
promote our values across our overall ecosystem under a unified global brand philosophy.
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Our Business
We are a global media and
entertainment ecosystem covering high fashion, arts, lifestyle, cultural, entertainment as well as hospitality and F&B. Inheriting
more than one hundred years of history and with a worldwide geographical presence, we offer a holistic media and entertainment experience
and lifestyle to millions of people around the world.
●Media. We are the publisher of prominent print publications and digital content, including
L’Officiel, The Art Newspaper and DigFin.
●Entertainment. We are a producer and investor of movies, with proven ability in identifying
and sourcing films with high box office potential.
●Hospitality and VIP services. We hold premium whole building properties and provide
hospitality services in Hong Kong and Singapore.
●IP extended business. We operate IP extended business, including in the area of F&B,
leveraging the power of our brands and the extensive library of contents and IP we have amassed.
●Cultural connector and exchange business. We host a multitude of cultural events to
inspire conversation with traditions and bridge exchanges and we have been recognized for our cultural ambassadorship.
We also conduct strategic
investment business and hold equity investment in two major Chinese regional banks.
Media
We have developed a worldwide
reputation for the quality and creativity of our publications. Today, we reach large, diverse audience through our printed publications
and digital contents.
We are the publisher of prominent
publications L’Officiel and The Art Newspaper and we own DigFin, a digital content platform. L’Officiel
and The Art Newspaper publish print editions in a total of 28 countries and territories and digital contents to an even wider scope
of readers globally, while our DigFin is a website for information on digital finance, FinTech, and digital assets in Asia.
Our major source of revenue
for the media segment was derived from the sale of advertising spaces in our publications. We also generated revenue from the circulation
of our publications. The balance of our media revenue is generated by our other operations related to publications and live
events.
L’Officiel
L’Officiel is
one of the oldest and top fashion magazines in the world.
L’Officiel was
first published under the name L’Officiel de la couture et de la mode de Paris in France in 1921. Since 2022, it has
been marketed under and by reference to the
mark. It has been referred to as “the Bible of fashion and of high society.” It is internationally present in 28
countries and engages millions of fashion enthusiasts worldwide. The magazine brings together numerous luxury brands, A-list
artists, designers, celebrities and offers extensive contents including high-end to high-street fashion for both women and men,
beauty, culture, watches, arts and lifestyles. L’Officiel is more than just a magazine; it is a captivating blend of
the contemporary and the timeless. It not only captures the essence of the fashion world as it stands today and offers insights into
its future, but also serves as a faithful chronicler of the historical milestones that have shaped the industry, making it a classic
and an icon in its own right. We regard L’Officiel as a “bookazine” that seamlessly bridges the past,
present, and future of fashion.
As of the date of this prospectus,
L’Officiel has accumulated close to 30 million followers on social media worldwide, with more than 15 million website page
views and 9.2 million global website users.
A men’s edition called L’Officiel
Hommes is also in issue and was first launched in 2005. Other titles published include L’Officiel Art, the art-focused
issue, and La Revue des Montres, a luxury watch review.
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The magazine has close to
50 different international editions, including international editions for France, Italy, the U.S., mainland China and Hong Kong,
Singapore, Malaysia, Japan, Korea, Vietnam, Thailand and Philippines that provide coverage over Europe, North America, South America,
Africa and Asia. We intend to allocate resources to expand L’Officiel geographically so we continue to have the front-row
view of what is happening in the fashion industry around the world. Most recently, we launched the digital and print editions of L’Officiel
Japan in October 2024 and we launched the digital and print editions of L’Officiel Hong Kong at the end of
2023 and in March 2024, respectively.
We directly publish digital
versions of local editions curated by local editorial teams. These digital versions cover a wider range of audience as compared with the
prints. These digital versions offer both free content and premium, subscription-only content. We also provide live reporting at events
and real-time and interactive information through multimedia platforms including Instagram, LinkedIn, Facebook, YouTube, Threads and X
so that our readers remain at the forefront of their areas of interests.
L’Officiel has
also taken a bold step in empowering women through the art of photography by featuring the work of female photographers in the early days.
L’Officiel not only challenges gender stereotypes in the field but also paves the way for greater representation and opportunities
for women in the world of fashion and art.
We target to launch L’Officiel
in Australia, Mexico, Canada and Taiwan editions in the near future.
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The Art Newspaper
First published in 1990 and
with offices in London and New York, The Art Newspaper positions itself as the international publication of record for the
art industry and a prominent art world source with an authoritative roster of global correspondents covering the art market, technology,
museums, exhibitions, books, films and social media. The publication operates as the journal of record for the art world by covering international
art events as the designated publication for many of the largest and most prominent art events such as Frieze, Art Basel, Art Dubai, Art
Week Tokyo, Singapore Art Week, etc. The Art Newspaper covers international news and art and focuses on contemporary and modern
art, fine art, decorative art and designs. It enjoys the reputation as a bible of the art industry.
Note 1:
As of November 24, 2024
The Art Newspaper covers
news of the visual arts as they are developed. It also publishes reviews and commentary by major players in the art scene. In addition
to a 100-plus-page monthly print edition, The Art Newspaper also produces special daily editions at the Art Basel fairs in Basel,
Paris, Miami Beach and Hong Kong; at the Frieze fairs in London, Seoul, Los Angeles and New York; at the Venice Biennale as
well as at the Art Dubai, to name a few. With a global presence at major international art fairs across the U.S., U.K., Europe, Asia,
the Middle East, the publication has valuable relationship with Frieze, TEFAF, Art Basel and Art Dubai and is the only art paper distributed
throughout the fair. We also plan launch at Zona Maco, the leading Latin America art fair in the near future.
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The Art Newspaper provides
in-depth reports on annual museum attendance figures and the year’s forthcoming exhibitions compiled in “The Year Ahead”
magazine. “The Year Ahead” is an authoritative guide to the must-see art exhibitions, museum openings and art events around
the world. It is an important and unique hub of information for those working in the art world including curators, museum directors, collectors,
auctioneers, dealers, as well as individual art enthusiasts.
The comprehensive news and
events coverage of The Art Newspaper is fed by a network of international editions, altogether connecting with more than 50 correspondents
working in various countries across the world such as the UK, the US, France and Italy. We also plan to expand our international network
to include Southeast Asia, the Middle East and Latin America.
The Art Newspaper provides
a daily online news service, as well as a daily newsletter and weekly podcasts covering. The Art Newspaper website has notched
a total page view of 12 million and our two podcasts, The Week in Art and A brush with..., generated total downloads
of 1.1 million in 2024. Our online materials comprise both free content and premium, subscription-only content.
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We have recently launched
the Art of Luxury, a commercial supplement produced in association with Show Media, as we see more luxury brands sponsoring elements
of art fairs and the increasing collaborations between the art world and jewelry, watches, fashion, travel and lifestyle.
The Art Newspaper also
runs sponsored editorials such as the Tokyo Time for Tokyo Art Week, Opening Luma Museum and Richard Mille Art Prize.
We expect to extend the geographical
reach of The Art Newspaper to remain at the forefront of the art scene.
DigFin
Establishment in 2017, DigFin
provides contents and insights on digital finance, FinTech, and digital assets. It offers both timely news and in-depth reviews in digital
finance sectors covering banking and payments, asset and wealth management, insurance, capital markets, and environmental, social and
governance topics. DigFin also operates a podcast program named DigFin VOX which provides audio stories and interviews in
digital finance, FinTech, and digital assets. DigFin offers quality content free of charge and we primarily generate advertising
income from DigFin.
DigFin organized the
“DigFin Innovation Awards” to recognize best companies and solutions in the world of digital finance. The award has been viewed
as one of the most prestigious awards in digital finance and FinTech in Asia.
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Mr. Jame Dibiasio, the
Editor-in-Chief of DigFin, is an award-winning financial journalist and has worked in the field for nearly 30 years. Mr. Dibiasio
is a journalist in Asia to have taken home the State Street Institutional Press Awards for “Outstanding Contribution to Institutional
Journalism.” He also founded various financial trade publications for the region. He is a board member of the FinTech Association
of Hong Kong and has previously served as co-chairman of its WealthTech committee.
Forkast Labs
We are a seed investor of
Forkast Labs (previously named Forkast.News), which is a global data, media, and web3-infrastructure company.
Forkast Labs meticulously
indexes the decentralized web, diligently organizing its abundant multi-chain data to enhance usefulness through creative UI, empowering
individuals to seamlessly join the thriving digital economy. The esteemed team of journalists of Forkast Labs imparts data-driven clarity
to the ever-evolving realm of web3.
Editorial Management
We operate as a unified set
of platforms across editorial, advertising, consumer marketing and technology. For each publication, we centralize our editorial reporting
structure to focus on topics where we have particular strengths and maintain quality and standard. Each of our publications has its own
content production team which is responsible for the contents of the publication, layout design, artwork production and advertorial production.
During our content production process, we also purchase certain licensed materials, from time to time, for reproducing certain contents,
texts, photos, pictures and the like in our publications.
For L’Officiel
and The Art Newspaper, the central editorial team creates the editorial and advertising content of the main titles, featuring subjects
that speak to a global audience base. On the other hand, the international issues comprise an international section that features the
global content developed by the central editorial team as well as a regional section developed by our regional and international editorial
teams that appeals specifically to the demography relevant to the applicable regional title. Our regional editorial teams are headed by
regional editors in chief and are viewed as an integral component of our operation. Our central and regional editorial teams share and
abide by common editorial philosophies and positions on major issues, and guidelines for selection and presentation of content. Each editorial
team is also required to adhere to applicable local guidelines that are formulated to comply with local laws and regulations, social norms
and customs. In order to uphold the overall image and artistic quality of our publications, the artwork production also follows a common
set of guidelines and is subject to supervision and review. Each regional editorial team devises the local highlights based on these principles
and guidelines. Our central editorial team maintains regular discussions with local editorial teams and reviews editorial quality of each
regional title to ensure compliance with guidelines and consistency. Insofar as the parameters set by the editorial guidelines are respected,
our management and central editorial team are committed to the principle of editorial independence and do not interfere with editorial
decisions.
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We consider that the ability
to maintain the quality of the contents of our publications is crucial to our long-term growth and reputation. We place great emphasis
on preventive measures in the quality control process. With the aim of identifying, analyzing and solving irregularities at the earliest
possible stage of the production process, these measures are implemented at various stages of the production process including: resources
management, contents editorial management, photographs editorial management, proofreading management, design and production management,
advertisement quality management, printing quality management, complimentary production quality management and marketing management.
Direct Ownership
Model
In contrast to many of the
international media brands that adopt primarily the franchising model, we implement a direct ownership model for L’Officiel
and The Art Newspaper in major countries and regions around the world so we are able to promote our values across an overall ecosystem
under a unified global brand philosophy. Simultaneously, we are nurturing partnerships with franchisees in other regions to facilitate
expansion and enhance diversity within our overall ecosystem of content. Since 2022, we have converted L’Officiel’s
then existing businesses in Singapore, Malaysia and Philippines from a franchise licensee model to a direct ownership model. As of the
date of this prospectus, L’Officiel’s operations in the U.S., Italy, France, Hong Kong, Singapore, Malaysia, Philippines
and Japan as well as the operations of The Art Newspaper in the United States, the United Kingdom and France are conducted
under our direct ownership model, while the remaining regions in which L’Officiel and The Art Newspaper has a presence,
respectively, are run by our franchisees. We believe a direct ownership model improves content creation, sharing and syndication, enables
cross-region content distribution and collaborations between different titles, allows implementation of best practices across different
segments, ensures our missions and visions are carried out in each area of our businesses, and empowers us to deliver timely and relevant
global and local content servicing a wide base of audience. It also enables us to more effectively pursue our key growth drivers, improve
efficiencies, and harvest greater synergies among the sectors and geographies that we cover, thereby delivering more compelling value
propositions for our audience and customers.
Production of Print Publications
Our paper procurement and
printing functions are generally managed locally at the respective places of publication. We work with different external suppliers, producers
and printers in different regions for efficiency purposes.
Papers of various grades and
weights are the principal raw materials used in the production of our print publications. A variety of factors affect paper prices and
availability, including demand, capacity, raw material and energy costs and general economic conditions. Our current paper supply arrangements
are based on a negotiated pricing framework which either applies for a year or until such time as renegotiated. We believe we will continue
to have access to an adequate supply of paper for our future needs. Should disruptions affect our current suppliers, alternative sources
of paper are generally available at competitive prices.
Printing is a significant
component in the production of our print publications. The printing function is typically consolidated under one-year contracts with a
single printer at the place of publication.
Distribution
We distribute our publications
in print. Subscription copies of our print publications are delivered through local courier or postal services that are typically operated
under one-year contracts.
To complement our publication
business, we have developed and are growing internet capability which provides an additional means of reaching and expanding our target
audience and enables us to deliver the latest news around the world in real-time.
We distribute our contents
through an array of digital platforms including websites, mobile apps, social media, and streaming audio platforms. We provide original
and engaging digital content in a variety of formats, including articles, illustrations, videos and images.
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We believe that the internet
will become an increasingly important part of our media business. Our focus on quality and innovation has enabled us to capitalize on
the shift to digital consumption to deliver contents in a more engaging, timely and personalized manner and create opportunities for more
effective monetization, including digital offerings that leverage our existing content rights. We are pursuing multiple strategies to
further exploit these opportunities, including leveraging our international audience scale and valuable insights into user and reader
preferences, and sharing technologies and practices across geographies and businesses.
Franchise
While we manage the publication
of L’Officiel and The Art Newspaper in key geographies under the direct ownership model, we also adopt franchise arrangements
and work with local franchisees to allow us to expand more efficiently and build greater local relevance and appeals in other regions.
Our franchisees are granted
the license to utilize the broad repertoire of global content developed by our central editorial team and they then select and syndicate
content for the relevant regional issues based on this central library. Our franchisees also contribute to our library content they own
for the use of other publishers for a fee.
Our franchisees are subject
to the same set of editorial principles and guidelines as our central and regional editorial teams. Our central and regional editorial
teams also hold regular discussions with franchisees and review editorial quality of their titles to ensure compliance with guidelines
and consistency. Provided that the publication complies with our printing and editorial standards, our franchisees select and work with
their own suppliers and printers for production and distribution.
Franchisees typically pay
us a fixed amount of licensing fees annually and are also required to share a certain percentage of their revenues with us if the revenues
hit a pre-determined target.
Advertising
We provide customary sale
of advertising spaces in our printed publications. We also offer a variety of digital advertising products and services, from traditional
digital display advertisements and performance marketing arrangements to new advertising products and services developed in response to
evolving digital advertising trends, allowing advertisers to target users based on intent.
With an online and offline
audience of millions and backed by our technology architecture, we are able to gain invaluable cross-platform insights into their preferences
which we believe is a key competitive advantage for us to create customized and targeted advertising campaign.
Our experienced creative team
designs tailor-made creative and unique promotions for our advertising customers that suit their advertising needs as well as the marketing
strategies of different brands and products, aiming to create talk-of-the-town promotions with a strong impact on the target end customers
of our advertising customers. A variety of value-added services is available, including creative content design services, event management
and joint promotion events.
Leveraging our multi-segmented
operations and comprehensive media and entertainment platform, particularly our movie production business, we have adopted, and will continue
to implement, the strategy to cross-sell to our advertising customers to incrementally place advertisements in other contents, products
and services that we provide. We will continue to expand the scope of our value-added advertising services and integrated marketing solutions
so that we can develop new business opportunities and generate revenues from different channels. For example, we distribute our publications
in all guest rooms and facilities of our hotels and promote our hospitality services to other participants of our ecosystem. We offer
a bundled advertisement package of L’Officiel and The Art Newspaper to luxury brands, which incentivizes them to order joint
advertisements. We also leverage our operation in the entertainment industry and offer additional advertising solutions from our media
business to advertising customers who desire to gain access to movie audience.
We have a broad and diverse
advertiser base and our advertising revenues are not reliant on any single industry sector or company, but rather are supported by a wide
variety of international, national and local companies and industries.
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Entertainment
We operate in the movie production
sector having produced various Asia-focused blockbuster movies. We have partnered with established production companies to present a number
of Asia-focused blockbuster movies globally, which in aggregate notched a box office of more than US$400 million. We believe we are
well positioned to capture opportunities in the large and fast-growing film industry. Movies we have invested in and produced have accumulated
large box office receipts, demonstrating our ability in identifying and sourcing films with high box office potential. We have built our
reputation and resources in the media and entertainment industries and partnered with Asian and international film producers, directors
and casts. We have and aim to continue to attract promising film projects from established domestic and international industry participants.
Note: We and
our affiliated companies served as production or co-production company of these movies
Taking our latest movie “The
Last Dance” as an example, it broke nine major Hong Kong movie records:
●Highest box office record on opening day for a Hong Kong film
●Highest accumulated box office record on opening day for a Hong Kong film
●Highest attendance record on opening day for a Hong Kong film
●Most screenings hosted on opening day for a Hong Kong film
●Highest attendance record in a single day for a Hong Kong film
●Highest box office record on opening day for Chinese and Western films in 2024
●Highest attendance record on opening day for Chinese and Western films in 2024
●Highest single-day box office record for Chinese and Western films in 2024
●Highest single-day attendance record for Chinese and Western films in 2024
Production
We produce films jointly with
other studios or production companies.
We make capital investment
in the form of equity investment in the production and we plan to leverage our industry insights and our network and experience in the
media and entertainment sectors to provide market-oriented advice throughout the production process, including idea origination, casting,
shooting and post-production activities.
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Selection of Movie Projects
We select movie projects by
leveraging our industry insights and we consider key factors such as expected critical reception, marketability, box office potential,
timing of production and the estimated promotion and distribution expenses needed. We identify promising film projects through a variety
of sources, including collaboration with leading industry players and utilizing our network and relationships within the media and entertainment
industries.
We aim to achieve a balance
between risk and return for our movie projects. While we are focused on maximizing the commercial upside of our investment, we actively
manage the risks associated with committing capital to film projects. Accordingly, we have devised and implemented rigid risk control
practices to limit our exposure and diversify our risk.
The following table lists
a selection of films we and our affiliates have produced, co-produced or invested in which have been publicly released:
Title
Release Date
Principal Cast
Genre
Gross Box Office
Shock Wave 2
December 24, 2020
Andy Lau, Sean Lau, and Ni Ni
Action/Crime
US$185.0 million
The White Storm 3: Heaven or Hell
July 6, 2023
Louis Koo, Aaron Kwok, and Sean Lau
Action/Crime/Drama
US$42.0 million
Moscow Mission
September 29, 2023
Hanyu Zhang, Andy Lau, and Xuan Huang
Drama/Crime/Action
US$94.3 million
The Goldfinger
December 30, 2023
Tony Leung, Andy Lau, and Charlene Choi
Drama/Crime
US$90.4 million
The Last Dance
November 9, 2024
Dayo Wong, Michael Hui and Michelle Wai
Drama
US$50.4 million
We also intend to utilize
our film production know-how, intellectual property and growing portfolio of film entertainment to produce and diversify into different
entertainment formats, such as television series.
Hospitality and VIP Services
We hold premium whole building
properties and provide hospitality services. We focus on and specialize in hospitality and lifestyle concepts and offers a customer-centric
VIP members approach for its business portfolio in the key areas comprising stylish hotels and serviced apartments, F&B, and club
membership services in Hong Kong and Singapore, with plans for further global expansion.
iclub AMTD Sheung
Wan Hotel
We own the iclub AMTD Sheung
Wan Hotel through a joint venture. iclub AMTD Sheung Wan Hotel is a contemporary select-service hotel centrally located amidst Hong Kong’s
famed Sheung Wan district, a prime center for business and entertainment. The hotel has 32 stories with 98 guestrooms and suites and is
managed by our joint venture partner. It has a total gross floor area of over 5,000 square meters, with an average occupancy rate of 92%
and 90% in 2023 and the first half of 2024, respectively.
In 2024, iclub AMTD Sheung
Wan Hotel was awarded the Customer Review Award by Agoda and the Traveller Review Awards by Booking.com, among others.
Dao by Dorsett AMTD
Singapore
We own and manage Dao by Dorsett
AMTD Singapore through a joint venture. Located in the heart of Singapore’s Central Business District, Dao by Dorsett AMTD Singapore
features high quality serviced apartment units with excellent connectivity. The property has 26 stories with 268 studios (with one and
two bedrooms). It has a total gross floor area of over 25,000 square meters, with an average occupancy rate of 78% in 2023 and 79% in
2024.
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In 2024, Dao by Dorsett AMTD
Singapore was awarded the Traveler’s Choice — Best of the Best by Tripadvisor, the Best Serviced Residence (Property Level)
by TTG Asia and the Customer Review Award by Agoda, among others.
Other property
We own two units in a property
located in New York, New York. The property is a recently completed high-rise luxury building situated in a major metropolitan area, and
represents one of our premium asset investments.
Investment
We hold equity investments
in two major Chinese regional banks, Bank of Qingdao Co., Ltd (Hong Kong Stock Exchange stock code: 3866; Shenzhen Stock Exchange
stock code: 002948) and Guangzhou Rural Commercial Bank Co., Ltd (Hong Kong Stock Exchange stock code: 1551). We also hold an investment
in AMTD Digital Inc.
Our investment business focuses
on long-term equity investments in leading companies in their respective verticals. Our portfolio companies allow us to access unique
opportunities and resources to augment and complement our ecosystem, optimize our business operations or generate financial returns.
Historical Content and
Intellectual Property
We extend the power of our
brands and extensive library of content and related intellectual property through other media, platforms, products and services.
We have accumulated a vast
number of high-quality content and related intellectual property which will see increase as we expand. As an example, L’Officiel,
the centennial fashion media house, hosts more than 150,000 exclusive fashion images and approximately 50,000 articles and interviews,
and approximately 10,000 videos from more than 100 years of fashion archives. We intend to exploit synergies across our different
business segments to spark inspiration and creativity as well as to maximize the commercialization opportunities of our content and related
intellectual property. For example, the line between fashion, art and lifestyle has blurred rapidly in the past few decades where fashion
has made its way into prominent museums, and artists have been enlisted by high-profile fashion houses. On the other hand, the art,
fashion and hospitality worlds have long been amicable bedfellows and there is a growing trend of artists and fashion brands
partnering with hospitality groups to craft distinctive experiences. We plan to launch L’Officiel Hotel in the near future, with
London as the first venue. In this regard, our media and hospitality businesses are naturally complementary to each other and we expect
to see great synergies and new dialogues among our different business segments spanning art, fashion, movie, lifestyle, culture, hospitality
and F&B.
We have gained invaluable
cross-platform insights into the preferences of an audience of millions which we believe is a key competitive advantage for us to venture
into new businesses to match their evolving needs including with respect to non-content products and services. We plan to expand into
businesses that provide a wider span of opportunities for our audience to interact with the content and related intellectual property
we have accumulated and we have identified the hospitality and F&B sectors, which we are already operating in, as an immediate opportunity.
Encapsulating its publication legacy and fashion concept, L’Officiel successfully launched the L’Officiel Coffee pop-up
store during the week of the World Economic Forum Annual Meeting in Davos in January 2023 and is expected to open L’Officiel
Coffee houses in Japan in the near future, showcasing avant-garde fashion concepts.
We have and intend to continue
to extend the aesthetic power and historical significance of our archives to new dimensions including in the hospitality and F&B sectors,
breathing modernity into tradition and allowing these historic materials to become an invaluable source of originality and creativity
for today and tomorrow.
Cultural Connector and
Exchange Business
We host a multitude of cultural
events to inspire conversation with traditions and bridge exchanges and we have been recognized for our cultural ambassadorship. For example,
we are a global strategic partner associates of the World Economic Forum, the distinguished mécène of French May Arts Festival,
a supporting media partner of Art Basel Hong Kong, and the diamond sponsor of Lumieres Hong Kong.
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In October 2023, we officially
entered into a strategic cooperation with The Centre des monuments nationaux, or the CMN, a French public administrative establishment
under the supervision of the Ministry of Culture. Through resource integration, we aim to boost cultural exchanges between China and France
and promote open dialogues between the East and the West. We have finalized our first strategic cooperation project, serving as the strategic
cultural partner, to support CMN in the restoration of Villers-Cotterêts Castle and to launch the International City of the French
Language at Villers-Cotterêts Castle.
Dr. Calvin Choi, our
founder and a director of The Generation Essentials Group, was awarded the “Knight — Order of Arts and Letters” by the
French government in February 2023, for his outstanding work and contributions, bridging Asia and France through art, fashion and culture.
Sales and Marketing
In respect of our media business,
we devote significant resources to strengthen the leadership and market recognition of our publications and develop and maintain relationships
with our advertising customers, which are mainly brand advertisers and advertising agencies. Our sales efforts primarily focus on the
sale of advertising spaces in our publications to brand advertisers and advertising agencies as well as other advertising solutions such
as event organization. We also devise marketing campaigns online and offline and work closely with distributors to expand our readership
and promote subscription of our publications. Currently, the advertising sales team dedicated to the media segment, and is divided into
regional sub-teams focusing on different sales territories, namely, Europe, the U.S. and Southeast Asia with a view to maintaining
proximity with our advertising customers.
We also exploit synergies
across our different business segments and we utilize cross selling to improve the effectiveness of our marketing strategy and maximize
the commercialization opportunities of the contents we produce. For example, we distribute our publications in all guest rooms and facilities
of our hotels and promote our hospitality services to other participants of our ecosystem. We offer a bundled advertisement package of
L’Officiel and The Art Newspaper to luxury brands, which incentivizes them to order joint advertisements. We also leverage
our operation in the entertainment industry and offer additional advertising solutions from our media business to advertising customers
who desire to gain access to movie audience.
Seasonality
The hospitality industry is
subject to fluctuations in revenues due to seasonality. The periods during which our properties experience higher revenues vary from property
to property, depending principally upon their location, type of property and competitive mix within the specific location. Generally,
the third quarter, in which the summer holidays fall, accounts for a higher percentage of our annual revenues in the hotel operation,
hospitality and VIP services segment than the other quarters of the year. In addition, certain special events, such as large-scale exhibition,
concerts or sports events, may increase the demand for our hotels significantly as such special events may attract travelers into and
within the regions where we operate hotels. We do not observe any material seasonality with respect to the other business segments.
Intellectual Property
We own or have the right to
use to valuable intellectual property which include:
●trademarks,
including our magazines’ key brands and trade names, such as “L’Officiel”, “,”
“,” “L’Officiel Hommes,” “L’Officiel Art,” “L’Officiel
Voyage,” “L’Officiel Art,” “L’Officiel Watches,” “,”
“La Revue des Montres,” “The Art Newspaper,” “.”
●copyrights in certain printed and digital publication materials (current and archived), images, photographs,
videos, media clips, written materials, articles and commentary in the L’Officiel and The Art Newspaper magazines
and stored in the digital libraries.
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●domain names; and
●licenses of intellectual property rights, including rights to many of the photos appearing in our print
and digital publications, third-party content appearing in the L’Officiel and The Art Newspaper magazines and stored
in the digital libraries.
Our intellectual property
assets are, collectively, among our most valuable assets and are critical to our continued success and our competitive position. To protect
our intellectual property assets, we rely on a combination of intellectual property rights, such as trademarks, copyrights and trade secrets
(including know-how), in addition to internal policies, employee and third-party nondisclosure agreements, intellectual property licenses
and other contractual rights. Specifically, we enter into confidentiality and non-disclosure agreements with our employees to protect
our proprietary rights. The foregoing notwithstanding, there can be no assurance that our efforts will be successful. Even if our efforts
are successful, we may incur significant costs in defending our rights.
It is equally important for
us to operate without infringing, misappropriating, or otherwise violating the intellectual property or proprietary rights of others.
From time to time, third parties may raise IP infringement claims against us alleging infringement of their intellectual property rights.
A comprehensive discussion
on risks relating to intellectual property is provided under the sections titled “Risk Factors — Risks Relating to Our Businesses
and Industries in General — We operate and use a L’Officiel AMTD composite brand, and not the historic L’Officiel brand,”
“Risk Factors — Risks Relating to Our Businesses and Industries in General — Our business may suffer
if the intellectual property we use in our business is not protected” and “Risk Factors — Risks Relating to
Our Businesses and Industries in General — We may be subject to claims of intellectual property infringement that could adversely
affect our business.”
Intellectual Property
License Agreement with AMTD Group Inc.
We license L’Officiel
and The Art Newspaper trademarks and domain names and other intellectual property rights we use in our business from AMTD Group Inc. We
entered into an Intellectual Property License Agreement with AMTD Group Inc. on January 27, 2025. Under this agreement, AMTD Group
Inc. grants, on behalf of itself and its affiliates, to us an irrevocable, worldwide, fully paid-up, royalty-free, sublicensable license
to (i) certain L’Officiel and The Art Newspaper trademarks and domain names (on an exclusive basis) and (ii) certain other
intellectual property (on a non-exclusive basis), subject to the terms and conditions therein. We refer to the intellectual properties
licensed to us under the Intellectual Property License Agreement collectively as the “Licensed IP.”
The license allows us to use
and exploit the Licensed IP in connection with the operation or conduct of our business, including publishing or making available our
publications in paper and/or digital format and associated websites, social media activities, mobile applications and promotional and
marketing activities and hospitality, temporary accommodation, food and beverage, event management, fashion shows and luxury goods and
services, including related branded events, experiences, branded hotels and cafes.
If AMTD Group Inc. or its
affiliate assigns or transfers any Licensed IP, AMTD Group Inc. shall, or shall cause its relevant affiliate to, require that the assignee
or transferee be bound by all applicable licenses and covenants granted under this agreement with respect to such Licensed IP.
We undertake to and to cause
our sublicensees to, display, affix and use the licensed trademarks in accordance with the branding guidelines of AMTD Group Inc. and
its affiliates.
This agreement shall (i) remain
in full force and effect for an initial term of 20 years and (ii) automatically renew for renewal terms of five years each,
unless either party notifies the other party that it does not wish for this agreement to renew by no later than six months prior
to the expiration of the then-current initial term or renewal term.
Either party may terminate
this agreement if the other party materially breaches this agreement and the other party fails to cure such breach within 30 days
following the other party’s receipt of written notice of such breach from the terminating party.
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Competition
We compete with other publishers
for market share and for the time and attention of readers of media content. We also compete with digital publishers and other forms of
media, including, among others, social media platforms, search platforms, portals and digital marketing services for audience and for
advertising customers. Competition among publishers for readership is primarily based on editorial content, brand perception, quality,
price and effectiveness of distribution. Competition for subscription-based readership is also based on subscriber acquisition and retention,
and competition for newsstand-based readership is also based on cover selection and the placement and display of publications in retail
outlets. Technological advances and the growing popularity of digitally-delivered content and mobile consumer devices, such as smartphones
and tablets, have introduced significant new competition for circulation in the form of readily available free or low-priced digital content.
Competition among print publications and digital publishers for advertising is primarily based on the circulation and readership of publications
and the number of visitors to websites, respectively, the demographics of customer bases, advertising rates, the effectiveness of advertising
sales teams and the results observed by advertisers. The shift in consumer preference from print media to digital media, as well as growing
consumer engagement with digital media, such as online and mobile social networking, have introduced significant new competition for advertising.
The use of digital devices as distribution platforms for content has also lowered the barriers to entry for launching digital products
that compete with our business. Nonetheless, we believe that our quality brands, reputation and the implementation of the direct ownership
model provide us with significant competitive advantages.
The entertainment industry
is intensely competitive and subject to rapid change. The films we produce and invest in compete for audience and exhibition outlets with
films presented by other companies. We compete with production companies and other content producers in obtaining content for our service,
both for licensed content and for original content projects; we also compete with these entities for the services of directors, producers,
casts and other creative and technical personnel and production financing, all of which are essential to the success of our entertainment
business. We also compete with a broad set of activities for consumers’ leisure time, including other entertainment providers, such
as TV, streaming entertainment providers, video gaming providers and more broadly against other sources of entertainment and recreation,
like social media, that our target audience could choose in their free time. In the area of movie right investment, we compete with
other investors in terms of participation in film projects that we have identified. Such competition is based on a number of factors including
our funding as well as other resources.
We also compete with other
hotel operators and hospitality service providers with respect to our hotel operations, hospitality and VIP services.
Data Privacy and Security
We are committed to protecting
the information and privacy of our audience and customers. We have established and implemented a strict platform-wide policy on data collection,
processing and usage. We collect information and other data that is related to the services we provide, with prior consent.
To ensure the confidentiality
and integrity of our data, we maintain a comprehensive and rigorous data security program. We anonymize and encrypt confidential information
and take other technological measures to ensure the secure processing, transmission and usage of data. We have also established stringent
internal protocols under which we grant classified access to confidential data only to limited employees with access authorization.
We back up our core data on
a real-time basis and other data on a daily basis in separate and various secured data back-up systems to minimize the risk of data loss.
Our People
As of December 31, 2024,
we had 79 full-time employees globally.
Function
Number of Employees
Percentage (%)
General management and administration
9
11.4
Sales and marketing
21
26.6
Production and Editorial
49
62.0
Total
79
100
77
Our team is mainly based in
Europe, the United States and Southeast Asia.
Our success depends on our
ability to attract, motivate, train and retain qualified employees. We believe we offer our employees competitive compensation packages
and an environment that encourages innovation and creativity. As a result, we have generally been successful in attracting and retaining
qualified employees. We believe that we maintain a good working relationship with our employees, and we have not experienced any material
labor disputes in the past. None of our employees are represented by labor unions and our employees are not covered by any collective
bargaining agreement.
As required by local regulations,
we participate in various employee social security plans including pension insurance, unemployment insurance, maternity insurance, work-related
injury insurance, medical insurance and housing provident fund.
We enter into standard employment
agreements with our employees. We also enter into standard confidentiality and non-compete agreements with our employees in
accordance with common market practice.
Facilities
Our corporate headquarters
is located in Paris. In addition to our headquarters, we also lease offices in the United States, London, Japan and Malaysia. The
table below contains a summary of our facilities as of December 31, 2024.
Location
Space
Use
Lease Term
Paris
90m2
Office
9 years
US
58m2
Office
3 years
London
145m2
Office
1 year
Japan
160m2
Office/F&B
3 years
Malaysia
38m2
Office
2 years
We believe that our existing
facilities are generally adequate to meet our current needs, but we expect to seek additional space as needed to accommodate future growth.
We hold a 999-year leasehold
interest in the land plot underlying the iclub AMTD Sheung Wan Hotel. The hotel property is mortgaged to The Bank of East Asia, Limited
in relation to loan facilities in the original principal amount of HK$400,000,000.
We hold a 99-year leasehold
interest in the land plot underlying Dao by Dorsett AMTD Singapore which expires in 2066. The hotel property is mortgaged to RHB Bank
Berhad in relation to loan facilities in the original principal amount of SGD217,000,000.
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We own two units in a property
located in New York, New York. The property is a recently completed high-rise luxury building situated in a major metropolitan area, and
represents one of our premium asset investments. The units are mortgaged to East West Bank in relation to loan facilities in the aggregate
principal amount of US$11.2 million.
Insurance
We provide pension insurance,
work-related injury insurance and medical insurance for our employees. We do not maintain property insurance, third-party liability insurance,
business interruption insurance or key-man insurance.
Legal Proceedings
From time to time, we may
be involved in legal proceedings and subject to claims that arise in the ordinary course of business. Although the results of legal proceedings
and claims cannot be predicted with certainty, we believe we are not currently party to any legal proceedings which, if determined adversely
to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial
condition.
Litigation or any other legal
or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including
our management’s time and attention. See “Risk Factors — Risks Relating to Our Businesses and Industries in
General — We may be subject to risks relating to litigation and regulatory investigations and proceedings, which could adversely
affect our business, prospects, results of operations and financial condition.”
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GOVERNMENT
REGULATIONS
This section sets forth a
summary of the most significant rules and regulations that affect our business activities.
United States
Part of our business operations
is conducted in the United States. This section summarizes the most significant rules and regulations that affect our business activities
in the United States.
Overview and General
Principles
The First Amendment of the
U.S. Constitution protects the right to free speech, which significantly restricts the ability of the U.S. government to regulate
magazine publication and film distribution. However, not all content is protected by the First Amendment, and the U.S. courts have
identified certain categories of speech that can be the subject of government regulation. Additionally, various U.S. laws and regulations
apply to different aspects of business that are important for magazine publishers and film distributors, including rules governing protection
of intellectual property and advertising.
This section provides an overview
of content regulation and key regulatory regimes that apply to various aspects of our company that publish magazines and distribute films.
Content Regulation
The First Amendment of the
U.S. Constitution prohibits federal lawmakers from passing any laws abridging the freedom of speech or of the press. This prohibition
also extends to state governments through the Due Process Clause of the Fourteenth Amendment. These restrictions generally prevent the
U.S. government from regulating and restricting published content, including magazines and film.
However, not all content is
protected by the First Amendment, and U.S. courts have recognized certain categories of speech that can be regulated and even prohibited
in certain circumstances. The categories of content subject to government regulation that are most relevant to media publication and distribution
include false statements of fact, commercial speech, content that intrudes upon an individual’s right to privacy and seclusion,
and content that the average person would consider obscene or pornographic. U.S. courts have permitted the government to apply narrowly
tailored laws and regulations that moderate these categories of speech, including prohibiting the content in certain circumstances (e.g.,
prohibiting false and misleading advertising and content that would be considered obscene), imposing criminal and civil liability for
harm caused by content (e.g., for false statements of fact that constitute slander or libel), and restricting sales and distribution of
some types of content (e.g., age restrictions for the purchase of pornographic materials).
There is no central or general
regulatory authority that is responsible for content regulation. Lawmakers determine the appropriate rules and regulations, and the U.S. enforcement
agencies apply these rules and regulations with the U.S. court system adjudicating disputes and enforcement actions.
Intellectual Property
The United States has
a well-developed regulatory regime governing intellectual property protection, an important area of law for companies like us that publish
and distribute media. Intellectual property protection can be generally divided into three overlapping regulatory regimes that govern:
(i) patents, (ii) trademarks; and (iii) copyrights.
Patents protects (i) useful
inventions (utility patents); (ii) new, original, and ornamental designs of manufactured articles (design patents); and (iii) distinct
and new varieties of plants (plant patents). Patents are regulated exclusively at the federal level by the U.S. Patent and Trademark
Office, or the USPTO, and the designated federal courts. The USPTO decides in the first instance which patent protections to grant and
also provides legal and regulatory guidance for inventors seeking patent protections. Once the USPTO grants patent protection, an inventor
seeking to enforce his or her patent rights against another party must bring a claim in federal court. The U.S. Court of Appeals
for the Federal Circuit has exclusive authority to review USPTO patent decisions as well as lower court patent infringement decisions.
A party seeking further review may petition the U.S. Supreme Court to review the decisions of the U.S. Court of Appeals for
the Federal Circuit. The U.S. Supreme Court has discretion over whether to hear such cases.
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Trademarks include brand names,
symbols, slogans, packaging and other designs that are used by an entity to identify and distinguish its goods or services in a particular
marketplace. Trademarks are regulated in a similar manner as patents by the same government entities, with two key differences. First,
trademark rights do not require registration; rather, a party establishes trademark rights through commercial use of the mark. However,
trademark registration can strengthen protections. Second, trademarks are also protected and regulated at the state level, which means
that state enforcers also oversee trademark protections, and that trademark disputes can be litigated in both state and federal court.
Copyrights protect original
works of intellectual and artistic expression and cover a wide variety of content, including magazines and movies. Copyrights are regulated
exclusively at the federal level under a regime separate from the one that applies to patent and trademark protection. An author automatically
obtains a copyright over work as soon as it is committed to a medium, including paper, film or electronic memory. The U.S. Copyright
Office oversees copyright protections and provides legal and regulatory guidance to authors. It also allows authors to register copyrighted
material, which is in turn recorded and stored in the Library of Congress. Although registration is not necessary to obtain copyright
protection, it is generally a prerequisite for a copyright holder to seek enforcement in court. Federal courts adjudicate most copyright
disputes, while the Copyright Claims Board has authority to resolve certain smaller and more limited disputes.
The Digital Millennium Copyright
Act also plays an important role in copyright protection. This act protects online service providers from copyright liability arising
from user activities; for example, the Act applies when a user uses an online service provider to distribute copyrighted works, such as
a movie or periodical, without proper authorization or permission. The Digital Millennium Copyright Act establishes a self-regulatory
process for copyright enforcement in which an online service provider must participate in order to qualify for protections from liability.
Through this process, copyright holders can submit complaints and takedown notices directly to an online service provider for an alleged
violation by a user using the service. The online service provider must then take action to comply with the complaint and remove the allegedly
infringing material, while giving the affected user notice of the complaint and an opportunity to respond. If the user objects to the
complaint, the online service provider must then restore the material and provide notice to the copyright holder, who can then seek further
adjudication and enforcement in federal court.
Advertising
A combination of federal and
state laws regulate advertising in the United States. At the federal level, the Federal Trade Commission Act prohibits unfair and
deceptive advertising and requires claims made in advertisements to be evidence-based. State analogues of the Federal Trade Commission
Act similarly prohibit unfair and deceptive advertising. Various rules also prohibit and restrict certain kinds of advertising, such as
advertising that uses obscene material, or unfair and deceptive endorsements. The Federal Trade Commission and the state consumer protection
regulators enforce these rules directly and on behalf of affected consumers. Some state laws also provide a private right of action, which
allows affected consumers to bring claims directly for damages.
The U.S. advertising
industry also has certain self-regulatory principles and standards that are issued by non-governmental associations that represent industry
members. For example, the Digital Advertising Alliance issues the Self-Regulatory Principles of Transparency and Control, a set of principles
aimed at establishing responsible privacy practices for digital advertising. Such principles are voluntary and generally do not carry
the force of law. Instead, the industry groups themselves enforce compliance. For example, the Digital Advertising Alliance works with
its members and industry associations to monitor and enforce compliance with the Self-Regulatory Principles of Transparency and Control
and respond to consumer complaints. However, companies that publicly commit to self-regulatory principles and fail to abide by them can
in turn violate the Federal Trade Commission Act and state consumer protection laws.
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Magazine Publishing
There is no central authority
or set of rules that regulates magazine publishing activities in the United States. However, magazine publishers are subject to various
regulatory regimes that are applicable to different aspects of their business. In addition to the regulatory regimes described above,
magazine publishers must also be aware of consumer protection laws that govern service offerings and subscriptions, as well as laws and
regulations that protect consumers’ personal data privacy. There are also voluntary industry standards and principles of which magazine
publishers in the United States should be aware of. This section provides a high-level overview of these regulatory regimes.
Consumer Protection
In addition to overseeing
certain aspects of advertising, the Federal Trade Commission and state consumer protection regulators enforce general consumer protection
rules that prohibit unfair and deceptive business conduct, including rules that are particularly important to subscription-based services.
These rules impose various requirements that magazine publishers must consider, such as rules regarding disclosure of subscription terms,
the process for consumers to cancel a subscription, and notices required for recurring payments and renewal. The rules generally aim at
preventing subscription providers, including magazine publishers and distributors, from employing practices that are considered unfair
and deceptive. The Federal Trade Commission and state consumer protection regulators enforce these rules directly and on behalf of affected
consumers. Additionally, where state laws provide a private right of action, affected consumers can bring claims directly for damages.
Data Privacy
Magazine publishers are also
likely to hold significant amounts of personal information of their subscribers, including contact information, billing data, preferences
and interests and any other information that they collect and process. As a result, publishers need to comply with applicable data privacy
laws. The United States does not have comprehensive consumer privacy law at federal level; instead, there is a fragmented patchwork
of state and sector-specific privacy laws.
As of February 2025,
nineteen states, including California, Connecticut, Texas, and Virginia, have comprehensive privacy laws that protect personal information
of the residents in these states. These laws apply to companies that conduct business in these states and that meet certain thresholds
of revenue and/or data processing activities. In California, the California Privacy Protection Agency shares enforcement authority with
the state attorney general, which is the state general consumer protection enforcer. California law also provides a limited private right
of action for security breaches. In other states, enforcement responsibility of privacy laws is within the authority of each state’s
respective attorney general.
Additionally, the Federal
Trade Commission has interpreted general consumer protection rules to extend to privacy, requiring companies to provide consumers with
a basic level of privacy protections as well as abide by any privacy and data protection-related representations made by a company (e.g.,
in the form of a privacy notice or privacy terms in a contractual agreement).
Voluntary Industry
Standards
Magazine publishers should
also be aware of regulations and guidance issued by non-government associations that represent industry members. In the United States,
the primary industry association for magazine publishers is the News Media Alliance, an organization that represents most of the major
newspaper and magazine publishers in the United States, including both digital and print media publishers. The focus of the News
Media Alliance is on advocacy and research, but in the past it has issued principles and standards, such as the Generative Artificial
Intelligence Principles aiming at providing guidance on the use of media content to train and develop generative artificial intelligence
systems. Similar to other voluntary industry standards, these principles do not carry the force of law, but they can provide helpful guidance
for industry participants.
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Film Distribution
There is no central authority
that oversees film distribution in the United States. However, the federal government has regulatory authority over wire communications,
which allows it to regulate most forms of television broadcasting. Additionally, various non-governmental industry associations play a
key role in regulating film distribution. This section provides a high-level overview of these regulatory regimes.
Federal Communications
Commission
The Federal Communications
Commission has authority over wire communications in the United States, including most forms of television broadcasting. However,
it has no formal regulatory authority over online streaming services. For film distributors, any movie that is broadcasted over television
airwaves must abide by the rules of Federal Communications Commission, including Federal Communications Commission rules in place that
prohibit and restrict certain types of content, such as language, nudity, violence and other content that could be considered obscene,
indecent and/or profane. The Federal Communications Commission enforces its rules against broadcast networks and providers, who in turn
may extend these rules to film distributors seeking to distribute their films on these networks.
Voluntary Industry
Regulations
In the absence of significant
government regulation, the film industry has different non-governmental associations that play an important role in regulating movies.
A key example is the Motion Picture Association, which represents the five major film studios in the United States, including Netflix.
The Motion Picture Association established the Motion Picture Association film rating system, which is a widely used system that provides
guidance for different types of audience on suitable film content. The Motion Picture Association also rates film trailers, print advertising
and other media used to promote a film. The Motion Picture Association rating system is not just for the members, and non-members can
also submit films for rating. This rating system is voluntary and is not enforced by law, although most U.S. movie theaters will
refuse to exhibit non-rated films. Additionally, certain states have incorporated the ratings system into state and local laws, prohibiting
theaters from permitting children under age 18 to view an R-rated or above film without an accompanying adult.
Italy
Introduction
Our subsidiary, World Media
and Entertainment Group indirectly holds a 100% share into L’Officiel Publishing Italia S.r.l., the business of which focuses, among
others, on the publication of magazines in Italy (e.g. “L’Officiel,” including the online version made available onto
www.lofficielitalia.com) and the distribution of audiovisual works.
The Italian subsidiary is
mainly affected by the laws and regulations in the fields of copyright and publishing as well as advertising.
The Italian Subsidiaries are
mainly affected by the laws and regulations in the fields of copyright and publishing as well as advertising. The following provides a
brief description of the main laws and regulations that govern the Italian subsidiary’s activities in Italy. Although the following
brief description contains the main information concerning such regulations that the Italian subsidiary considers material, it is not
an exhaustive overview of all applicable laws and regulations. References and discussions to treaties, laws, regulations and other administrative
and regulatory documents are entirely qualified by the full text of such treaties, laws, regulations and other administrative and regulatory
documents themselves.
Publishing
The Italian subsidiary’s
business is subject to a number of laws in the field of publishing. The key regulatory framework includes law 8 February 1948,
no. 47, law 5 August 1981, no. 416 and law 7 March 2001, no. 62, which laws set out, among others,
a system providing contributions and incentives for publishing businesses.
The offering on the market
of copyrighted works (such as articles published on a magazine or a website) are also subject to the Italian copyrights laws and regulations,
which include (i) law 22 April 1941, no. 633, which provides for a framework of protection for copyrighted works,
and (ii) legislative decree 8 November 2021, no. 177, which implements the “Digital Copyright Directive”
(i.e. directive (EU) 2019/790), which directive, among others, provides for rules to ensure remuneration for creators and rightsholders,
press publishers and journalists, in particular when their works are used online.
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Distribution of
audiovisual works
The Italian subsidiary’s
business is also subject to the laws and regulations governing the distribution of audiovisual works in Italy. The framework includes
legislative decree 31 July 2005, no. 177 (the “Consolidated Italian Audiovisual Media Act” or “CAMA”),
as subsequently amended including to implement directive (EU) 2018/1808, which in turn amended the so-called “Audiovisual Media
Services Directive (AVMS Directive)” (i.e. directive 2010/13/EU).
The CAMA governs the transmission
of television and radio programmes and includes provisions on audiovisual commercial communications and video-sharing platform services.
It applies to audiovisual and radio media service providers operating within Italian territory, ensuring that they comply with both national
and EU regulations.
Advertising in magazines
and newspapers
The Italian subsidiary’s
business is subject to laws and regulations governing advertising in magazines and newspapers. Specific provisions requiring transparency
in identifying sponsored content and differentiating it from editorial content to prohibit potentially misleading and / or hidden advertising
are contained in the CAMA as well as the articles 18-32 of the legislative decree 6 September 2005, no. 206 (the “Italian
Consumer Code”), as subsequently amended.
To the extent that the Italian
subsidiary is also directly or indirectly involved in advertisement content through celebrities or influencers, Italian subsidiary may
also be subject to the guidelines published on 16 January 2024 by the Autorità Garante delle Comunicazioni (AGCM) with
the Resolution no. 7/24/CONS in relation to compliance to CAMA and transparency requirements by influencers.
Singapore
Magazines Publishing
Background
Part of our media and entertainment
business operates in Singapore. We currently hold three separate active newspaper permits for the publication of three different L’Officiel
magazines in Singapore.
These magazines are considered
lifestyle magazines.
The Newspaper and Printing
Presses Act 1974, or NPPA, is the legislation applicable to the licensing of newspaper companies in Singapore. The Newspaper and
Printing Presses (Applications and Permits) Rules 2004 is the applicable subsidiary legislation and governs the newspaper permit
application process.
The Infocomm Media Development
Authority, or the IMDA, is a statutory board of the Singapore government which operates under the auspices of the Ministry of Digital
Development and Information Singapore and regulates the issuance of newspaper permits in Singapore.
The Registrar of Newspapers
as defined in NPPA reports to the general administration of NPPA and exercises the functions imposed by NPPA.
Dr. Feridun Hamdullahpur,
an independent director of AMTD, is the holder of the newspaper permit of the L’Officiel magazines.
Application of NPPA
Our publication of magazines
in Singapore is governed by NPPA.
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Pursuant to Section 2
of NPPA, “newspaper” means any publication containing news, intelligence, reports of occurrences, or any remarks, observations
or comments, in relation to such news, intelligence, reports of occurrences, or to any other matter of public interest, printed in any
language and published for sale or free distribution at regular intervals or otherwise, but does not include any publication published
by or for the government.
A newspaper permit is a regulatory
requirement by the IMDA aiming to ensure that newspapers published in Singapore meet content standards that promote responsible content
creation and consumption.
Sections 21 to 23 of
NPPA provide that a newspaper permit is required for (i) printing or publishing a newspaper in Singapore; (ii) publishing, selling
or distributing a Malaysian newspaper in Singapore; or (iii) selling or distributing an offshore newspaper in Singapore. An offshore
newspaper is a newspaper published outside Singapore, at intervals not exceeding one week, which carries news or reports on politics and
current affairs of any country in Southeast Asia, and with a circulation of 300 or more copies in Singapore.
Relevant Newspaper Permit
As our publication of magazines
is in Singapore, the newspaper permit for printing or publication of a newspaper under Section 21 of NPPA apply to our business.
Newspaper permit applications and renewals shall be completed online via an online platform to connect business owners to various government
e-services and resources in Singapore.
The newspaper permit entitles
us to print, publish, sell or distribute the relevant newspaper, as applied for in the newspaper permit application.
We were granted three separate
newspaper permits by the Minister under Section 21 of the NPPA in respect of each of the L’Officiel magazines.
The active newspaper permits
we hold for each of the L’Officiel magazines expires in April 2025. Section 21(4) of NPPA provides that the newspaper
permit may be renewed for further periods not exceeding 12 months in respect of each renewal.
Conditions and Notes
of Newspaper Permit
We must comply with the following
conditions and notes specified in each of the newspaper permit certificates issued to it.
Conditions
The newspaper permit is non-transferable
and becomes invalid if there is a change in ownership, editorship, the newspaper’s name, content nature, language or publication
frequency. Any change in the publisher or printer must be reported to the Registrar of Newspapers within seven days. The permit number
must be printed on the title page of each issue. For newspapers printed in Singapore, changes in financial holdings must also be reported
within seven days, unless an extension is granted. The first issue must be published within three months, and subsequent issues
must follow the specified frequency. The newspaper must adhere to the content nature and guidelines provided in the application. Two copies
of each issue must be sent to the Registrar at the permit holder’s expense upon release.
Notes
Additionally, under the National
Library Board Act 1995, two copies of every publication must be deposited with the National Library Board within four weeks
of publication. For newspapers printed in Singapore, the names of the printer and publisher must be printed on the first or last page,
as stipulated by the Newspaper and Printing Presses Act. If printed in Malaysia, the newspaper must include specific details such as names
and addresses of the printer and publisher, and a local address for legal service, all in English or Malay. The permit does not exempt
the printer and publisher from their obligations under the Newspaper and Printing Presses Act.
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Content Guidelines
for Local Lifestyle Magazines
In addition to the conditions
and notes specified above, the magazines published by us in Singapore must conform with the nature of contents submitted with the application
for the newspaper permit and the content guidelines for local lifestyle magazines stated in the covering letter to the newspaper permit
certificate.
The IMDA does not vet local
publications in advance. Publishers of local publications are to exercise responsibility in their content and be mindful of local community
norms, as well as racial and religious sensitivities. As part of the permit conditions, publishers are required to adhere to the applicable
content guidelines issued together with the permit.
General Principles of
Content Guidelines
Set forth below is the general
principles of the content guidelines:
●magazines should be appropriate for all readers and avoid content that challenges social norms, racial
and religious harmony or national security;
●publishers must tailor content to their audience, particularly protecting children from sexual content;
●cover pages should be suitable for public display, avoiding offensive material;
●advertisements must adhere to the Singapore Code of Advertising Practice; and
●supplements and special editions must follow these guidelines.
The content guidelines provide
further guidance for the following genres and audiences: (i) teen magazines, (ii) general interest lifestyle magazines and (iii) adult
interest magazines. In particular, category (ii) is most relevant to our magazines published in Singapore.
Content Guidelines for
General Interest Lifestyle Magazines
Set forth below is the content
guidelines for general interest lifestyle magazines:
●content should be suitable for a general adult readership, avoiding explicit material;
●cover pages should not feature mature content; and
●mature content is allowed occasionally if the magazine is clearly labelled and packaged to restrict access
to young readers.
Film Distribution
Background
We may potentially distribute
films which are produced in Hong Kong and Singapore. The following regime applies to the distribution of films in Singapore.
The Films Act 1981 sets
out the regulatory framework for the distribution, exhibition and possession of films in Singapore. This legislation relates to the possession,
importation, making, distribution and exhibition of films, and to provide for the classification of films and for the enforcement of those
classifications in Singapore.
The Films (Class License
for General Films Distribution) Order 2021 is the applicable subsidiary legislation and governs the issuance of class licenses. Other
applicable subsidiary legislation includes the Films (Licence — Exemption) Notification 2019 and the Films (Licence — Exemption)
(Amendment) Notification 2021.
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Under the Films Act, distributors
and exhibitors are required to obtain a license from the IMDA, a statutory board in the Singapore government which operates under the
auspices of the Ministry of Digital Development and Information Singapore, unless exempted.
Application of Films
Act
Pursuant to Section 6(1) of
the Films Act, if we intend to distribute films in Singapore, it must first have a film distribution license to distribute a film or video,
unless they meet any of the exemption conditions as elaborated further below.
The Films Act defines “distribute”
as doing any of the following without using a broadcasting service:
(i)sell, supply or let for hire to a person in Singapore;
(ii)offer or agree to sell, supply or let for hire to a person
in Singapore;
(iii)cause or permit to be sold, supplied to or hired by a person
in Singapore;
(iv)under or in connection with a commercial arrangement:
a.exchange or supply to a person in Singapore; or
b.enable or assist an exchange or a supply to a person in Singapore,
even if the exchange or supply is not, by itself, a commercial arrangement;
(v)display or invite to treat for an act mentioned in paragraph (a),
(b), (c) or (d).
Under the Films Act, “film”
means (i) a cinematograph film or video recording; (ii) a video game; or (iii) any other form of recording from which a
moving visual image, except as provided otherwise in subsection (5), including a computer generated image which can be produced and
viewed together with its soundtrack and any trailer of a film and any part of a film.
Film Classification
Under the Films Act 1981,
films and videos have to be classified before they can be publicly exhibited or distributed in Singapore. We will have to submit the film
intended to distribute in Singapore for classification before it is made available to the general public, unless it falls within the exemption
categories as described below and does not contain impermissible content.
Types of Film Distribution
Licenses and Validity
There are two types of film
distribution licenses required for the film distribution in Singapore depending on the classification of the respective films by the IMDA:
(i) class licensing for the distribution of films rated G, PG and PG13; or (ii) film distribution (restricted) license
for the distribution of films rated NC16 and M18.
Class License
The Films (Class License
for General Films Distribution) Order 2021 provides that distributors of films that the IMDA has rated G, PG or PG13 are automatically
class-licensed and must comply with the class license conditions. The class license applies only to the distribution of films that have
been assigned G, PG or PG13 classification ratings and excludes video games.
The validity of a class license
that has been granted by the IMDA is perpetual until the film distribution business ceases or if the IMDA cancels the license.
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Film Distribution (Restricted)
Licence
Distributors of films that
the IMDA has rated NC16 or M18 must apply for a Film Distribution (Restricted) Licence. Each license covers all distribution points or
locations owned by the same business.
The validity of a Restricted
Licence that had been granted by the IMDA is either for a period of one or three years depending on the license applied for, or 30 days
for a temporary license.
Exemptions from licensing
Pursuant to the Films (Licence — Exemption)
Notification 2019 and the Films (Licence — Exemption) (Amendment) Notification 2021, the following activities are exempted
from film distribution licensing:
●importing any film for re-export;
●importing any video game on behalf of an IMDA licensed distributor of video games (whether these are licensed
under Section 7(2) of the Films Act 1981 or class licensees);
●importing any film (other than video games) on behalf of an IMDA licensed distributor of films (whether
these are licensed under Section 7(2) of the Films Act 1981 or class licensees);
●distributing any film for public exhibition in cinemas;
●distributing any exempted films; and
●distributing films by supplying, in the course of any business, the contents of the film only by electronic
transmission.
France
Publishing
Our French subsidiaries’
business may be subject to several laws in the field of publishing, in particular:
●the Law of 28 July 1881 on the freedom of the press (“Act 1881”) whose main
rules are based on the principle of the freedom of printing and of booksellers, and on the freedom of speech enshrined in the 1789 French
Declaration of the Rights of Man and of the Citizens;
●copyright law (particularly for journalists, photographers, and illustrators), the rules of which are
codified in the French Intellectual Property Code. In this area, several French texts have transposed Directive (EU) 2019/790 of 17 April 2019
on copyright and related rights in the Digital Single Market;
●deposit requirements applying to press publishers i.e., (i) administrative deposit obligations for
national press organs, i.e., for periodicals with national circulation (Act 1881) and (ii) legal deposit obligations for periodicals,
which concern written material of any kind and are the responsibility of both publishers and printers under the French Heritage Code (“FHC”,
Code du Patrimoine). This deposit is organized by region and is carried out at the Bibliothèque nationale de France (BNF) for the
Île-de-France region;
●the Act 1881, the Law of 1 August 1986 on freedom of communication (“Loi Léotard”)
and the Law of 21 June 2004 on confidence in the digital economy (“LCEN”) that lay down a certain number of compulsory
information that publishers must include on each publication. The LCEN itself sets out the compulsory information for online publications.
Together with the Digital Service Act, this same law requires the implementation of measures to fight online hate;
●the Law of 4 January 2010 that protects the confidentiality of journalists’ sources, and
the Law of 14 November 2016 that requires press companies to introduce an ethics charter within their business; and
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●obligations applying to advertising, in particular as regards the distinction between advertising space
and editorial content (Loi Léotard) and the obligation to identify online advertising (LCEN).
Distribution of
audiovisual works
Our French subsidiaries interested
in distributing audiovisual works may have to comply in particular to the following rules (some of which are genuinely specific to France):
●copyright law, the rules of which are codified in the French Intellectual Property Code;
●the principle of release window schedule (chronologie des médias), which governs the chronology
of releases on the various distribution channels (cinemas, television, VOD services, etc.). This chronology is decided by professional
agreement, the latest in force being that provided for in the Order of February 9, 2025;
●the rules codified in the French Cinema and Moving Image Code (“CMI”, Code du cinéma
et de l’image animée). The rules vary depending on the distribution channel for the audiovisual work. In particular, as the
audiovisual sector is eligible for financial aid from the CNC (Centre National du Cinéma et de l’image animée), distributors
of a certain number of works must send to the CNC, accounts of the exploitation of the work on a regular basis (art. L251-5 CMI); and
●the FHC (art. L131-1 to L133-1, and art. R131-1 à R133-1-1) that requires distributors of all foreign
cinematographic works broadcast in cinemas to submit a legal deposit to the CNC, once they have been approved for broadcasting. Depending
on the case, the distributor may also be responsible for obtaining the necessary visa before any public broadcasting of the audiovisual
work.
European rules resulting from
Audiovisual Media Services Directive 2018/1808 that were transposed by the Order of 21 December 2020. This order sets out
financing of audiovisual creation requirements and strengthens the powers of ARCOM, the authority responsible for regulating audiovisual
and digital communication in France.
89
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
This discussion and analysis
should be read together with “Business,” “Selected Historical Financial Data,” and our consolidated financial
statements and related notes that are included elsewhere in this prospectus. In addition to historical financial information, this discussion
and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties and assumptions. For
more information about forward-looking statements, see the section of this prospectus entitled “Forward-Looking Statements.”
Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result
of various factors, including those set forth under the section of this prospectus entitled “Risk Factors” or elsewhere in
this prospectus.
Our combined financial
statements for the years ended December 31, 2022 and 2023 presented and discussed in this prospectus capture the stand-alone
media and entertainment services, hotel operation, hospitality and VIP services and strategic investment business (“Carve-out Businesses”),
which were operated under AMTD Group Inc., our controlling shareholder, during the historical periods. A series of reorganization steps
were undertaken from October 2024 to November 2024 to establish us as the holding company of the Carve-out Businesses and the
corresponding subsidiaries of AMTD Group Inc. The reorganization was not completed as of December 31, 2022 and 2023. Therefore, our
results of operations for the period from January 1, 2022 through December 31, 2023 and financial condition as of December 31,
2022 and 2023 presented and discussed in this prospectus are those of certain subsidiaries of AMTD Group Inc., arising from the reorganization,
which have been prepared on a carve-out basis. Upon the completion of the reorganization in November 2024, all entities operating
in the Carve-out Businesses (except WME Assets Group, Fine Cosmos Development Limited and Singapore hotel companies) became wholly-owned
subsidiaries of the Company and accordingly their financial results are consolidated under the Company.
Overview
We are a global media and
entertainment ecosystem covering high fashion, arts, lifestyle, cultural, entertainment as well as F&B. Inheriting more than
one hundred years of history and with a worldwide geographical presence, we offer a holistic media and entertainment experience to
an audience of millions around the world.
Our publications L’Officiel
and The Art Newspaper publish print editions in a total of 28 countries and territories and digital contents to an even wider scope
of readers globally.
We operate in the movie production
sector having produced various Asia-focused blockbuster movies. We have partnered with established production companies to present a number
of Asia-focused blockbuster movies globally, which in aggregate notched a box office of more than US$400 million.
We hold premium whole building
properties and provide hospitality services in Hong Kong and Singapore. We focus on and specialize in hospitality and lifestyle concepts
and offers a customer-centric VIP members approach for its business portfolio in the key areas comprising stylish hotels and serviced
apartments, F&B, and club membership services in Hong Kong and Singapore, with plans for further global expansion.
We extend the power of our
brands and extensive library of contents and intellectual property through other media, platforms, products and services, including in
the area of F&B.
We also host a multitude of
cultural events to inspire conversation with traditions and bridge exchanges and we have been recognized for our cultural ambassadorship.
Key Factors Affecting Our
Results of Operations
Our business and operating
results are influenced by a number of general factors that impact the media and entertainment industry, hospitality industry and strategic
investment business.
90
The general factors include,
among others, changes in the global macroeconomic environment, economic growth in the jurisdictions we operate, growth in consumer spending
and consumption upgrade, costs along the supply chain, shifts in consumer preferences and competition, political and geopolitical uncertainties,
terrorism, epidemic or pandemic, civil unrest, fiscal or other economic policy of governments, political, legislative and regulatory reform
and changes in market trends. Unfavorable changes in any of these general factors could adversely affect demand for our content, products
and services and materially and adversely affect our results of operations.
While our business and results
of operations are influenced by these general factors, they are more directly affected by the following company-specific factors.
Our Ability to Produce
Content and Attract Audience
Our business and results of
operations depend significantly on our ability to create compelling content that resonates with our target audience. Our ability to produce
high-quality, engaging content across various mediums, including magazines and motion pictures, forms the cornerstone of our value proposition.
The freshness, relevance and diversity of our content portfolio are paramount in capturing and retaining audience attention in the current
competitive media and entertainment landscape. Our success in attracting and retaining a loyal audience directly impacts our revenue streams,
whether through subscriptions, advertising or box office sales. By continuously innovating and adapting to evolving audience preferences,
consumption habits and technological advancements, we aim to enhance our position as a leading content provider. Additionally, the success
of our content creation and audience engagement hinges on our ability to maintain and continually enrich our IP portfolio, thereby effectively
protecting our creative output. Our intellectual property assets include trademarks, copyrights in printed and digital publication materials,
domain names and licenses of intellectual property rights. Further, our ability to grow and retain audience depends on our ability to
foster meaningful connections with our audience through tailored marketing strategies, community engagement initiatives and market insights.
Our Ability to Improve
Our Advertising Revenue
Our business and results of
operations are intertwined with our ability to enhance our advertising revenue, namely, to establish strong relationships with advertisers
and leverage our platform to offer targeted and impactful advertising solutions. Through innovative advertising formats, market insights
and customized campaigns, we provide advertisers with compelling opportunities to connect with our audience effectively. Additionally,
we have been expanding our advertising reach across various channels and platforms, as well as capitalizing on emerging trends and technologies
to maximize exposure and engagement. By continuously refining our advertising offerings, optimizing pricing strategies and enhancing the
effectiveness of our advertising placements, we also seek to unlock new revenue opportunities and drive sustained growth.
Our Ability to Successfully
Navigate from Franchise Business Model to Direct Ownership Model
We are undergoing a transition
to turn franchise business model into direct ownership model in a number of major geographics. Our business and results of operations
are intricately tied to our adeptness in this transition because we will be able to turn indirect revenue from royalties to direct sales
revenue after this transaction. Key to this transition is our ability to strategically manage this pivotal shift as well as our capacity
to effectively streamline operations, optimize resource allocation and enhance operational efficiency across different locations. By assuming
direct ownership, we gain greater control over our brand identity, customer experience and operational standards, which enable us to deliver
a consistent but differentiated offering to our audience. Moreover, this transition empowers us to implement tailored marketing strategies,
innovate product offerings and capitalize on emerging market opportunities more swiftly and decisively. As this transition may entail
challenges and adjustments, our success depends on our ability to leverage our experience and expertise to align our strategic objectives
with the evolving needs and preferences of our target audience, create new avenues for growth and profitability and achieve long-term
sustainability.
Our Ability to Compete
in the Hospitality Market and the Expansion of Our Hotel Network
The market to provide hospitality
services is highly competitive and fragmented. The barriers to entry are low and new competitors may enter the market at any time. Our
current or potential competitors include global hotel brands, regional hotel chains, independent hotels, online travel agencies and home-sharing
and rental services and short term/vacation rental. It is crucial for us to respond quickly and effectively to new or changing opportunities,
technologies, standards or customer requirements. Our success depends on our ability to maintain our brand reputation and the quality
of our services and to differentiate our business or services from those of our competitors.
91
Our hospitality revenues largely
depend on the size of our hotel network. Furthermore, we believe the expanded geographic coverage of our hotel network will enhance our
brand recognition. As a result, the success of our hospitality business depends on whether we can successfully increase the number of
hotels and hotel rooms in our hotel network and our ability to maintain the quality of service at our hotels and the value of our brand.
Our Ability to Cultivate
and Diversify Our Businesses and Explore Synergies
Our business and results of
operations rely heavily on our ability to cultivate new revenue streams and harness synergies across our diverse business segments. Central
to this endeavor is our commitment to innovation, strategic partnerships and cross-functional collaboration. By continuously identifying
emerging market opportunities, unmet customer needs and evolving industry trends, we aim to diversify our revenue sources and expand our
market reach. Additionally, we leverage our existing assets, capabilities and expertise to synergize across our various business segments.
Through collaborations, strategic alliances, joint ventures and strategic investments, we seek to capitalize on complementary strengths
and shared resources to create value and drive sustainable growth. Further, we are committed to ongoing strategic expansion, market penetration
and brand visibility across key international markets for most of our business lines. Our robust global presence enables us to leverage
economies of scale, optimize resource allocation, drive operational efficiencies across our international operations and mitigate risks
associated with regional economic fluctuations. Moreover, our focus on customer-centricity and agility enables us to adapt quickly to
changing market dynamics and capitalize on emerging trends, so that we remain at the forefront of innovation and opportunities.
Key Components of Results
of Operations
Revenue
We generate revenue primarily
through (i) the provision of advertising and marketing services, (ii) the provision of hotel operations, hospitality and VIP
services, and (iii) strategic investment.
Advertising and marketing
services income. AMTD IDEA Group acquired the business of L’Officiel Inc. and The Art Newspaper in April 2022 and
October 2023, respectively. We generate revenue from fashion, arts and luxury media advertising and marketing services income and
licensing, subscription and marketing services income. We sell printed and digital publications and we provide print and digital advertising
campaigns and marketing services to the customers. We also provide licensing and marketing services to our customers on our multimedia
channels.
Hotel operations, hospitality
and VIP services income. We generate revenue from our hotel operations and the provision of hospitality and VIP services.
Strategic investment. We
generate revenue from net fair value changes on financial assets at FVTPL and derivative financial instruments, gain related to disposed
investments, and dividend income, in relation to our proprietary investments and management of high-quality investment portfolio, including
listed and unlisted equity shares investments and movie income right investments. We enter into movie income right agreements with production
houses and we are entitled to certain percentage of the variable profit to be derived from the release movies. We may be required to further
contribute to the movie production programs due to budget overruns, which will be added to the carrying amounts of financial assets.
The following table sets forth
the components of our revenue by amounts and percentages of our total revenue for the years indicated.
For the Year Ended December 31,
2022
2023
2024
US$
%
US$
%
US$
%
(in thousands, except for percentages)
Revenue:
Media advertising and marketing services income
7,670
24.5
14,422
33.9
18,859
24.5
Hotel operation, hospitality and VIP services income
3,201
10.3
5,423
12.8
23,132
30.0
Dividend income and gain related to disposed financial assets at fair value through profit or loss (“FVTPL”)
7,381
23.6
60,457
142.1
8,681
11.3
Net fair value changes on FVTPL and derivative financial instruments
13,011
41.6
(37,759)
(88.8)
26,342
34.2
Total
31,263
100.0
42,543
100.0
77,014
100.0
92
Cost of production
and cost of hotel operation
Our cost of production and
cost of hotel operation was US$3.2 million, US$5.9 million and US$15.6 million in 2022, 2023 and 2024, respectively.
Cost of production. Cost
of production refers to expenses related to production of magazines since the acquisition of the business of L’Officiel and The
Art Newspaper in April 2022 and October 2023, respectively. Cost of production primarily include (i) production expenses
including editorial expenses paid to editorial staff, payments to authors and other parties for creating articles, features and other
content for our magazines, design and layout expenses, (ii) distribution expenses such as shipping and subscription fulfillment expenses
incurred in connection with the delivery of magazines to subscribers and distribution network expenses spent on leases and equipment,
and (iii) printing expenses primarily including expenses on creating plates, printing materials and supplies such as paper, ink and
general office supplies, utilities and printing equipment acquisition and maintenance, as well as prepress expenses such as proofreading
and color correction. Our cost of production was US$1.5 million, US$3.8 million and US$7.1 million in 2022, 2023 and 2024,
respectively.
Cost of hotel operation. Cost
of hotel operation primarily includes utilities expenses, repair and maintenance of the hotel properties, travel agent commission and
cleaning expenses. Our cost of hotel operation was US$1.7 million, US$2.1 million and US$8.5 million in 2022, 2023 and 2024, respectively.
Other income
Our other income was US$0.5 million,
US$1.2 million and US$24.8 million in 2022, 2023 and 2024, respectively. Other income comprises gain on disposal of subsidiaries,
bank interest income and others.
Gain from a bargain
purchase
Our gain from a bargain purchase
was US$4.8 million and US$4.5 million in 2022 and 2023, respectively, representing the gain from our acquisition of the business
of L’Officiel and The Art Newspaper in April 2022 and October 2023, respectively. We recorded no gain from a bargain purchase
in 2024.
Other operating
expenses
Our other operating expenses
were US$3.5 million, US$5.7 million and US$15.5 million in 2022, 2023 and 2024, respectively. Other operating expenses
primarily include depreciation relating to our hotel properties, advertising and promotion expenses, IT related costs, legal and professional
fee, premises costs, travelling expenses and others.
Staff costs
Our staff costs were US$3.9 million,
US$7.9 million and US$13.1 million in 2022, 2023 and 2024, respectively. Salaries and bonus and pension scheme contributions
are the major components of our staff costs.
Share of profits
(losses) of joint ventures
Our share of profits (losses)
of joint ventures was US$0.8 million in profit, US$2.6 million in losses and US$0.6 million in losses in 2022, 2023 and
2024, respectively. Share of profits (losses) of joint ventures represents our share of losses or profits of our joint venture in the
business of investment holding and our Singapore joint venture in the business of hotel investment.
93
Finance costs
Our finance costs were US$2.6 million,
US$7.1 million and US$10.6 million in 2022, 2023 and 2024, respectively. Finance costs consist primarily of interests on our
borrowings and interests on amounts due to non-controlling shareholders of our subsidiaries.
Taxation
Cayman Islands
The Cayman Islands currently
levies no taxes on individuals or corporations based upon profits, income, capital gains or appreciation and there is no taxation in the
nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman
Islands except for stamp duties which may be applicable on instruments executed in or brought within the jurisdiction of the Cayman Islands.
There are no exchange control regulations or currency restrictions in the Cayman Islands.
France
In France, corporate income
tax rate of 15% applies to the first €38,120 of taxable profits for entities realizing a turnover up to €10 million for
the years ended December 31, 2022, 2023 and 2024. The corporate income tax rate above €38,120 of taxable profits is 25%
during the years ended December 31, 2022, 2023 and 2024.
Italy
Italian corporate entities
are subject to a corporate income tax of 24%, and to a regional production tax of 3.9% during the year ended December 31, 2022, 2023
and 2024.
United States
In the United States,
the federal corporate tax rate is a flat rate of 21% during the year ended December 31, 2022, 2023 and 2024. New York, where
part of our subsidiaries domiciles, has a 6.50% to 7.25% corporate income tax rate during the year ended December 31, 2022 and 6.50%
to 8.85% corporate income tax rate during the year ended December 31, 2023 and December 31, 2024.
Southeast Asia
Malaysian corporate income
tax is 25% of the chargeable income during the year ended December 31, 2022, 2023 and 2024. Singapore tax on corporate income is
imposed at a flat rate of 17%.
Hong Kong
Under the current Hong Kong
Inland Revenue Ordinance, a two-tiered profits tax rates regime was introduced in 2018 where the first HK$2 million of assessable
profits earned by a company is taxed at half of the current tax rate (8.25%) while the remaining profits are taxed at 16.5%. For the year
ended December 31, 2022, 2023 and 2024, the Hong Kong profits tax of our qualifying subsidiaries is calculated at 8.25% on the
first HK$2 million of the estimated assessable profits and at 16.5% on the estimated assessable profits above HK$2 million.
Payments of dividends by the
Hong Kong subsidiary to us is not subject to withholding tax in Hong Kong.
There is an anti-fragmentation
measure where each group will have to elect only one company in the group to benefit from the progressive rates.
The Inland Revenue (Amendment)
(Taxation on Specified Foreign-sourced income) Bill 2022, or the new FSIE regime, has come into effect since January 1, 2023. The
change was introduced to address the European Union’s inclusion of Hong Kong in Annex II of the EU list of non-cooperative
jurisdictions for tax purposes in concern of any risk of double non-taxation arising from the tax exemption of offshore passive income
for companies in Hong Kong without substantial economic substance. Since January 1, 2023, offshore passive income (including
interest income, dividend income or gain on disposal of equity interest (where applicable)), that is received or deemed to be received
in Hong Kong would need to meet additional requirements, including, amongst others, the economic substance requirements in order
to continue to be entitled to the offshore income tax exemption in Hong Kong. We will monitor the regulatory developments and continue
to evaluate the impact on our financial statements, if any.
94
Results of Operations
The following table sets forth
our results of operations with line items by amounts for the years indicated.
Year ended December 31,
2022
2023
2024
US$
%
US$
%
US$
%
(in thousands, except for percentages, share numbers and per share
data)
REVENUE
Media advertising and marketing services income
7,670
24.5
14,422
33.9
18,859
24.5
Hotel operation, hospitality and VIP services income
3,201
10.3
5,423
12.8
23,132
30.0
Dividend income and gain related to disposed financial assets at fair value through profit or loss (“FVTPL”)
7,381
23.6
60,457
142.1
8,681
11.3
Net fair value changes on FVTPL and derivative financial instruments
13,011
41.6
(37,759)
(88.8)
26,342
34.2
31,263
100.0
42,543
100.0
77,014
100.0
Cost of production and cost of hotel operation
(3,239)
(10.4)
(5,886)
(13.8)
(15,612)
(20.3)
Other income
522
1.7
1,245
2.9
24,815
32.3
Gain from a bargain purchase
4,848
15.5
4,469
10.5
—
—
Impairment losses under expected credit loss (“ECL”) model on financial assets
(501)
(1.6)
—
—
—
—
Other operating expenses
(3,500)
(11.2)
(5,677)
(13.3)
(15,542)
(20.2)
Staff costs
(3,900)
(12.5)
(7,891)
(18.5)
(13,132)
(17.1)
Share of profits (losses) of joint ventures
815
2.6
(2,608)
(6.1)
(558)
(0.7)
Finance costs
(2,586)
(8.3)
(7,136)
(16.8)
(10,612)
(13.8)
PROFIT BEFORE TAX
23,722
75.8
19,059
44.9
46,373
60.2
Income tax expense
(599)
(1.9)
(1,811)
(4.3)
(1,643)
(2.1)
PROFIT FOR THE YEAR
23,123
73.9
17,248
40.6
44,730
58.1
OTHER COMPREHENSIVE INCOME (EXPENSES)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
602
1.9
(966)
(2.3)
(4,571)
(5.9)
Share of other comprehensive income of joint ventures
53,946
172.6
5,269
12.4
2,833
3.6
Items that will not be reclassified subsequently to profit or loss:
Exchange difference on translation from functional currency to presentation currency
512
1.6
(361)
(0.8)
2,463
3.2
Surplus on revaluation of properties
20,213
64.7
9,041
21.3
20,629
26.8
OTHER COMPREHENSIVE INCOME FOR THE YEAR
75,273
240.8
12,983
30.6
21,354
27.7
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
98,396
314.7
30,231
71.2
66,084
85.8
Profit for the year attributable to:
Owners of the Company
14,975
47.9
8,164
19.2
27,751
36.0
Non-controlling interests
8,148
26.0
9,084
21.4
16,979
22.1
23,123
73.9
17,248
40.6
44,730
58.1
Total comprehensive income for the year attributable to:
Owners of the Company
75,061
240.1
11,144
26.3
41,725
54.2
Non-controlling interests
23,335
74.6
19,087
44.9
24,359
31.6
98,396
314.7
30,231
71.2
66,084
85.8
95
Discussion of Segment Operations
We operate in three operating
segments: media and entertainment segment, hotel operations, hospitality and VIP services segment and strategic investment segment:
Media and entertainment
segment. We engage in the provision of print and digital advertising campaigns, licensing, subscription, sales of magazines and
newspaper, and value-added marketing services including branded content, video production, social media activation, event creation, and
experiential marketing, among other services.
Hotel operation, hospitality
and VIP services segment. We engage in hotel operations, hospitality and VIP services
The strategic investment
segment. We engage in proprietary investments and management of high-quality investment portfolio, including listed and unlisted
equity shares investments and movie income right investments.
Our management monitors the
results of our operating segments separately for the purpose of making decisions about resources allocation and performance assessment.
Segment performance is evaluated based on reportable segment result, which is a measure of profit before tax from operations. The profit
before tax from operations is measured after allocation of attributable costs of specialized staff and direct operating costs consistently
with our profit before tax from operations. Other income, gain from a bargain purchase, finance costs, impairment loss under expected
credit loss model on financial assets and corporate expenses such as staff costs not directly attributable to segments, short-term leases
and administrative expenses are excluded from such measurement.
The following table set forth
the revenues by segments and segment results for the years indicated.
For the Year Ended December 31,
2022
2023
2024
US$
%
US$
%
US$
%
(in thousands, except for percentages, share numbers and per share data)
Media and entertainment
7,670
24.5
14,422
33.9
18,859
24.5
Hotel operation, hospitality and VIP services
3,201
10.3
5,423
12.8
23,132
30.0
Strategic investment
20,392
65.2
22,698
53.3
35,023
45.5
Total
31,263
100.0
42,543
100.0
77,014
100.0
Year Ended December 31,
2023 Compared to Year Ended December 31, 2024
Revenue
Our revenue increased from
US$42.5 million in 2023 to US$77.0 million in 2024.
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Segment Revenue
Our segment revenue from the
media and entertainment segment increased from US$14.4 million in 2023 to US$18.9 million in 2024, primarily due to the successful
operations and expansions of L’Officiel, as well as the full year impact of our acquisition of The Art Newspaper in October 2023.
Our segment revenue from the
hotel operation, hospitality and VIP services segment increased from US$5.4 million in 2023 to US$23.1 million in 2024, primarily
due to the additional contribution recognized from our hotels to the segment revenue.
Our segment revenue from the
strategic investment segment increased from US$22.7 million in 2023 to US$35.0 million 2024, primarily due to the net effect of (i)
the unrealized gain on our listed shares investments of US$26.3 million for 2024, as compared with an unrealized loss of US$37.8 million
recognized for 2023 mainly due to fluctuation in the stock market affecting the fair value of the listed shares of Bank of Qingdao and
Guangzhou Rural Commercial Bank which we hold as investments, and (ii) a decrease in the realized gain on disposed investments of US$50.5
million as we disposed of certain film investments in 2023 whereas no investment was disposed of during 2024.
Cost of production
and cost of hotel operation
Our cost of production and
cost of hotel operation increased from US$5.9 million in 2023 to US$15.6 million in 2024.
Our cost of production increased
from US$3.8 million in 2023 to US$7.1 million in 2024, mainly due to the additional costs incurred as a result of the expansion of the
operation of L’Officiel and the full year impact in 2024 of our acquisition of The Art Newspaper in October 2023.
Our cost of hotel operation
increased from US$2.1 million in 2023 to US$8.5 million in 2024, mainly due to the additional costs recognized from our hotels in
line with the increase in segment revenue generated from our hotel operation.
Other income
Our other income increased
from US$1.2 million in 2023 to US$24.8 million in 2024, mainly due to the disposal of the entire equity interests in certain of our
subsidiaries which were not conducting the core business of our company, during 2024.
Other operating
expenses
Our other operating expenses
increased from US$5.7 million in 2023 to US$15.5 million in 2024, mainly due to an increase in depreciation of our hotel properties
and other corporate expenses arising from the additional contribution recognized from our hotel operations during 2024.
Staff costs
Our staff costs increased
from US$7.9 million in 2023 to US$13.1 million in 2024, mainly due to the increase in salaries as a result of our business expansion.
Share of losses
of joint ventures
Our share of losses of joint
venture decreased from US$2.6 million in 2023 to US$0.6 million in 2024.
Finance costs
Our finance costs increased
from US$7.1 million in 2023 to US$10.6 million in 2024, mainly due to an increase in our borrowings and the interests payable thereon.
97
Income tax expense
Our income tax marginally
decreased from US$1.8 million in 2023 to US$1.6 million in 2024, mainly due to the decrease in assessable profits in 2024.
Profit for the year
As a result of the foregoing,
our profit increased from US$17.2 million in 2023 to US$44.7 million in 2024.
Year Ended December 31,
2022 Compared to Year Ended December 31, 2023
Revenue
Our revenue increased from
US$31.3 million in 2022 to US$42.5 million in 2023.
Segment Revenue
Our segment revenue from the
media and entertainment segment increased from US$7.7 million in 2022 to US$14.4 million in 2023, primarily due to the expansion
of L’Officiel into various jurisdictions such as Singapore and Malaysia since 2023, as well as our acquisition of The Art Newspaper
in October 2023 which brought in new sources of income.
Our segment revenue from the
hotel operation, hospitality and VIP services segment increased from US$3.2 million in 2022 to US$5.4 million in 2023, primarily
due to the increase in the unit room rate and occupancy rate of our hotels.
Our segment revenue from the
strategic investment segment increased from US$20.4 million in 2022 to US$22.7 million in 2023, primarily due to (i) the
increase in realized gain to the disposed investment from US$1.0 million in 2022 to US$50.5 million in 2023 resulting from the
realized gain in derivative contracts of upside participation and profit distribution agreements and future settlement contract (as described
in details in note 17 of TGE’s consolidated financial statements included herein), which contracts were terminated in 2023
and (ii) the increase in dividend income from US$6.4 million in 2022 to US$9.9 million in 2023. The increase was partially
offset by the unrealized loss on our investments in the listed shares of Bank of Qingdao and Guangzhou Rural Commercial Bank and derivative
financial instruments of US$37.8 million in year 2023, while an unrealized gain of US$13.0 million was recognized in 2022, due
to fluctuation in the stock market affecting the fair value of these listed shares.
Cost of production
and cost of hotel operation
Our cost of production and
cost of hotel operation increased from US$3.2 million in 2022 to US$5.9 million in 2023.
Our cost of production increased
from US$1.5 million in 2022 to US$3.8 million in 2023, mainly due to the additional cost incurred as a result of the expansion
of L’Officiel into various jurisdictions such as Singapore and Malaysia since 2023 and our acquisition of The Art Newspaper in October 2023.
Our cost of hotel operation
increased from US$1.7 million in 2022 to US$2.1 million in 2023, mainly due to the additional costs incurred to maintain the
operation of services resulting from the increase in occupancy rate of our hotels.
Other income
Our other income marginally
increased from US$0.5 million in 2022 to US$1.2 million in 2023.
98
Gain from a bargain
purchase
Our gain from a bargain purchase
decreased from US$4.8 million in 2022 to US$4.5 million in 2023. The gain from a bargain purchase in 2023 resulted from the
acquisition of The Art Newspaper, while the gain in 2022 resulted from the acquisition of L’Officiel.
Other operating
expenses
Our other operating expenses
increased from US$3.5 million in 2022 to US$5.7 million in 2023, mainly due to an increase in depreciation as a result of the
increase in the revalued amount of our hotel property.
Staff costs
Our staff costs increased
from US$3.9 million in 2022 to US$7.9 million in 2023, mainly due to the increase in salaries as a result of our expansion.
Share of (losses)
profits of joint ventures
Our share of profits of joint
venture was US$0.8 million in 2022 and our share of losses of joint ventures was US$2.6 million in 2023. The difference was
mainly due to the increase in depreciation of our hotel property and the increase in our hotel joint venture’s finance costs.
Finance costs
Our finance costs increased
from US$2.6 million in 2022 to US$7.1 million in 2023, mainly due to (i) an increase in our borrowings and the interests
payable thereon, and (ii) an increase in average interest rate charged by the banks due to global interest rate hike in 2023.
Income tax expense
Our income tax increased from
US$0.6 million in 2022 to US$1.8 million in 2023, mainly due to the increase in the assessable profits generated from our operations.
Profit for the year
As a result of the foregoing,
our profit decreased from US$23.1 million in 2022 to US$17.2 million in 2023.
Liquidity and Capital Resources
Cash Flows and Working
Capital
The following table sets forth
a summary of our cash flows for the years indicated.
For the Year Ended December 31,
2022
2023
2024
US$
US$
US$
(in thousands)
Net cash (used in) from operating activities
(1,421)
1,132
4,567
Net cash from investing activities
247
6,700
3,312
Net cash from (used in) financing activities
1,064
(2,472)
6,232
Net (decrease) increase in cash and cash equivalents
(110)
5,360
14,111
Cash and cash equivalents at beginning of year
1,268
1,208
6,121
Effect of foreign exchange rate changes
50
(447)
(254)
Cash and cash equivalents at end of year
1,208
6,121
19,978
99
To date, we have financed
our operating and investing activities primarily through cash generated from
operations, funding from our
Controlling Shareholder and bank borrowings. We had cash and bank balances of US$6.1 million and US$20.0 million as of December 31,
2023 and December 31, 2024, respectively. Cash and bank balances include demand deposits at banks, earning interest at floating rates
based on daily bank deposit rates for all the periods. The bank balances are deposited with creditworthy banks with no recent history
of default.
In connection with the Business
Combination, holders of 13,120,874 BSII Class A Ordinary Shares exercised their right to redeem their shares for cash at a redemption
price of approximately US$10.30 per share, for an aggregate redemption amount of approximately US$135.2 million, representing approximately
85.8% of the total BSII Class A Shares outstanding as of the Record Date. We raised gross cash proceeds of approximately US$22.5 million
in connection with the Business Combination.
We may seek additional equity
or debt financing in the future to satisfy capital requirements, respond to adverse developments or changes in our circumstances or unforeseen
events or conditions, or fund organic or inorganic growth.
Subject to the AMTD Lock-up
Obligations, the Selling Securityholders can sell, under this prospectus, up to (i) 57,401,944 Class A Ordinary Shares constituting approximately
88.7% of the total issued and outstanding Ordinary Shares (assuming exercise of all outstanding Warrants), and (ii) 11,120,000 Warrants,
representing approximately 68.6% of our outstanding Warrants, as of the date of this prospectus. Subject to the AMTD Lock-up Obligations,
AMTD Digital, AMTD IDEA Group, AMTD Group Inc. can sell all Ordinary Shares beneficially owned by them under this prospectus, being 37,756,286
Class A Ordinary Shares (including (i) 18,470,375 Class A Ordinary Shares and (ii) 19,285,911 Class A Ordinary Shares issuable upon the
conversion of 19,285,911 Class B Ordinary Shares beneficially owned by AMTD Digital Inc.), and constituting approximately 58.4% of our
issued and outstanding Ordinary Shares and represented 93.8% of the aggregate voting power of our total issued and outstanding share capital
as of the date of this prospectus (assuming exercise of all outstanding Warrants), so long as the registration statement of which this
prospectus forms a part is available for us. These shares were acquired at prices significantly below the current trading price of the
Class A Ordinary Shares. Sales of a substantial number of Registered Securities, or the perception that those sales might occur,
could result in a significant decline in the public trading price of our securities and could impair our ability to raise capital through
the sale or issuance of additional equity securities. We are unable to predict the effect that such sales may have on the prevailing market
price of our securities. See “Risk Factors — Risks Relating to Our Securities — Future resales of Ordinary Shares issued
to our shareholders and other significant shareholders may cause the market price of the Class A Ordinary Shares to drop significantly,
even if our business is doing well.” The issuance and sale of additional equity would also result in further dilution to our shareholders.
The incurrence of indebtedness would result in increasing fixed obligations and could result in operating covenants that would restrict
our operations.
We will not receive any proceeds
from any sale of the Registered Securities by the Selling Securityholders. We will receive proceeds of up to an aggregate of approximately
US$186,530,000 from the exercise of the Warrants if all of the Warrants are exercised for cash. However, the exercise price of the Warrants
is US$11.50 per share and the closing price of our Class A Ordinary Shares on the NYSE on June 23, 2025 was US$7.79 per ordinary
share. The likelihood that warrant holders will exercise the Warrants and any cash proceeds that we would receive are dependent upon the
market price of the Class A Ordinary Shares, among other things. If the market price for the Class A Ordinary Shares is less
than US$11.50 per share, we believe warrant holders will be unlikely to exercise their Warrants. There is no assurance that the Warrants
will be “in the money” prior to their expiration or that the warrant holders will exercise their Warrants. Holders of the
Sponsor Warrants have the option to exercise the Sponsor Warrants on a cashless basis in accordance with the Warrant Agreement. To the
extent that any Warrants are exercised on a cashless basis, the amount of cash we would receive from the exercise of the Warrants will
decrease. We will pay the expenses associated with registering the sales by the Selling Securityholders, as described in more details
in the section titled “Use of Proceeds” appearing elsewhere in this prospectus.
We believe that our current
cash and cash equivalents and our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements
and capital expenditures for at least the next 12 months. After the Business Combination, we may decide to enhance our liquidity
position or increase our cash reserve for future investments through additional financing. The issuance and sale of additional equity
will result in further dilution to our shareholders. The incurrence of indebtedness will result in increased fixed obligations and could
result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or
on terms acceptable to us, if at all.
100
Operating Activities
Net cash generated from operating
activities in 2024 was US$4.6 million. The difference between our profit before tax of US$46.4 million and operating cash inflow
was primarily the result of (i) the adjustment of non-cash items of US$36.9 million, consisted primarily of US$24.8 million
in gain on disposal of subsidiaries, US$8.7 million in dividend income, US$26.3 million in net fair value changes on financial
assets at FVTPL, US$10.6 million in finance costs and US$11.7 million in depreciation; and (ii) a net increase in working
capital by US$4.9 million. The net increase in working capital was primarily attributable to an increase in accounts receivable of
US$3.7 million, a decrease in contract liabilities of US$0.2 million and an increase in prepayments, deposits and other receivables
of US$2.4 million, partially offset by an increase in accounts payable of US$0.9 million and an increase in other payables and accruals
of US$0.4 million.
Net cash generated from operating
activities in 2023 was US$1.1 million. The difference between our profit before tax of US$19.1 million and operating cash inflow
was primarily the result of (i) the adjustment of non-cash items of US$14.6 million, consisted mainly of realized gain in disposal
of financial assets at FVTPL and derivative financial instruments of US$50.5 million and dividend income of US$9.9 million,
partially offset by net fair value changes on financial assets at FVTPL of US$37.8 million and finance costs of 7.1 million;
and (ii) a net increase in working capital by US$3.3 million. The net increase in working capital was primarily attributable
to an increase in accounts receivable of US$1.8 million, a decrease in accounts payable of US$1.4 million, and a decrease in
contract liability of US$0.9 million, partially offset by an increase in other payables and accruals of US$1.3 million.
Net cash used in operating
activities in 2022 was US$1.4 million. The difference between our profit before tax of US$23.7 million and operating cash outflow
was primarily the result of (i) the adjustment of non-cash items of US$21.9 million, consisted primarily of net fair value changes
on financial assets at FVTPL of US$13.0 million, dividend income of US$6.4 million and gain from a bargain purchase of US$4.8 million,
partially offset by finance costs of US$2.6 million; (ii) a net increase in working capital by US$3.3 million. The net
increase in working capital was primarily attributable to a decrease in other payables and accruals of US$1.9 million, a decrease
in accounts payable of US$1.6 million and an increase in accounts receivable of US$0.9 million, partially offset by an increase
in contract liabilities of US$0.8 million.
Investing Activities
Cash generated from investing
activities in 2024 was US$3.3 million, consisting primarily of the acquisition of subsidiaries of US$4.3 million, partially
offset by the disposal of subsidiaries of US$1.0 million.
Cash generated from investing
activities in 2023 was US$6.7 million, consisting primarily of net receipt from amounts due from joint ventures.
Cash generated from investing
activities in 2022 was US$0.2 million due to the acquisition of subsidiaries.
Financing Activities
Cash generated from financing
activities in 2024 was US$6.2 million, consisting primarily of net receipt from amount due to ultimate holding company of US$34.9 million,
partially offset by interest paid of US$10.9 million and repayment paid to subsidiaries’ non-controlling shareholders of US$15.7
million.
Cash used in financing activities
in 2023 was US$2.5 million, consisting primarily of interest paid of US$2.6 million and repayment to subsidiaries’ non-controlling
shareholders of US$2.1 million, partially offset by net receipt from amount due to ultimate holding company of US$2.8 million.
Cash generated from financing
activities in 2022 was US$1.1 million, consisting primarily of new bank borrowing raised of US$5.3 million and net receipt from
amount due to ultimate holding company of US$3.7 million, partially offset by repayment to subsidiaries’ non-controlling shareholders
of US$6.4 million and interest paid of US$1.6 million.
101
Material Cash Requirements
Our material cash requirements
as of December 31, 2024 and any subsequent interim period primarily include (i) borrowings, (ii) amount due to our ultimate
holding company, (iii) amounts due to non-controlling shareholders of our subsidiaries, and (iv) lease liabilities.
Our borrowings mainly comprise
of secured bank borrowings of US$219.6 million, which are denominated in Hong Kong dollars, Singapore dollars and USD, and unsecured
bank borrowings of US$25 thousands. Except for bank borrowings of US$11.0 million carrying a fixed-rate interest of 5.0% per annum,
other bank borrowings carry variable interest rates with a weighted average contractual interest rate of 4.03% per annum as of December 31,
2024.
Our amount due to our ultimate
holding company mainly consists of interest-free current account with our ultimate holding company. The amount will be waived by our ultimate
holding company upon Closing.
Our amounts due to non-controlling
shareholders of our subsidiaries consists of interest-free current account of US$63.0 million as of December 31, 2024. In August 2024,
interest bearing balance of US$29.5 million was settled through the current account of our ultimate holding company and the non-controlling
shareholders.
Our lease liabilities primarily
consist of certain outstanding lease obligations of our offices.
The following table sets forth
our material cash requirements as of December 31, 2024.
Payment Due by Period
Total
Within One Year
More Than One Year
US$
US$
US$
(in thousands, except percentages)
Bank borrowings
219,609
176
219,433
Amount due to ultimate holding company
102,622
—
102,622
Amount due to subsidiaries’ non-controlling shareholders
63,019
63,019
—
Lease liabilities
520
253
267
Total
385,770
63,448
322,322
Other than as shown above,
we did not have any other significant capital and other commitments, long-term obligations or guarantees as of December 31, 2024.
To provide additional consideration
to Black Spade II Public Shareholders, The Generation Essentials Group will make a cash payment equal to $1.25 multiplied by the
number of BSII Class A Ordinary Shares held by eligible Black Spade II Public Shareholders on the Closing Date immediately before
the Merger Effective Time (the “Non-Redemption Payment Amount”). This additional cash payment will be made no earlier than
60 days and no later than 90 days after the Closing Date. The aggregate Non-Redemption Payment Amount that we currently expect to pay
to eligible Black Spade II Public Shareholders is US$1.7 million.
Off-Balance Sheet Commitments
and Arrangements
We have not entered into any
financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered
into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in
our combined financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated
entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated
entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services
with us.
102
Critical Accounting Estimates
Impairment assessment
of intangible assets
Determining whether intangible
assets are impaired requires an estimation of the recoverable amount of the cash-generating unit to which intangible assets have been
allocated, which is the higher of the value in use or fair value less costs of disposal. The value in use calculation requires us to estimate
the future cash flows from the cash-generating unit and a suitable discount rate in order to calculate the present value. Where the actual
future revenue is less than expected, or change in facts and circumstances which results in downward revision of future cash flows or
upward revision of discount rate, a material impairment loss or further impairment loss may arise.
Revaluation measurement
of properties
As at the end of the reporting
period, our properties are stated at revalued amounts based on the valuation performed by independent qualified professional valuers.
In determining the fair value, the valuers have based their valuation on income approach for respective properties, which involves certain
estimates, including appropriate discount rates and market transactions of comparable properties, as appropriate. In relying on the valuation,
our management has exercised its judgement and is satisfied that the methods of valuation adopted are appropriate for the relevant property
and reflective of current market conditions.
Holding Company Structure
The Generation Essentials
Group is a holding company with no material operations of its own. We conduct our operations through our subsidiaries in France, Italy,
the U.S., Hong Kong, Malaysia and Singapore currently. As a result, although other means are available for us to obtain financing
at the holding company level, our ability to pay dividends to the shareholders and to service any debt we may incur may depend upon dividends
paid by our subsidiaries. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt
may restrict its ability to pay dividends to us.
Quantitative and Qualitative
Disclosure about Market Risks
We have various financial
assets and liabilities such as financial assets at FVTPL, accounts receivable, deposits and other receivables, amounts due from joint
ventures, restricted cash, cash and bank balances, accounts payable, other payables and accruals, borrowings, amounts due to subsidiaries’
non-controlling shareholders and amount due to ultimate holding company.
The main risks arising from
our financial instruments are price risk, foreign currency risk, interest rate risk, credit risk and liquidity risk. Our management manages
and monitors these risks to ensure appropriate measures are implemented on a timely and effective manner.
Price Risk
Equity price risk is the risk
that the fair values of equity investments decrease as a result of changes in the levels of equity indices and the value of individual
securities. We are exposed to equity securities price risk because certain investments we held are classified in the combined statements
of financial position as financial assets at FVTPL. Profit for the year would increase/decrease as a result of gains/losses on equity
securities classified as financial assets at FVTPL.
As of December 31, 2022,
2023 and 2024, if there had been a 5% increase/decrease in the equity price of listed equity shares, included in financial assets at FVTPL,
with all other variables held constant, our profit before tax would have been approximately US$5,524,000, US$3,603,000 and US$20,376,000,
respectively.
We also had concentration
risk in two listed equity shares as of December 31, 2022 and 2023. As of December 31, 2024, we had concentration risk in equity
shares in AMTD Digital Inc. and two listed equity shares.
We entered into certain agreements
in relation to the movement of the share price of the entirety of our holding of certain listed shares to reduce our exposure to the changes
in fair value of financial assets. The derivative financial asset is initially recognized at fair value and are subsequently remeasured
at fair value and any gains or losses arising from changes in fair value of derivative financial asset are taken directly to profit or
loss.
No sensitivity analysis is
prepared on unlisted equity shares and movie income right investments as our directors consider that the impact on the price risk is insignificant.
103
Foreign Currency
Risk
We have certain transactions
denominated in foreign currencies which are different from our functional currency, and therefore we are exposed to foreign currency risk.
We currently do not have a foreign currency hedging policy. However, our management monitors foreign exchange exposure and will consider
hedging significant foreign exchange exposure should the need arise.
Our key currency risk exposure
primarily arises from accounts receivable, accounts payable and bank balances denominated in other currencies. As of December 31,
2022, 2023 and 2024, we had no significant exposure to foreign currency risk.
Interest Rate Risk
We are exposed to cash flow
interest rate risk in relation to variable-rate bank balances and variable-rate borrowings. We aim at keeping borrowings at variable rates.
We manage our interest rate exposures by assessing the potential impact arising from any interest rate movements based on interest rate
level and outlook. Our management will review the proportion of borrowings in fixed and floating rates and ensure they are within reasonable
range. Our cash flow interest rate risk exposure is insignificant.
Credit Risk
Credit risk refers to the
risk that our counterparties default on their contractual obligations resulting in financial losses to us. Our credit risk exposures are
primarily attributable to accounts receivable, bank balances and deposits and other receivables. Our directors consider that these credit
risks are not significant.
Liquidity Risk
We aim to maintain cash and
credit lines to meet its liquidity requirements. We finance our working capital requirements through a combination of funds generated
from operations, loans and equity financing. Our liquidity risk exposures are primarily attributable to accounts payable, other payables
and accruals, borrowings, amounts due to subsidiaries’ non-controlling shareholders, amount due to ultimate holding company.
Internal Control Over Financial
Reporting
Prior to the consummation
of the Business Combination, we had been a private company with limited accounting personnel and other resources with which to address
our internal control. Our management has not completed an assessment of the effectiveness of our internal control and procedures over
financial reporting and our independent registered public accounting firm has not conducted an audit of our internal control over financial
reporting. In the course of auditing our combined financial statements included in this prospectus, we and our independent registered
public accounting firm did not identify any material weakness in our internal control over financial reporting. As defined in the standards
established by the U.S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Neither we nor our independent
registered public accounting firm undertook a comprehensive assessment of our internal control under the Sarbanes-Oxley Act for purposes
of identifying and reporting any weakness in our internal control over financial reporting. We and they are required to do so only after
we become a public company. Had we performed a formal assessment of our internal control over financial reporting or had our independent
registered public accounting firm performed an audit of our internal control over financial reporting, control deficiencies may have been
identified. See “Risk Factors — Risks Relating to Our Businesses and Industries in General — If
we do not appropriately maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley
Act of 2002, we may be unable to accurately report our financial results and the market price of our securities may be adversely
affected.”
As a company with less than
US$1.235 billion in revenues for fiscal year of 2024, we qualify as an “emerging growth company” pursuant to the JOBS
Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable
generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the
Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting.
Recently Issued Accounting
Pronouncements
A list of recently issued
accounting pronouncements that are relevant to us is included in Note 2.2 of our combined financial statements included elsewhere
in this prospectus.
104
MANAGEMENT
The following table sets forth
certain information relating to our executive officers and directors as of the date of this prospectus. Our board of directors is comprised
of four directors.
Directors and Executive Officers
Age
Position/Title
Feridun Hamdullahpur
70
Co-Chairperson of the Board of Directors and Independent Director
Joanne Shoveller
64
Co-Chairperson of the Board of Directors and Independent Director
Samuel Chau
43
Director and Chief Financial Officer
Calvin Choi
46
Director
Giampietro Baudo
46
Chief Executive Officer
Dr. Feridun Hamdullahpur
is co-chairperson of the board of directors and an independent director of The Generation Essentials Group. Dr. Hamdullahpur is also
the chairman of the executive management committee and an independent director of AMTD Digital Inc. and the chairman and independent director
of AMTD IDEA Group. He currently serves as the Chancellor of International Business University. Dr. Hamdullahpur served as the sixth
president and vice-chancellor of the University of Waterloo from 2010 to 2021. Prior to that, he served as a vice-president academic and
provost at the University of Waterloo from September 2009 to September 2010. Dr. Hamdullahpur has served as a member of
the strategic advisory board of Sorbonne University since 2014, and member of the international advisory board of King Abdulaziz University
since 2017. He has served as chair of the Waterloo Global Science Initiative since 2016. In 2022, Dr. Hamdullahpur was named a member
of the Order of Canada. In 2015, Dr. Hamdullahpur was appointed chair of the Leadership Council for Digital Infrastructure in Canada.
Dr. Hamdullahpur was named a fellow of the Canadian Academy of Engineering in July 2014 and was awarded the Queen Elizabeth II
Diamond Jubilee Medal in January 2013 in acknowledgement of his leadership in education and innovation. In 2019, he received the
recognition of Knight of the order of Palmes Academiques awarded by the Republic of France. Dr. Hamdullahpur graduated from the Technical
University of Istanbul with a bachelor’s degree in mechanical engineering in 1976 and a master’s degree in mechanical engineering
from Technical University of Istanbul in 1979. Dr. Hamdullahpur received his Ph.D. in chemical engineer from the Technical University
of Nova Scotia in 1985.
Joanne Shoveller is
co-chairperson of the board of directors and an independent director of The Generation Essentials Group. She is also an independent director
of AMTD Digital Inc. Ms. Shoveller has been the president and vice chancellor of International Business University since January 2022,
and has served on the executive team of four higher education institutions, most recently as vice president of advancement at the University
of Waterloo from 2017 to 2021. Prior to that, Ms. Shoveller held progressive roles in part-time and continuing education, university
advancement and the Ivey Business School at Western University. In 1997 she was assigned to Hong Kong as part of the small team that
founded Ivey’s Asian campus, executive MBA, research, case-writing and fundraising programs. In 2001 Ms. Shoveller influenced
the successful closure of the Ivey Campaign then assumed leadership of the Ivey MBA program until 2004, diversifying and strengthening
its student cohort and steering curriculum development. Ms. Shoveller led the advancement teams at the University of Guelph from
2004 to 2012 and INSEAD Business School in France from 2012 to 2016, building alumni, donor and corporate relations, multiplying charitable
giving, contributing to strategic direction and launching two capital campaigns. With a strong focus on business — university
partnerships, Ms. Shoveller has volunteered and consulted with organizations based in North America, Europe, Asia, Australia and
Africa, from which she brings a rich international perspective to her work, along with unique insights into the student, faculty, employer
and alumni experience. Ms. Shoveller holds a Bachelor of Arts from Wilfrid Laurier University, an MBA from Ivey Business School,
Western University and achieved the ICD.D, June 2022 designation from the Institute of Corporate Directors, through the University
of Toronto ICD-Rotman, Directors Education Program, April 2022.
Samuel Chau is a director
and the chief financial officer of The Generation Essentials Group. Mr. Chau was admitted to the partnership of Deloitte Touche Tohmatsu
in 2016, and has over 20 years of professional experience in providing assurance, business advisory, and capital market services
to companies. Mr. Chau obtained his bachelor’s degree in business administration in The University of Hong Kong in 2001.
Mr. Chau is currently a fellow member of Hong Kong Institute of Certified Public Accountants and member of The Institute of
Chartered Accountants in England and Wales.
105
Dr. Calvin Choi
is a director of The Generation Essentials Group. He is also the Global Chairman of L’Officiel, and The Art Newspaper. Calvin was
awarded “Knight — Order of Arts and Letters” by the Ministry of Culture of France in 2022. He was named “Asia
FinTech Leader”, “Singapore FinTech Leader” and “Top 10 FinTech Leader” respectively in 2019 to 2021 by
the Singapore Fintech Association; granted “Outstanding Contribution Award (Individual)” by the conference of “Pilot
9+2: First Guangdong-Hong Kong-Macao Greater Bay Area Development Forum” held by Hong Kong Ta Kung Wen Wei Media Group
in 2021; named “Asia’s Most Influential” by the Tatler in 2021; selected as a “Young Global Leader” by the
World Economic Forum in 2017; and awarded by the Institutional Investor magazine as one of the global “Fintech Finance 35”
in 2016. He was granted the degree Doctor of Laws honoris causa, and the “International Alumni Achievement Award” by the University
of Waterloo in 2021 and 2019, respectively. He was also awarded as the Honorary Professorship by the International Business University
in 2024. Calvin currently serves as the Honorary President of the Hong Kong Federation of Journalists.
Giampietro Baudo is
the chief executive officer of The Generation Essentials Group. He is the Global Chief Content Officer of L’Officiel and the
Editor in Chief of L’Officiel Italia Publishing SRL. He joined TGE in 2019 from Esquire Italia where he has served as the Editor
in Chief since 2017, launching and managing one of the world’s leading men’s fashion publications (in his tenure at Hearst
Magazines Italia he worked closely to the board also for the feminine magazine Elle and Marie Claire plus on digital launch of Harper’s
Bazaar Italia). Previously he was the Editor in Chief of MF Fashion, the one and only European daily newspaper about fashion and luxury,
where he continues to be contributor go with the BLACKSTAGE weekly column. During his career he has been, also, Managing Editor of L’Uomo
Vogue, Vogue Sport and Vogue Tessuti, Editor at large of Vogue Italia, EIC of MFF-Magazine for Fashion and MFF-Magazine for Living, Curator
of the exhibition “Eccellenza Italia” in China, Creative Director of Ladies and contributor to System magazine, Elle and Vogue
Italia. He is also part of the jury/committee for CFDA-The Council of Fashion Designers of America, BFC-British fashion council, CNMI-Camera
nazionale della moda Italiana, ITS-International Talent Support and many other international fashion awards.
Board of Directors
The board of directors of
The Generation Essentials Group consists of four directors. The Amended Articles provide that the minimum number of directors shall be
three and the exact number of directors shall be determined from time to time by The Generation Essentials Group board of directors.
A director is not required
to hold any shares in The Generation Essentials Group by way of qualification. A director who is in any way, whether directly or indirectly,
interested in a contract or transaction or proposed contract or transaction with TGE is required to declare the nature of his or her interest
at a board meeting. Subject to applicable stock exchange rules and disqualification by the chairman of the relevant board meeting, a director
may vote in respect of any contract or proposed contract or arrangement in which such director may be interested provided that (a) the
nature of his/her interest is declared at a meeting of the directors, either specifically or by way of a general notice, and such director’s
vote may be counted in the quorum at any meeting of directors at which any such contract or proposed contract or arrangement is considered,
and (b) if such contract or arrangement is a transaction with a related party, such transaction has been approved by the audit committee.
The directors may exercise
all the powers of the company to raise or borrow money, mortgage, or charge its undertaking, property, and assets (present or future),
uncalled capital or any part thereof, and to issue debentures, debenture stock, bonds, or other securities, whether outright or as collateral
security for any debt, liability, or obligation of our company or of any third party.
No The Generation Essentials
Group non-employee director has a service contract with The Generation Essentials Group that provides for benefits upon termination of
service.
Committees of the Board
of Directors
We have established an audit
committee, a compensation committee, and a nominating and corporate governance committee under our board of directors and have adopted
a charter for each of the three committees. Each committee’s members and functions are described below.
106
Audit Committee
The audit committee consists
of Dr. Feridun Hamdullahpur and Joanne Shoveller. Dr. Feridun Hamdullahpur is the chairperson of the audit committee. Dr. Feridun
Hamdullahpur satisfies the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC. Each
of Dr. Feridun Hamdullahpur and Joanne Shoveller satisfies the requirements for an “independent director” within the
meaning of Section 303A of the Corporate Governance Rules of the NYSE and the criteria for independence set forth in Rule 10A-3
of the Exchange Act.
The audit committee oversees
The Generation Essentials Group accounting and financial reporting processes. The audit committee is responsible for, among other things:
●appointing the independent auditors and pre-approving all auditing and non-auditing services permitted
to be performed by the independent auditors;
●reviewing with the independent auditors any audit problems or difficulties and management’s response;
●discussing the annual audited financial statements with management and the independent auditors;
●reviewing the adequacy and effectiveness of TGE’s accounting and internal control policies and procedures
and any steps taken to monitor and control major financial risk exposures;
●reviewing and approving all proposed related party transactions;
●meeting separately and periodically with management and the independent auditors; and
●monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and
effectiveness of our procedures to ensure proper compliance.
Compensation Committee
The compensation committee
consists of Dr. Feridun Hamdullahpur and Joanne Shoveller. Joanne Shoveller is the chairperson of the compensation committee. Each
of Dr. Feridun Hamdullahpur and Joanne Shoveller satisfies the requirements for an “independent director” within the
meaning of Section 303A of the Corporate Governance Rules of the NYSE.
The compensation committee
assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to The Generation
Essentials Group directors and executive officers. The Generation Essentials Group chief executive officer may not be present at any committee
meeting during which his or her compensation is deliberated. The compensation committee is responsible for, among other things:
●reviewing and approving, or recommending to the board for its approval, the compensation for The Generation
Essentials Group chief executive officer and other executive officers;
●reviewing and recommending to the board for determination with respect to the compensation of The Generation
Essentials Group non-employee directors;
●reviewing periodically and approving any incentive compensation or equity plans, programs similar arrangements;
and
●selecting compensation consultant, legal counsel or other adviser only after taking into consideration
all factors relevant to that person’s independence from management.
107
Nominating and Corporate Governance Committee
The nominating and corporate
governance committee consists of Dr. Feridun Hamdullahpur and Joanne Shoveller. Dr. Feridun Hamdullahpur is the chairperson
of the nominating and corporate governance committee. Each of Dr. Feridun Hamdullahpur and Joanne Shoveller satisfies the requirements
for an “independent director” within the meaning of Section 303A of the Corporate Governance Rules of the NYSE.
The nominating and corporate
governance committee assists the board of directors in selecting individuals qualified to become directors of The Generation Essentials
Group and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible
for, among other things:
●selecting and recommending to the board nominees for election by the shareholders or appointment by the
board;
●reviewing annually with the board the current composition of the board with regards to characteristics
such as independence, knowledge, skills, experience and diversity;
●making recommendations on the frequency and structure of board meetings and monitoring the functioning
of the committees of the board; and
●advising the board periodically with regards to significant developments in the law and practice of corporate
governance as well as compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate
governance and on any remedial action to be taken.
Duties of Directors
Under Cayman Islands law,
directors owe fiduciary duties to the company, including a duty of loyalty, a duty to act honestly, and a duty to act in what they consider
in good faith to be in the company’s best interests. Directors must also exercise their powers only for a proper purpose, exercise
their powers fairly as between different sections of shareholders and exercise independent judgement. Directors should not improperly
fetter the exercise of future discretion nor put themselves in a position in which there is a conflict between their duty to the company
and their personal interests. Directors also have a duty to act with skill and care. It was previously considered that a director need
not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or
her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required
skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to The Generation
Essentials Group, directors of The Generation Essentials Group must ensure compliance with The Generation Essentials Group memorandum
and articles of association, as amended and restated from time to time, and the class rights vested thereunder in the holders of the shares.
The Generation Essentials Group has the right to seek damages if a duty owed by its directors is breached. A shareholder may in certain
circumstances have rights to seek damages in the name of the company if a duty owed by its directors is breached.
Appointment and Removal
of Directors
The Amended Articles provide
that all directors may be appointed by ordinary resolution and removed by ordinary resolution. The Amended Articles also provide that
the directors may, by the affirmative vote of a simple majority of the remaining directors, appoint any person to be a director so as
to fill a casual vacancy or as an addition to the existing board of director. Directors of The Generation Essentials Group are generally
not subject to a term of office and will hold office until such time as he or she resigns his office by notice in writing to The Generation
Essentials Group, is removed from office by ordinary resolution or is otherwise disqualified from acting as a director or removed in accordance
with the Amended Articles.
The office of a director shall
be vacated if, amongst other things, such director (a) becomes bankrupt or makes any arrangement or composition with his or her creditors,
(b) dies or is found to be or becomes of unsound mind, (c) resigns his or her office by notice in writing to The Generation
Essentials Group, (d) without special leave of absence from the board, is absent from meetings of the board for three consecutive
meetings, and the board resolves that his or her office be vacated; or (e) is removed from office pursuant to any other provision
of the Amended Articles.
108
Foreign Private Issuer
Status
We are an exempted company
limited by shares incorporated in 2023 under the laws of the Cayman Islands. We report under the Exchange Act as a non-U.S. company
with foreign private issuer status. Under Rule 405 of the Securities Act, the determination of foreign private issuer status is made
annually on the last business day of an issuer’s most recently completed second fiscal quarter. For so long as we qualify as
a foreign private issuer, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic
public companies, including:
●the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current
reports on Form 8-K with the SEC;
●the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations
in respect of a security registered under the Exchange Act;
●the sections of the Exchange Act requiring insiders to file public reports of their share ownership
and trading activities and liability for insiders who profit from trades made in a short period of time; and
●the selective disclosure rules by issuers of material nonpublic information under Regulation Fair
Disclosure, or Regulation FD, which regulates selective disclosure of material non-public information by issuers.
We will be required to file
an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results
on a quarterly basis through press releases, distributed pursuant to applicable stock exchange rules. Press releases relating to financial
results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file
with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic
issuers. Accordingly, our shareholders will receive less or different information about us than a shareholder of a U.S. domestic
public company would receive.
We are a non-U.S. company
with foreign private issuer status and is listed on NYSE. Applicable stock exchange rules permit a foreign private issuer like us to follow
the corporate governance practices of the home country of The Generation Essentials Group. Certain corporate governance practices in the
Cayman Islands, which is The Generation Essentials Group home country, may differ significantly from applicable corporate governance listing
standards. Among other things, we are not required to have:
●a majority of the board of directors consist of independent directors;
●a compensation committee consisting of independent directors;
●a nominating committee consisting of independent directors; or
●regularly scheduled executive sessions with only independent directors each year.
Although not required and
as may be changed from time to time, we currently have a majority-independent compensation committee and nominating and corporate governance
committee. Subject to the foregoing, we rely on the exemptions listed above. As a result, you may not be provided with the benefits of
certain corporate governance requirements applicable to U.S. domestic public companies.
Code of Business Conduct
and Ethics
We have adopted a Code of
Business Conduct and Ethics applicable to our directors, officers and employees. We seek to conduct business ethically, honestly, and
in compliance with applicable laws and regulations. Our Code of Business Conduct and Ethics sets out the principles designed to guide
our business practices — compliance, integrity, respect and dedication. The code applies to all directors, officers, employees
and extended workforce. Relevant sections of the code also apply to members of The Generation Essentials Group board of directors. We
expect our suppliers, contractors, consultants, and other business partners to follow the principles set forth in our code when providing
goods and services to us or acting on our behalf.
109
Compensation of Directors
and Executive Officers
For the year ended December 31,
2024, we paid an aggregate of US$0.3 million in cash and benefits to our executive officers as a group and we did not pay any compensation
to our non-executive directors. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to
our executive officers. Some of our subsidiaries are required by law to make contributions equal to certain percentages of each employee’s
salary for his or her pension insurance, medical insurance, unemployment insurance, work-related injury insurance and maternity insurance
and other statutory benefits, and a housing provident fund.
For information regarding
share awards granted to our directors and executive officers, see the section entitled “— Share Incentive Plan.”
Employment Agreements and
Indemnification Agreements
Each of our executive officers
is party to an employment agreement with us. Under these agreements, the employment of each of executive officers is for a specified time
period, and may be terminated for cause, at any time and without advance notice or compensation, for certain acts of the executive officer,
such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment,
or misconduct or a failure to perform agreed duties. In such case of termination, we will provide severance payments to the relevant executive
officer as expressly required by applicable law of the jurisdiction where the executive officer is based. The employment may also be terminated
without cause upon three-month advance written notice. The executive officer may resign at any time with three-month advance written notice.
Each of our executive officers
has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to
use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any confidential
information of ours or trade secrets, any confidential information or trade secrets of our customers or prospective customers, or the
confidential or proprietary information of any third party received by us and for which we have confidential obligations. The executive
officers have also agreed to disclose in confidence to us all inventions, designs, and trade secrets which they conceive, develop, or
reduce to practice during the executive officer’s employment with us and to assign all right, title, and interest in them to us,
and assist us in obtaining and enforcing patents, copyrights, and other legal rights for these inventions, designs, and trade secrets.
In addition, each of our executive
officers has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically
for one year following the last date of employment. Specifically, each executive officer has agreed not to (a) approach any of our
suppliers, clients, customers, or contacts or other persons or entities introduced to the executive officer in his or her capacity as
our representative for the purpose of doing business with such persons or entities that will harm the business relationships between us
and these persons or entities, (b) assume employment with or provide services to any of our competitors, or engage, whether as principal,
partner, licensor, or otherwise, any of such competitors, without our express consent; or (c) seek directly or indirectly, to solicit
the services of any of our employees on or after the date of the executive officer’s termination, or in the year preceding such
termination, without our express consent.
We have also entered into
indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors
and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their
being our director or officer.
Share Incentive Plan
We adopted the 2025 Share
Incentive Plan at the Closing, to attract and retain the best available personnel, provide additional incentives to employees, directors
and consultants, and promote the success of our business. The maximum aggregate number of ordinary shares that may be issued under the
2025 Share Incentive Plan is initially 875,255, being 3% of the total number of Class A Ordinary Shares outstanding as of the Closing
Date.
The following paragraphs summarize
the principal terms of the 2025 Share Incentive Plan.
110
Type of Awards. The
2025 Share Incentive Plan permits the awards of options, restricted shares, restricted share units or other equity incentive awards pursuant
to the authorizations of the administrator under the 2025 Share Incentive Plan.
Plan Administration. The
Generation Essentials Group’s board of directors or a committee of one or more members of the board (or such other administrator
to which such committee delegates all of its authority) administers the 2025 Share Incentive Plan. The administrator of 2025 Share Incentive
Plan determines, among other things, the eligibility of individuals to receive awards, the type and number of awards to be granted to
each eligible individual, and the terms and conditions of each award.
Award Agreement. Each
award granted under the 2025 Share Incentive Plan is evidenced by an award agreement.
Eligibility. We
may grant awards to employees, consultants and directors. The general scope of eligible individuals shall be determined by the Committee.
Vesting Schedule. In
general, the administrator determines the vesting schedule, if any, which is specified in the award agreement.
Exercise of Options. The
exercise price per share subject to an option shall be determined by the administrator and set forth in the award agreement which may
be a fixed price or a variable price related to the fair market value of the shares; provided, however, that no option may be granted
to an individual subject to taxation in the United States at less than the fair market value on the date of grant, without compliance
with Section 409A of the Code, or the holder’s consent.
Transfer Restrictions. Awards
may not be transferred in any manner by the holder other than in accordance with the exceptions provided in the 2025 Share Incentive Plan,
such as transfers to us or transfers upon the death of the holder, pursuant to such conditions and procedures as the administrator may
establish.
Termination and Amendment
of the 2025 Share Incentive Plan. Unless terminated earlier, the 2025 Share Incentive Plan has a term of 10 years. The Committee
has the authority to terminate, amend or modify the plan.
Awards Granted
No awards were granted under the 2025 Share Incentive
Plan as of the date of this prospectus.
111
PRINCIPAL
SHAREHOLDERS
The following table sets forth
information regarding the beneficial ownership of our Ordinary Shares as of the date of this prospectus:
●each person who beneficially owns 5.0% or more of the outstanding Shares;
●each person who is an executive officer or director; and
●all executive officers and directors as a group.
Beneficial ownership is determined
in accordance with the rules of the SEC and includes voting or investment power with respect to, or the power to receive the economic
benefit of ownership of, the securities. In computing the number of shares beneficially owned by a person and the percentage ownership
of that person, shares that the person has the right to acquire within 60 days are included, including through the exercise of Warrants
or any option or other right or the conversion of any other security. However, these shares are not included in the computation of the
percentage ownership of any other person.
The total number of Shares
issued and outstanding as of the date of this prospectus is 54,804,126 (comprising 29,175,159 Class A Ordinary Shares, 19,285,911 Class
B Ordinary Shares and 6,343,056 Preferred Shares). As of the date of this prospectus, 16,220,000 Warrants exercisable into 16,220,000
Class A Ordinary Shares are outstanding.
Ordinary Shares Beneficially Owned
Class A ordinary shares
Class B ordinary shares
Preferred shares
% of total ordinary shares
% of voting power
Directors and Executive Officers(1):
Feridun Hamdullahpur
—
—
—
—
—
Joanne Shoveller
—
—
—
—
—
Samuel Chau
—
—
—
—
—
Calvin Choi
—
—
—
—
—
Giampietro Baudo
—
—
—
—
—
All Directors and Executive Officers as a Group
5.0% Shareholders:
AMTD Group Inc.(2)
18,470,375
19,285,911
6,243,056
77.9
97.4
AMTD IDEA Group(3)
18,425,068
19,285,911
6,243,056
77.8
97.4
AMTD Digital Inc.(4)
—
19,285,911
6,343,056
39.8
93.0
South Horizon Oceans (Group) Co. Inc.(5)
3,253,714
—
—
6.7
0.8
Notes:
*Holders of Class A Ordinary Shares and Class B Ordinary Shares will at all times vote together as a single
class on all resolutions submitted to a vote by the members of The Generation Essentials Group (including ordinary resolutions and special
resolutions). Each holder of Class A Ordinary Shares will be entitled to one vote per share and each holder of Class B Ordinary Shares
will be entitled to 20 votes per share on all matters submitted to them for a vote. Each Class B Ordinary Share will be convertible into
one Class A Ordinary Share at any time at the option of the holder thereof. Class A Ordinary Shares will not be convertible into
Class B Ordinary Shares under any circumstances. Holders of Preferred Shares are entitled to vote only on transactions that may result
in a change of control of The Generation Essentials Group, in which case holders of Preferred Shares must vote as a separate class and
no change of control transaction may proceed unless and until so approved.
(1)The business address for the directors and executive officers of The Generation Essentials Group is 66
rue Jean-Jacques Rousseau 75001 Paris, France.
112
(2)Represents (i) 45,307 Class A Ordinary Shares directly held by AMTD Group Inc., (ii) 18,425,068
Class A Ordinary Shares directly held by AMTD IDEA Group; (iii) 19,285,911 Class B Ordinary Shares directly held by AMTD Digital
Inc., and (iv) 6,343,056 Preferred Shares directly held by AMTD Digital Inc. AMTD Group is a British Virgin Islands company, with
its registered address at the offices of Conyers Trust Company (BVI) Limited, Commerce House, Wickhams Cay I, P.O. Box 3140,
Road Town, Tortola, British Virgin Islands VG1110. The board of directors of AMTD Group consists of Mr. Marcellus Wong and Dr. Feridun
Hamdullahpur.
(3)Represents (i) 18,425,068 Class A Ordinary Shares directly held by AMTD IDEA Group, (ii) 19,285,911
Class B Ordinary Shares directly held by AMTD Digital Inc, and (iii) 6,343,056 Preferred Shares directly held by AMTD Digital Inc. AMTD
IDEA Group is a Cayman Islands company whose registered address is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111,
Cayman Islands. The board of directors of AMTD IDEA Group consists of Dr. Feridun Hamdullahpur, Dr. Timothy Tong, Dr. Annie
Koh, Marcellus Wong, and Raymond Yung. AMTD IDEA Group is dual-listed on the NYSE and SGX and controlled by AMTD Group Inc.
(4)Represents 19,285,911 Class B Ordinary Shares and 6,343,056 Preferred Shares directly held by AMTD Digital
Inc., a Cayman Islands company whose registered address is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111,
Cayman Islands. The board of directors of AMTD Digital Inc. consists of Dr. Timothy Tong, Dr. Feridun Hamdullahpur and
Joanne Shoveller. AMTD Digital Inc. is listed on the NYSE and controlled by AMTD IDEA Group.
(5)Represents 1,464,944 Class A Ordinary Shares held by South Horizon Oceans (Group) Co. Inc., a Cayman Islands
company whose registered address of is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Island. South Horizon
Oceans (Group) Co. Inc. is owned by L.R. Capital China Growth II Company Limited.
113
SELLING
SECURITYHOLDERS
This prospectus relates to,
among other things, the registration and resale by the Selling Securityholders of up to (A) 57,401,944 Class A Ordinary Shares, which
include (i) 3,235,714 Class A Ordinary Shares beneficially owned by South Horizon Oceans (Group) Co. Inc. and 1,464,944 Class A Ordinary
Shares beneficially owned by Radisson Everton Venture Fund, which were originally acquired prior to the Closing Date; (ii) 18,425,068
Class A Ordinary Shares beneficially owned by AMTD IDEA Group, 45,307 Class A Ordinary Shares beneficially owned by AMTD Group Inc. and
19,285,911 Class A Ordinary Shares issuable upon the conversion of 19,285,911 Class B Ordinary Shares beneficially owned by AMTD Digital
Inc., which were originally acquired prior to the Closing Date; (iii) 3,825,000 Sponsor Shares issued to the Sponsor Shareholders on the
Closing Date in exchange for the Class B ordinary shares of Black Spade II; and (iv) 11,120,000 Class A Ordinary Shares issuable
upon the exercise of the Sponsor Warrants which warrants subsequently distributed to certain members of the Sponsor, and (B) 11,120,000
Sponsor Warrants. When we refer to the “Selling Securityholders” in this prospectus, we mean the persons listed in the tables
below, and the pledgees, donees, transferees, assignees, successors and others who later come to hold any of the Selling Securityholders’
interest in our securities after the date of this prospectus.
The Selling Securityholders
may from time to time offer and sell any or all of the Ordinary Shares or Warrants set forth below pursuant to this prospectus and
any accompanying prospectus supplement. However, we cannot advise you as to whether the Selling Securityholders will, in fact, sell
any or all of such Ordinary Shares or Warrants. In addition, the Selling Securityholders identified below may have sold, transferred or
otherwise disposed of some or all of their Ordinary Shares or Warrants since the date on which the information in the following table
is presented, including in transactions exempt from or not subject to the registration requirements of the Securities Act.
The table below sets forth
the aggregate number of Ordinary Shares and Warrants beneficially owned by the Selling Securityholders immediately prior to the offering,
the aggregate number of Ordinary Shares and Warrants that the Selling Securityholders may offer pursuant to this prospectus, and the aggregate
number of Ordinary Shares and Warrants beneficially owned by the Selling Securityholders after the Registered Securities are sold. We
have determined beneficial ownership in accordance with the rules of the SEC and the information is not necessarily indicative of
beneficial ownership for any other purpose. The information in the table below is based upon information provided by the Selling Securityholders.
Certain selling securityholders may also beneficially own securities indirectly through their beneficial ownership of securities held
directly by other selling securityholders included in the table below. In the table set forth below, such beneficial ownership is only
included for the direct owner of such securities to avoid double counting, but is reflected in the footnotes for the other applicable
beneficial owners of such securities.
Selling Securityholder information
for each additional Selling Securityholder, if any, will be set forth by prospectus supplement to the extent required prior to the time
of any offer or sale of such Selling Securityholder’s securities pursuant to this prospectus. Any prospectus supplement may add,
update, substitute, or change the information contained in this prospectus, including the identity of each Selling Securityholder and
the number of Ordinary Shares registered on its behalf. A Selling Securityholder may sell all, some or none of such securities in this
offering. See the section titled “Plan of Distribution.”
114
Securities Owned Before the Offering
Securities to be Sold
Securities Owned After the Offering
Name of Selling Securityholders
Ordinary Shares
Warrants
Ordinary Shares
Warrants
Ordinary Shares
Warrants
Black Spade Sponsor LLC II(1)
3,266,217
11,120,000
3,266,217
11,120,000
—
—
Po Yi Patsy Chan(2)
17,739
—
17,739
—
—
—
Russell William Galbut(3)
17,739
—
17,739
—
—
—
Sek Yan Ho(4)
21,287
—
21,287
—
—
—
Wing Hong Sammy Hsieh(5)
17,739
—
17,739
—
—
—
Chung Yik Lee(6)
21,287
—
21,287
—
—
—
Luxi Li(7)
21,287
—
21,287
—
—
—
Robert Steven Moore(8)
17,739
—
17,739
—
—
—
Shing Joe Kester Ng(9)
88,696
—
88,696
—
—
—
Chi Wai Dennis Tam(10)
177,391
—
177,391
—
—
—
Richard Kirby Taylor(11)
88,696
—
88,696
—
—
—
Yuen Wai Samuel Tsang(12)
44,348
—
44,348
—
—
—
Chiu Yi Zoe Tse(13)
24,835
—
24,835
—
—
—
South Horizon Oceans (Group) Co. Inc.(14)
3,235,714
—
3,235,714
—
—
—
Radisson Everton Venture Fund(15)
1,464,944
—
1,464,944
—
—
—
AMTD Group Inc.(16)
45,307
—
45,307
—
—
—
AMTD IDEA Group(17)
18,425,068
—
18,425,068
—
—
—
AMTD Digital Inc.(18)
19,285,911
—
19,285,911
—
—
—
Total
46,281,944
11,120,000
46,281,944
11,120,000
—
—
Notes:
(1)Includes 11,120,000 Class A Ordinary Shares issuable upon the exercise of the Warrants. Black Spade Sponsor
LLC II, Black Spade II’s sponsor, is the record holder of the shares reported herein. The Sponsor is managed by three managers,
each of whom has one vote, and the approval of two of the three managers is required to approve an action of the Sponsor. No individual
manager exercises voting or dispositive control over any of the securities held by the Sponsor. Under the so-called “rule of three,”
if voting and dispositive decisions regarding an entity’s securities are made by two or more individuals, and a voting and dispositive
decision requires the approval of a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s
securities. This is the situation with regard to the Sponsor. Based upon the foregoing analysis, no individual manager of the Sponsor
exercises voting or dispositive control over any of the securities held by the Sponsor, even those in which he directly holds a pecuniary
interest. Accordingly, none of them are deemed to have or share beneficial ownership of such shares. The registered office address of
Black Spade Sponsor LLC II is Appleby Global Services (Cayman) Limited, PO Box 500, 71 Fort Street, Grand Cayman, KY1-1106, Cayman Islands.
(2)The address of Po Yi Patsy Chan is Flat A, 27/F, Tower 2, Larvotto, 8 Ap Lei Chau Praya Road, Ap Lei Chau,
Hong Kong.
(3)The address of Russell William Galbut is 800 1st Street Unit 1, Miami Beach, FL 33139.
(4)The address of Sek Yan Ho is Suite 2902, 29/F, The Centrium, 60 Wyndham Road, Central, Hong Kong.
(5)The address of Wing Hong Sammy Hsieh is Room 23, Floor 16, Block A, Fontana Garden, Ka Ning Path, Hong
Kong.
(6)The address of Chung Yik Lee is Suite 2902, 29/F, The Centrium, 60 Wyndham Road, Central, Hong Kong.
(7)The address of Luxi Li is Suite 2902, 29/F, The Centrium, 60 Wyndham Road, Central, Hong Kong.
(8)The address of Robert Steven Moore is 6250 Hollywood Boulevard, Unit 11I, Los Angeles, CA 90028.
(9)The address of Shing Joe Kester Ng is Unit A, 4/F, 5-7 Magazine Gap Road, The Peak, Hong Kong.
(10)The address of Chi Wai Dennis Tam is Suite 2902, 29/F, The Centrium, 60 Wyndham Road, Central, Hong Kong.
(11)The address of Richard Kirby Taylor is 1/F, 20 Stanley Mound Road, Stanley, Hong Kong.
(12)The address of Yuen Wai Samuel Tsang is Suite 2902, 29/F, The Centrium, 60 Wyndham Road, Central, Hong
Kong.
(13)The address of Chiu Yi Zoe Tse is Suite 2902, 29/F, The Centrium, 60 Wyndham Road, Central, Hong Kong.
(14)The address of South Horizon Oceans (Group) Co. Inc. is Cricket Square, Hutchins Drive, PO Box 2681, Grand
Cayman KY1-1111, Cayman Islands.
(15)The address of Radisson Everton Venture Fund is Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman
KY1-1111, Cayman Islands.
(16)The address of AMTD Group Inc. is Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British
Virgin Islands VG1110.
(17)The address of AMTD IDEA Group is Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman KY1-1111,
Cayman Islands.
(18)The address of AMTD Digital Inc.is Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman KY1-1111,
Cayman Islands.
115
CERTAIN
RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Certain Relationships and
Related Person Transactions in Connection with the Business Combination
Shareholders Support
and Lock-Up Agreement and Deed
Concurrently with the execution
of the Business Combination Agreement, Black Spade II, The Generation Essentials Group and the then shareholders of The Generation
Essentials Group entered into a shareholder support and lock-up agreement and deed (the “TGE Shareholders Support Agreement”),
pursuant to which each such shareholder agreed to, among other things, (i) attend any shareholder meeting of The Generation Essentials
Group to establish a quorum for the purpose of approving the Business Combination, and (ii) vote the shares of The Generation Essentials
Group and any other securities acquired by such shareholder in favor of approving the transactions contemplated by the Business Combination
Agreement and the ancillary agreements.
In addition, pursuant to the
TGE Shareholders Support Agreement, each of AMTD Digital, AMTD IDEA Group and AMTD Group Inc. (each, a “Lock-Up Obligor”)
also agreed not to transfer or sell, during a period of three (3) years from and after the Closing Date, subject to customary exceptions,
(i) any Ordinary Shares or other equity securities of The Generation Essentials Group held by such Lock-Up Obligor immediately after
the Closing (including the Earnout Shares), excluding any Ordinary Shares acquired in open market transactions after the Closing, (ii) any
Ordinary Shares received by such Lock-Up Obligor upon the exercise, conversion or settlement of options or warrants held by such Lock-Up
Obligor immediately after Closing (along with such options or warrants themselves), and (iii) any equity securities of The Generation
Essentials Group issued or issuable with respect to any securities referenced in clauses (i) through (ii) by way of share
dividend or share split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization or similar transaction.
Sponsor Support
Agreement and Deed
Concurrently with the execution
of the Business Combination Agreement, The Generation Essentials Group, Black Spade II, Sponsor and certain other holders of BSII II
Class B Ordinary Shares and BSII Private Warrants (each, and together with the Sponsor, the “Sponsor Parties”) entered
into a sponsor support agreement and deed (the “Sponsor Support Agreement”), pursuant to which each Sponsor Party agreed to,
among other things, (i) attend an extraordinary general meeting of holders of BSII Shares (including any permitted adjournment or
postponement) to establish a quorum for the purpose of approving the Business Combination, and (ii) vote the BSII Class B Ordinary
Shares, and any other BSII securities acquired by such Sponsor Party in favor of approving the transactions contemplated by the Business
Combination Agreement and the ancillary agreements.
In addition, pursuant to the
Sponsor Support Agreement, from the Closing until the date falling two years after the Closing Date, for so long as the Sponsor and
its affiliates collectively hold at least 5% of the issued and outstanding ordinary shares of The Generation Essentials Group, the Sponsor
shall be entitled to appoint up to two non-voting observers to the board of directors of The Generation Essentials Group, and, for so
long as the Sponsor and its affiliates collectively hold at least 3% but less than 5% of the issued and outstanding ordinary shares of
The Generation Essentials Group, the Sponsor shall be entitled to appoint one non-voting observer to the board of directors of The Generation
Essentials Group.
Registration Rights
Agreement
At the Closing, The Generation
Essentials Group, certain shareholders of The Generation Essentials Group, the Sponsor and certain affiliates of the Sponsor entered into
a registration rights agreement (the “Registration Rights Agreement”), pursuant to which The Generation Essentials Group agrees
to use its reasonable best efforts to file a shelf registration statement with respect to the registrable securities defined therein within
30 days of the Closing. Pursuant to the Registration Rights Agreement, the Sponsor, AMTD Digital Inc., AMTD IDEA Group, AMTD Group
Inc., and certain other current equity holders of Black Spade II and certain other current equity holders of The Generation Essentials
Group may request to sell all or a portion of their registrable securities in an underwritten offering; provided that The Generation Essentials
Group is only obligated to effect an underwritten takedown if such underwritten offering will include registrable securities proposed
to be sold with a total offering price reasonably expected to exceed, in the aggregate, $7,500,000. The Generation Essentials Group also
agrees to provide customary “piggyback” registration rights. The Registration Rights Agreement provides that TGE should pay
certain expenses relating to such registrations and indemnify the shareholders against certain liabilities.
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Assignment, Assumption
and Amendment Agreement
At the Closing, The Generation
Essentials Group, Black Spade II and Continental Stock Transfer & Trust Company entered into an assignment, assumption and
amendment agreement (the “Assignment, Assumption and Amendment Agreement”) of that certain warrant agreement, dated August 27,
2024, by and between Black Spade II and Continental Stock Transfer & Trust Company (the “BSII Warrant Agreement”),
pursuant to which, among other things, effective as of the Merger Effective Time, Black Spade II assigned to The Generation Essentials
Group, and The Generation Essentials Group assumed, all of Black Spade II’s rights, title, interests, liabilities and obligations
under the BSII Warrant Agreement.
Certain Relationships and
Related Person Transactions
We generated US$2,888,000,
US$2,726,000 and US$2,737,000 of marketing income from AMTD Group Inc. in 2022, 2023 and 2024.
Employment Agreements
and Indemnification Agreements
See “Management—
Employment Agreements and Indemnification Agreements.”
Share Incentive
Plans
See “Management—
Share Incentive Plan.”
License Agreement
between TGE and AMTD Group Inc.
See “Business— Intellectual
Property — Intellectual Property License Agreement with AMTD Group Inc.”
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TAXATION
The following summary of the
material Cayman Islands and U.S. federal income tax consequences of an investment in our ordinary shares is based upon laws and relevant
interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This summary does not deal with
all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences under state, local and other
tax laws.
Cayman Islands Tax Considerations
The Cayman Islands currently
levies no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature
of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands
except for stamp duties which may be applicable on instruments executed in, or after execution brought within, the jurisdiction of the
Cayman Islands. The Cayman Islands are a party to a double tax treaty entered into with the United Kingdom in 2010 but otherwise is not
party to any double tax treaties. There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and
capital in respect of Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the
payment of a dividend or capital to any holder of Ordinary Shares, nor will gains derived from the disposal of Ordinary Shares be subject
to Cayman Islands income or corporation tax.
Under the laws of the Cayman
Islands, no stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests
in land in the Cayman Islands or if the transfer documents are executed in or brought into the Cayman Islands.
U.S. Federal Income Tax Considerations
General
The following is a discussion
of U.S. federal income tax considerations generally applicable to U.S. Holders (as defined below) of the ownership and disposition
Class A Ordinary Shares and Warrants (collectively, the “Securities”). This summary addresses only U.S. Holders that
hold Securities as “capital assets” within the meaning of section 1221 of the Internal Revenue Code of 1986, as amended (the
“Code”) (generally, property held for investment) and assumes that any distributions made (or deemed made) by us on the Securities
and any consideration received (or deemed received) by us on the sale or other taxable disposition of Securities will be in U.S. dollars.
This discussion does not discuss all aspects of U.S. federal income taxation that may be relevant to holders in light of their particular
circumstances or status including:
●our officers or directors;
●financial institutions or financial services entities;
●broker-dealers;
●taxpayers that are subject to the mark-to-market accounting
rules;
●tax-exempt entities;
●governments or agencies or instrumentalities thereof;
●insurance companies;
●regulated investment companies or real estate investment trusts;
●expatriates or former long-term residents of the United States;
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●persons that actually or constructively own five percent or
more of our shares, by vote or value, or that will actually or constructively own five percent or more of our voting shares or five percent
or more of the total value of any class of our shares;
●persons that acquired Securities pursuant to an exercise of
employee share options, in connection with employee share incentive plans or otherwise as compensation or in connection with the performance
of services;
●persons that are resident or ordinarily resident in or have
a permanent establishment in a jurisdiction outside the U.S. to which the income from the Securities is attributable;
●persons subject to special tax accounting rules as a result
of any item of gross income with respect to the Securities being taken into account in an applicable financial statement;
●persons that hold the Securities as part of a straddle, constructive
sale, hedging, conversion or other integrated or similar transaction; or
●persons whose functional currency is not the U.S. dollar.
This discussion is based on
the Code, proposed, temporary and final Treasury Regulations promulgated under the Code, and judicial and administrative interpretations
thereof, all as of the date hereof. All of the foregoing is subject to change, which change could apply retroactively and could affect
the tax considerations described herein. This discussion does not address U.S. federal taxes other than those pertaining to U.S. federal
income taxation (such as estate or gift taxes, any alternative minimum tax or the Medicare tax on investment income), nor does it address
any aspects of U.S. state or local or non-U.S. taxation. There can be no assurance that the IRS will not take positions inconsistent
with the considerations discussed below or that any such positions would not be sustained by a court.
This discussion does not consider
the tax treatment of partnerships or other pass-through entities or persons who hold the Securities through such entities. If a partnership
(or any entity or arrangement so characterized for U.S. federal income tax purposes) holds the Securities, the tax treatment of such
partnership and a person treated as a partner of such partnership will generally depend on the status of the partner and the activities
of the partnership. Partnerships holding the Securities and persons that are treated as partners of such partnerships should consult their
tax advisors regarding the U.S. federal income tax consequences of owning and disposing of Securities in light of their particular circumstances.
THIS SUMMARY DOES NOT
PURPORT TO BE A COMPREHENSIVE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF ACQUIRING, OWNING AND DISPOSING
OF SECURITIES. HOLDERS OF SECURITIES SHOULD CONSULT WITH THEIR TAX ADVISORS REGARDING THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE ACQUISITION,
OWNERSHIP AND DISPOSITION OF SECURITIES, INCLUDING THE APPLICABILITY AND EFFECTS OF U.S. FEDERAL, STATE, LOCAL, AND OTHER TAX LAWS.
As used herein, a “U.S. Holder”
is a beneficial owner of the Securities who or that is, for U.S. federal income tax purposes:
●an individual citizen or resident of the United States,
●a corporation (or other entity that is treated as a corporation
for U.S. federal income tax purposes) that is created or organized (or treated as created or organized) in or under the laws of
the United States or any state thereof or the District of Columbia,
●an estate whose income is subject to U.S. federal income tax regardless of its source, or
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●a trust if (1) a U.S. court can exercise primary supervision over the administration of such trust
and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election
in place to be treated as a U.S. person.
Taxation of Dividends
and Other Distributions on Class A Ordinary Shares
As stated under “Dividend
Policy”, we do not intend to pay any dividends or pay distributions in the near future. If we do make a distribution of cash or
other property to a U.S. Holder of the Class A Ordinary Shares, however, subject to the PFIC rules discussed below, such distributions
will generally be treated as a dividend for U.S. federal income tax purposes to the extent the distribution is paid out of our current
or accumulated earnings and profits (as determined under U.S. federal income tax principles). Such dividends will be taxable to a
corporate U.S. Holder at regular rates and will not be eligible for the dividends-received deduction generally allowed to domestic
corporations in respect of dividends received from other domestic corporations.
Distributions in excess of
such earnings and profits will generally be applied against and reduce the U.S. Holder’s basis in its Class A Ordinary
Shares (but not below zero) and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of such Class A
Ordinary Shares. Because we does not expect to determine its earnings and profits on the basis of U.S. federal income tax principles,
it is expected that any distribution paid by us will generally be reported as a dividend.
With respect to non-corporate
U.S. Holders, dividends will generally be taxed at preferential long-term capital gains rates only if Class A Ordinary Shares
are readily tradable on an established securities market in the United States, provided that we are not a PFIC (or treated as a PFIC
with respect to a particular U.S. Holder) in the taxable year in which the dividend was paid or the preceding taxable year and certain
holding period and other requirements are met. U.S. Holders should consult their tax advisors regarding the availability of the lower
rate for any dividends paid with respect to Class A Ordinary Shares.
Possible Constructive
Distributions
The terms of each Warrant
provide for an adjustment to the number of Class A Ordinary Shares for which the warrant may be exercised or to the exercise price
of the warrant in certain events. An adjustment that has the effect of preventing dilution is generally not taxable to U.S. Holders
of Warrants. However, the U.S. Holders of Warrants would be treated as receiving a constructive distribution from us if, for example,
the adjustment increases the warrant holder’s proportionate interest in our assets or earnings and profits (e.g., through an increase
in the number of Class A Ordinary Shares that would be obtained upon exercise) as a result of a distribution of cash to the holders
of Class A Ordinary Shares that is taxable to the U.S. Holders of such Class A Ordinary Shares as a distribution as described
above under “— Taxation of Dividends and Other Distributions on Class A Ordinary Shares.” Such a constructive
distribution to the U.S. Holders of the warrants would be subject to tax as described under that section in the same manner as if
the U.S. Holders of the warrants received a cash distribution from us equal to the fair market value of the increase in the interest.
A U.S. Holder’s adjusted tax basis in a Warrant would generally be increased to the extent any such constructive distribution
is treated as a dividend.
Taxation on the
Disposition of the Securities
Subject to the PFIC rules
discussed below, upon a sale or other taxable disposition of the Securities, a U.S. Holder will generally recognize capital gain
or loss. The amount of gain or loss recognized will generally be equal to the difference between (i) the sum of the amount of cash
and the fair market value of any property received in such disposition and (ii) the U.S. Holder’s adjusted tax basis in
such securities.
Under tax law currently in
effect, long-term capital gains recognized by non-corporate U.S. Holders are generally subject to U.S. federal income tax
at a reduced rate of tax. Capital gain or loss will constitute long-term capital gain or loss if the U.S. Holder’s holding
period for the securities exceeds one year. The deductibility of capital losses is subject to various limitations.
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Exercise, Lapse
or Redemption of a Warrant
Subject to the PFIC rules
discussed below and except as discussed below regarding a cashless exercise, a U.S. Holder will generally not recognize gain or loss
upon the exercise of a Warrant. A Class A Ordinary Share acquired pursuant to the exercise of n Warrant for cash will generally have
a tax basis equal to the U.S. Holder’s tax basis in the Warrant, increased by the amount paid to exercise the Warrant. It is
unclear whether a U.S. Holder’s holding period for the Class A Ordinary Share will commence on the date of exercise of
the Warrant or the day following the date of exercise of the Warrant; in either case, the holding period will not include the period
during which the U.S. Holder held the Warrant. If a Warrant is allowed to lapse unexercised, a U.S. Holder will generally recognize
a capital loss equal to such holder’s tax basis in the Warrant. Such loss will be long-term capital loss if, at the time of the
expiration, the holding period in the Warrants is more than one year. The deductibility of capital losses is subject to limitations.
Because of the absence of
authority specifically addressing the treatment of a cashless exercise of warrants under current U.S. federal income tax law, the
treatment of such a cashless exercise is unclear. A cashless exercise may be tax-free, either because the exercise is not a realization
event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. Alternatively, a cashless exercise
could be treated as a taxable exchange in which gain or loss would be recognized.
In either tax-free situation,
a U.S. Holder’s tax basis in the Class A Ordinary Shares received would generally equal the U.S. Holder’s tax
basis in the Warrants. If a cashless exercise is not treated as a realization event, it is unclear whether a U.S. Holder’s
holding period for the Class A Ordinary Shares received on exercise would be treated as commencing on the date of exercise of the
Warrants or the following day. If a cashless exercise is treated as a recapitalization, the holding period of the Class A Ordinary
Share received will include the holding period of the Warrant.
If a cashless exercise is
treated as a taxable exchange, a U.S. Holder could be deemed to have surrendered a portion of the Warrants to be exercised with an
aggregate fair market value equal to the exercise price for the remaining portion of the total number of warrants to be exercised. In
this case, the U.S. Holders would recognize gain or loss in an amount equal to the difference between the fair market value of the
Warrants deemed surrendered and the U.S. Holder’s tax basis in such warrants. A U.S. Holder’s tax basis in the Class A
Ordinary Shares received would equal the sum of the U.S. Holder’s initial investment in the portion of the Warrants deemed
to be exercised (i.e., the U.S. Holder’s purchase price for such Warrants (or the portion of such U.S. Holder’s
purchase price for units that is allocated to such Warrants)) and the exercise price of such Warrants. It is unclear whether a U.S. Holder’s
holding period for the Class A Ordinary Shares would commence on the date of exercise of the Warrants or the day following the
date of exercise of the Warrants. We expect a cashless exercise of Warrants to be treated as a recapitalization for U.S. federal
income tax purposes. However, there can be no assurance which, if any, of the alternative tax characterizations and holding periods described
above would be adopted by the IRS or a court of law. Accordingly, U.S. Holders should consult their tax advisors regarding the tax
consequences of a cashless exercise of Warrants.
Subject to the PFIC rules
described below, if we redeem Warrants for cash pursuant to the redemption provisions of the Warrants or purchase Warrants in an open
market transaction, such redemption or purchase will generally be treated as a taxable disposition of such Warrants by the U.S. Holder,
taxed as described above under “— Taxation on the Disposition of the Securities.”
PFIC Considerations
Definition of a
PFIC
A foreign (i.e., non-U.S.)
corporation will be a PFIC for U.S. federal income tax purposes if at least 75% of its gross income in a taxable year of the foreign
corporation, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the
shares by value (a “Look-Through Subsidiary”), is passive income. Alternatively, a foreign corporation will be a PFIC if at
least 50% of its assets in a taxable year of the foreign corporation, ordinarily determined based on fair market value and averaged quarterly
over the year, including such foreign corporation’s pro rata share of the assets of any Look-Through Subsidiary (and excluding the
value of the shares held in such corporation), are held for the production of, or produce, passive income (for these purposes including
cash and cash equivalents). Passive income generally includes dividends (excluding any dividends received from a Look-Through Subsidiary),
interest, rents and royalties (other than certain rents or royalties derived from the active conduct of a trade or business) and net gains
from the disposition of passive assets.
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PFIC Status of TGE
Based on the current and anticipated
value of the assets and the composition of the income and assets, including goodwill and other unbooked intangibles, of TGE and its subsidiaries,
TGE does not currently expect to be a PFIC for the current taxable year ending December 31, 2025 or foreseeable future taxable years.
However, this conclusion is a factual determination that must be made annually at the close of each taxable year on the basis of the composition
of the income and assets, which may fluctuate, of TGE and its subsidiaries, and, thus, is subject to change. Accordingly, there can be
no assurance that TGE or any of its subsidiaries will not be a PFIC for any taxable year. Furthermore, fluctuations in the market price
of the Class A Ordinary Shares may cause TGE to become a PFIC because the value of its assets, including goodwill and other unbooked
intangibles, for purposes of the asset test may be determined by reference to the market price of the Class A Ordinary Shares, which
may be volatile. Additionally, under circumstances where TGE’s income from activities that produce passive income significantly
increases relative to income from activities that produce non-passive income, or where TGE determines not to deploy significant amounts
of cash for active purposes, TGE’s risk of becoming a PFIC may substantially increase.
Application of PFIC
Rules
If TGE is a PFIC for any taxable
year (or portion thereof) that is included in the holding period of a U.S. Holder’s Class A Ordinary Shares, respectively,
then such holder will generally be subject to special rules (the “Default PFIC Regime”) with respect to such Shares unless
the U.S. Holder makes a “mark-to-market” election as described below.
It is not entirely clear how
various aspects of the PFIC rules apply to the Warrants. Section 1298(a)(4) of the Code provides that, to the extent provided
in Treasury regulations, any person who has an option to acquire stock in a PFIC shall be considered to own such stock in the PFIC for
purposes of the PFIC rules. No final Treasury regulations are currently in effect under Section 1298(a)(4) of the Code. However,
proposed Treasury regulations under Section 1298(a)(4) of the Code have been promulgated with a retroactive effective date (the
“Proposed PFIC Option Regulations”). U.S. Holders should consult their tax advisors regarding the possible application
of the Proposed PFIC Option Regulations to the Warrants. The following discussion assumes that the Proposed PFIC Option Regulations will
apply to the Warrants.
The Default PFIC Regime applies
with respect to:
●Any gain recognized by the U.S. Holder on the sale or
other disposition of such Securities; and
●any “excess distribution” made to the U.S. Holder
with respect to such Securities (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder
that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of such Securities during
the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for such
Securities).
●Under the Default PFIC Regime:
●the U.S. Holder’s gain or excess distribution will
be allocated ratably over the U.S. Holder’s holding period for such Securities;
●the amount of gain allocated to the U.S. Holder’s
taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s
holding period before the first day of TGE’s first taxable year as a PFIC in which the U.S. Holder held such Shares (such
taxable year as it relates to each U.S. Holder, the “First PFIC Holding Year”), will be taxed as ordinary income;
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●the amount of gain allocated to other taxable years (or
portions thereof) of the U.S. Holder and included in such U.S. Holder’s holding period will be taxed at the highest tax
rate in effect for that year and applicable to the U.S. Holder; and
●an additional tax equal to the interest charge generally applicable
to underpayments of tax will be imposed on the U.S. Holder in respect of the tax attributable to each such other taxable year of
such U.S. Holder.
Alternatively, if a U.S. Holder,
at the close of its taxable year, owns (or is deemed to own) shares in a PFIC that are treated as marketable shares, the U.S. Holder
may make a mark-to-market election with respect to such shares for such taxable year. If the U.S. Holder makes (or has made)
a valid mark-to-market election with respect to Shares for such holder’s First PFIC Holding Year, such holder will generally
not be subject to the Default PFIC Regime in respect of such shares as long as such shares continue to be treated as marketable shares.
Instead, in general, the U.S. Holder will include as ordinary income for each year that TGE is treated as a PFIC the excess, if any,
of the fair market value of such shares at the end of its taxable year over the adjusted basis in such shares. The U.S. Holder also
will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of such shares over the fair market value
of such shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the
mark-to-market election). The U.S. Holder’s basis in such shares will be adjusted to reflect any such income or loss amounts,
and any further gain recognized on a sale or other taxable disposition of such shares in a taxable year in which TGE is treated as a PFIC
will be treated as ordinary income. Special tax rules may also apply if a U.S. Holder makes a mark-to-market election for a
taxable year after such holder’s First PFIC Holding Year. Currently, a mark-to-market election may not be made with respect
to any Warrants.
The mark-to-market election
is available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange
Commission. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election
under their particular circumstances.If TGE is a PFIC and, at any time, has an equity interest in any foreign entity that is classified
as a PFIC, U.S. Holders of the Securities would generally be deemed to own a proportionate amount (by value) of the shares of such
lower-tier PFIC, and generally could incur liability for the deferred tax and interest charge described above if TGE receives a distribution
from, or disposes of all or part of TGE’s interest in, the lower-tier PFIC or the U.S. Holders otherwise were deemed to have
disposed of an interest in the lower-tier PFIC, in each case, as if the U.S. Holder held such shares directly, even though the
U.S. Holder will not receive any proceeds of those distributions or dispositions. A mark-to-market election generally would
not technically be available with respect to such lower-tier PFIC. U.S. Holders are urged to consult their own tax advisors
regarding the tax issues raised by lower-tier PFICs.
We do not intend to provide
information necessary for U.S. Holders to make a “qualified electing fund” election under Section 1295 of the Code which,
if available, would result in tax treatment different from (and generally less adverse than) the Default PFIC regime described above.
A U.S. Holder that owns
(or is deemed to own) shares in a PFIC during any taxable year of the U.S. Holder, may have to file an IRS Form 8621 (whether
or not a market-to-market election is made) with such U.S. Holder’s U.S. federal income tax return and provide such
other information as may be required by the U.S. Treasury Department. The rules dealing with PFICs and the elections described
above are very complex and are affected by various factors in addition to those described above. Accordingly, U.S. Holders should
consult their own tax advisors concerning the application of the PFIC rules under their particular circumstances.
THE RULES DEALING WITH PFICS
ARE COMPLEX AND ARE IMPACTED BY VARIOUS FACTORS IN ADDITION TO THOSE DESCRIBED ABOVE. ALL U.S. HOLDERS SHOULD CONSULT THEIR
TAX ADVISORS REGARDING THE CONSEQUENCES TO THEM OF THE PFIC RULES, INCLUDING, WITHOUT LIMITATION, WHETHER A MARK-TO-MARKET ELECTION OR
ANY OTHER ELECTION IS AVAILABLE AND THE CONSEQUENCES TO THEM OF ANY SUCH ELECTION, AND THE IMPACT OF ANY PROPOSED OR FINAL PFIC TREASURY
REGULATIONS.
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DESCRIPTION
OF SHARE CAPITAL
The following description
of the material terms of our securities includes a summary of specified provisions of the Amended Articles. This description is qualified
by reference to the Amended Articles. All capitalized terms used in this section are as defined in the Amended Articles, unless elsewhere
defined herein.
The Generation Essentials
Group is a Cayman Islands exempted company with limited liability and its affairs are governed by the Amended Articles, the Cayman Islands
Companies Act, and the common law of the Cayman Islands.
The authorized share capital
of The Generation Essentials Group consists of 1,887,814,313,346.23 shares of a par value of US$0.0000000264856557377049 each, consisting
of 1,791,048,851,868.47 Class A Ordinary Shares, 72,816,437,663.4429 Class B Ordinary Shares, and 23,949,023,814.3133 non-voting
redeemable preferred shares (the “Preferred Shares”). All Ordinary Shares issued and outstanding at the consummation of the
Business Combination will be fully paid and non-assessable.
The following are summaries
of material provisions of the Amended Articles and the Cayman Islands Companies Act insofar as they relate to the material terms of the
Shares.
Ordinary Shares
General
Holders of Class A Ordinary
Shares and Class B Ordinary Shares will generally have the same rights except for voting and conversion rights. The Generation Essentials
Group maintains a register of its shareholders and a shareholder will be entitled upon request to a share certificate.
Dividends
The holders of Ordinary Shares
will be entitled to such dividends as the board of directors may in its discretion lawfully declare from time to time, or as shareholders
of The Generation Essentials Group may declare by ordinary resolution. Class A Ordinary and Class B Ordinary Shares rank equally
as to dividends and other distributions. Dividends may be paid either in cash or in specie.
Holders of Preferred Shares
shall not be entitled to any dividends for a period of twelve (12) months after June 3, 2025, being the date of effectiveness
of the Amended Articles.
Voting Rights
In respect of all matters
upon which holders of Ordinary Shares are entitled to vote, each Class A Ordinary Share will be entitled to one vote and each Class B
Ordinary Share will be entitled to 20 votes. Voting at any meeting of shareholders will be decided by way of a poll and not by way of
a show of hands. A poll shall be taken in such manner as the chairperson of the meeting directs and the result of a poll shall be deemed
to be the resolution of the meeting.
Class A Ordinary Shares
and Class B Ordinary Shares will vote together on all matters as a single class except as otherwise required by law. An ordinary
resolution to be passed by the shareholders will require a simple majority of votes cast, while a special resolution will require not
less than two-thirds of votes cast, in each case by such shareholders entitled to vote and present in person or by proxy or (in the case
of corporations) by their duly authorized representatives. Both ordinary resolutions and special resolutions may also be passed by a unanimous
written resolution signed by all members entitled to vote. A special resolution will be required for important matters such as a change
of name or making changes to the memorandum and articles of association of The Generation Essentials Group.
Holders of Preferred Shares
shall only on any transaction that may result in a Change of Control (as defined in the Amended Articles), be entitled to cast one (1) vote
per Preferred Share and shall vote at a separate general meeting of the holders of the Preferred Shares. Save for the above and except
as provided in the Amended Articles, each Preferred Share shall not be entitled to vote on any other matters subject to a vote at general
meetings of TGE.
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Optional and Mandatory
Conversion
Each Class B Ordinary
Share will be convertible into one Class A Ordinary Share at any time at the option of the holder thereof. Class A Ordinary
Shares will not be convertible into Class B Ordinary Shares under any circumstances.
Upon any transfer of Class B
Ordinary Shares by a holder thereof to any person other than Dr. Calvin Choi or any other person designated by Dr. Calvin Choi,
each such Class B Ordinary Share will automatically and immediately convert into one Class A Ordinary Share.
Holders of Preferred Shares
are not entitled to any conversion rights under the Amended Articles.
Transfer of Shares
Subject to applicable laws,
including securities laws, and the restrictions contained in the Amended Articles and to any lock-up agreements to which a shareholder
may be a party, any shareholders may transfer all or any of their Class A Ordinary Shares, Class B Ordinary Shares or Preferred
Shares by an instrument of transfer in the usual or common form or any other form approved by the board of directors.
Class B Ordinary Shares
may be transferred only to Dr. Calvin Choi and any other person designated by Dr. Calvin Choi and any Class B Ordinary
Shares transferred otherwise will be converted into Class A Ordinary Shares as described above. See “— Optional
and Mandatory Conversion.”
The board of directors may
decline to register any transfer of any share unless:
●the instrument of transfer is lodged with The Generation Essentials Group accompanied by the certificate
for the shares to which it relates (if any) and such other evidence as the board of directors of The Generation Essentials Group may reasonably
require to show the right of the transferor to make the transfer;
●the instrument of transfer is in respect of only one class or series of shares;
●the instrument of transfer is properly stamped, if required;
●in the case of a transfer to joint holders, the number of joint holders to whom the share is to be transferred
does not exceed four; or
●a fee of such maximum sum as the applicable stock exchange may determine to be payable, or such lesser
sum as the board of directors of The Generation Essentials Group may from time to time require, is paid to The Generation Essentials Group
in respect thereof.
If the board of directors
refuses to register a transfer they shall, within three calendar months after the date on which the instrument of transfer was lodged,
send to each of the transferor and the transferee notice of such refusal.
Liquidation
The Class A Ordinary
Shares and Class B Ordinary Shares will rank equally upon occurrence of any liquidation or winding up of The Generation Essentials
Group, in the event of which assets of The Generation Essentials Group will be distributed to, or the losses will be borne by, shareholders
in proportion to the par value of the shares held by them.
Holders of Preferred Shares
shall, in the event of a liquidation, winding-up or dissolution of The Generation Essentials Group, be entitled, prior and in preference
to holders of the Class A Ordinary Shares and Class B Ordinary Shares, to the distribution of the assets of The Generation Essentials
Group available for distribution in the amount of the Preferred Shares Liquidation Preference (as defined in the Amended Articles) (ratably
based on the Preferred Shares held by each holder thereof), and the assets (if any) available for distribution after the full distribution
of the Preferred Shares Liquidation Preference shall be distributed ratably among holders of the Class A Ordinary Shares and Class B
Ordinary Shares.
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Calls on Shares
and Forfeiture of Shares
The board of directors of
The Generation Essentials Group may from time to time make calls upon shareholders for any amounts unpaid on their shares in The Generation
Essentials Group. The shares in The Generation Essentials Group that have been called upon and remain unpaid are, after a notice
period, subject to forfeiture.
Redemption of Shares
Subject to the provisions
of the Cayman Islands Companies Act, The Generation Essentials Group may issue shares that are to be redeemed or are liable to be redeemed
at the option of the shareholder or The Generation Essentials Group. The redemption of such shares will be effected in such manner
and upon such other terms as The Generation Essentials Group may, by either the board of directors or by the shareholders by ordinary
resolution, determine before the issue of the shares.
Variations of Rights
of Shares
If at any time the share capital
of The Generation Essentials Group is divided into different classes of shares, all or any of the rights attached to any class (subject
to any rights or restrictions for the time being attached to any class or series,) may only be materially and adversely varied with the
consent in writing of the holders of all of the issued shares of that class or series or with the sanction of an ordinary resolution passed
at a separate meeting of the holders of the shares of that class or series where at least one-third (1/3) in nominal or par value amount
of the issued shares of that class are present (provided that if at any adjourned meeting of such holders a quorum as above defined is
not present, those shareholders who are present shall form a quorum).
General Meetings
of Shareholders
The Generation Essentials
Group may (but shall not be obliged to) in each calendar year hold an annual general meeting. The annual general meeting shall be held
at such time and place as the board of directors may determine. At least seven calendar days’ notice shall be given for any
general meeting. The chairperson of the board of directors or the board of directors of The Generation Essentials Group may call extraordinary
general meetings. The board of directors must convene an extraordinary general meeting upon the requisition of shareholders holding at
least one third of the votes that may be cast at such meeting. One or more shareholders holding shares which carry in aggregate (or representing
by proxy) not less than one-third (1/3) of all votes attaching to all shares in issue and entitled to vote at such general meeting present
shall be a quorum for all purposes; provided, that the presence in person or by proxy of holders of a majority of Class B Ordinary
Shares shall be required in any event.
Inspection of Books
and Records
The board of directors will
determine whether, to what extent, at what times and places and under what conditions or regulations the accounts and books of The Generation
Essentials Group will be open to the inspection by shareholders, and no shareholder will otherwise have any general right of inspecting
any account or book or document of The Generation Essentials Group except as required by law or the Amended Articles or authorized by
the board of directors.
Changes in Capital
The Generation Essentials
Group may from time to time by ordinary resolution:
●increase its share capital by new shares of such amount as it thinks expedient;
●consolidate and divide all or any share capital into shares of a larger amount than existing shares;
●sub-divide its existing shares or any of them into shares of a smaller amount; provided that in the subdivision
the proportion between the amount paid and the amount, if any, unpaid on each reduced share will be the same as it was in case of the
share from which the reduced share is derived; or
●cancel any shares that at the date of the passing of the resolution have not been taken or agreed to be
taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled.
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The Generation Essentials
Group may by special resolution reduce its share capital or any capital redemption reserve fund in any manner permitted by the Cayman
Islands Companies Act.
Warrants
As a result of the Business
Combination, each BSII Warrant outstanding immediately prior thereto was assumed by The Generation Essentials Group and converted into
a Warrant. Each Warrant will continue to have and be subject to substantially the same terms and conditions as were applicable to the
BSII Warrant immediately prior to the consummation of the Business Combination (including any repurchase rights and cashless exercise
provisions). A summary description of the Warrants is set forth below.
Public Warrants
Each whole Warrant entitles
the registered holder to purchase one Class A Ordinary Share at a price of $11.50 per share, subject to adjustment as discussed below,
at any time commencing on July 4, 2025, being 30 days after the consummation of the Business Combination, except as discussed
in the immediately succeeding paragraph. Pursuant to the Warrant Agreement, a Warrant holder may exercise its Warrants only for a whole
number of Class A Ordinary Shares. This means only a whole Warrant may be exercised at a given time by a Warrant holder. No fractional
Warrants will be issued upon separation of Units and only whole Warrants will trade. The Warrants will expire five years consummation
of the Business Combination, at 5:00 p.m., New York City time on June 4, 2030, or earlier upon redemption or liquidation.
We will not be obligated to
deliver any Class A Ordinary Shares pursuant to the exercise of a Warrant and will have no obligation to settle such exercise unless a
registration statement under the Securities Act with respect to the Class A Ordinary Shares underlying the Warrants, such as the registration
statement to which this prospectus forms a part, is then effective and a prospectus relating thereto is current, subject to we satisfying
our obligations described below with respect to registration, or a valid exemption from registration is available. No Warrant will be
exercisable for cash or on a cashless basis, and we will not be obligated to issue a Class A Ordinary Share upon exercise of a Warrant
unless the Class A Ordinary Share issuable upon such Warrant exercise has been registered, qualified or deemed to be exempt under the
securities laws of the state of residence of the registered holder of the Warrants. In the event that the conditions in the two immediately
preceding sentences are not satisfied with respect to a Warrant, the holder of such Warrant will not be entitled to exercise such Warrant
and such Warrant may have no value and expire worthless. In no event will we be required to net cash settle any Warrant.
We have agreed to use our
best efforts to file with the SEC the registration statement to which this prospectus forms a part and will use our best efforts to cause
the same to become effective and to maintain the effectiveness of such registration statement and a current prospectus relating to those
Class A Ordinary Shares until the Warrants expire or are redeemed, as specified in the Warrant Agreement. If the Class A Ordinary Shares
are at the time of any exercise of a Warrant not listed on a national securities exchange such that they satisfy the definition of a “covered
security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of Public Warrants who
exercise their Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act
and, in the we so elect, we will not be required to file or maintain in effect a registration statement, but will use our best efforts
to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If the registration statement
covering the Class A Ordinary Shares issuable upon exercise of the Warrants is not effective within 60 business days after the closing
of the Business Combination, holders of Warrants may, until such time as there is an effective registration statement and during any period
when we will have failed to maintain an effective registration statement, exercise Warrants on a “cashless basis” in accordance
with Section 3(a)(9) of the Securities Act or another exemption.
In the case of a cashless
exercise, each holder would pay the exercise price by surrendering the Warrants for that number of Class A Ordinary Shares equal to the
quotient obtained by dividing (x) the product of the number of Class A Ordinary Shares underlying the Warrants, multiplied by the
excess of the “fair market value” less the exercise price of the Warrants by (y) the fair market value. The “fair
market value” as used in this paragraph means the volume-weighted average price of the Class A Ordinary Shares as reported during
the 10 trading day period ending on the trading day prior to the date on which the notice of exercise is received by the Warrant
agent.
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A holder of a Warrant may
notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such Warrant,
to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the Warrant agent’s
actual knowledge, would beneficially own in excess of 4.9% or 9.8% (as specified by the holder) of the Class A Ordinary Shares issued
and outstanding immediately after giving effect to such exercise.
Redemption of Warrants. After
the Warrants become exercisable, we may redeem the outstanding Warrants (except as described herein with respect to the private placement
Warrants):
●in whole and not in part;
●at a price of $0.01 per Warrant;
●upon a minimum of 30 days’ prior written notice of redemption to each Warrant holder; and
●if, and only if, the closing price of the Class A Ordinary Shares equals or exceeds $18.00 per share (as
adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Warrant as described under the heading
“— Warrants — Public Warrants — Anti-Dilution Adjustments”) for any 20 trading days within
a 30-trading day period ending three trading days before we send the notice of redemption to the Warrant holders.
If and when the Warrants become
redeemable by us, we may not exercise our redemption right if the issuance of Class A Ordinary Shares upon exercise of the Warrants is
not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification.
If and when the Warrants become redeemable, we may exercise our redemption right even if we are unable to register or qualify the underlying
securities for sale under all applicable state securities laws. As a result, we may redeem Warrants even if the holders are otherwise
unable to exercise their Warrants.
We have established the last
of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium
to the Warrant exercise price. If the foregoing conditions are satisfied and we issue a notice of redemption of the Warrants, each Warrant
holder will be entitled to exercise his, her or its Warrant prior to the scheduled redemption date. However, the price of the Class A
Ordinary Shares may fall below the $18.00 redemption trigger price (as adjusted for adjustments to the number of shares issuable upon
exercise or the exercise price of a Warrant as described below under the heading “— Warrants — Public Warrants
— Anti-dilution Adjustments”) as well as the $11.50 (for whole shares) Warrant exercise price after the redemption notice
is issued.
If we call the Warrants for
redemption as described above, our management will have the option to require any holder that wishes to exercise its Warrant to do so
on a “cashless basis.” In determining whether to require all holders to exercise their Warrants on a “cashless basis,”
our management will consider, among other factors, our cash position, the number of Warrants that are outstanding and the dilutive effect
on its shareholders of issuing the maximum number of Class A Ordinary Shares issuable upon the exercise of the Warrants. If our management
takes advantage of this option, all holders of Warrants would pay the exercise price by surrendering their Warrants for that number of
Class A Ordinary Shares equal to the quotient obtained by dividing (x) the product of the number of Class A Ordinary Shares underlying
the Warrants, multiplied by the difference between the exercise price of the Warrants and the “fair market value” by (y) the
fair market value. For this purpose, “fair market value” means the average reported last sale price of the Class A Ordinary
Shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to
the holders of Warrants. If our management takes advantage of this option, the notice of redemption will contain the information necessary
to calculate the number of shares of Class A Ordinary Shares to be received upon exercise of the Warrants, including the “fair market
value” in such case.
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Anti-dilution Adjustments. If
the number of outstanding Class A Ordinary Shares is increased by a capitalization or share dividend payable in Class A Ordinary Shares,
or by a subdivision of ordinary shares or other similar event, then, on the effective date of such capitalization or share dividend, subdivision
or similar event, the number of Class A Ordinary Shares issuable on exercise of each Warrant will be increased in proportion to such increase
in the outstanding ordinary shares. A rights offering to holders of ordinary shares entitling holders to purchase Class A Ordinary Shares
at a price less than the “historical fair market value” (as defined below) will be deemed a share dividend of a number of
Class A Ordinary Shares equal to the product of (i) the number of Class A Ordinary Shares actually sold in such rights offering (or
issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A Ordinary
Shares) and (ii) one minus the quotient of (x) the price per Class A Ordinary Share paid in such rights offering and (y) the
historical fair market value. For these purposes, (i) if the rights offering is for securities convertible into or exercisable for
Class A Ordinary Shares, in determining the price payable for Class A Ordinary Shares, there will be taken into account any consideration
received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) “historical fair market
value” means the volume weighted average price of Class A Ordinary Shares as reported during the 10 trading day period ending
on the trading day prior to the first date on which the Class A Ordinary Shares trade on the applicable exchange or in the applicable
market, regular way, without the right to receive such rights.
In addition, if we, at any
time while the Warrants are outstanding and unexpired, pay a dividend or make a distribution in cash, securities or other assets to holders
of the Class A Ordinary Shares on account of such Class A Ordinary Shares (or other securities into which the Warrants are convertible),
other than (a) as described above or (b) any cash dividends or cash distributions which, when combined on a per share basis
with all other cash dividends and cash distributions paid on the Class A Ordinary Shares during the 365-day period ending on the date
of declaration of such dividend or distribution does not exceed $0.50 (as adjusted to appropriately reflect any other adjustments and
excluding cash dividends or cash distributions that resulted in an adjustment to the exercise price or to the number of Class A Ordinary
Shares issuable on exercise of each Warrant) but only with respect to the amount of the aggregate cash dividends or cash distributions
equal to or less than $0.50 per share, then the Warrant exercise price will be decreased, effective immediately after the effective date
of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each Class A Ordinary Share
in respect of such event.
If the number of outstanding
Class A Ordinary Shares is decreased by a consolidation, combination, reverse share sub-division, or reclassification of Class A Ordinary
Shares or other similar event, then, on the effective date of such consolidation, combination, reverse share sub-division, reclassification
or similar event, the number of Class A Ordinary Shares issuable on exercise of each Warrant will be decreased in proportion to such decrease
in outstanding Class A Ordinary Shares.
Whenever the number of Class
A Ordinary Shares purchasable upon the exercise of the Warrants is adjusted, as described above, the Warrant exercise price will be adjusted
by multiplying the Warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the
number of Class A Ordinary Shares purchasable upon the exercise of the Warrants immediately prior to such adjustment and (y) the
denominator of which will be the number of Class A Ordinary Shares so purchasable immediately thereafter.
In case of any reclassification
or reorganization of the outstanding Class A Ordinary Shares (other than those described above or that solely affects the par value of
such Class A Ordinary Shares), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation
or merger in which we are the continuing corporation and that does not result in any reclassification or reorganization of the outstanding
Class A Ordinary Shares), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of
ours as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of the Warrants will thereafter
have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the Warrants and in lieu of the
Class A Ordinary Shares immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind
and amount of Class A Ordinary Shares or other securities or property (including cash) receivable upon such reclassification, reorganization,
merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the Warrants would have received
if such holder had exercised their Warrants immediately prior to such event. However, if such holders were entitled to exercise a right
of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and
amount of securities, cash or other assets for which each Warrant will become exercisable will be deemed to be the weighted average of
the kind and amount received per share by such holders in such consolidation or merger that affirmatively make such election, and if a
tender, exchange or redemption offer has been made to and accepted by such holders (other than a tender, exchange or redemption offer
made by the company in connection with redemption rights held by shareholders of the company as provided for in the company’s amended
and restated memorandum and articles of association or as a result of the redemption of Class A Ordinary Shares by the company if a proposed
initial business combination is presented to the shareholders of the company for approval) under circumstances in which, upon completion
of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under
the Exchange Act) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of
Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own
beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more than 50% of the issued and outstanding Class A Ordinary
Shares, the holder of a Warrant will be entitled to receive the highest amount of cash, securities or other property to which such holder
would actually have been entitled as a shareholder if such holder had exercised the Warrant prior to the expiration of such tender or
exchange offer, accepted such offer and all of the Class A Ordinary Shares held by such holder had been purchased pursuant to such tender
or exchange offer, subject to adjustment (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible
to the adjustments provided for in the Warrant Agreement. If less than 70% of the consideration receivable by the holders of Class A Ordinary
Shares in such a transaction is payable in the form of Class A Ordinary Shares in the successor entity that is listed for trading on a
national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately
following such event, and if the registered holder of the Warrant properly exercises the Warrant within 30 days following public
disclosure of such transaction, the Warrant exercise price will be reduced as specified in the Warrant Agreement based on the per share
consideration minus the Black-Scholes Warrant Value (as defined in the Warrant Agreement) of the Warrant.
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The Warrant Agreement provides
that (a) the terms of the Warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity
or correct any mistake, including to conform the provisions of the Warrant Agreement to the description of the terms of the Warrants and
the Warrant Agreement set forth in this prospectus, or defective provision, (ii) removing or reducing our ability to redeem the Public
Warrants and, if applicable, a corresponding amendment to our ability to redeem the Sponsor Warrants, or (iii) adding or changing
any provisions with respect to matters or questions arising under the Warrant Agreement as the parties to the Warrant Agreement may deem
necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the Public Warrants under
the Warrant Agreement in any material respect; (b) the terms of the Warrants may be amended with the vote or written consent of at
least 50% of the then outstanding Public Warrants and Sponsor Warrants, voting together as a single class, to allow for the Warrants to
be, or continue to be, as applicable, classified as equity in our financial statements; and (c) all other modifications or amendments
to the Warrant Agreement with respect to (i) the Public Warrants require the vote or written consent of holders of at least 50% of
the then outstanding Public Warrants, and (ii) the Sponsor Warrants require the vote or written consent of holders of at least 50%
of the then outstanding Sponsor Warrants.
Warrant holders do not have
the rights or privileges of holders of ordinary shares and any voting rights until they exercise their Warrants and receive Class A Ordinary
Shares. After the issuance of Class A Ordinary Shares upon exercise of the Warrants, each holder will be entitled to one vote for each
share held of record on all matters to be voted on by shareholders.
If, upon exercise of the Warrants,
a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number
the number of Class A Ordinary Shares to be issued to the Warrant holder.
Subject to applicable law,
any action, proceeding or claim against us arising out of or relating in any way to the Warrant Agreement will be brought and enforced
in the courts of the State of New York or the United States District Court for the Southern District of New York, and we
irrevocably submit to such jurisdiction, which jurisdiction will be the exclusive forum for any such action, proceeding or claim. This
provision applies to claims under the Securities Act but does not apply to claims under the Exchange Act or any claim for which the
federal district courts of the United States of America are the sole and exclusive forum.
Sponsor Warrants
The Sponsor Warrants (including
the Class A Ordinary Shares issuable upon exercise of the Sponsor Warrants) are not transferable, assignable or saleable until 30 days
after the completion of the Business Combination (except pursuant to limited exceptions to certain officers and directors and other persons
or entities affiliated with the Sponsor) and they will not be redeemable by us so long as they are held by the Sponsor, its members or
their respective permitted transferees. The Sponsor, or its permitted transferees, has the option to exercise the Sponsor Warrants on
a cashless basis. If the Sponsor Warrants are held by holders other than the Sponsor or its permitted transferees, the Sponsor Warrants
will be redeemable by us in all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants.
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Except as described below,
the Sponsor Warrants have terms and provisions that are identical to those of the Public Warrants. The Sponsor Warrants will not be redeemable
by us and may be exercisable on a cashless basis.
If holders of the Sponsor
Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its Sponsor Warrants
for that number of Class A Ordinary Shares equal to the quotient obtained by dividing (x) the product of the number of Class A Ordinary
Shares underlying the Sponsor Warrants, multiplied by the excess of the “Sponsor fair market value” (defined below) over the
exercise price of the Sponsor Warrants by (y) the Sponsor fair market value. For these purposes, the “Sponsor fair market value”
shall mean the volume-weighted average price of the Class A Ordinary Shares for the 10 trading days ending on the 10th trading
day prior to the date on which the notice of Sponsor Warrants exercise is sent to the warrant agent.
Exempted Company
The Generation Essentials
Group is an exempted company with limited liability incorporated under the laws of Cayman Islands. The Cayman Islands Companies Act distinguishes
between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business
mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially
the same as for an ordinary company except for the exemptions and privileges listed below:
●annual reporting requirements are minimal and consist mainly of a statement that the company has conducted
its operations mainly outside of the Cayman Islands and has complied with the provisions of the Companies Act;
●an exempted company’s register of members is not open to inspection;
●an exempted company does not have to hold an annual general meeting;
●an exempted company may issue shares with no par value;
●an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings
are usually given for 20 or 30 years in the first instance);
●an exempted company may register by way of continuation in another jurisdiction and be deregistered in
the Cayman Islands;
●an exempted company may register as a limited duration company; and
●an exempted company may register as a segregated portfolio company.
“Limited liability”
means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder’s shares of
the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or
improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).
Differences in Corporate
Law
The Cayman Islands Companies
Act is derived, to a large extent, from the older Companies Acts of England but does not follow recent English statutory enactments and
accordingly there are significant differences between the Cayman Islands Companies Act and the current Companies Act of England.
In addition, the Cayman Islands Companies Act differs from laws applicable to U.S. corporations and their shareholders. Set forth
below is a summary of certain significant differences between the provisions of the Cayman Islands Companies Act applicable to us and
the laws applicable to companies incorporated in the State of Delaware in the United States and their shareholders.
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Mergers and Similar Arrangements. The
Cayman Islands Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies
and non-Cayman Islands companies. For these purposes, (a) “merger” means the merging of two or more constituent companies
and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a “consolidation”
means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and
liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent
company must approve a written plan of merger or consolidation containing certain prescribed information. That plan of merger or consolidation
must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization,
if any, as may be specified in such constituent company’s articles of association. The plan must be filed with the Registrar of
Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a list of the
assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be
given to the members and creditors of each constituent company and that notification of the merger or consolidation will be published
in the Cayman Islands Gazette, among other formalities. Court approval is not required for a merger or consolidation which is effected
in compliance with these statutory procedures.
A merger between a Cayman
parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman
subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise.
For this purpose, a company is a “parent” of a subsidiary if it holds issued shares that together represent at least ninety
percent (90%) of the votes at a general meeting of the subsidiary.
The consent of each holder
of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman
Islands.
If the Cayman Islands Registrar
of Companies is satisfied that the requirements of the Companies Act have been complied with, the Registrar of Companies will register
the plan of merger or consolidation.
Save in certain limited circumstances,
a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of
his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or
consolidation, provided the dissenting shareholder complies strictly with the procedures set out in the Cayman Islands Companies Act.
The exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might
otherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that the merger or consolidation is
void or unlawful.
Separate from the statutory
provisions relating to mergers and consolidations, the Cayman Islands Companies Act also contains statutory provisions that facilitate
the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by seventy-five
per cent in value of the members or class of members, as the case may be, with whom the arrangement is to be made and a majority in number
of each class of creditors with whom the arrangement is to be made, and who must in addition represent seventy-five per cent in value
of each such class of creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings,
convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the
Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved,
the court can be expected to approve the arrangement if it determines that:
●the statutory provisions as to the required majority vote have been met;
●the shareholders have been fairly represented at the meeting in question and the statutory majority are
acting bona fide without coercion of the minority to promote interests adverse to those of the class;
●the arrangement is such that may be reasonably approved by an intelligent and honest man of that class
acting in respect of his interest; and
●the arrangement is not one that would more properly be sanctioned under some other provision of the Cayman
Islands Companies Act.
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The Cayman Islands Companies
Act also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of a dissentient minority
shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90% of the shares affected within four months,
the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining
shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands
but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction
by way of scheme of arrangement is thus approved and sanctioned, or if a tender offer is made and accepted, in accordance with the foregoing
statutory procedures, a dissenting shareholder would have no rights comparable to appraisal rights, save that objectors to a takeover
offer may apply to the Grand Court of the Cayman Islands for various orders that the Grand Court of the Cayman Islands has a broad discretion
to make, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive
payment in cash for the judicially determined value of the shares.
The Cayman Islands Companies
Act also contains statutory provisions which provide that a company may present a petition to the Grand Court of the Cayman Islands for
the appointment of a restructuring officer on the grounds that the company (a) is or is likely to become unable to pay its debts
within the meaning of section 93 of the Cayman Islands Companies Act; and (b) intends to present a compromise or arrangement
to its creditors (or classes thereof) either, pursuant to the Cayman Islands Companies Act, the law of a foreign country or by way of
a consensual restructuring. The petition may be presented by a company acting by its directors, without a resolution of its members or
an express power in its articles of association. On hearing such a petition, the Cayman Islands court may, among other things, make an
order appointing a restructuring officer or make any other order as the court thinks fit.
Shareholders’ Suits. In
principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder.
However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands
courts can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto)
so that a non-controlling shareholder may be permitted to commence a class action against or derivative actions in the name of the company
to challenge actions where:
●a company is acting, or proposing to act, illegally or beyond the scope of its authority;
●the act complained of, although not beyond the scope of the authority, could only be effected duly if
authorized by more than the number of votes which have actually been obtained; and
●those who control the company are perpetrating a “fraud on the minority.”
A shareholder may have a direct
right of action against us where the individual rights of that shareholder have been infringed or are about to be infringed.
Indemnification of Directors
and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the extent to which a company’s memorandum
and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be
held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences
of committing a crime. The Amended Articles provide that that we shall indemnify our directors, secretaries and officers, and their personal
representatives, against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such
persons, other than by reason of such person’s dishonesty, wilful default or fraud, in or about the conduct of our company’s
business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities
or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by
such persons in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court
whether in the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation
Law for a Delaware corporation.
In addition, we have entered
into indemnification agreements with our directors and executive officers that provide such persons with additional indemnification beyond
that provided in the Amended Articles.
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Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing
provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
Directors’ Fiduciary
Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders.
This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with
the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself
of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty
requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate
position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation
and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the
shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the
honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence
of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must
prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
As a matter of Cayman Islands
law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered
that he owes the following duties to the company — a duty to act in good faith in the best interests of the company, a
duty not to make a personal profit based on his position as director (unless the company permits him to do so), a duty not to put himself
in a position where the interests of the company conflict with his personal interest or his duty to a third party and a duty to exercise
powers for the purpose for which such powers were intended. A director of a Cayman Islands company owes to the company a duty to act with
skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill
than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards
an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.
Shareholder Action by Written
Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written
consent by amendment to its certificate of incorporation. Cayman Islands law permits us to eliminate the right of shareholders to act
by written consent and the Amended Articles provide that a resolution in writing signed by all the shareholders for the time being entitled
to receive notice of and to attend and vote at general meetings of The Generation Essentials Group (or being corporations by their duly
authorised representatives) shall be as valid and effective as if the same had been passed at a general meeting of The Generation Essentials
Group duly convened and held.
Shareholder Proposals. Under
the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided
it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other
person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
The Cayman Islands Companies
Act does not provide shareholders with any right to requisition a general meeting or to put any proposal before a general meeting. However,
these rights may be provided in a company’s articles of association. The Amended Articles allow our shareholders holding shares
which carry in aggregate not less than one-third of all votes attaching to the issued and outstanding shares of our company entitled to
vote at general meetings to requisition an extraordinary general meeting of our shareholders, in which case our board is obliged to convene
an extraordinary general meeting and to put the resolutions so requisitioned to a vote at such meeting. Other than this right to requisition
a shareholders’ meeting, the Amended Articles do not provide our shareholders with any other right to put proposals before annual
general meetings or extraordinary general meetings. As an exempted Cayman Islands company, we are not obliged by law to call shareholders’
annual general meetings.
Cumulative Voting. Under
the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate
of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on
a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single
director, which increases the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation
to cumulative voting under the laws of the Cayman Islands but the Amended Articles do not provide for cumulative voting. As a result,
our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
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Removal of Directors. Under
the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval
of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under the Amended
Articles, subject to certain restrictions as contained therein, directors may be removed with or without cause, by an ordinary resolution
of our shareholders. An appointment of a director may be on terms that the director shall automatically retire from office (unless he
has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period
in a written agreement between the company and the director, if any; but no such term shall be implied in the absence of express provision.
Under the Amended Articles, a director’s office shall be vacated if the director (i) becomes bankrupt or makes any arrangement
or composition with his creditors; (ii) is found to be or becomes of unsound mind or dies; (iii) resigns his office by notice
in writing to the company; (iv) without special leave of absence from our board of directors, is absent from three consecutive meetings
of the board and the board resolves that his office be vacated; (v) is removed from office pursuant to other provisions of the Amended
Articles.
Transactions with Interested
Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations
whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation,
it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following
the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns
or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect of limiting
the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The
statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board
of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder.
This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s
board of directors.
Cayman Islands law has no
comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute.
However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide
that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud
on the minority shareholders.
Dissolution; Winding up. Under
the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by
shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors
may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include
in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.
Under Cayman Islands law,
a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the
company is unable to pay its debts, by an ordinary resolution of its members. The court has authority to order winding up in a number
of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.
Variation of Rights of
Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval
of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under the Amended Articles,
if our share capital is divided into more than one class of shares, the rights attached to any such class may only be varied with the
consent in writing of the holders of all of the issued shares of that class or series or the sanction of an ordinary resolution passed
at a separate meeting of the holders of the shares of that class or series.
Amendment of Governing
Documents. Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval
of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under Cayman Islands
law, the Amended Articles may only be amended with a special resolution of our shareholders.
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Rights of Non-resident
or Foreign Shareholders. There are no limitations imposed by the Amended Articles on the rights of non-resident or foreign shareholders
to hold or exercise voting rights on our shares. In addition, there are no provisions in our Amended Articles governing the ownership
threshold above which shareholder ownership must be disclosed.
Recent Sales of Unregistered
Securities
In the past three years,
The Generation Essentials Group issued the following securities. The Generation Essentials Group believes that each of the following issuances
was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act regarding transactions
not involving a public offering or in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore
transactions. No underwriters were involved in these issuances of securities.
Securities/Purchaser
Date of Issuance
Number of Securities
Consideration
Ordinary shares
AMTD Digital Inc.
October 25, 2024
5,108 ordinary shares
Issue upon swapping the shares of World Media and Entertainment Group Inc.
AMTD IDEA Group
October 25, 2024
4,880 ordinary shares
Issue upon swapping the shares of World Media and Entertainment Group Inc.
AMTD Group Inc.
October 25, 2024
12 ordinary shares
Issue upon swapping the shares of World Media and Entertainment Group Inc.
South Horizon Oceans (Group) Co. Inc.
November 2, 2024
857 ordinary shares
US$50.8 million
Radisson Everton Venture Fund
November 14, 2024
388 ordinary shares
US$23.0 million
AMTD Digital Inc.
November 26, 2024
1,680 non-voting redeemable ordinary shares
US$100.0 million
In connection with the Business
Combination and on the Closing Date, The Generation Essentials Group issued 23,171,033 Class A Ordinary Shares, 19,285,911 Class B Ordinary
Shares and 6,343,056 Preferred Shares to then existing shareholders of The Generation Essentials Group as a part of the Recapitalization.
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PLAN
OF DISTRIBUTION
We are registering the issuance
by us of up to 16,220,000 Class A Ordinary Shares issuable upon the exercise of the Warrants. We are also registering the resale by the
Selling Securityholders of up to (A) 57,401,944 Class A Ordinary Shares, which include (i) 3,235,714 Class A Ordinary Shares beneficially
owned by South Horizon Oceans (Group) Co. Inc. and 1,464,944 Class A Ordinary Shares beneficially owned by Radisson Everton Venture Fund,
which were originally acquired prior to the Closing Date; (ii) 18,425,068 Class A Ordinary Shares beneficially owned by AMTD IDEA Group,
45,307 Class A Ordinary Shares beneficially owned by AMTD Group Inc. and 19,285,911 Class A Ordinary Shares issuable upon the conversion
of 19,285,911 Class B Ordinary Shares beneficially owned by AMTD Digital Inc., which were originally acquired prior to the Closing Date;
(iii) 3,825,000 Sponsor Shares issued to the Sponsor Shareholders on the Closing Date in exchange for the Class B ordinary shares
of Black Spade II; and (iv) 11,120,000 Class A Ordinary Shares issuable upon the exercise of the Sponsor Warrants which warrants
subsequently distributed to certain members of the Sponsor, and (B) 11,120,000 Sponsor Warrants. As used herein, “Selling Securityholders”
includes donees, pledgees, transferees or other successors-in-interest (as a gift, pledge, partnership distribution or other non-sale
related transfer) selling securities received after the date of this prospectus from the Selling Securityholders.
The Selling Securityholders
reserve the right to accept and, together with their respective agents, to reject, any proposed purchases of Registered Shares to be made
directly or through agents. The Selling Securityholders may offer and sell, from time to time, some or all of the securities covered by
this prospectus, and each Selling Securityholder will act independently of us in making decisions with respect to the timing, manner and
size of any sale. However, there can be no assurance that the Selling Securityholders will sell all or any of the securities offered by
this prospectus.
We will receive proceeds of
up to an aggregate of approximately US$186,530,000 from the exercise of the Warrants if all of the Warrants are exercised for cash. The
likelihood that warrant holders will exercise the Warrants and any cash proceeds that we would receive are dependent upon the market price
of the Class A Ordinary Shares, among other things. If the market price for the Class A Ordinary Shares is less than US$11.50 per share,
we believe warrant holders will be unlikely to exercise their Warrants. There is no assurance that the Warrants will be “in the
money” prior to their expiration or that the warrant holders will exercise their Warrants. Holders of the Sponsor Warrants have
the option to exercise the Sponsor Warrants on a cashless basis in accordance with the Warrant Agreement. To the extent that any Warrants
are exercised on a cashless basis, the amount of cash we would receive from the exercise of the Warrants will decrease.
We will not receive any proceeds
from any sale by the Selling Securityholders of the securities being registered hereunder. The aggregate proceeds to the Selling Securityholders
will be the aggregate purchase price of the securities sold less any discounts and commissions borne by the Selling Securityholders. We
will bear all costs, expenses and fees in connection with the registration of the securities offered by this prospectus, whereas the Selling
Securityholders will bear all commissions and discounts, if any, attributable to their sale of our Class A Ordinary Shares or Warrants.
The Class A Ordinary Shares are listed on the NYSE under the trading symbol “TGE” and the Warrants are listed on the
NYSE American under the trading symbol “TGE WS.”
The Selling Securityholders
may use any one or more of the following methods when selling the securities offered by this prospectus:
●purchases by a broker-dealer as principal and resale by such broker-dealer for its own account pursuant
to this prospectus;
●ordinary brokerage transactions and transactions in which the broker solicits purchasers;
●block trades in which the broker-dealer so engaged will attempt to sell the securities as agent but may
position and resell a portion of the block as principal to facilitate the transaction;
●an over-the-counter distribution in accordance with applicable stock exchange rules;
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●through trading plans entered into by a Selling Securityholder pursuant to Rule 10b5-1 under the
Exchange Act that are in place at the time of an offering pursuant to this prospectus and any applicable prospectus supplement hereto
that provide for periodic sales of their securities on the basis of parameters described in such trading plans;
●through one or more underwritten offerings on a firm commitment or best efforts basis;
●settlement of short sales entered into after the date of this prospectus;
●agreements with broker-dealers to sell a specified number of the securities at a stipulated price per
share or warrant;
●distribution to employees, members, limited partners or stockholders of the Selling Securityholder or
its affiliates by pledge to secure debts and other obligations;
●delayed delivery arrangements;
●in “at the market” offerings, as defined in Rule 415 under the Securities Act, at negotiated
prices, at prices prevailing at the time of sale or at prices related to such prevailing market prices, including sales made directly
on a national securities exchange or sales made through a market maker other than on an exchange or other similar offerings through sales
agents;
●directly to purchasers, including through a specific bidding, auction or other process or in privately
negotiated transactions;
●through the writing or settlement of options or other hedging transactions, whether through an options
exchange or otherwise;
●through a combination of any of the above methods of sale; or
●any other method permitted pursuant to applicable law.
The Selling Securityholders
may sell the securities at prices then prevailing, related to the then prevailing market price or at negotiated prices. The offering price
of the securities from time to time will be determined by the Selling Securityholders and, at the time of the determination, may be higher
or lower than the market price of our securities on NYSE, NYSE American or any other exchange or market. The Selling Securityholders have
the sole and absolute discretion not to accept any purchase offer or make any sale of securities if they deem the purchase price to be
unsatisfactory at any particular time or for any other reason.
With respect to a particular
offering of the securities held by the Selling Securityholders, to the extent required, an accompanying prospectus supplement will be
or, if appropriate, a post-effective amendment to the registration statement of which this prospectus is part may be, prepared and will
set forth the following information:
●the specific securities to be offered and sold;
●the names of the Selling Securityholders;
●the respective purchase prices and public offering prices, the proceeds to be received from the sale,
if any, and other material terms of the offering;
●settlement of short sales entered into after the date of this prospectus;
●the names of any participating agents, broker-dealers or underwriters; and
●any applicable commissions, discounts, concessions and other items constituting compensation from the
Selling Securityholders.
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To the extent required, we
will use our best efforts to file a post-effective amendment to the registration statement of which this prospectus is part to describe
any material information with respect to the plan of distribution not previously disclosed in this prospectus or any material change to
such information, and this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution.
We may suspend the sale of
the Registered Securities by the Selling Securityholders pursuant to this prospectus for certain periods of time for certain reasons,
including if the prospectus is required to be supplemented or amended to include additional material information.
Subject to the terms of the
agreement(s) governing the registration rights applicable to a Selling Securityholder’s Class A Ordinary Shares or Warrants
or such other agreement(s), the Selling Securityholders also may transfer the securities in other circumstances, in which case the transferees,
pledgees or other successors-in-interest will be the Selling Securityholders for purposes of this prospectus. Upon
being notified by a Selling Securityholder that a donee, pledgee, transferee, other successor-in-interest intends to
sell our securities, we will, to the extent required, promptly file a supplement to this prospectus or post-effective amendment to name
specifically such person as a Selling Securityholder.
In addition, a Selling Securityholder
that is an entity may elect to make a pro rata in-kind distribution of securities to its members, partners or shareholders
pursuant to the registration statement of which this prospectus is a part by delivering a prospectus with a plan of distribution. Such
members, partners or shareholders would thereby receive freely tradeable securities pursuant to the distribution through a registration
statement. To the extent a distributee is an affiliate of ours (or to the extent otherwise required by law), we may file a prospectus
supplement or post-effective amendment in order to permit the distributees to use the prospectus to resell the securities acquired in
the distribution. The Selling Securityholders may also sell securities under Rule 144 under the Securities Act, if available, or
in other transactions exempt from registration, rather than under this prospectus.
If any of the Selling Securityholders
use an underwriter or underwriters for any offering, we will name such underwriter or underwriters, and set forth the terms of the offering,
in a prospectus supplement pertaining to such offering and, except to the extent otherwise set forth in such prospectus, the applicable
Selling Securityholders will agree in an underwriting agreement to sell to the underwriter(s), and the underwriter(s) will agree
to purchase from the Selling Securityholders, the number of shares set forth in such prospectus supplement. These sales may be at a fixed
price or varying prices, which may be changed, or at market prices prevailing at the time of sale, at prices relating to prevailing market
prices or at negotiated prices. The securities may be offered to the public through underwriting syndicates represented by managing underwriters
or by one or more underwriters without a syndicate. The obligations of the underwriters to purchase the securities will be subject to
certain conditions. Unless otherwise set forth in such prospectus supplement, the underwriters will be obligated to purchase all the securities
offered if any of the securities are purchased.
Underwriters, broker-dealers
or agents may facilitate the marketing of an offering online directly or through one of their affiliates. In those cases, prospective
investors may view offering terms and a prospectus online and, depending upon the particular underwriter, broker-dealer or agent, place
orders online or through their financial advisors.
In offering the securities
covered by this prospectus, the Selling Securityholders and any underwriters, broker-dealers or agents who execute sales for the Selling
Securityholders may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales.
Any discounts, commissions, concessions or profit they earn on any resale of those securities may be underwriting discounts and commissions
under the Securities Act.
The underwriters, broker-dealers
and agents may engage in transactions with us or the Selling Securityholders, may have banking, lending or other relationships with us
or the Selling Securityholders or perform services for us or the Selling Securityholders, in the ordinary course of business.
Upon our notification by a
Selling Securityholder that any material arrangement has been entered into with an underwriter or broker-dealer for the sale of securities
through a block trade, special offering, exchange distribution, secondary distribution or a purchase by an underwriter or broker-dealer,
we will file, if required by applicable law or regulation, a supplement to this prospectus pursuant to Rule 424(b) under the
Securities Act disclosing certain material information relating to such underwriter or broker-dealer and such offering.
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In order to facilitate the
offering of the securities, any underwriters, broker-dealers or agents, as the case may be, involved in the offering of such securities
may engage in transactions that stabilize, maintain or otherwise affect the price of our securities. Specifically, the underwriters, broker-dealers
or agents, as the case may be, may overallot in connection with the offering, creating a short position in our securities for their own
account. In addition, to cover overallotments or to stabilize the price of our securities, the underwriters, broker-dealers or agents,
as the case may be, may bid for, and purchase, such securities in the open market. Finally, in any offering of securities through a syndicate
of underwriters, the underwriting syndicate may reclaim selling concessions allotted to an underwriter or a broker-dealer for distributing
such securities in the offering if the syndicate repurchases previously distributed securities in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the securities
above independent market levels. The underwriters, broker-dealers or agents, as the case may be, are not required to engage in these activities,
and may end any of these activities at any time.
The Selling Securityholders
may also authorize underwriters, broker-dealers or agents to solicit offers by certain purchasers to purchase the securities at the public
offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified
date in the future. The contracts will be subject only to those conditions set forth in the prospectus supplement, and the prospectus
supplement will set forth any commissions we or the Selling Securityholders pay for solicitation of these contracts.
In effecting sales, underwriters,
broker-dealers or agents engaged by the Selling Securityholders may arrange for other broker-dealers to participate. Underwriters, broker-dealers
or agents may receive commissions, discounts or concessions from the Selling Securityholders in amounts to be negotiated immediately prior
to the sale.
It is possible that one or
more underwriters may make a market in our securities, but such underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. We cannot give any assurance as to the liquidity of the trading market for our securities.
A Selling Securityholder may
enter into derivative transactions with third parties, including hedging transactions with broker-dealers or other financial institutions,
or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus
supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable
prospectus supplement, including in short sales of the securities offered hereby or of securities convertible into or exchangeable for
such securities. If so, the third party may use securities pledged by any Selling Securityholder or borrowed from any Selling Securityholder
or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from any Selling
Securityholder in settlement of those derivatives to close out any related open borrowings of shares. The third party in such sale transactions
will be an underwriter and will be identified in the applicable prospectus supplement (or a post-effective amendment). In addition, any
Selling Securityholder may otherwise loan, pledge or grant security interest in some or all of the securities to a financial institution
or other third party that in turn may sell the securities short using this prospectus. Such financial institution or other third party
may transfer its economic short position to investors in our securities or in connection with a concurrent offering of other securities.
In compliance with the guidelines
of the Financial Industry Regulatory Authority (“FINRA”), the aggregate maximum discount, commission, fees or other items
constituting underwriting compensation to be received by any FINRA member or independent broker-dealer will not exceed 8% of the gross
proceeds of any offering pursuant to this prospectus and any applicable prospectus supplement.
If at the time of any offering
made under this prospectus a member of FINRA participating in the offering has a “conflict of interest” as defined in FINRA
Rule 5121 (“Rule 5121”), that offering will be conducted in accordance with the relevant provisions of Rule 5121.
In order to comply with the
securities laws of certain states, if applicable, the securities must be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states the securities may not be sold unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
140
The Selling Securityholders
and any other persons participating in the sale or distribution of the securities will be subject to applicable provisions of the Securities
Act and the Exchange Act, and the rules and regulations thereunder, including, without limitation, Regulation M. These
provisions may restrict certain activities of, and limit the timing of purchases and sales of any of the securities by, the Selling Securityholders
or any other person, which limitations may affect the marketability of the shares of the securities.
We will make copies of this
prospectus available to the Selling Securityholders for the purpose of satisfying the prospectus delivery requirements of the Securities
Act.
We have agreed to indemnify
certain Selling Securityholders against certain liabilities, including liabilities under the Securities Act with respect to their Registered
Securities and these Selling Securityholders have agreed to indemnify us in certain circumstances against certain liabilities, including
certain liabilities under the Securities Act. We and/or these Selling Securityholders may indemnify any broker or underwriter that participates
in transactions involving the sale of the securities against certain liabilities, including liabilities arising under the Securities Act.
EXPENSES
RELATED TO THE OFFERING
We estimate the following
expenses in connection with the offer and sale of our Class A Ordinary Shares and Warrants by the Selling Securityholders. With the
exception of the SEC registration fee, all amounts are estimates.
SEC registration fee
US$
66,953
Legal fees and expenses
*
Accountants’ fees and expenses
*
Printing expenses
*
Miscellaneous costs
*
Total
*
*These fees are calculated based on the securities offered and the number of issuances and accordingly
cannot be defined at this time.
Under agreements to which
we are party with the Selling Securityholders, we have agreed to bear all expenses relating to the registration of the resale of the securities
pursuant to this prospectus.
141
LEGAL
MATTERS
We have been represented by
Skadden, Arps, Slate, Meagher & Flom LLP with respect to certain legal matters as to United States federal securities and New
York State law. Conyers Dill & Pearman Pte. Ltd. has advised us on certain legal matters as to Cayman Islands law including the
issuance of the ordinary shares offered by this prospectus, Skadden, Arps, Slate, Meagher & Flom LLP has advised us on the validity
of Warrants under New York law.
EXPERTS
The combined financial statements
of The Generation Essentials Group as of and for the years ended December 31, 2022, 2023 and 2024, have been included herein
in reliance upon the report of Assentsure PAC, independent registered public accounting firm, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.
The financial statements of
Black Spade Acquisition II Co as of December 31, 2024 and for the period from May 9, 2024 (inception) through December 31,
2024 appearing in this prospectus have been audited by WithumSmith+Brown, PC, independent registered public accounting firm, as set forth
in their report thereon, appearing elsewhere in this prospectus, and are included in reliance upon such report given on the authority
of such firm as experts in accounting and auditing.
142
ENFORCEABILITY
OF CIVIL LIABILITIES AND AGENT FOR SERVICE OF PROCESS IN THE UNITED STATES
The Generation Essentials
Group is incorporated under the laws of the Cayman Islands. Service of process upon The Generation Essentials Group and upon its directors
and officers named in this prospectus, may be difficult to obtain within the United States. Furthermore, because substantially all
of our assets are located outside the United States, any judgment obtained in the United States against us may not be collectible
within the United States.
We have been advised by our
Cayman Islands legal counsel that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce
judgments of U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States
or the securities laws of any state in the United States, or (ii) entertain original actions brought in the Cayman Islands that
are predicated upon the federal securities laws of the United States or the securities laws of any state in the United States.
We have also been advised
by our Cayman Islands legal counsel that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the
federal or state courts of the United States, the courts of the Cayman Islands would recognize as a valid judgment, a final and conclusive
judgment in personam obtained in the federal or state courts of the United States against us under which a sum of money is
payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a
fine or other penalty) or, in certain circumstances, an in personam judgment for non-monetary relief, and would give a judgment
based thereon provided that (a) such courts had proper jurisdiction over the parties subject to such judgment; (b) such courts
did not contravene the rules of natural justice of the Cayman Islands; (c) such judgment was not obtained by fraud; (d) the
enforcement of the judgment would not be contrary to the public policy of the Cayman Islands; (e) no new admissible evidence relevant
to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands; and (f) there is due compliance
with the correct procedures under the laws of the Cayman Islands.
143
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC
a registration statement on Form F-1 of which this prospectus forms a part under the Securities Act that registers the Registered
Securities that may be offered under this prospectus from time to time. The registration statement on Form F-1, including the
attached exhibits and schedules, contains additional relevant information about us and our securities. The rules and regulations
of the SEC allow us to omit from this prospectus certain information included in the registration statement. For further information about
us and the Registered Securities, you should refer to the registration statement and the exhibits and schedules filed with the registration
statement. With respect to the statements contained in this prospectus regarding the contents of any agreement or any other document,
in each instance, the statement is qualified in all respects by the complete text of the agreement or document, a copy of which has been
filed as an exhibit to the registration statement.
We are subject to the informational
reporting requirements of the Exchange Act. We file reports and other information with the SEC under the Exchange Act. Our SEC filings
are available over the Internet at the SEC’s website at https://www.sec.gov. Our website address is https://www.thegenerationessentials.com.
The information on, or that can be accessed through, our website is not part of this prospectus.
We will provide, without charge,
to each person, including any beneficial owner, to whom a copy of this prospectus is delivered, upon written or oral request of such person,
a copy of any or all of the reports and documents referred to above which have been or may be incorporated by reference into this prospectus.
Any statement made in a document incorporated by reference into this prospectus will be deemed to be modified or superseded for purposes
of this prospectus to the extent that a statement contained in this prospectus modifies or supersedes that statement. Any statement so
modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus. You can obtain
any of the filings incorporated by reference into this prospectus through us or from the SEC through the SEC’s website at http://www.sec.gov.
You should direct requests for those documents to:
The Generation Essentials Group
66 rue Jean-Jacques Rousseau
75001 Paris, France
+33 (0) 1 7673 2800
144
INDEX TO FINANCIAL STATEMENTS
BLACK SPADE ACQUISITION II CO
Page(s)
Report of Independent Registered Public Accounting Firm (PCAOB: 100)
F-2
Financial Statements
Balance Sheet as of December 31, 2024
F-3
Statement of Operations for the Period from May 9, 2024 (Inception) through December 31, 2024
F-4
Statement of Changes in Shareholder’s Deficit for the Period from May 9, 2024 (Inception) through December 31, 2024
F-5
Statement of Cash Flows for the Period from May 9, 2024 (Inception) through December 31, 2024
F-6
Notes to Financial Statements
F-7 to F-22
THE GENERATION ESSENTIALS GROUP
Page(s)
Report of Independent Registered Public Accounting Firm (PCAOB Id No. 6783)
F-23
Consolidated Financial Statements
Consolidated Statements of Profit or Loss and Other Comprehensive Income for the Years Ended December 31, 2022, 2023 and 2024
F-24
Consolidated Statements of Financial Position as of December 31, 2022, 2023 and 2024
F-25
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2023 and 2024
F-26 to F-28
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2023 and 2024
F-29 to F-30
Notes to the Consolidated Financial Statements for the Years Ended December 31, 2022, 2023 and 2024
F-31 to F-82
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Shareholders and the Board of Directors of
Black Spade Acquisition II Co
Opinion on the Financial Statements
We have audited the accompanying balance sheets
of Black Spade Acquisition II Co. as of December 31, 2024, the related statements of operations, changes in shareholders’
deficit and cash flows for the period from May 9, 2024 (inception) through December 31, 2024 and the related notes (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Company as of December 31, 2024 and the results of its operations and its cash flows for the period
from May 9, 2024 (inception) through December 31, 2024 in conformity with accounting principles generally accepted in the United States
of America.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards
of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ WithumSmith+Brown, PC
We have served as the Company’s auditor since 2024.
New York, NY
March 4, 2025
PCAOB Number 100
F-2
BLACK SPADE ACQUISITION II CO
BALANCE SHEET
DECEMBER 31, 2024
Assets
Current assets
Cash
$2,117,016
Prepaid expenses and other current assets
133,094
Total current assets
2,250,110
Cash held in Trust Account
155,345,149
Total Assets
$157,595,259
Liabilities and Shareholders’ Deficit
Current Liabilities
Due to related party
$41,286
Accrued expenses
1,096,908
Total current liabilities
1,138,194
Deferred underwriting fee
4,302,000
Total Liabilities
5,440,194
Commitments and Contingencies (Note 6)
Class A ordinary shares subject to possible redemption, 15,300,000 shares at redemption value of approximately $10.15 per share
155,345,149
Shareholders’ Deficit
Preference shares, $0.0001 par value; 1,500,000 shares authorized; none issued or outstanding
—
Class A ordinary shares, $0.0001 par value; 150,000,000 shares authorized; none issued or outstanding (excluding 15,300,000 shares subject to possible redemption)
—
Class B ordinary shares, $0.0001 par value; 15,000,000 shares authorized; 3,825,000 shares issued and outstanding
382
Additional paid-in capital
—
Accumulated deficit
(3,190,466)
Total Shareholders’ Deficit
(3,190,084)
Total Liabilities and Shareholders’ Deficit
$157,595,259
The accompanying notes are an integral part of
these financial statements.
F-3
BLACK SPADE ACQUISITION II CO
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MAY 9, 2024 (INCEPTION)
THROUGH DECEMBER 31, 2024
General and administrative expenses
$1,485,361
Loss from operations
(1,485,361)
Other income
Bank interest income
20,785
Change in over-allotment liability
221,227
Interest earned on cash held in Trust Account
2,475,445
Total other income
2,717,457
Net income
$1,232,096
Weighted average shares outstanding, Class A redeemable ordinary shares
8,038,983
Basic and diluted net income per share, Class A ordinary shares
$0.11
Weighted average shares outstanding, Class B ordinary shares
3,599,168
Basic net income per share, Class B ordinary shares
$0.11
Weighted average shares outstanding, Class B ordinary shares
3,617,902
Diluted net income per share, Class B ordinary shares
$0.11
The accompanying notes are an integral part of
these financial statements.
F-4
BLACK SPADE ACQUISITION II CO
STATEMENT OF CHANGES IN SHAREHOLDERS’
DEFICIT
FOR THE PERIOD FROM MAY 9, 2024 (INCEPTION)
THROUGH DECEMBER 31, 2024
Class A
Ordinary Shares
Class B Ordinary Shares
Additional
Paid-in
Accumulated
Total
Shareholders’
Shares
Amount
Shares
Amount
Capital
Deficit
Deficit
Balance – May 9, 2024 (inception)
—
$ —
—
$—
$—
$—
$—
Issuance of Class B ordinary shares to Sponsor(1)
—
—
4,312,500
431
24,569
—
25,000
Sale of 11,120,000 Private Placement Warrants
—
—
—
—
5,560,000
—
5,560,000
Accretion of Class A ordinary shares to redemption amount
—
—
—
—
(6,084,431)
(4,455,304)
(10,539,735)
Fair Value of Public Warrants at issuance
—
—
—
—
555,900
—
555,900
Allocated value of transaction costs to Class A shares
—
—
—
—
(56,087)
—
(56,087)
Forfeiture of Founder Shares
—
—
(487,500)
(49)
49
—
—
Removal of the over-allotment liability and recording of partial over-allotment close
—
—
—
—
—
32,742
32,742
Net income
—
—
—
—
—
1,232,096
1,232,096
Balance – December 31, 2024
—
$—
3,825,000
$382
$—
$(3,190,466)
$(3,190,084)
(1)Includes an aggregate of up to 562,500 Class B ordinary
shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters. On September 26,
2024, the underwriters partially exercised their over-allotment option to purchase an additional 300,000 units at a purchase price
of $10.00 per Unit, and forfeited their option to purchase an additional 1,950,000 units. As a result, 487,500 Founder Shares were
forfeited on September 26, 2024 (see Note 5).
The accompanying notes are an integral part of
these financial statements.
F-5
BLACK SPADE ACQUISITION II CO
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MAY 9, 2024 (INCEPTION)
THROUGH DECEMBER 31, 2024
Cash Flows from Operating Activities:
Net income
$1,232,096
Adjustments to reconcile net income to net cash used in operating activities:
Payment of general and administrative costs through promissory note
58,059
Interest income on cash held in Trust Account
(2,475,445)
Change in fair value of over-allotment liability
(221,227)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets
(133,094)
Accounts payable and accrued expenses
1,096,908
Due to related party
41,286
Net cash used in operating activities
(401,417)
Cash Flows from Investing Activities:
Investment of cash into Trust Account
$(153,000,000)
Cash withdrawn from Trust Account for working capital purposes
130,296
Net cash used in investing activities
(152,869,704)
Cash Flows from Financing Activities:
Proceeds from sale of Units, net of underwriting discounts paid
$150,340,000
Proceeds from sale of Private Placements Warrants
5,560,000
Repayment of promissory note – related party
(193,720)
Payment of offering costs
(318,143)
Net cash provided by financing activities
155,388,137
Net Change in Cash
2,117,016
Cash – Beginning of period
—
Cash – End of period
$2,117,016
Non Cash investing and financing activities:
Deferred offering costs paid by Sponsor in exchange for issuance of Class B ordinary shares
$25,000
Deferred offering costs paid through promissory note – related party
$135,661
Deferred underwriting fee payable
$4,302,000
The accompanying notes are an integral part of
these financial statements.
F-6
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 1 — DESCRIPTION
OF ORGANIZATION AND BUSINESS OPERATIONS
Black Spade Acquisition II Co (the “Company”)
was incorporated in the Cayman Islands on May 9, 2024. The Company was formed for the purpose of effecting a merger, capital share
exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business
Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination.
The Company is an early stage and emerging growth company, and, as such, the Company is subject to all of the risks associated with early
stage and emerging growth companies.
As of December 31, 2024, the Company had not
commenced any operations. All activity for the period from May 9, 2024 (inception) through December 31, 2024 relates to the
Company’s formation and the initial public offering (“Initial Public Offering”), which is described below, and subsequent
to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenue
until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the
form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year
end.
The registration statement for the Company’s
Initial Public Offering was declared effective on August 23, 2024. On August 29, 2024, the Company consummated the Initial Public
Offering of 15,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being
offered, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $150,000,000, which is discussed in Note 3.
Simultaneously with the closing of the Initial Public
Offering, the Company consummated the sale of 11,000,000 warrants (the “Private Placement Warrants”) at a price of $0.50
per Private Placement Warrant, in a private placement to Black Spade Sponsor LLC II, the Company’s sponsor (the “Sponsor”),
generating gross proceeds of $5,500,000, which is described in Note 4.
The Company had granted the underwriters in the
Initial Public Offering, a 45-day option to purchase up to 2,250,000 additional Units to cover over-allotments, if any (“Over-Allotment
Units”). On September 26, 2024, the underwriters exercised a portion of the option and purchased 300,000 Over-Allotment Units,
generating gross proceeds of $3,000,000. In connection with the partial exercise of the over-allotment option, the Sponsor purchased an
additional 120,000 Private Placement Warrants at a purchase price of $0.50 per Private Placement Warrant, generating additional gross
proceeds to the Company of $60,000. The underwriters have forfeited the option to purchase the remaining 1,950,000 Units.
Transaction costs amounted to $7,440,804, consisting
of $2,660,000 of cash underwriting fee (net of $400,000 underwriters’ reimbursement), $4,302,000 of deferred underwriting fee (see
additional discussion in Note 6), and $478,804 of other offering costs.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Proposed Public Offering and the sale of Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully.
The Company must complete one or more initial Business
Combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in
the Trust Account (as defined below) (excluding the deferred underwriting commissions on the Trust Account). The Company will only complete
a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target
or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment
company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
Following the closing of the Initial Public Offering,
on August 29, 2024, and the partial over-allotment close on September 26, 2024, an amount of $153,000,000 ($10.00 per Unit)
from the net proceeds of the sale of the Units and the sale of the Private Placement Warrants was placed in the trust account (the
“Trust Account”), located in the United States and invested only in U.S. government
securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less
or in any money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act and/or
held as cash or cash items (including in demand deposit accounts), as determined by the Company, until the earlier of (i) the completion
of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below.
F-7
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 1
— DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (cont.)
The Company will provide the holders of the outstanding
Public Shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public Shares either (i) in
connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer in connection
with the Business Combination. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct
a tender offer will be made by the Company. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata
portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, including interest earned on the
funds held in the trust account (net of amounts withdrawn to fund the working capital requirements, including for payment of any income
taxes and up to $100,000 to pay dissolution expenses, subject to an annual limit of 10% of interest earned on funds held in the trust
account (“permitted withdrawals”)). There will be no redemption rights upon the completion of a Business Combination with
respect to the Company’s warrants. The Public Shares subject to possible redemption were recorded at a redemption value and were
classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Accounting Standards Codification
(“ASC”) Topic 480, “Distinguishing Liabilities from Equity.”
The Company will not redeem Public Shares in an
amount that would cause its net tangible assets to be less than $5,000,001 (so that it does not then become subject to the U.S. Securities
and Exchange Commission’s (“SEC”) “penny stock” rules) or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to the Business Combination. If the Company seeks shareholder approval of the Business
Combination, the Company will proceed with a Business Combination if a majority of the outstanding shares are voted in favor of the Business
Combination, or such other vote as required by law or stock exchange rule. If a shareholder vote is not required by applicable law or
stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the Company
will, pursuant to its amended and restated memorandum and articles of association (the “Articles of Association”), conduct
the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC prior to completing a
Business Combination. If, however, shareholder approval of the transaction is required by applicable law or stock exchange listing requirements,
or the Company decides to obtain shareholder approval for business or other reasons, the Company will offer to redeem shares in conjunction
with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks shareholder
approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and
any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each
Public Shareholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for
or against the proposed transaction.
Notwithstanding the foregoing, if the Company seeks
shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Articles of
Association will provide that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such
shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate
of 15% of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed (a) to waive its redemption
rights with respect to the Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and
(b) not to propose an amendment to the Articles of Association (i) to modify the substance or timing of the Company’s
obligation to allow redemptions in connection with a Business Combination or to redeem 100% of its Public Shares if the Company does not
complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating
to shareholders’ rights or pre-business combination activity, unless the Company provides the Public Shareholders with the opportunity
to redeem their Public Shares in conjunction with any such amendment.
F-8
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 1
— DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (cont.)
If the Company has not completed a Business Combination
within 24 months from the closing of the Initial Public Offering (or 27 months from the closing of the Initial Public Offering
if the Company has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within
24 months from the closing of the Proposed Public Offering) (the “Combination Period”), the Company will (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust
Account, including interest earned on the funds held in the Trust Account and not previously released to pay taxes (less funds withdrawn
for any permitted withdrawals), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public
Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and the
Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands
law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating
distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination
within the Combination Period.
The Sponsor has agreed to waive its liquidation
rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However,
if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions
from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed
to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does
not complete a Business Combination within the Combination Period and, in such event, such amounts were included with the other funds
held in the Trust Account that was available to fund the redemption of the Public Shares. In the event of such distribution, it is possible
that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit
($10.00).
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s
independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business
with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00
per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust
Account, if less than $10.00 per public Share due to reductions in the value of the trust assets, in each case net of the amount of interest
which may be withdrawn for any permitted withdrawals, except as to any claims by a third party who executed a waiver of any and all rights
to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial
Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not
be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor
will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for
the Company’s independent registered accounting firm), prospective target businesses and other entities with which the Company does
business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust
Account.
NOTE 2 — SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented
in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America
(“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange
Commission (the “SEC”).
F-9
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 2
— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Liquidity and Capital Resources
As of December 31, 2024, the Company had $2,117,016
in cash and working capital of $1,111,916. In connection with the Company’s assessment of going concern considerations in accordance
with ASC 205-40, “Going Concern, “as of December 31, 2024, the Company has sufficient funds for the working capital
needs of the Company until a minimum of one year from the date of issuance of these financial statements. The Company cannot be assured
that its plans to consummate an Initial Business Combination will be successful.
The Company does not believe it will need to raise
additional funds in order to meet the expenditure required for operating its business. However, if the estimate of the costs of identifying
a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary
to do so, the Company may have insufficient funds available to operate its business prior to the initial Business Combination.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified
by the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and it may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including,
but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that
a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies
but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means
that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make a
comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an
emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences
in accounting standards used.
Use of Estimates
The preparation of the financial statements in conformity
with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
F-10
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 2
— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company had $2,117,016 in cash and no
cash equivalents as of December 31, 2024.
Cash held in Trust Account
As of December 31, 2024, the assets held in
the Trust Account were cash in a demand deposit account, amounting to $155,345,149. For the period from May 9, 2024 (inception) through
December 31, 2024, the Company withdrew $130,296 of interest earned on the cash held in the Trust Account, for working capital purposes.
Offering Costs
The Company complies with the requirements of ASC 340-10-S99
and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering.” Offering costs consist
principally of professional and registration fees that are related to the Initial Public Offering. FASB ASC 470-20, “Debt with
Conversion and Other Options,” addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt
components. The Company applies this guidance to allocate Initial Public Offering proceeds from the Units between Class A ordinary
shares and warrants, using the residual method by allocating Initial Public Offering proceeds first to assigned value of the warrants
and then to Class A ordinary shares. Offering costs allocated to Class A ordinary shares were charged to temporary equity and
offering costs allocated to the Public and Private Placement Warrants were charged to shareholders’ deficit as Public and Private
Placement Warrants after management’s evaluation were accounted for under equity treatment.
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold
and a measurement attribute for the financial statements’ recognition and measurement of tax positions taken or expected to be taken
in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by
taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits, and no amounts accrued for interest and penalties as of December 31, 2024. The Company is currently not aware of any
issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is considered to be an exempted Cayman
Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing
requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period presented.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement,” approximates the carrying
amounts represented in the balance sheet, primarily due to their short-term nature.
F-11
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 2
— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Concentration of Credit Risk
Financial instruments that potentially subject the
Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Deposit Insurance Corporation coverage limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant
adverse impact on the Company’s financial condition, results of operations, and cash flows.
Derivative Financial Instruments
The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815,
“Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value
reported in the statement of operations. The classification of derivative instruments, including whether such instruments should be recorded
as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet
as current or non-current based on whether or not net cash settlement or conversion of the instrument could be required within 12 months
of the balance sheet date. The underwriters’ over-allotment option is deemed to be a freestanding financial instrument indexed on
the contingently redeemable shares and was accounted for as a liability pursuant to ASC 480, with the changes in fair value of the
over-allotment liability recorded in the statements of operations.
Warrant Instruments
The Company accounts for the Public and Private
Warrants issued in connection with the Initial Public Offering and the private placement in accordance with the guidance contained in
FASB ASC Topic 815, “Derivatives and Hedging”. Accordingly, the Company evaluated and classified the warrant instruments
under equity treatment at their assigned values.
Class A Ordinary Shares Subject to Possible Redemption
The public shares contain a redemption feature which
allows for the redemption of such public shares in connection with the Company’s liquidation, or if there is a shareholder vote
or tender offer in connection with the Company’s initial Business Combination. In accordance with ASC 480-10-S99, the Company
classifies public shares subject to redemption outside of permanent equity as the redemption provisions are not solely within the control
of the Company. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of redeemable
shares to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering,
the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of redeemable
shares will result in charges against additional paid-in capital (to the extent available) and an accumulated deficit. Accordingly, as
of December 31, 2024, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary
equity, outside of the shareholders’ deficit section of the Company’s balance sheet. As of December 31, 2024, the Class A
ordinary shares subject to redemption reflected in the balance sheet are reconciled in the following table:
Gross proceeds
$153,000,000
Less:
Proceeds allocated to Public Warrants
(555,900)
Proceeds allocated to the over-allotment option
(253,969)
Class A ordinary shares issuance costs
(7,384,717)
Plus:
Remeasurement of carrying value to redemption value
10,539,735
Class A Ordinary Shares subject to possible redemption, December 31, 2024
$155,345,149
F-12
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 2
— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Net Income Per Ordinary Share
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, (i) Class A
Ordinary Shares and non-redeemable Class A Ordinary Shares and (ii) Class B ordinary shares, par value of $0.0001 per share
(the “Class B Ordinary Shares, and together with the Class A Ordinary Shares, the “Ordinary Shares”). Income
and losses are shared pro rata between the two classes of shares. Net income per Ordinary Share is calculated by dividing the net income
by the weighted average shares of Ordinary Shares outstanding for the respective period.
The calculation of diluted net income did not consider
the effect of the 5,100,000 Public Warrants underlying the Units sold in the Initial Public Offering (including the consummation
of the over-allotment) and the 11,120,000 Private Placement Warrants to purchase an aggregate of 16,220,000 shares of Class A Ordinary
Shares in the calculation of diluted income per ordinary share, because their exercise is contingent upon future events. Accretion associated
with the redeemable Class A Ordinary Shares is excluded from earnings per share as the redemption value approximates fair value.
The following table reflects the calculation of
basic and diluted net income per Ordinary Share (in dollars, except per share amounts):
For
the Year
Ended December 31,
2024
Class A
Class B
Basic net income per ordinary share:
Numerator:
Allocation of net income
$851,063
$381,033
Denominator:
Basic weighted average ordinary shares outstanding
8,038,983
3,599,168
Basic net income per ordinary share
$0.11
$0.11
Diluted net income per ordinary share:
Numerator:
Allocation of net income
$849,695
$382,401
Denominator:
Diluted weighted average ordinary shares outstanding
8,038,983
3,617,902
Diluted net income per ordinary share
$0.11
$0.11
Recent Accounting Standards
In November 2023, the FASB issued ASU 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this ASU require disclosures,
on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating officer decision maker
(“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss.
The ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported
measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Public entities will
be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable
segment are required to provide all the disclosures required by the amendments in this ASU and existing segment disclosures in Topic 280.
This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning
after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 since fiscal year ended December 31,
2024 (Note 10).
Management does not believe that any recently issued,
but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
F-13
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 3 — INITIAL
PUBLIC OFFERING
Pursuant to the Initial Public Offering, on August 29,
2024, the Company sold 15,000,000 Units, at a price of $10.00 per Unit. On September 26, 2024, the underwriters purchased an
additional 300,000 Units pursuant to the partial exercise of the over-allotment option. The Units were sold at an offering
price of $10.00 per Unit, generating additional gross proceeds to the Company of $3,000,000.
Each Unit consists of one Class A ordinary
share and one-third of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase
one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 7). Only whole warrants are exercisable.
No fractional warrants will be issued upon separation of the units and only whole warrants will trade. The warrants will become exercisable
on the later of 30 days after the completion of the initial Business Combination or 12 months from the closing of the Initial
Public Offering and will expire five years after the completion of the initial Business Combination or earlier upon redemption or
liquidation.
NOTE 4 — PRIVATE
PLACEMENT
Simultaneously with the closing of the Initial Public
Offering, the Sponsor purchased an aggregate of 11,000,000 Private Placement Warrants at a price of $0.50 per Private Placement Warrant
($5,500,000 in the aggregate). In connection with the partial exercise of the over-allotment option, the Sponsor purchased an additional
120,000 Private Placement Warrants at a purchase price of $0.50 per Private Placement Warrant, generating additional gross proceeds to
the Company of $60,000. Each Private Placement Warrant is exercisable to purchase one Class A ordinary share at a price of $11.50
per share, subject to adjustment (see Note 7). The proceeds from the sale of the Private Placement Warrants were added to the net
proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the
Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption
of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless. The Private
Placement Warrants (including Class A ordinary shares issuable upon exercise of the Private Placement Warrants) are not transferable,
assignable or saleable until 30 days after the completion of an Initial Business Combination, subject to certain exceptions.
NOTE 5 — RELATED
PARTY TRANSACTIONS
Founder Shares
On May 21, 2024, the Sponsor purchased 4,312,500
of the Company’s Class B ordinary shares (the “Founder Shares”) in exchange for a capital contribution of $25,000
that was paid by the Sponsor for deferred offering costs. The Founder Shares include an aggregate of up to 562,500 shares subject to forfeiture
to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the number of Founder Shares will
equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding ordinary shares after the Initial Public
Offering. On September 26, 2024, the underwriters partially exercised their over-allotment option and purchased an additional 300,000 Units.
Due to the partial exercise and the decision to forfeit the remaining option, 487,500 Class B ordinary shares were forfeited and
the Sponsor subsequently holds 3,825,000 Founder Shares.
On August 20, 2024, the Sponsor transferred
a total of 630,000 Founder Shares to directors, officers and certain employees of Sponsor’s affiliates, at a price of $0.006 per
share. The sale of the Founders Shares to each of the directors, officers and certain employees of Sponsor’s affiliates is in the
scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based
compensation associated with equity-classified awards is measured at fair value upon the grant date. The fair value of the 630,000 shares
granted to the directors, officers and certain employees of Sponsor’s
affiliates was $1,096,200 or $1.74 per share. The Founders Shares were granted subject to a performance condition (i.e., the occurrence
of a Business Combination). Compensation expense related to the Founders Shares is recognized only when the performance condition is probable
of occurrence under the applicable accounting literature in this circumstance. As of December 31, 2024, the Company determined that
a Business Combination is not considered probable, and, therefore, no stock-based compensation expense has been recognized. Stock-based
compensation would be recognized at the date a Business Combination is considered probable (i.e., upon consummation of a Business Combination)
in an amount equal to the number of Founder Shares times the grant date fair value per share (unless subsequently modified) less the amount
initially received for the purchase of the Founder Shares.
F-14
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 5 — RELATED
PARTY TRANSACTIONS (cont.)
The Sponsor has agreed, subject to limited exceptions,
not to transfer, assign or sell any of the Founder Shares until the earlier to occur of (A) six months after the completion
of the initial Business Combination or earlier if, subsequent to the initial Business Combination, the closing price of the Class A
ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial business
combination, and (B) the date following the completion of the initial Business Combination on which the Company completes a liquidation,
merger, share exchange or other similar transaction that results in all of the shareholders having the right to exchange their Class A
ordinary shares for cash, securities or other property.
Due to Related Party
As of December 31, 2024, the balance of due
to related party was $41,286, consists of the unpaid administrative service fee $40,000 as described below and reimbursement payable to
the management of $1,286.
Promissory Note — Related Party
On May 21, 2024, the Sponsor issued an unsecured
promissory note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal
amount of $250,000. The Promissory Note was non-interest bearing and payable on the earlier of (i) December 31, 2024, or
(ii) the consummation of the Initial Public Offering. Prior to the closing of the Initial Public Offering, the Company withdrew $193,720
under the Promissory Note, which was fully repaid subsequent to the closing of the Initial Public Offering, on September 5, 2024.
As of December 31, 2024, there were no outstanding borrowings under the Promissory Note and the note is no longer available.
Administrative Services Agreement
The Company entered into an agreement, commencing
on August 23, 2024, through the earlier of the consummation of the initial Business Combination and liquidation, to pay Sponsor $20,000
per month for office space, utilities and secretarial and administrative support services. For the period from May 9, 2024 (inception)
through December 31, 2024, the Company incurred $86,000 in fees for these services, of which $40,000 was unpaid and included in due
to related party in the accompanying balance sheet as of December 31, 2024.
Working Capital Loans
In order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may,
but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans
would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the
lender’s discretion, up to $2,000,000 of the notes may be converted upon completion of a Business Combination into warrants at a
price of $0.50 per warrant. Such warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion
of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used
to repay the Working Capital Loans. As of December 31, 2024, there were no amounts outstanding under the Working Capital Loans.
F-15
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 6 — COMMITMENTS
AND CONTINGENCIES
Risk and Uncertainties
The United States and global markets are experiencing
volatility and disruption following the geopolitical instability resulting from the ongoing Russia-Ukraine conflict and the recent escalation
of the Israel-Hamas conflict. In response to the ongoing Russia-Ukraine conflict, the North Atlantic Treaty Organization (“NATO”)
deployed additional military forces to eastern Europe, and the United States, the United Kingdom, the European Union and other countries
have announced various sanctions and restrictive actions against Russia, Belarus and related individuals and entities, including the removal
of certain financial institutions from the Society for Worldwide Interbank Financial Telecommunication payment system. Certain countries,
including the United States, have also provided and may continue to provide military aid or other assistance to Ukraine and to Israel,
increasing geopolitical tensions among a number of nations. The invasion of Ukraine by Russia and the escalation of the Israel-Hamas conflict
and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom,
the European Union, Israel and its neighboring states and other countries have created global security concerns that could have a lasting
impact on regional and global economies. Although the length and impact of the ongoing conflicts are highly unpredictable, they could
lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain
interruptions and increased cyberattacks against U.S. companies. Additionally, any resulting sanctions could adversely affect the
global economy and financial markets and lead to instability and lack of liquidity in capital markets.
Any of the above mentioned factors, or any other
negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian invasion of Ukraine,
the escalation of the Israel-Hamas conflict and subsequent sanctions or related actions, could adversely affect the Company’s search
for an initial business combination and any target business with which the Company may ultimately consummate an initial business combination.
Registration Rights
The holders of the Founder Shares, Private Placement
Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any ordinary shares issuable upon the exercise
of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares)
are entitled to registration rights pursuant to a registration rights agreement signed on the effective date of Initial Public Offering
requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to Class A
ordinary shares). The holders of these securities will be entitled to make up to three demands, excluding short form registration demands,
that the Company register such securities. In addition, the holders have certain piggyback registration rights with respect to registration
statements filed subsequent to completion of a Business Combination and rights to require the Company to register for resale such securities
pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not be required
to effect or permit any registration or cause any registration statement to become effective until the securities covered thereby are
released from their lock-up restrictions. The Company will bear the expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
The Company granted the underwriters a 45-day
option from the date of Initial Public Offering to purchase up to 2,250,000 additional Units to cover overallotments, if any,
at the Initial Public Offering price less the underwriting discounts and commissions. On September 26, 2024, the underwriters
purchased an additional 300,000 Units pursuant to the partial exercise of the over-allotment option. The Units were
sold at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $3,000,000. The underwriters
have forfeited the option to purchase the remaining 1,950,000 Units.
F-16
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 6 — COMMITMENTS
AND CONTINGENCIES (cont.)
The underwriters were entitled to a cash underwriting
discount of $0.20 per Unit, or 2%, or $3,000,000 in aggregate, paid at the closing of the Initial Public Offering. The underwriters paid
the Company an aggregate amount of $400,000 at the closing of the Initial Public Offering as reimbursement to the Company for certain
of its expenses and fees incurred in connection with the Initial Public Offering. Additionally, the underwriters were entitled to a cash
underwriting discount of $60,000 for the partial over-allotment exercise, which closed and was paid on September 26, 2024. In addition,
the underwriters were entitled to a deferred fee of up to $0.30 per Unit, or 3% of the gross proceeds of the offering, or up to $4,302,000
in the aggregate (including the partial over-allotment exercised which closed on September 26, 2024). The deferred fee will be payable
to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination,
subject to the terms of the underwriting agreement.
NOTE 7 — SHAREHOLDERS’
DEFICIT
Preference Shares — The Company
is authorized to issue 1,500,000 preference shares with a par value of $0.0001 per share with such designations, voting and other rights
and preferences as may be determined from time to time by the Company’s board of directors. As of December 31, 2024, there
were no preference shares issued or outstanding.
Class A Ordinary Shares — The
Company is authorized to issue 150,000,000 Class A ordinary shares with a par value of $0.0001 per share. Holders of Class A
ordinary shares are entitled to one vote for each share. As of December 31, 2024, there were no Class A ordinary shares issued
or outstanding, excluding 15,300,000 Class A ordinary shares subject to possible redemption.
Class B Ordinary Shares — The
Company is authorized to issue 15,000,000 Class B ordinary shares with a par value of $0.0001 per share. Holders of Class B
ordinary shares are entitled to one vote for each share. On May 21, 2024, 4,312,500 Class B ordinary shares were issued, of
which an aggregate of up to 562,500 Class B ordinary shares were subject to forfeiture to the extent that the underwriters’
over-allotment option was not exercised in full or in part so that the number of Founder Shares would equal 20% of the Company’s
issued and outstanding ordinary shares after the Initial Public Offering. On September 26, 2024, the underwriters partially exercised
their over-allotment option and purchased an additional 300,000 Units. Due to the partial exercise and the decision to forfeit the
remaining option, 487,500 Class B ordinary shares were forfeited, and the Sponsor subsequently holds 3,825,000 Founder Shares at
December 31, 2024.
Only holders of the Class B ordinary shares
will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A ordinary shares and
holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the shareholder except
as otherwise required by law. In connection with the initial business combination, the Company may enter into a shareholders’ agreement
or other arrangements with the shareholders of the target or other investors to provide for voting or other corporate governance arrangements
that differ from those in effect upon completion of this offering.
The Class B ordinary shares will convert
into Class A ordinary shares concurrently with or immediately following the initial Business Combination, or earlier at the option
of the holder, on a one-for-one basis, subject to adjustment for share subdivisions, share capitalizations, recapitalizations and the
like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares or equity-linked
securities are issued or deemed issued in connection with the initial Business Combination, the number of Class A ordinary shares
issuable upon conversion of all founder shares will equal, in the aggregate, 20% of the sum of (i) the total number of Class A
ordinary shares issued and outstanding upon completion of the Initial Public Offering, plus (ii) the total number of Class A
ordinary shares issuable upon conversion of the Class B ordinary shares issued and outstanding upon the completion of the Initial
Public Offering, plus (iii) the total number of Class A ordinary shares issued, or deemed issued or issuable upon conversion
or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the
consummation of the initial Business Combination (including securities issued or issuable pursuant to forward purchase agreements or
backstop arrangements the Company may enter into prior to or following consummation of this offering but excluding the forward purchase
warrants), excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary
shares issued, or to be issued, to any seller in the initial Business Combination and any private placement warrants issued to the Sponsor,
officers or directors upon conversion of working capital loans, minus (iv) the number of Class A ordinary shares redeemed by
public shareholders; provided that such conversion of founder shares will never occur on a less than one-for-one basis.
F-17
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 8 — WARRANTS
As of December 31, 2024, there were 16,220,000 warrants
outstanding, including 5,100,000 Public Warrants and 11,120,000 Private Placement Warrants. Public Warrants may only be exercised for
a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade.
The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months
from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination
or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any
Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless
a registration statement under the Securities Act covering the issuance of Class A ordinary shares issuable upon exercise of the
warrants is then effective and a current prospectus relating to those Class A ordinary shares is available, subject to the Company
satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable
for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants,
unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of residence of
the exercising holder, or an exemption from registration is available.
The Company has agreed that as soon as practicable,
but in no event later than 30 business days after the closing of a Business Combination, the Company will use its best efforts to
file with the SEC, and will use its best efforts to have declared effective within 60 business days following the closing of its
Business Combination, a registration statement covering the issuance of Class A ordinary shares issuable upon exercise of the warrants
and to maintain a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed. Notwithstanding
the above, if the Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange
such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the
Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required
to file or maintain in effect a registration statement, but will use its best efforts to register or qualify the shares under applicable
blue sky laws to the extent an exemption is not available.
Redemption of Warrants When the Price per Class A
Ordinary Shares Equals or Exceeds $18.00 — Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:
●in whole and not in part;
●at a price of $0.01 per Public Warrant;
●upon a minimum of 30 days prior written notice of redemption,
or the 30-day redemption period to each warrant holder; and
●if, and only if, the closing price of the Class A ordinary
shares equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and
the like and for certain issuances of ordinary shares and equity-linked securities for capital raising purposes in connection with the completion of the initial business
combination as described elsewhere in this prospectus) (which is referred to as the “Reference Value”) for any 20 trading
days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice
of redemption to the warrant holders.
F-18
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 8 — WARRANTS
(cont.)
The Company will not redeem the Public Warrants
for cash unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon
exercise of the public warrants is then effective and a current prospectus relating to those Class A ordinary shares is available
throughout the 30-day redemption period or the Company has elected to require the exercise of the public warrants on a cashless basis.
If and when the Public Warrants become redeemable by the Company, it may exercise its redemption right even if the Company is unable to
register or qualify the underlying securities for sale under all applicable state securities laws. As a result, the Company may redeem
warrants even if the holders are otherwise unable to exercise their warrants.
If the Company calls the Public Warrants for redemption
as described above, the Company will have the option to require all holders that wish to exercise such warrants to do so on a “cashless
basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that number of Class A ordinary
shares equal to the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants,
multiplied by the excess of the “fair market value (as defined below) of the shares of Class A ordinary shares over the exercise
price of the public warrants by (y) the fair market value. The “fair market value” means the volume weighted average
price of the Class A ordinary shares as reported during the ten (10) trading days ending on the trading day prior
to the date on which the notice of redemption is sent to the holder of the public warrants or its securities broker or intermediary.
The Private Placement Warrants are identical to
the Public Warrants underlying the Units being sold in the Initial Public Offering, except that the Private Placement Warrants and
the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or
saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private
Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held
by the initial purchasers or their permitted transferees.
NOTE 9 — FAIR
VALUE MEASUREMENTS
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1:
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3:
Unobservable inputs based on assessment of the assumptions that market participants would use in pricing the asset or liability.
F-19
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 9 — FAIR
VALUE MEASUREMENTS (cont.)
The Company did not have any assets or liabilities
that are measured at fair value on December 31, 2024.
The following table presents information about the
Company’s assets and liabilities that are measured at fair value on August 29, 2024, and indicates the fair value hierarchy
of the valuation inputs the Company utilized to determine such fair value:
Level
August 29, 2024
Liabilities:
Over-allotment option liability
3
$253,969
Equity:
Fair value of Public Warrants for Class A ordinary shares subject to redemption allocation
3
$545,000
The over-allotment option was accounted for as a
liability in accordance with ASC 815-40 and was presented within liabilities on the balance sheet. The over-allotment option liability
is measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of over-allotment
option liability in the statement of operations. Upon the partial exercise of the over-allotment option by the underwriters on September 26,
2024, the Company recorded $221,227 unrealized gain on change in fair value of over-allotment liability.
The Company used a Black-Scholes model to value
the over-allotment option. The over-allotment option liability was classified within Level 3 of the fair value hierarchy at the measurement
dates due to the use of unobservable inputs inherent in pricing models are assumptions related to expected share-price volatility, expected
life and risk-free interest rate. The Company estimates the volatility of its ordinary share based on historical volatility that matches
the expected remaining life of the option. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the
grant date for a maturity similar to the expected remaining life of the option. The expected life of the option is assumed to be equivalent
to their remaining contractual term.
The key inputs into the Black-Scholes model were
as follows at initial measurement of the over-allotment option:
Input
August 29, 2024
Risk-free interest rate
5.40%
Expected term (years)
0.12
Expected volatility
5.42%
Exercise price
$10.00
Fair value of over-allotment Unit
$0.113
The following table provides a summary of the changes
in the fair value of the Company’s Level 3 financial instruments that are measured at fair value on a recurring basis:
Over-allotment option liability
Fair value at May 9, 2024 (inception)
$—
Initial measurement of over-allotment option liability at August 29, 2024
253,969
Change in fair value of over-allotment option liability
(8,405)
Partially exercise of over-allotment option at September 26, 2024
(32,742)
Forfeiture of over-allotment option at September 26, 2024
(212,822)
Fair value of over-allotment option liability at December 31, 2024
$—
F-20
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 9 — FAIR
VALUE MEASUREMENTS (cont.)
The fair value of Public Warrants was determined
using Monte Carlo Simulation Model. The Public Warrants have been classified within shareholders’ deficit and will not require remeasurement
after issuance. The following table presents the quantitative information regarding market assumptions used in the valuation of the Public
Warrants:
August 29, 2024
Underlying share price
$10.00
Exercise price
$11.50
Term (years)
6.0
Risk-free rate
3.7%
Volatility
3.3%
De-SPAC probability with market adjustment
20.0%
NOTE 10 — SEGMENT
INFORMATION
ASC Topic 280, “Segment Reporting,”
establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic
areas, and major customers. Operating segments are defined as components of an enterprise that engage in business activities from
which it may recognize revenues and incur expenses, and for which separate financial information is available that is regularly evaluated
by the Company’s chief operating decision maker, or group, in deciding how to allocate resources and assess performance.
The Company’s chief operating decision maker
(“CODM”) has been identified as the Chief Financial Officer, who reviews the assets, operating results, and financial metrics
for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has
determined that there is only one reportable segment.
The CODM assesses performance for the single segment
and decides how to allocate resources based on net income that also is reported on the statement of operations as net income. The measure
of segment assets is reported on the balance sheet as total assets. When evaluating the Company’s performance and making key decisions
regarding resource allocation, the CODM reviews several key metrics included in net income and total assets, which include the following:
December 31, 2024
Trust Account
$155,345,149
Cash
$2,117,016
For the Period from May 9, 2024 (Inception) Through December 31, 2024
General and administrative expenses
$1,485,361
Interest earned on the Trust Account
$2,475,445
The CODM reviews interest earned on the Trust Account
to measure and monitor shareholder value and determine the most effective strategy of investment with the Trust Account funds while maintaining
compliance with the Trust Agreement.
F-21
BLACK SPADE ACQUISITION II CO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 10 — SEGMENT
INFORMATION (cont.)
General and administrative expenses are reviewed
and monitored by the CODM to manage and forecast cash to ensure enough capital is available to complete a business combination or similar
transaction within the business combination period. The CODM also reviews general and administrative costs to manage, maintain and enforce
all contractual agreements to ensure costs are aligned with all agreements and budget. General and administrative costs, as reported on
the statement of operations, are the significant segment expenses provided to the CODM on a regular basis.
All other segment items included in net income are
reported on the statement of operations and described within their respective disclosures.
NOTE 11 — SUBSEQUENT
EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, other than
described as below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial
statements.
Financial Advisor Agreement
Clear Street LLC (“Clear Street”) and
Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC (“Cohen, and together with Clear Street,
the “Advisors”) were formally engaged by the Company on January 26, 2025, to serve as its joint financial advisors and
joint lead capital markets advisors in connection with the Business Combination. In connection therewith, the Advisors are providing capital
markets advice to the Company, including advice on strategic issues relating to the Business Combination such as valuation, and general
assistance in implementing and closing the Business Combination, including but not limited to coordinating marketing efforts. Under the
terms of such engagement, upon the closing of the Business Combination, the Advisors will receive a fee of $1,500,000 in return for such
advisory services which will be shared equally among them. This agreement expires eighteen months from the date thereof, unless extended
in writing by the parties.
Business Combination Agreement
On January 27, 2025, the Company entered into
a Business Combination Agreement (the “Business Combination Agreement”) with World Media and Entertainment Universal Inc.,
an exempted company incorporated with limited liability under the laws of the Cayman Islands, (“WME”) and WME Merger Sub Limited,
an exempted company incorporated with limited liability under the laws of the Cayman Islands and a direct wholly-owned subsidiary of WME
(“Merger Sub”), pursuant to which, among other transactions, on the terms and subject to the conditions set forth therein,
Merger Sub will merge with and into the Company (“Merger”), with the Company surviving the Merger as a wholly-owned subsidiary
of WME.
Under the Business Combination Agreement, upon Closing,
the Sponsor will be entitled to receive a transaction bonus in the amount of $5,560,000. Such amount will be deducted from the Trust Account,
to the extent there remain any funds in the Trust Account after application of the funds in the Trust Account to satisfy any of the Company’s
shareholders redemption, and any shortfall will be paid by WME.
Interest Withdrawal
On January 21, 2025, the Company withdrew $117,249
interest earned on cash held in the Trust Account, for working capital purposes.
F-22
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM (PCAOB ID NO. 6783)
To the shareholders and the Board of Directors of The Generation Essentials
Group
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial
position of The Generation Essentials Group and its subsidiaries (formerly known as World Media and Entertainment Universal Inc.) (collectively
known as the “Group”) as of December 31, 2022, 2023 and 2024, the related consolidated statements of profit or loss and
other comprehensive income, changes in equity and cash flows the years ended December 31, 2022, 2023 and 2024 and the related
notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Group as of December 31, 2022, 2023 and 2024, and the results
of its operations and its cash flows for the years ended December 31, 2022, 2023 and 2024, in conformity with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These financial statements are the responsibility of the Group’s
management. Our responsibility is to express an opinion on the Group’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required
to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over
financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial
reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Assentsure PAC
Singapore
March 21, 2025
We have served as the Group’s auditor since 2024.
F-23
THE
GENERATION ESSENTIALS GROUP
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
Year ended December 31,
Notes
2022
2023
2024
US$’000
US$’000
US$’000
REVENUE
Media advertising and marketing services income
5
7,670
14,422
18,859
Hotel operation, hospitality and VIP services income
5
3,201
5,423
23,132
Dividend income and gain related to disposed financial assets at fair value through profit or loss (“FVTPL”)
5
7,381
60,457
8,681
Net fair value changes on FVTPL and derivative financial instruments
5
13,011
(37,759)
26,342
31,263
42,543
77,014
Cost of production and cost of hotel operation
(3,239)
(5,886)
(15,612)
Other income
5
522
1,245
24,815
Gain from a bargain purchase
34
4,848
4,469
—
Impairment losses under expected credit loss (“ECL”) model on financial assets
(501)
—
—
Other operating expenses
6
(3,500)
(5,677)
(15,542)
Staff costs
7
(3,900)
(7,891)
(13,132)
Share of profits (losses) of joint ventures
815
(2,608)
(558)
Finance costs
8
(2,586)
(7,136)
(10,612)
PROFIT BEFORE TAX
23,722
19,059
46,373
Income tax expense
9
(599)
(1,811)
(1,643)
PROFIT FOR THE YEAR
23,123
17,248
44,730
OTHER COMPREHENSIVE INCOME (EXPENSES)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
602
(966)
(4,571)
Share of other comprehensive income of joint ventures
53,946
5,269
2,833
Items that will not be reclassified subsequently to profit or loss:
Exchange differences on translation from functional currency to presentation currency
512
(361)
2,463
Surplus on revaluation of properties
20,213
9,041
20,629
OTHER COMPREHENSIVE INCOME FOR THE YEAR
75,273
12,983
21,354
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
98,396
30,231
66,084
Profit for the year attributable to:
Owners of the Company
14,975
8,164
27,751
Non-controlling interests
8,148
9,084
16,979
23,123
17,248
44,730
Total comprehensive income for the year attributable to:
Owners of the Company
75,061
11,144
41,725
Non-controlling interests
23,335
19,087
24,359
98,396
30,231
66,084
Earnings per share
10
Basic and diluted (US$)
0.65
0.45
1.64
The accompanying notes are an integral part of
the consolidated financial statements.
F-24
THE GENERATION ESSENTIALS GROUP
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31, 2022, 2023 AND 2024
As of December 31,
Notes
2022
2023
2024
US$’000
US$’000
US$’000
ASSETS
Non-current assets
Property, plant and equipment
11
173,345
195,109
574,693
Intangible assets
12
93,042
118,678
119,381
Interests in joint ventures
13
99,884
95,686
—
Financial assets at FVTPL
14
102,702
60,243
395,337
Total non-current assets
468,973
469,716
1,089,411
Current assets
Accounts receivable
15
2,831
5,339
6,457
Prepayments, deposits and other receivables
16
1,959
2,645
3,042
Financial assets at FVTPL
14
21,219
17,558
25,207
Derivative financial instruments
17
185,069
—
30,339
Restricted cash
18
415
135
—
Cash and bank balances
18
1,208
6,121
19,978
Total current assets
212,701
31,798
85,023
Total assets
681,674
501,514
1,174,434
EQUITY AND LIABILITIES
Current liabilities
Accounts payable
19
6,100
5,794
2,785
Other payables and accruals
20
9,804
17,151
7,309
Contract liabilities
21
1,303
809
564
Tax payable
—
812
1,554
Borrowings
22
571
741
176
Lease liabilities
23
100
185
253
Provisions
24(a)
4,079
3,866
—
Amounts due to subsidiaries’ non-controlling shareholders
26
52,611
53,727
63,019
Total current liabilities
74,568
83,085
75,660
Non-current liabilities
Accounts payable
19
3,746
3,014
—
Provisions
24(b)
—
—
1,664
Borrowings
22
51,126
61,563
219,433
Lease liabilities
23
120
198
267
Deferred tax liabilities
25
2,661
5,624
5,658
Amount due to ultimate holding company
27
62,810
70,196
102,622
Total non-current liabilities
120,463
140,595
329,644
Total liabilities
195,031
223,680
405,304
CAPITAL AND RESERVES
Share capital
28
—*
—*
—*
Reserves
289,265
103,780
665,277
Equity attributable to owners of the Company
289,265
103,780
665,277
Non-controlling interests
35
197,378
174,054
103,853
Total equity
486,643
277,834
769,130
Total liabilities and equity
681,674
501,514
1,174,434
*The amount is less than US$1,000.
The accompanying notes are an integral part of
the consolidated financial statements.
F-25
THE GENERATION ESSENTIALS GROUP
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
AS OF DECEMBER 31, 2022, 2023 AND 2024
Share capital
Share premium
Preferred shares
Capital reserve
Revaluation reserve
Exchange reserve
Retained profits
Total equity attributable to owners of the Company
Non- controlling interests
Total equity
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
(note (ii))
As of January 1, 2022
—
—
—
109,963
4,521
(1,060)
75,939
189,363
117,372
306,735
Profit for the year
—
—
—
—
—
—
14,975
14,975
8,148
23,123
Exchange differences arising from translation
—
—
—
—
—
885
—
885
229
1,114
Surplus on revaluation in properties
—
—
—
—
9,341
—
—
9,341
10,872
20,213
Share of other comprehensive income of joint ventures
—
—
—
—
49,764
96
—
49,860
4,086
53,946
Total comprehensive income for the year
—
—
—
—
59,105
981
14,975
75,061
23,335
98,396
Change in shareholding of subsidiaries without losing control
—
—
—
(11,885)
(720)
(32)
(8,717)
(21,354)
21,354
—
Contribution to ultimate holding company (note (i))
—
—
—
46,195
—
—
—
46,195
35,317
81,512
As of December 31, 2022
—
—
—
144,273
62,906
(111)
82,197
289,265
197,378
486,643
F-26
THE
GENERATION ESSENTIALS GROUP
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY — (Continued)
AS OF DECEMBER 31, 2022, 2023 AND 2024
Share capital
Share premium
Preferred shares
Capital reserve
Revaluation reserve
Exchange reserve
Retained profits
Total
equity attributable to owners of the Company
Non- controlling interests
Total equity
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
(note (ii))
As of January 1, 2023
—
—
—
144,273
62,906
(111)
82,197
289,265
197,378
486,643
Profit for the year
—
—
—
—
—
—
8,164
8,164
9,084
17,248
Exchange differences arising from translation
—
—
—
—
—
(758)
—
(758)
(569)
(1,327)
Surplus on revaluation in properties
—
—
—
—
1,726
—
—
1,726
7,315
9,041
Share of other comprehensive income of joint ventures
—
—
—
—
2,385
(373)
—
2,012
3,257
5,269
Total comprehensive income (expenses) for the year
—
—
—
—
4,111
(1,131)
8,164
11,144
19,087
30,231
Change in shareholding of subsidiaries without losing control
—
—
—
(31,845)
(36,762)
(150)
(16,945)
(85,702)
85,702
—
Distribution from ultimate holding company (note (i))
—
—
—
(110,927)
—
—
—
(110,927)
(128,113)
(239,040)
As of December 31, 2023
—
—
—
1,501
30,255
(1,392)
73,416
103,780
174,054
277,834
F-27
THE GENERATION ESSENTIALS GROUP
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY — (Continued)
AS OF DECEMBER 31, 2022, 2023 AND 2024
Share capital
Share premium
Preferred shares
Capital reserve
Revaluation reserve
Exchange reserve
Retained profits
Total
equity attributable to owners of the Company
Non- controlling interests
Total equity
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
(note (ii))
Profit for the year
—
—
—
—
—
—
27,751
27,751
16,979
44,730
Exchange differences arising from translation
—
—
—
—
—
653
—
653
(2,761)
(2,108)
Surplus on revaluation in properties
—
—
—
—
12,239
—
—
12,239
8,390
20,629
Share of other comprehensive income of joint ventures
—
—
—
—
329
753
—
1,082
1,751
2,833
Total comprehensive income for the year
—
—
—
—
12,568
1,406
27,751
41,725
24,359
66,084
Issue of voting ordinary shares of the Company
—
261,889
—
—
—
—
—
261,889
—
261,889
Issue of non-voting redeemable preferred shares of the Company
—
—
100,000
—
—
—
—
100,000
—
100,000
Change in shareholding of subsidiaries without losing control
—
—
—
3,159
52,855
(696)
110,378
165,696
(165,696)
—
Recognition of subsidiaries upon control over Singapore hotel companies (defined in note 13)
—
—
—
—
—
—
—
—
71,136
71,136
Distribution from ultimate holding company (note (i))
—
—
—
(7,813)
—
—
—
(7,813)
—
(7,813)
As of December 31, 2024
—
261,889
100,000
(3,153)
95,678
(682)
211,545
665,277
103,853
769,130
Notes:
(i)Contribution from and distribution to ultimate holding company
during the years represents the dividend income net with withholding tax received, payments to or disposal receipts of financial
assets at FVTPL and settlement of derivative financial instruments directly through ultimate holding company.
(ii)The amount is less than US$1,000.
The accompanying notes are an integral part of
the combined financial statements.
F-28
THE
GENERATION ESSENTIALS GROUP
consolidated STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
Year ended December 31,
Notes
2022
2023
2024
US$’000
US$’000
US$’000
OPERATING ACTIVITIES
Profit before tax
23,722
19,059
46,373
Adjustments for:
Interest income
—
(4)
(17)
Dividend income
(6,412)
(9,935)
(8,681)
Net fair value changes on financial assets at FVTPL and derivative financial instruments
(13,011)
37,759
(26,342)
Gain on disposal of financial assets at FVTPL and derivative financial instruments
(969)
(50,522)
—
Finance costs
2,586
7,136
10,612
Depreciation of property, plant and equipment
1,068
2,824
11,712
Amortization of intangible assets
9
9
9
Gain from a bargain purchase
(4,848)
(4,469)
—
Gain on disposal of subsidiaries
—
—
(24,757)
Share of (profits) losses of joint ventures
(815)
2,608
558
Impairment losses under ECL model on financial assets
501
—
—
Operating cash flows before changes in working capital
1,831
4,465
9,467
Increase in accounts receivable
(929)
(1,834)
(3,727)
Decrease (increase) in prepayments, deposits and other receivables
494
(385)
(2,435)
Decrease (increase) in restricted cash
62
280
(72)
(Decrease) increase in accounts payable
(1,643)
(1,440)
924
(Decrease) increase in other payables and accruals
(1,897)
1,316
434
Increase (decrease) in contract liabilities
756
(913)
(216)
(Decrease) increase in provisions
(95)
(355)
175
Cash (used in) from operations
(1,421)
1,134
4,550
Profits Tax paid
—
(6)
—
Bank interest received
—
4
17
Net cash (used in) from operating activities
(1,421)
1,132
4,567
INVESTING ACTIVITIES
Addition to property, plant and equipment
—
—
(8)
Net cash inflow from acquisition of subsidiaries
34
247
27
4,273
Net cash outflow from disposal of subsidiaries
—
—
(953)
Net receipt from amounts due from joint ventures
—
6,673
—
Net cash from investing activities
247
6,700
3,312
FINANCING ACTIVITIES
Interests paid
(1,550)
(2,638)
(10,920)
Payment of lease liabilities
—
(81)
(280)
Receipts of bank borrowings
5,303
—
—
Repayment of bank borrowings
—
(508)
(1,757)
Repayment to subsidiaries’ non-controlling shareholders
(6,432)
(2,059)
(15,675)
Net receipt of amount due to ultimate holding company
3,743
2,814
34,864
Net cash from (used in) financing activities
1,064
(2,472)
6,232
The accompanying notes are an integral part of
the combined financial statements.
F-29
THE
GENERATION ESSENTIALS GROUP
consolidated STATEMENTS OF CASH FLOWS — (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
Year ended December 31,
Notes
2022
2023
2024
US$’000
US$’000
US$’000
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(110)
5,360
14,111
Cash and cash equivalents at the beginning of the year
1,268
1,208
6,121
Effect of foreign exchange rate change, net
50
(447)
(254)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
1,208
6,121
19,978
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances
1,208
6,121
19,978
The accompanying notes are an integral part of
the consolidated financial statements.
F-30
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
1.CORPORATE INFORMATION
The Generation Essentials Group (formerly known as World Media
and Entertainment Universal Inc.) (the “Company”) is a limited liability company incorporated in the Cayman Islands. The Company’s
immediate holding company is AMTD Digital Inc., a company incorporated in Cayman Islands. The Company’s ultimate holding company
is AMTD Group Inc. (“AMTD Group”), a private company incorporated in the British Virgin Islands (“BVI”). The Company
is an investment holding company. The Company and its subsidiaries (collectively known as “the Group”) are involved in the
provision of media and entertainment services, hotel operation, hospitality and VIP services and strategic investments.
Information about principal subsidiaries
Particulars of the Company’s principal subsidiaries
as of the date of the report are as follows:
Issued and
Effective interests attributable to the
Company as of
Place
registered share
December 31,
date of
Principal
Name
of Incorporation
capital
2022
2023
2024
the report
activities
(note iv)
(note iv)
(note iv)
WME Assets Group (note (i))
BVI
United States Dollar (“US$”) 10,410
91.4%
38.2%
96.1%
96.1%
Investment holdings and hotel operation, hospitality and VIP services
L’Officiel Group Inc. (note (ii))
Cayman IslandsUS$
1
56.8%
46.6%
100%
100%
Investment holding and media and entertainment services
L’Officiel Europe Group Co., Ltd.
Cayman IslandsUS$
1
—
—
100%
100%
Media and entertainment services
The Art Newspaper Group Inc. (note (iii))
Cayman IslandsUS$
1
—
46.6%
100%
100%
Investment holding and media and entertainment services
WME Direct Investment Limited
BVIUS$
1
49.1%
46.6%
100%
100%
Investment holding
Notes:
(i)WME Assets Group is the holding company of the Group’s
hotel operation, hospitality and VIP services in Hong Kong and Singapore at the date of this report.
(ii)L’Officiel Group Inc. is the holding company of the
Group’s media and entertainment business unit of “L’Officiel” at the date of this report. During the year ended
December 31, 2022, the Group acquired 100% interests of L’Officiel. Details refer to note 34.
(iii)The Art Newspaper Group Inc. is the holding company of the
Group’s media and entertainment business unit of “The Art Newspaper” at the date of this report. During the year ended
December 31, 2023, the Group acquired 100% interests in The Art Newspaper. Details refer to note 34.
(iv)The reorganization of the Group is not yet completed as of
December 31, 2022 and 2023, the combination of entities and related businesses are common control of AMTD Group. The effective interests
attributable to the Group as of December 31, 2022 and 2023 represented the effective interests of respective entities under AMTD
Group. The effective interests of certain entities are lower than 50%, AMTD Group owns class B shares of AMTD IDEA Group and AMTD IDEA
Group owns class B shares of AMTD Digital Inc., of which class B shares of AMTD IDEA Group and AMTD Digital Inc. entitled 20 votes on
each share. As such, AMTD Group can exercise their control over the combined entities.
F-31
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
2.1BASIS OF PRESENTATION
The consolidated financial statements include the financial
statements of certain subsidiaries of AMTD Group arising from the reorganization, and also include the results of operations of the investments
business, which have been prepared on a carve-out basis. Such reorganization of entities is under common control, which is outside of
the scope of IFRS 3 Business Combinations, as such entities were under common control and managed by AMTD Group. The Group prepared
the consolidated financial statements to capture the stand-alone media and entertainment services, hotel operation, hospitality and VIP
services and strategic investment business, which have operated under AMTD Group during the years ended December 31, 2022, 2023
and 2024. The consolidated financial statements do not represent the financial position and results of operations of a legal entity but
rather a combination of entities and business under common control of AMTD Group that reflect significant assumptions and allocations,
including the following:
●The assets and liabilities of the entities subject to the
restructuring were reflected at their carrying amounts in AMTD Group. No adjustments were made to reflect fair values or recognize any
new assets or liabilities that would otherwise be done under the acquisition method.
●Any difference between transferred and the aggregate book
value of the assets and liabilities of the entities subject to the reorganization was reflected as an adjustment to equity.
●Include all revenues, expenses, assets and liabilities attributed
to the media and entertainment services, hotel operation, hospitality and VIP services and strategic investment business as part of the
reorganization;
●Under the pooling of interest method, each of the entities subject
to the reorganization is accounted for as if it had always been part of the Group; and
●All intercompany transactions and balances have been eliminated
in combination.
The preparation of consolidated financial statements in conformity
with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process
of applying the respective accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the consolidated financial statements are disclosed in note 2.2.
The reorganization of the Group is completed in November 2024
and the Company has become the holding company of the companies now comprising the Group since then. The consolidated statements of profit
or loss and other comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows have been
prepared to present the results, changes in equity and cash flows of the companies now comprising the Group, as if the group structure
upon the completion of the reorganisation had been in existence. The consolidated statements of financial position of the Group have been
prepared to present the assets and liabilities of the companies now comprising the Group as if the current group structure had been in
existence.
The Group’s consolidated financial statements have been
prepared in accordance with IFRSs and the Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”)
issued by the IASB. For the purpose of preparation of the consolidated financial statements, information is considered material if
such information is reasonably expected to influence decision made by primary users.
The consolidated financial statements have been prepared on
a historical cost basis, except for financial assets at FVTPL, which are measured at fair value. The consolidated financial statements
are presented in US$ unless otherwise stated, which is also the functional currency of the Company.
F-32
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
2.2APPLICATION OF AMENDMENTS TO IFRSs
For the purpose of preparing and presenting the consolidated
financial statements, the Group has consistently applied the accounting policies which conform with IFRSs, International Accounting Standards
(“IASs”) and the related interpretations issued by the IASB that are effective for the accounting period beginning on January 1,
2024 throughout the reporting periods.
New and amendments to IFRSs in issue but not yet effective
The Group has not early applied the following new and amendments
to IFRSs and International Accounting Standards (“IASs”) that have been issued but are not yet effective:
Amendments to IFRS 9 and IFRS 7
Amendments to the Classification and Measurement of Financial Instruments(3)
Amendments to IFRS 10 and IAS 28
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture(1)
Amendments to IAS 21
Lack of Exchangeability(2)
IFRS 18
Presentation and Disclosure in Financial Statements(4)
(1)Effective for annual periods beginning on or after a date
to be determined
(2)Effective for annual periods beginning on or after January 1,
2025
(3)Effective for annual periods beginning on or after January 1,
2026
(4)Effective for annual periods beginning on or after January 1,
2027
Except for the new and amendments to IFRS mentioned below,
the directors of the Company anticipate that the application of the new and amendments to IFRSs will have no material impact on the consolidated
financial statements in the foreseeable future.
IFRS 18 “Presentation and Disclosure in Financial
Statements”
IFRS 18 “Presentation and Disclosure in Financial Statements”,
which sets out requirements on presentation and disclosures in financial statements, will replace IAS 1 “Presentation of Financial
Statements”. This new IFRS Accounting Standard, while carrying forward many of the requirements in IAS 1, introduces new requirements
to present specified categories and defined subtotals in the statement of profit or loss; provide disclosures on management-defined performance
measures in the notes to the financial statements and improve aggregation and disaggregation of information to be disclosed in the financial
statements. In addition, some IAS 1 paragraphs have been moved to IAS 8 and IFRS 7. Minor amendments to IAS 7 “Statement of Cash
Flows” and IAS 33 “Earnings per Share” are also made. IFRS 18, and amendments to other standards, will be effective
for annual periods beginning on or after 1 January 2027, with early application permitted. The application of the new standard is
expected to affect the presentation of the statement of profit or loss and disclosures in the future financial statements. The Group is
in the process of assessing the detailed impact of IFRS 18 on the Group’s consolidated financial statements.
2.3MATERIAL ACCOUNTING POLICIES
Basis of combination
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company:
●has power over the investee;
●is exposed, or has rights, to variable returns from its involvement
with the investee; and
●has the ability to use its power to affect its returns.
F-33
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
The Group reassesses whether or not it controls an investee
if facts and circumstances indicate that there are changes to one or more of the three elements of control described above.
The financial statements of the subsidiaries are prepared
for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from
the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
Profit or loss and each item of other comprehensive income,
if any, is attributed to the owners of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling
interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
among members of the Group are eliminated in full on combination.
Non-controlling interests in subsidiaries are presented separately
from the Group’s equity therein, which represent present ownership interests entitling their holders to a proportionate share of
net assets of the relevant subsidiaries upon liquidation.
Changes in the Group’s interests in existing
subsidiaries
Changes in the Group’s interests in subsidiaries that
do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the
Group’s relevant components of equity and the non-controlling interests are adjusted to reflect the changes in their relative interests
in the subsidiaries, including re-attribution of relevant reserves between the Group and the non-controlling interests according to the
Group’s and the non-controlling interests’ proportionate interests.
Any difference between the amount by which the non-controlling
interests are adjusted, and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners
of the Company.
Business combinations
A business is an integrated set of activities and assets which
includes an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired processes
are considered substantive if they are critical to the ability to continue producing outputs, including an organized workforce with the
necessary skills, knowledge, or experience to perform the related processes or they significantly contribute to the ability to continue
producing outputs and are considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability
to continue producing outputs.
Acquisitions of businesses, other than business combination
under common control, are accounted for using the acquisition method. The consideration transferred in a business combination is measured
at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities
incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the
acquiree. Acquisition-related costs are generally recognized in profit or loss as incurred.
The identifiable assets acquired and liabilities assumed must
meet the definitions of an asset and a liability in the Conceptual Framework except for transactions and events within the scope of IAS
37 Provisions, Contingent Liabilities and Contingent Assets or IFRIC 21 Levies, in which the Group applies IAS 37 or IFRIC
21 instead of the Conceptual Framework to identify the liabilities it has assumed in a business combination. Contingent assets are not
recognized.
F-34
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
At the acquisition date, the identifiable assets acquired
and the liabilities assumed are recognized at their fair value.
Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity
interest in the acquiree (if any) over the net amount of the identifiable assets acquired and the liabilities assumed As of acquisition
date. If, after re-assessment, the net amount of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest
in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests
and entitle their holders to a proportionate share of the relevant subsidiary’s net assets in the event of liquidation are initially
measured at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net
assets or at fair value.
Business combinations under common control
The Company accounts for the business combination with entities
under common control using historical carrying values and under a prospective basis which involves the Company accounting for the combination
prospectively from the date on which it occurred. For predecessor accounting:
●Assets and liabilities of the acquired entity are stated at
carrying amounts. Fair value measurement is not required.
●Income statement reflects the results of the combining parties.
●No new goodwill arises in predecessor accounting.
●Any difference between the consideration given and the aggregate
carrying value of the assets and liabilities of the acquired entity at the date of the transaction is recognized in capital reserve.
Investments joint ventures
A joint venture is a type of joint arrangement whereby the
parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually
agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent
of the parties sharing control.
The Group’s investment in joint ventures are stated
in the consolidated statement of financial position at cost and the Group’s share of net assets under the equity method of accounting,
less any impairment losses. The financial statements of joint ventures used for equity accounting purposes are prepared using uniform
accounting policies as those of the Group for like transactions and events in similar circumstances. Appropriate adjustments have been
made to conform the joint venture’s accounting policies to those of the Group. The Group’s share of the post-acquisition results
and other comprehensive income of joint ventures is included in the consolidated statement of profit or loss and other comprehensive income,
respectively. Changes in net assets of joint venture other than profit or loss and other comprehensive income are not accounted for unless
such changes resulted in changes in ownership interest held by the Group. When the Group’s share of losses of a joint venture exceeds
the Group’s interest in that joint venture exceeds the Group’s interest in that joint venture, the Group discontinues recognising
its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations
or made payments on behalf of the joint venture.
F-35
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
An investment in a joint venture is accounted for using the
equity method from the date on which the investee becomes a joint venture. On acquisition of the investment in a joint venture, any excess
of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee
is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the
net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognized immediately
in profit or loss in the period in which the investment is acquired.
The Group assesses whether there is objective evidence that
the interest in a joint venture may be impaired. When any objective evidence exists, the entire carrying amount of the investment (including
goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable
amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognized is not
allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment
loss is recognized in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases. When
a group entity transacts with a joint venture of the Group, profits and losses resulting from the transactions with the joint ventures
are recognized in the Group’s consolidated financial statements only to the extent of interests in the joint venture that are not
related to the Group
Fair value measurement
The Group measures its movie income right investments and
listed and unlisted equity investment at fair value at the end of each reporting period. Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair
value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the
principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or
liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is
measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants
act in their economic best interest.
The Group uses valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs.
All assets for which fair value is measured or disclosed in
the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level
input that is significant to the fair value measurement as a whole:
Level 1based on quoted
prices (unadjusted) in active markets for identical assets or liabilities
Level 2based on valuation
techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly
Level 3based on valuation
techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets that are recognized in the consolidated financial
statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
F-36
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
Property, plant and equipment and depreciation
Property, plant and equipment, apart from properties, are
stated at cost or fair value less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment
comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended
use.
Expenditure incurred after items of property, plant and equipment
have been put into operation, such as repairs and maintenance, is normally charged to the consolidated statement of profit or loss and
other comprehensive income in the year in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure
for a major inspection is capitalized in the carrying amount of the asset as a replacement. Where significant parts of property, plant
and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives
and depreciates them accordingly.
When the Group makes payments for ownership interests of properties
of which includes both leasehold land and building elements, the entire consideration is allocated between the leasehold land and the
building elements in proportion to the relative fair values at initial recognition. To the extent the allocation of the relevant payments
can be made reliably, interest in leasehold land is presented as “right-of-use assets” included in “property, plant
and equipment” in the consolidated statement of financial position. When the consideration cannot be allocated reliably between
non-lease building element and undivided interest in the underlying leasehold land, the entire properties are classified as property,
plant and equipment.
Any revaluation increase arising from revaluation of property,
plant and equipment is recognized in other comprehensive income and accumulated in revaluation reserve, except to the extent that it reverses
a revaluation decrease of the same asset previously recognise in profit or loss, in which case the increase is credited to profit or loss
to the extent of the decrease previously charged. A decrease in net carrying amount arising on revaluation of property, plant and equipment
is recognized in profit or loss to the extent that it exceeds the balance, if any, on the revaluation reserve relating to a previous revaluation
of that asset. On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus is transferred to retained
profits.
Depreciation is calculated on a straight-line basis to write
off the cost or valuation of each item of property, plant and equipment to its residual value over its estimated useful life.
Where parts of an item of property, plant and equipment have
different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately.
Useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each reporting period.
An item of property, plant and equipment including any significant
part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any
gain or loss on disposal or retirement recognized in the consolidated statement of profit or loss and other comprehensive income in the
year the asset is derecognized is the difference between the net sales proceeds and the carrying amount of the relevant asset.
Intangible assets
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination are recognized
separately from goodwill and are initially recognized at their fair value at the acquisition date (which is regarded as their cost).
F-37
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
Subsequent to initial recognition, intangible assets acquired
in a business combination with finite useful lives are reported at costs less accumulated amortization and any accumulated impairment
losses, on the same basis as intangible assets that are acquired separately. Intangible assets acquired in a business combination with
indefinite useful lives are carried at cost less any subsequent accumulated impairment losses.
Impairment of property, plant and equipment and intangible
assets (other than goodwill)
At the end of the reporting period, the Group reviews the
carrying amounts of its property, plant and equipment and intangible assets with finite useful lives to determine whether there is any
indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss, if any. Intangible assets with indefinite useful lives and intangible assets
not yet available for use are tested for impairment at least annually, and whenever there is an indication that they may be impaired.
The recoverable amount of property, plant and equipment and
intangible assets are estimated individually. When it is not possible to estimate the recoverable amount individually, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
In testing a cash-generating unit for impairment, corporate
assets are allocated to the relevant cash-generating unit when a reasonable and consistent basis of allocation can be established, or
otherwise they are allocated to the smallest group of cash generating units for which a reasonable and consistent allocation basis can
be established. The recoverable amount is determined for the cash-generating unit or group of cash-generating units to which the corporate
asset belongs, and is compared with the carrying amount of the relevant cash-generating unit or group of cash-generating units.
Recoverable amount is the higher of fair value less costs
of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset (or a cash-generating
unit) for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or a cash-generating
unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its
recoverable amount. For corporate assets or portion of corporate assets which cannot be allocated on a reasonable and consistent basis
to a cash-generating unit, the Group compares the carrying amount of a group of cash-generating units, including the carrying amounts
of the corporate assets or portion of corporate assets allocated to that group of cash-generating units, with the recoverable amount of
the group of cash-generating units. In allocating the impairment loss, the impairment loss is allocated first to reduce the carrying amount
of any goodwill (if applicable) and then to the other assets on a pro-rata basis based on the carrying amount of each asset in the unit
or the group of cash-generating units. The carrying amount of an asset is not reduced below the highest of its fair value less costs of
disposal (if measurable), its value in use (if determinable) and zero. The amount of the impairment loss that would otherwise have been
allocated to the asset is allocated pro rata to the other assets of the unit or the group of cash-generating units. An impairment loss
is recognized immediately in profit or loss.
Related parties
A party is considered to be related to the Group if:
(a)the party is a person or a close member of that person’s
family and that person
(i)has control or joint control over the Group;
F-38
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
(ii)has significant influence over the Group; or
(iii)is a member of the key management personnel of the Group
or of a parent of the Group; or
(b)the party is an entity where any of the following conditions
applies:
(i)the entity and the Group are members of the same group;
(ii)one entity is an associate or joint venture of the other
entity (or of a parent, subsidiary or fellow subsidiary of the other entity);
(iii)the entity and the Group are joint ventures of the same third
party;
(iv)one entity is a joint venture of a third entity and the other
entity is an associate of the third entity;
(v)the entity is a post-employment benefit plan for the benefit
of employees of either the Group or an entity related to the Group; and the sponsoring employers of the post-employment benefit plan;
(vi)the entity is controlled or jointly controlled by a person
identified in (a);
(vii)a person identified in (a)(i) has significant influence
over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and
(viii)the entity, or any member of a group of which it is a part,
provides key management personnel services to the Group or to the parent of the Group.
Financial instruments — Investments and
other financial assets
Initial recognition and measurement
The classification of financial assets at initial recognition
depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With
the exception of accounts receivable arising from IFRS 15 Revenue from Contracts with Customers that do not contain a significant
financing component or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing
component, the Group initially measures a financial asset at its fair value, plus in the case of a financial asset not at FVTPL, transaction
costs. Accounts receivable that do not contain a significant financing component or for which the Group has applied the practical expedient
are measured at the transaction price determined under IFRS 15 in accordance with the policies set out for “Revenue recognition”
below.
In order for a financial asset to be classified and measured
at amortized cost, the contractual terms need to give rise to cash flows that are solely payments of principal and interest on the principal
amount outstanding and the financial asset needs to be held within a business model whose objective is to collect contractual cash flows.
The Group’s business model for managing financial assets
refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortized cost
are held within a business model with the objective to hold financial assets in order to collect contractual cash flows. Financial assets
which are not held within the aforementioned business models are classified and measured at FVTPL.
F-39
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
All regular way purchases or sales of financial assets are
recognized and derecognized on a trade date basis.
Regular way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
Subsequent measurement
The subsequent measurement of financial assets depends on
their classification as follows:
Financial assets at amortized cost
Financial assets at amortized cost are subsequently measured
using the effective interest method and are subject to impairment. Gains and losses are recognized in the consolidated statements of profit
or loss when the asset is derecognized, modified or impaired.
The effective interest method is a method of calculating the
amortized cost of a financial asset and of allocating interest income and interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points paid or received that
form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of
the financial asset, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Financial assets at FVTPL
Financial assets at FVTPL are carried in the consolidated
statements of financial position at fair value with net changes in fair value recognized in profit or loss.
Dividend income and gain related to disposed financial assets
at FVTPL and net fair value changes on FVTPL which are derived from the Group’s ordinary course of business are presented as revenue
Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual
rights to the cash flows from the asset expire.
On derecognition of a financial asset measured at amortized
cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized
in profit or loss.
Impairment of financial assets
The Group recognizes an allowance for ECLs for financial assets
at amortized cost. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the
cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash
flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
General approach
For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible
within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk
since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).
F-40
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
Financial assets at amortized cost are subject to impairment
under the general approach and they are classified within the following stages for measurement of ECLs except for accounts receivable
arising from IFRS 15 which apply the simplified approach as detailed below.
Stage 1Financial assets
for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount
equal to 12-month ECLs
Stage 2Financial assets
for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for
which the loss allowance is measured at an amount equal to lifetime ECLs
Stage 3Financial assets
that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance
is measured at an amount equal to lifetime ECLs
Simplified approach
For accounts receivable arising from IFRS 15 that do not contain
a significant financing component or when the Group applies the practical expedient of not adjusting the effect of a significant financing
component, the Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changes
in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date.
Significant increase in credit risk
In assessing whether the credit risk has increased significantly
since initial recognition, the Group compares the risk of a default occurring on the financial instrument As of the reporting date with
the risk of a default occurring on the financial instrument As of the date of initial recognition. In making this assessment, the Group
considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking
information that is available without undue cost or effort.
In particular, the following information is taken into account
when assessing whether credit risk has increased significantly:
●an actual or expected significant deterioration in the financial
instrument’s external (if available) or internal credit rating;
●significant deterioration in external market indicators of
credit risk, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor;
●existing or forecast adverse changes in business, financial
or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;
●an actual or expected significant deterioration in the operating
results of the debtor;
●an actual or expected significant adverse change in the regulatory,
economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its
debt obligations.
Irrespective of the outcome of the above assessment, the Group
presumes that the credit risk has increased significantly since initial recognition when contractual payments are more than 30 days
past due, unless the Group has reasonable and supportable information that demonstrates otherwise.
F-41
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
The Group regularly monitors the effectiveness of the criteria
used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria
are capable of identifying significant increase in credit risk before the amount becomes past due.
Definition of default
For internal credit risk management, the Group considers an
event of default occurs when information developed internally or obtained from external sources indicates that the debtor is unlikely
to pay its creditors, including the Group, in full (without taking into account any collaterals held by the Group).
Irrespective of the above, the Group considers that default
has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to
demonstrate that a more lagging default criterion is more appropriate.
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events
that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset
is credit-impaired includes observable data about the following events:
a)significant financial difficulty of the issuer or the borrower;
b)a breach of contract, such as a default or past due event;
c)the lender(s) of the borrower, for economic or contractual
reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would
not otherwise consider; or
d)it is becoming probable that the borrower will enter bankruptcy
or other financial reorganization.
Write-off policy
The Group writes off a financial asset when there is information
indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, for example, when the
counterparty has been placed under liquidation or has entered into bankruptcy proceedings. Financial assets written off may still be subject
to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate. A write-off
constitutes a derecognition event. Any subsequent recoveries are recognized in profit or loss.
Measurement and recognition of ECL
The measurement of ECL is a function of the probability of
default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the
probability of default and loss given default is based on historical data and forward-looking information. Estimation of ECL reflects
an unbiased and probability-weighted amount that is determined with the respective risks of default occurring as the weights.
Generally, the ECL is the difference between all contractual
cash flows that are due to the Group in accordance with the contract and the cash flows that the Group expects to receive, discounted
at the effective interest rate determined at initial recognition.
Lifetime ECL for accounts receivable from contract with customers
are considered on a collective basis taking into consideration past due information and relevant credit information such as forward looking
macroeconomic information.
F-42
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
For collective assessment, the Group takes into consideration
the following characteristics when formulating the grouping:
●Past-due status;
●Nature, size and industry of debtors; and
●External credit ratings where available.
The grouping is regularly reviewed by management to ensure
the constituents of each group continue to share similar credit risk characteristics.
Interest income is calculated based on the gross carrying
amount of the financial asset unless the financial asset is credit-impaired, in which case interest income is calculated based on amortized
cost of the financial asset.
The Group recognizes an impairment gain or loss in profit
or loss for all financial instruments by adjusting their carrying amount, with the exception of accounts receivable from contracts with
customers where the corresponding adjustment is recognized through a loss allowance account.
Financial liabilities and equity
Classification as debt or equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability
and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at
the proceeds received, net of direct issue costs.
Financial liabilities at amortized cost
Financial liabilities including accounts payable, borrowings,
other payables and accruals, amounts due to subsidiaries’ non-controlling shareholders and amount due to ultimate holding company
are subsequently measured at amortized cost, using the effective interest method.
Derecognition of financial liabilities
The Group derecognizes financial liabilities when, and only
when, the Group’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial
liability derecognized and the consideration paid and payable is recognized in profit or loss.
Derivative financial instruments
Derivatives are initially recognised at fair value at the
date when derivative contracts are entered into and are subsequently remeasured to their fair value at the end of the reporting period.
The resulting gain or loss is recognised in profit or loss.
F-43
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
Cash and cash equivalents
Cash and cash equivalents are defined as cash plus highly
liquid and related certificates of deposits or commercial paper with an original term to maturity of three months or less.
Provisions
A provision is recognized when a present obligation (legal
or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle
the obligation, provided that a reliable estimate can be made of the amount of the obligation.
When the effect of discounting is material, the amount recognized
for a provision is the present value at the end of each reporting period of the future expenditures expected to be required to settle
the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in profit
or loss.
Contingent liabilities
A contingent liability is a present obligation arising from
past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required
to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.
Where the Group is jointly and severally liable for an obligation,
the part of the obligation that is expected to be met by other parties is treated as a contingent liability and it is not recognized in
the consolidated financial statements.
The Group assesses continually to determine whether an outflow
of resources embodying economic benefits has become probable. If it becomes probable that an outflow of future economic benefits will
be required for an item previously dealt with as a contingent liability, a provision is recognized in the consolidated financial statements
in the reporting period in which the change in probability occurs, except in the extremely rare circumstances where no reliable estimate
can be made.
Income tax
Income tax comprises current and deferred tax.
Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which
the Group operates.
Deferred tax is provided, using the liability method, on all
temporary differences at the end of each reporting period between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary
differences, except:
●when the deferred tax liability arises from the initial recognition
of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; and
●in respect of taxable temporary differences associated with
investments in subsidiaries, when the timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
F-44
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
Deferred tax assets are recognized for all deductible temporary
differences, and the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that
it is probable that taxable profit will be available against which the deductible temporary differences, the carryforward of unused tax
credits and unused tax losses can be utilized, except:
●when the deferred tax asset relating to the deductible temporary
differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at
the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
●in respect of deductible temporary differences associated
with investments in subsidiaries, deferred tax assets are only recognized to the extent that it is probable that the temporary differences
will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at
the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available
to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at the end of each reporting
period and are recognized to the extent that it has become probable that sufficient taxable profit will be available to allow all or part
of the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset
if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax
assets and deferred tax liabilities relate to income taxes levied by the same taxable entity to the same taxation authority.
For the purposes of measuring deferred tax for leasing transactions
in which the Group recognizes the right-of-use assets and the related lease liabilities, the Group first determines whether the tax deductions
are attributable to the right-of-use assets or the lease liabilities.
For leasing transactions in which the tax deductions are attributable
to the lease liabilities, the Group applies IAS 12 Income Taxes requirements to lease liabilities and related assets separately.
The Group recognizes a deferred tax asset related to lease liabilities to the extent that it is probable that taxable profit will be available
against which the deductible temporary difference can be utilized and a deferred tax liability for all taxable temporary differences.
Revenue recognition
Revenue from contracts with customers
Revenue from contracts with customers is recognized when control
of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled
in exchange for those goods or services.
When the consideration in a contract includes a variable amount,
the amount of consideration is estimated to which the Group will be entitled in exchange for transferring the goods or services to the
customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant
revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration
is subsequently resolved.
F-45
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
Fashion, arts and luxury media advertising and marketing
services
Fashion, arts and luxury media advertising and marketing services
income is composed of advertising service income and licensing, subscription and marketing services income. Revenue is recognized at a
point in time when control of the goods has transferred to the customers (i.e. sales of magazines) or upon the edition in which the advertisement
is displayed (i.e. advertising income). The Group also provides fashion, arts and luxury media licensing and marketing services to its
customers on its multimedia channels. The Group recognizes revenues of such services over time based on the contract term.
Hotel operation services income
Hotel operation services income (i.e. income from hotel rooms
revenue and other ancillary service) are recognized over time using output method by reference to the progress towards complete satisfaction
of the relevant performance obligation, as the customer simultaneously receives and consumes the benefits provided by the Group’s
performance as the Group performs. The Group allows an average credit period of not more than 30 days to travel agents and corporate
customers. All the hotel operation services are for periods of one year or less and the effect of the time value of money is considered
insignificant.
Revenue from other sources
Fair value changes on financial assets at FVTPL are recognized
in the period in which they arise. Gain/loss recognized for those financial assets at FVTPL held at the end of each reporting period is
recognized as net fair value changes on financial assets at FVTPL.
Dividend income is recognized when the shareholders’
right to receive payment has been established, it is probable that the economic benefits associated with the dividend will flow to the
Group and the amount of the dividend can be measured reliably.
Contract liabilities
A contract liability is recognized when the payment is made
and received or the payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract
liabilities are recognized as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services
to the customer).
Employee benefits
Retirement benefit costs
Payments to defined contribution retirement benefit plans
are recognized as an expense when employees have rendered service entitling them to the contributions.
Short-term employee benefits
Short-term employee benefits are recognized at the undiscounted
amount of the benefits expected to be paid as and when employees rendered the services. All short-term employee benefits are recognized
as an expense unless another IFRS requires or permits the inclusion of the benefit in the cost of an asset. A liability is recognized
for benefits accruing to employees (such as wages and salaries) after deducting any amount already paid.
F-46
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
Leases
Definition of a lease
A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group assesses whether a contract is or contains a lease
based on the definition under IFRS 16 Leases at inception, modification date or acquisition date, as appropriate. Such contract
will not be reassessed unless the terms and conditions of the contract are subsequently changed.
The Group as a lessee
Allocation of consideration to components of a contract
For a contract that contains a lease component and one or
more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis
of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The Group applies
practical expedient not to separate non-lease components from lease component, and instead account for the lease component and any associated
non-lease components as a single lease component.
Short-term leases
The Group applies the short-term lease recognition exemption
to leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option. Lease payments
on short-term leases are recognized as expense on a straight-line basis or another systematic basis over the lease term.
Right-of-use assets
The cost of right-of-use asset includes the amount of the
initial measurement lease liability.
Right-of-use assets are depreciated on a straight-line basis
over the shorter of its estimated useful life and the lease term.
Lease liabilities
At the commencement date of a lease, the Group recognizes
and measures the lease liability at the present value of lease payments that are unpaid at that date. In calculating the present value
of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease
is not readily determinable.
The lease payments include fixed lease payments (including
in-substance fixed payments), less any lease incentives.
After the commencement date, lease liabilities are adjusted
by interest accretion and lease payments.
Foreign currencies
These financial statements are presented in US$, which is
the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group
are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies are translated at the functional currency rates of exchange ruling at the end of each reporting period.
Differences arising on settlement or translation of monetary items are recognized in profit or loss.
F-47
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
2.APPLICATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(cont.)
Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured
at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or
loss arising on translation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss
on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognized in other comprehensive
income or profit or loss is also recognized in other comprehensive income or profit or loss, respectively).
In determining the exchange rate on initial recognition of
the related asset, expense or income on the derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration,
the date of initial transaction is the date on which the Group initially recognizes the non-monetary asset or non-monetary liability arising
from the advance consideration. If there are multiple payments or receipts in advance, the Group determines the transaction date for each
payment or receipt of the advance consideration.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on the reporting date.
Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during
that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognized
in other comprehensive income and accumulated in an exchange reserve (attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation (that is, a disposal
of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a
foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which
the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable
to the owners of the Company are reclassified to profit or loss.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended
use or sale. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
3.KEY SOURCE OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies,
which are described in note 2.3, the Company is required to make judgments, estimates and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience
and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
F-48
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
3.KEY SOURCE OF ESTIMATION UNCERTAINTY (cont.)
The following are the key assumptions concerning the future,
and other key sources of estimation uncertainty at the end of each reporting period that may have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
Impairment assessment of intangible assets
Determining whether intangible assets are impaired requires
an estimation of the recoverable amount of the cash-generating unit to which intangible assets have been allocated, which is the higher
of the value in use or fair value less costs of disposal. The value in use calculation requires the Group to estimate the future cash
flows from the cash-generating unit and a suitable discount rate in order to calculate the present value. Where the actual future revenue
are less than expected, or change in facts and circumstances which results in downward revision of future cash flows or upward revision
of discount rate, a material impairment loss or further impairment loss may arise. Details of the impairment assessment of intangible
assets are disclosed in note 12.
Revaluation measurement of properties
As at the end of the reporting period, the Group’s properties
are stated at revalued amounts based on the valuation performed by independent qualified professional valuers. In determining the fair
value, the valuers have based their valuation on income approach for respective properties, which involves certain estimates, including
appropriate discount rates and market transactions of comparable properties, as appropriate. In relying on the valuation, management of
the Group has exercised its judgement and is satisfied that the methods of valuation adopted are appropriate for the relevant property
and reflective of current market conditions. Details of the valuation methodology are disclosed in note 11.
4.OPERATING SEGMENT INFORMATION
The Group operates its businesses in three operating segments:
media and entertainment segment, hotel operations, hospitality and VIP services segment and strategic investment segment.
The following summary describes the operations in each of
the Group’s operating and reportable segment:
(a)Media and entertainment segment: The Group engages in the
provision of print and digital advertising campaigns, licensing, and value-added marketing services including branded content, video
production, social media activation, event creation, and experiential marketing, among other services.
(b)Hotel operation, hospitality and VIP services segment: The
Group engages in hotel operations, hospitality and VIP services
(c)Strategic investment segment: The Group engages in proprietary
investments and management of global investment portfolio (including listed and unlisted equity shares investments and movie income right
investments).
Management closely monitors the performance of the Group’s
operating segments separately to support informed decisions on resource allocation and performance evaluation. Segment performance is
evaluated based on reportable segment result, which is a measure of profit (loss) before tax from operations. The profit (loss) before
tax from operations is measured after allocation of attributable costs of specialized staff and direct operating costs consistently with
the Group’s profit (loss) before tax from operations. Other income, gain from a bargain purchase, finance costs, impairment loss
under ECL model on financial assets and corporate expenses such as staff costs not directly attributable to segments, short-term leases
and administrative expenses are excluded from such measurement.
F-49
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
4.OPERATING SEGMENT INFORMATION (cont.)
Segment assets exclude prepayments, deposits and other receivables
and cash and bank balances, as these assets are managed on a group basis.
Segment liabilities exclude tax payable, borrowings, amount
due to ultimate holding company, lease liabilities and deferred tax liabilities as these liabilities are managed on a group basis.
Segment revenue and results
The following tables present information by segment:
For the year ended December 31, 2022
Media and entertainment
Hotel operation, hospitality and VIP services
Strategic investment
Total
US$’000
US$’000
US$’000
US$’000
Segment revenue (Note 5)
Revenue
– from contract with customers
7,670
3,201
—
10,871
– other
—
—
20,392
20,392
7,670
3,201
20,392
31,263
Segment results
2,206
701
20,392
23,299
Other income
522
Gain from a bargain purchase
4,848
Impairment losses under ECL model on financial assets
(501)
Finance costs
(2,586)
Corporate and other unallocated expenses
(1,860)
Profit before tax
23,722
Other segment information
Depreciation of property, plant and equipment
—
1,068
—
1,068
Amortization of intangible assets
9
—
—
9
F-50
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
4.OPERATING SEGMENT INFORMATION (cont.)
For the year ended December 31, 2023
Media and entertainment
Hotel operation, hospitality and VIP services
Strategic investment
Total
US$’000
US$’000
US$’000
US$’000
Segment revenue (Note 5)
Revenue
– from contract with customers
14,422
5,423
—
19,845
– other
—
—
22,698
22,698
14,422
5,423
22,698
42,543
Segment results
1,439
(2,451)
22,698
21,686
Other income
1,245
Gain from a bargain purchase
4,469
Finance costs
(7,136)
Corporate and other unallocated expenses
(1,205)
Profit before tax
19,059
Other segment information
Depreciation of property, plant and equipment
137
2,687
—
2,824
Amortization of intangible assets
9
—
—
9
Segment revenue and results
The following tables present information by segment:
For the year ended December 31, 2024
Media and entertainment
Hotel operation, hospitality and VIP services
Strategic investment
Total
US$’000
US$’000
US$’000
US$’000
Segment revenue (Note 5)
Revenue
– from contract with customers
18,859
23,132
—
41,991
– other
—
—
35,023
35,023
18,859
23,132
35,023
77,014
Segment results
2,072
(944)
35,023
36,151
Other income
24,815
Finance costs
(10,612)
Corporate and other unallocated expenses
(3,981)
Profit before tax
46,373
Other segment information
Depreciation of property, plant and equipment
312
11,400
—
11,712
Amortization of intangible assets
9
—
—
9
F-51
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
4.OPERATING SEGMENT INFORMATION (cont.)
Segment assets and liabilities
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Segment assets
Media and entertainment
96,436
139,929
124,952
Hotel operation, hospitality and VIP services
273,081
275,018
575,579
Strategic investments
308,990
77,801
450,882
Total segment assets
678,507
492,748
1,151,413
Unallocated corporate assets
3,167
8,766
23,021
Total assets
681,674
501,514
1,174,434
Segment liabilities
Media and entertainment
14,436
13,332
6,525
Hotel operation, hospitality and VIP services
53,403
53,878
68,767
Total segment liabilities
67,839
67,210
75,292
Unallocated corporate liabilities
127,192
156,470
330,012
Total liabilities
195,031
223,680
405,304
Geographical information
The following table sets forth the Group’s revenue from
contract with customers by geographical areas based on the location of the operations:
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Media and entertainment
– China (including Hong Kong)
50
34
666
– Europe
3,798
6,589
9,660
– America
3,822
5,157
4,866
– Southeast Asia
—
2,642
3,667
7,670
14,422
18,859
Hotel operation, hospitality and VIP services
– China (including Hong Kong)
3,201
5,423
5,801
– Southeast Asia
—
—
17,331
3,201
5,423
23,132
Total
10,871
19,845
41,991
F-52
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
4.OPERATING SEGMENT INFORMATION (cont.)
The following table sets forth the Group’s non-current
assets (other than financial assets) by geographical areas based on the location of the operations:
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
China (including Hong Kong)
173,125
179,221
180,313
Europe
93,262
119,152
119,527
America
—
15,414
48,068
Southeast Asia
99,884
95,686
346,166
Total assets
366,271
409,473
694,074
Information about major customers
Other than the income generated from media and entertainment
segment from AMTD Group of US$2,888,000, US$2,726,000 and US$2,737,000, respectively, for the year ended December 31, 2022, 2023
and 2024, no revenue derived from a single customer accounted for 10% or more of the total revenue of the Group for the year.
5.REVENUE AND OTHER INCOME
Revenue
(i)Disaggregated revenue information
The following tables present disaggregated revenue
information:
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Revenue from contracts with customers
Advertising and marketing services
Advertising services income
3,658
10,064
13,376
Licensing, subscription and marketing services income
4,012
4,358
5,483
7,670
14,422
18,859
Hotel operations, hospitality and VIP services
Hotel operation, hospitality and VIP services income
3,201
5,423
23,132
Subtotal
10,871
19,845
41,991
Revenue from other sources
Strategic investment
Net fair value changes on financial assets at FVTPL and derivative financial instruments
13,011
(37,759)
26,342
Gain related to disposed investments
969
50,522
—
Dividend income
6,412
9,935
8,681
Total
31,263
42,543
77,014
F-53
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
5.REVENUE AND OTHER INCOME (cont.)
Timing of revenue recognition
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Revenue from contracts with customers
Services transferred
– at a point in time
3,658
10,064
13,376
– over time
7,213
9,781
28,615
Total
10,871
19,845
41,991
(ii)Transaction price allocated to the remaining performance obligation
for contracts with customers
The expected duration of satisfying the performance obligation
of which is within one year, the transaction price allocated to these unsatisfied contracts is not disclosed as permitted under IFRS 15.
Other income
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Bank interest income
—
4
17
Gain on disposal of subsidiaries
—
—
24,757
Others
522
1,241
41
Total
522
1,245
24,815
During the year ended December 31, 2024, the Group disposed
entire equity interests in certain subsidiaries which engaged in the media and entertainment segment of the Group with a consideration
of Euro2,888,000 to an independent third party. These subsidiaries owned certain intellectual properties pertaining to non-core media
and entertainment business of the Group. The disposal was part of a strategic reorganization aimed at divesting non-core business and
intellectual properties to sharpen the Group’s focus on its primary existing operating business units within the media and entertainment
segment. The disposal recorded a gain of approximately US$24,757,000. The consideration is settled through the immediate holding company.
6.OTHER OPERATING EXPENSES
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Advertising and promotion expenses
124
52
504
Amortization of intangible assets
9
9
9
Bank charges
21
36
72
Depreciation of property, plant and equipment
1,068
2,824
11,712
Donation
—
327
81
IT related costs
98
275
534
Legal and professional fee
516
534
734
Premises costs
51
216
243
Travelling expenses
132
216
208
Others
1,481
1,188
1,445
Total
3,500
5,677
15,542
F-54
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
7.STAFF COSTS
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Salaries and bonus
3,078
6,436
11,693
Pension scheme contributions (defined contribution schemes) and others
822
1,455
1,439
Total
3,900
7,891
13,132
8.FINANCE COSTS
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Interests on borrowings
1,550
3,862
9,367
Interests on amounts due to subsidiaries’ non-controlling shareholders
1,036
3,268
1,115
Interests on lease liabilities
—
6
130
Total
2,586
7,136
10,612
9.INCOME TAX EXPENSE
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Hong Kong Profits Tax
—
682
775
United States corporate tax
—
136
—
Withholding tax on dividend income
599
993
868
Total income tax expenses
599
1,811
1,643
In the United States, the federal corporate tax rate
is a flat rate of 21% during the year ended December 31, 2022, 2023 and 2024. New York, the location of a group entity
domicile, has a 6.50% to 7.25% corporate income tax rate during the year ended December 31, 2022 and 6.50% to 8.85% corporate income
tax rate during the year ended December 31, 2023 and 2024.
Under the two-tiered profits tax rates regime of Hong Kong
Profits Tax, the first HK$2 million of profits of the qualifying group entity will be taxed at 8.25%, and profits above HK$2 million
will be taxed at 16.5%. The profits of group entities not qualifying for the two-tiered profits tax rates regime will continue to be taxed
at a flat rate of 16.5%. For the year ended December 31, 2022, 2023 and 2024 , the Hong Kong Profits Tax of the qualifying group
entity is calculated at 8.25% on the first HK$2 million of the estimated assessable profits and at 16.5% on the estimated assessable
profits above HK$2 million.
F-55
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
9.INCOME TAX EXPENSE (cont.)
A reconciliation of income tax expense and profit before tax
at the statutory tax rate in which the Group’s major operating subsidiaries are domiciled is as follows:
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Profit before tax
23,722
19,059
46,373
Tax at statutory tax rate of 16.5%
3,914
3,145
7,652
Tax effect of different tax rates of subsidiaries operating in other jurisdictions
86
117
233
Tax effect of non-taxable income
(4,335)
(4,045)
(14,862)
Tax effect of non-deductible expenses
17
399
5,450
Tax effect of tax losses not recognized
452
772
2,210
Tax effect of share of (profits) losses of joint ventures
(134)
430
92
Withholding tax on dividend income
599
993
868
Total income tax expenses
599
1,811
1,643
10.EARNINGS PER SHARE
The calculation of the basic earnings per share attributable
to the owners of the Company is based on the following data:
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Earnings figures are calculated as follows:
Profit for the year attributable to owners of the Company
14,975
8,164
27,751
Number of shares
’000
’000
’000
Weighted average number of ordinary shares for the purpose of basic earnings per share
22,913
18,312
16,964
No diluted earnings per share for year were presented as there
were no potential ordinary shares in issue for the year.
The number of ordinary shares for the purpose of calculating
basic earnings per share has been determined on the assumption that the reorganization of the Group and recapitalization of the Company
has been effective on January 1, 2022.
F-56
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
11.PROPERTY, PLANT AND EQUIPMENT
Properties
Computer equipment
Right-of-use assets
Total
US$’000
US$’000
US$’000
US$’000
COST OR REVALUED AMOUNT
As of January 1, 2022
153,919
—
—
153,919
Additions
—
—
219
219
Surplus on revaluation
19,145
—
—
19,145
Exchange realignment
62
—
—
62
As of December 31, 2022
173,126
—
219
173,345
Additions
15,391
57
—
15,448
Acquisition of subsidiaries (note 34)
—
80
253
333
Surplus on revaluation
6,353
—
—
6,353
Exchange realignment
(235)
1
—
(234)
As of December 31, 2023
194,635
138
472
195,245
Disposal of subsidiaries
—
—
(212)
(212)
Additions
372,061
8
544
372,613
Surplus on revaluation
9,455
—
—
9,455
Exchange realignment
(2,052)
(6)
(41)
(2,099)
As of December 31, 2024
574,099
140
763
575,002
ACCUMULATED DEPRECIATION
As of January 1, 2022
—
—
—
—
Charge for the year
1,068
—
—
1,068
Eliminated on revaluation
(1,068)
—
—
(1,068)
As of December 31, 2022
—
—
—
—
Charge for the year
2,688
16
120
2,824
Eliminated on revaluation
(2,688)
—
—
(2,688)
As of December 31, 2023
—
16
120
136
Charge for the year
11,408
31
273
11,712
Disposal of subsidiaries
—
—
(145)
(145)
Eliminated on revaluation
(11,174)
—
—
(11,174)
Exchange realignment
(234)
2
12
(220)
As of December 31, 2024
—
49
260
309
NET BOOK VALUE
As of December 31, 2022
173,126
—
219
173,345
As of December 31, 2023
194,635
122
352
195,109
As of December 31, 2024
574,099
91
503
574,693
The above items of property, plant and equipment are depreciated
on a straight-line basis at the following rates per annum:
Properties
Over the shorter of 40 years and the remaining lease terms
Computer equipment
33⅓%
Right-of-use assets
Over the lease term
F-57
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
11.PROPERTY, PLANT AND EQUIPMENT (cont.)
As of December 31, 2022, 2023 and 2024, the Group’s
properties are stated at revalued amounts of approximately US$173,126,000, US$194,635,000 and US$574,099,000, respectively. The fair value
of the Group’s properties of US$173,126,000, US$179,221,000 and US$574,099,000, respectively, as of December 31, 2022, 2023
and 2024 is a Level 3 fair value measurement. During the year ended December 31, 2024, a property with carrying amount of US$15,414,000
as of December 31, 2023 transferred from Level 2 to Level 3 fair value measurement.
In determining the fair values of the properties, the Group
engages an independent qualified professional valuer to perform the valuation. The management works with the independent qualified professional
valuer to establish the appropriate valuation techniques and inputs for Level 3 fair value measurement. Where there is a material change
in the fair value of the properties, the causes of the fluctuations will be reported to the directors of the Company.
The independent qualified professional valuer adopted the
following approaches in determination of the revalued amount:
●Hotel properties: income approach by using discounted cash flow analysis to arrive at the valuation
of the hotel properties. The discounted cash flow analysis for the properties is established based on analysis of assumptions about
future market conditions affecting supply, demand, income, expenses and the potential of risk. These assumptions determine the
earning capability of the properties upon which the pattern of income and expenditures are projected to establish a fair
maintainable operating profit on a pre-tax yearly basis by a reasonably efficient operator over a 10-year investment horizon; and
the anticipated net operating income stream receivable thereafter is capitalized at appropriate terminal capitalization rates and
adjusted to present value by appropriate discount rate to reflect the capital values beyond the 10 years. As of
December 31, 2022, 2023 and 2024, the revalued amount of hotel properties is US$173,126,000, US$179,221,000 and US$526,099,000,
respectively.
●Other properties: direct comparison approach by reference to market transactions of comparable
properties. As of December 31, 2022, 2023 and 2024, the revalued amount of other properties is nil, US$15,414,000 and
US$48,000,000, respectively.
There has been no change to the valuation techniques during
the year. In estimating the fair value of the properties, the highest and best use of the properties is their current use.
The key inputs used in valuing the hotel property in Hong Kong
by the independent qualified professional valuer under the aforesaid income approach were the discount rate used at 5.1%, 5.2% and 5.2%,
respectively as of December 31, 2022, 2023 and 2024 and average daily rates, which ranged from HK$880 to HK$1,810, HK$1,070 to HK$1,921
and HK$1,070 to HK$1,921, respectively, per room. Any decrease in the discount rate used would result in an increase in fair value measurement
of the property, and vice versa, holding all other variables constant. The sensitivity to a 50 basis points increase/decrease in discount
rate holding all other variables constant, the revalued amount of property will decrease/increase by approximately US$6,412,000/US$7,694,000,
US$7,662,000/US$6,385,000 and US$7,662,000/US$6,385,000, respectively, for the years ended December 31, 2022, 2023 and 2024.
The key inputs used in valuing the hotel property in Singapore
by the independent qualified professional valuer under the aforesaid income approach were the discount rate used at 5.7% as of December 31,
2024 and average daily rates, which ranged from Singapore Dollar (“SGD”) 380 to SGD505 per room. Any decrease in the discount
rate used would result in an increase in fair value measurement of the property, and vice versa, holding all other variables constant.
The sensitivity to a 50 basis points increase/decrease in discount rate holding all other variables constant, the revalued amount of property
will decrease/increase by approximately US$12,529,000/US$13,266,000 for the year ended December 31, 2024.
F-58
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
11.PROPERTY, PLANT AND EQUIPMENT (cont.)
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Expense relating to short-term leases
51
216
243
Total cash outflow for leases
51
303
653
For the year, the Group leases offices for its operations.
Lease contracts are entered into for fixed term of 3 to 6 years. Lease terms are negotiated on an individual basis and contain different
terms and conditions. In determining the lease term and assessing the length of the non-cancellable period, the Group applies the definition
of a contract and determines the period for which the contract is enforceable.
The Group regularly entered short-term leases for offices.
As of December 31, 2022, 2023 and 2024, the portfolio of short-term leases is similar to the portfolio of short-term leases to which
the short-term lease expense disclosed above.
12.INTANGIBLE ASSETS
Archived images
Brand names
Total
US$’000
US$’000
US$’000
CARRYING AMOUNT
As of January 1, 2022
—
172
172
Acquisition of subsidiaries (note 34)
497
91,797
92,294
Amortization for the year
—
(9)
(9)
Exchange realignment
3
582
585
As of December 31, 2022
500
92,542
93,042
Acquisition of subsidiaries (note 34)
—
25,752
25,752
Amortization for the year
—
(9)
(9)
Exchange realignment
(1)
(106)
(107)
As of December 31, 2023
499
118,179
118,678
Amortization for the year
—
(9)
(9)
Exchange realignment
3
709
712
As of December 31, 2024
502
118,879
119,381
The above carrying amounts of brand names of approximately
US$92,379,000, US$118,025,000 and US$118,733,000 and archived images of approximately US$500,000, US$499,000 and US$502,000, respectively,
as of December 31, 2022, 2023 and 2024 are considered by the directors of the Company as having an indefinite useful life because
it is expected to contribute to net cash inflows indefinitely. The brand names and archived images will not be amortized until its useful
life is determined to be finite. Instead they will be tested for impairment annually and whenever there is an indication that it may be
impaired.
The remaining brand name of approximately US$163,000, US$154,000
and US$146,000, respectively, as of December 31, 2022, 2023 and 2024 are amortized on a straight-line basis of 20 years.
As of December 31, 2022, 2023
and 2024, carrying amount of brand name of approximately US$92,379,000, US$92,216,000 and US$92,769,000, respectively, and archived
images of US$500,000, US$499,000 and US$502,000, respectively, are allocated to cash-generating unit of the business unit under
“L’Officiel”. For the purpose of impairment testing, the recoverable amount of this cash-generating unit has been
determined based on a value in use calculation. That calculation uses cash flow projections based on financial budgets approved by
management covering a 5-year period, and pre-tax approximate discount rate of 11%. Cash flows beyond the 5-year period are
extrapolated using a steady 1.6% to 2.1% growth rate. This growth rate is based on the relevant industry growth forecasts and does
not exceed the average long-term growth rate for the relevant industry. Other key assumptions for the value in use calculations relate
to the estimation of cash inflows/outflows which include budgeted sales and gross margin, such estimation is based on the L’Officiel’s
past performance and management’s expectations for the market development.
F-59
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
12.INTANGIBLE ASSETS (cont.)
As of December 31, 2023 and 2024, carrying amount of
brand name of approximately US$25,809,000 and US$25,964,000, respectively, are allocated to cash-generating unit of the business unit
under “The Art Newspaper”. For the purpose of impairment testing, the recoverable amount of this cash-generating unit has
been determined based on a value in use calculation. That calculation uses cash flow projections based on financial budgets approved by
management covering a 5-year period, and pre-tax approximate discount rate of 10.3%. Cash flows beyond the 5-year period are extrapolated
using a steady 1.8% to 2.1% growth rate. This growth rate is based on the relevant industry growth forecasts and does not exceed the average
long-term growth rate for the relevant industry. Other key assumptions for the value in use calculations relate to the estimation of cash
inflows/outflows which include budgeted sales and gross margin, such estimation is based on The Art Newspaper’s past performance
and management’s expectations for the market development.
Based on the results of the assessments, management of the
Group determined that the recoverable amounts of the above cash-generating units are higher than the carrying amounts and there is no
impairment of the related intangible assets allocated to these cash-generating units. Management of the Group believes that any reasonably
possible changes in any of these assumptions would not cause the carrying amount of cash-generating unit to exceed its recoverable amount.
13.INTERESTS IN JOINT VENTURES
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Costs of investment in joint ventures
16,535
16,506
—
Share of post-acquisition losses and other comprehensive income
52,795
55,370
—
69,330
71,876
—
Due from joint ventures
30,554
23,810
—
Total
99,884
95,686
—
Amounts due from joint ventures are unsecured, interest-free
and repayable on demand.
Particulars of the joint ventures which own and operate the
DAO by Dorsett AMTD Singapore Hotel in Singapore (“Singapore hotel companies”) as of December 31, 2022 and 2023 are as
follows:
Name
Particulars of issued shares held
Place of incorporation/ registration and business
Percentage of ownership interest, voting power and profit sharing
Principal activity
Cosmic Gold Limited
Ordinary shares
BVI
51%
Investment holding
DHI Holding (S) Pte Ltd.
Ordinary shares
Singapore
51%
Hotel investment
On April 1, 2024, the Group agreed with the remaining
shareholder of Singapore hotel companies that the Group owns the controlling interest in the Singapore hotel companies. Accordingly, the
Singapore hotel companies became the non-wholly owned subsidiaries of the Group without change in the percentage of ownership. Please
refer to note 34 for the details of the consolidation of Singapore hotel companies.
F-60
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
13.INTERESTS IN JOINT VENTURES (cont.)
The following table illustrates the summarised financial information
in respect of the Singapore hotel companies adjusted for any differences in accounting policies and reconciled to the carrying amount
in the consolidated financial statements:
As of December 31,
2022
2023
2024*
US$’000
US$’000
US$’000
Total assets
362,144
357,622
—
Total liabilities
(226,202)
(216,689)
—
Net assets
135,942
140,933
—
Proportional of the Group’s ownership
51%
51%
N/A
Group’s share of net assets of joint ventures
69,330
71,876
—
Due from joint ventures
30,554
23,810
—
Interests in joint ventures
99,884
95,686
—
Revenue
21,634
24,129
5,934
Profit (loss) for the year
1,598
(5,114)
(1,094)
Other comprehensive income for the year
105,776
10,331
5,555
Total comprehensive income for the year
107,374
5,217
4,461
Addition information of the joint ventures
Cash and cash equivalents
14,321
3,516
—
Amounts due to shareholders
60,411
48,280
—
Bank borrowings (note)
161,772
163,438
—
Depreciation of property, plant and equipment
6,820
7,209
1,777
Finance costs
4,167
8,221
1,836
*The amounts represented the profit or loss of the joint ventures
from January 1, 2024 to March 31, 2024 before the recognition of Singapore hotel companies as subsidiaries on April 1,
2024.
Note:On November 14, 2019, AMTD IDEA Group provided a corporate
guarantee to a bank in relation to the granting of banking facilities of SGD217,000,000 to the joint ventures for a maturity period of
3 years. AMTD IDEA Group limits the corporate guarantee of 51% of the banking facilities. Subsequently, the corporate guarantee
has been extended to May 2023. This corporate guarantee is expired by then. In July 2023, AMTD IDEA Group provided a corporate
guarantee to another bank in relation to the banking facilities of SGD217,000,000 to the joint ventures for a maturity of 5 years.
AMTD IDEA Group limits the corporate guarantee of 51% of the banking facilities. The banking facilities are also pledged by a property
in Singapore and guaranteed by another shareholder of the joint ventures. There is no default payment by the joint ventures for the years.
14.FINANCIAL ASSETS AT FVTPL
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Listed equity shares
110,474
72,052
407,510
Unlisted equity shares
200
200
902
Movie income right investments
13,247
5,549
12,132
Total
123,921
77,801
420,544
Shown as:
– current assets
21,219
17,558
25,207
– non-current assets
102,702
60,243
395,337
123,921
77,801
420,544
F-61
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
14.FINANCIAL ASSETS AT FVTPL (cont.)
During the year ended December 31, 2022, 2023 and 2024,
the Group entered into movie income right agreements with certain production houses. The Group is entitled to certain percentage of the
variable profit derived from the release of the films upon entering into relevant agreements. The Group may be required to further contribute
to the movie production programs due to the budget overruns. Any agreed further contribution to the film programs due to the budget overruns
will be added to the carrying amounts of financial assets.
During the year ended December 31, 2024, AMTD Digital
Inc. injected 34,819,047 Class A ordinary shares into the Group in exchange for the issuance of the shares of the Company to AMTD
Digital Inc. with details disclosed in note 28. As of December 31, 2024, the carrying amount of the listed equity shares of AMTD
Digital Inc. is US$257,661,000.
Certain listed equity shares, unlisted equity shares and movie
income right investments are not held for trading. Instead, they are held for medium to long-term strategic purposes. The directors of
the Company do not expect to realize these investments within 12 months and, accordingly, these investments are classified as non-current
assets.
15.ACCOUNTS RECEIVABLE
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Receivables from media and entertainment services
2,759
5,228
4,973
Receivables from hotel operations, hospitality and VIP services
72
111
1,484
Total
2,831
5,339
6,457
The Group allows a credit period of up to 90 days to
its accounts receivables arising from media and entertainment business. The settlement terms of accounts receivable from hotel operations,
hospitality and VIP services are specific terms mutually agreed between the contracting parties.
The Group seeks to maintain strict control over its outstanding
receivables and has a credit control team to minimize credit risk. Overdue balances are reviewed regularly by management of the Group.
The Group does not hold any collateral over its accounts receivable. The directors of the Company assess that there has been no significant
increase in credit risk or defaults, owing to the debtor’s background and their established history of payment arrangements. The
Group does not hold any collateral over these balances.
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Not yet due
1,743
2,454
3,399
Past due
– within 1 month
843
595
780
– 1 to 3 months
155
1,204
1,106
– Over 3 months
90
1,086
1,172
Total
2,831
5,339
6,457
The Group has applied the lifetime ECL to measure the loss
allowance and the ECL is performed on a collective basis. An impairment analysis of accounts receivable is performed at each reporting
date using probability of default approach to measure expected credit losses. The probability of default and loss given default are estimated
based on the Group’s assessment on credit ratings of the accounts receivable and historical loss experience. The calculation reflects the probability-weighted
outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events,
current conditions and forecasts of future economic conditions. The calculation of ECL considers forward looking information through the
use of publicly available economic data and forecasts, including macroeconomic data such as GDP growth and unemployment rate, management
judgement to reflect the qualitative factors and through the use of multiple probability weighted scenarios.
F-62
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
15.ACCOUNTS RECEIVABLE (cont.)
As of December 31, 2022, the probability of default ranged
from 0.39% to 0.57% and the loss given default was estimated to be 45%. As of December 31, 2023, the probability of default ranged
from 0.39% to 0.57% and the loss given default was estimated to be 46.9%. As of December 31, 2024, the probability of default ranged
from 0.39% to 0.57% and the loss given default was estimated to be 46.9%. The ECL as of December 31, 2022, 2023 and 2024 were immaterial
and no loss allowance for accounts receivable was provided.
16.PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Prepayments
67
506
1,727
Deposits
199
353
195
Other receivables
2,194
2,287
1,621
Less: impairment losses provided under ECL model
(501)
(501)
(501)
Total
1,959
2,645
3,042
17.DERIVATIVE FINANCIAL INSTRUMENTS
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Upside Participation and Profit Distribution Agreements
167,388
—
—
Future Settlement Contract
17,681
—
—
Price Protection Agreement
—
—
30,339
Total
185,069
—
30,339
Upside Participation and Profit Distribution Agreements
On April 1, 2019, the subsidiaries of the Group entered
into “Upside Participation and Profit Distribution Agreements” (the “Agreements”) with a counterparty in relation
to the movement of the share price of the entirety of certain listed shares of investments the Group owns (the “Underlying Assets”).
The Agreements have an original term of 12 months and can be extended for any further period or terminated at any time upon mutual
agreement of the contracting parties.
Pursuant to the Agreements:
(a)The counterparty is entitled to 25% (the “Sharing Percentage”)
of the gain of the Underlying Assets if the quoted market price or disposal prices of the Underlying Assets is higher the underlying
prices (“Underlying Prices;”);
(b)The counterparty shall pay a sum equivalent to the loss of
the Underlying Assets if the quoted market price or disposal prices of the Underlying Assets is lower than Underlying Price (“Participation
Cost”); and
F-63
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
17.DERIVATIVE FINANCIAL INSTRUMENTS (cont.)
(c)Dividend or cash distributions generated from the Underlying
Assets during the term of the Agreements shall be received by the subsidiaries of the Group for their sole benefit and shall not be included
in the computation of the gain or the Participation Cost.
In December 2022, the Underlying Assets have been partially
sold, in which 2,673,000 listed shares were sold in the market at the average disposal price of HK$3.27 per share, and US$1,963,000 was
due from the counterparty to settle 2,673,000 notional of the derivatives reflecting the difference between the average disposal price
and Underlying Price. Accordingly, corresponding revisions were made to the Agreements to reflect the reduction in the number of underlying
listed shares.
In December 2023, the Group terminated the Upside Participation
and Profit Distribution Agreements with the counterparty.
The Agreements satisfied the definition of derivative financial
instrument in accordance with IFRS 9 and were stated at fair value with any subsequent changes recognized in profit or loss.
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
As of January 1,
124,404
167,388
—
Change in fair value
44,461
—
—
Gain on disposal
486
34,234
—
Settlement
(1,963)
(201,411)
—
Exchange realignment
—
(211)
—
As of December 31,
167,388
—
—
Future Settlement Contract
In June 2022, the Group entered into a future settlement
contract with the counterparty, pursuant to which the Group is entitled to receive certain listed equity shares at a mutually agreed price
at approximately US$53,272,000 in aggregate (the “Future Settlement Contract”) within one year. The fair value of the underlying
shares as of December 31, 2022 was approximately US$70,953,000. The Future Settlement Contract was accounted for as a derivative
financial asset and the net fair value gain recognized in profit or loss was approximately US$17,681,000 for the year ended December 31,
2022. During the year ended December 31, 2023, the Agreement was terminated and fully settled with the counterparty with the consideration
of approximately US$17,681,000.
Price Protection Agreement
AMTD Group Inc. and the Company entered into an agreement
over the share price of AMTD Digital Inc., pursuant to which the Group is entitled to recover from AMTD Group Inc. if the share price
of AMTD Digital Inc. is lower than that at the time the Group invested in the shares of AMTD Digital Inc. (the “Price Protection
Agreement”). The purpose of the Price Protection Agreement is to provide a financial safety net for the Group by ensuring to receive
a minimum value for its investments in shares of AMTD Digital Inc. The Price Protection Agreement was accounted for as a derivative financial
asset and the net fair value gain recognized in profit or loss was approximately US$30,339,000 for the year ended December 31, 2024.
F-64
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
18.CASH AND BANK BALANCES AND RESTRICTED CASH
Cash and bank balances
Cash and bank balances include cash on hand and demand deposits
at bank. The bank balances earn interest at floating rate of daily bank deposit rates and are deposited with creditworthy banks with no
recent history of default. The bank balances are deposited with creditworthy banks with no recent history of default.
Restricted cash
As of December 31, 2022 and 2023, restricted deposits
held at banks were used to settle certain payables to vendors.
19.ACCOUNTS PAYABLE
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Payable to suppliers
9,846
8,808
2,785
Shown as:
– current liabilities
6,100
5,794
2,785
– non-current liabilities
3,746
3,014
—
9,846
8,808
2,785
The average credit period on purchases of goods is 30 days.
20.OTHER PAYABLES AND ACCRUALS
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Payroll and related expenses payable
4,089
3,974
686
Other tax payables
3,923
5,121
821
Payable for acquisition of subsidiaries
—
3,506
3,009
Interest expense payable
—
2,263
840
Accruals and other payables
1,792
2,287
1,953
9,804
17,151
7,309
21.CONTRACT LIABILITIES
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Fashion, arts and luxury media and advertising and marketing services
511
658
378
Hotel operation, hospitality and VIP services
792
151
186
1,303
809
564
Contract liabilities carried forward from each of January 1
are recognized as revenue during the next reporting period.
F-65
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
22.BORROWINGS
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Secured bank borrowings are denominated in:
– Hong Kong Dollar
51,117
50,655
50,135
– Singapore Dollar
—
—
158,466
– US$
—
11,139
10,983
Unsecured bank borrowings are denominated in:
– Euro
580
475
—
– British Pound
—
35
25
51,697
62,304
219,609
Shown as:
– current liabilities
571
741
176
– non-current liabilities
51,126
61,563
219,433
51,697
62,304
219,609
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
The carrying amounts are repayable:
Within one year
571
741
176
Within a period of more than one year but no more than two years
582
302
50,321
Within a period of more than two years but no more than five years
50,544
51,003
159,046
More than five years
—
10,258
10,066
51,697
62,304
219,609
Fixed-rate bank borrowings of US$11,139,000 and US$10,983,000
as of December 31, 2023 and 2024 respectively are bearing an interest rate 5.0% per annum. All other floating-rate bank borrowings are
bearing a variable interest rate with a weighted average contractual interest rate of 3.18% p.a., 9.11% p.a. and 4.03% p.a., respectively,
as of December 31, 2022, 2023 and 2024.
As of December 31, 2022, 2023 and 2024, the Group had
bank borrowings of approximately US$51,117,000, US$61,794,000 and US$219,584,000, respectively, secured by the Group’s properties
with carrying amounts of approximately US$173,126,000, US$194,635,000 and US$551,099,000, respectively.
F-66
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
23.LEASE LIABILITIES
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
The carrying amounts are repayable:
Within one year
100
185
253
Within a period of more than one year but no more than two years
100
113
255
Within a period of more than two years but no more than five years
20
85
12
220
383
520
Less: Amount due for settlement within 12 months shown under current liabilities
(100)
(185)
(253)
Amount due for settlement after 12 months shown under non-current liabilities
120
198
267
The weighted average incremental borrowing rate applied to
lease liabilities is 1.71%, 3.72% and 2.57%, respectively, for the years ended December 31, 2022, 2023 and 2024.
24.PROVISIONS
(a)Claims from vendors
US$’000
As of January 1, 2022
—
Acquisition of subsidiaries (note 34)
4,094
Settled during the year
(95)
Exchange realignment
80
As of December 31, 2022
4,079
Additions
476
Settled during the year
(831)
Exchange realignment
142
As of December 31, 2023
3,866
Additions
450
Settled during the year
(533)
Disposal of subsidiaries
(3,750)
Exchange realignment
(33)
As of December 31, 2024
—
(b)Provision for replacement
The amount represented provision for the replacement and maintenance
of furniture, fixtures and equipment within the hotels of the Group.
F-67
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
25.DEFERRED TAX LIABILITIES
The movements in deferred tax liabilities during the years
are as follows:
Intangible assets
US$’000
As of January 1, 2022
—
Acquisition of subsidiaries (note 34)
2,769
Exchange realignment
(108)
As of December 31, 2022
2,661
Acquisition of subsidiaries (note 34)
2,961
Exchange realignment
2
As of December 31, 2023
5,624
Exchange realignment
34
As of December 31, 2024
5,658
26.AMOUNTS DUE TO SUBSIDIARIES’ NON-CONTROLLING SHAREHOLDERS
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Interest-free
19,268
24,322
63,019
Interest bearing at Hong Kong Inter-bank Offered Rate (“HIBOR”) plus 1.15% per annum
25,648
21,762
—
Interest bearing at 2 times of HIBOR plus 1.15% per annum
7,695
7,643
—
52,611
53,727
63,019
Amounts due to subsidiaries’ non-controlling shareholders
are unsecured.
During the year ended December 31, 2024, interest bearing
balances were settled through the current account of ultimate holding company and the non-controlling shareholder.
27.AMOUNT DUE TO ULTIMATE HOLDING COMPANY
Amount due to ultimate holding company is unsecured, interest-free
and not expected to be repayable within 1 year after each of the reporting period.
28.SHARE CAPITAL
Share capital as of December 31, 2022 represented the
combined share capital of WME Assets Group, WME Direct Investment Limited, L’Officiel Inc SAS, L’Officiel Singapore Pte. Ltd.
and L’Officiel Malaysia Sdn. Bhd.
Share capital as of December 31, 2023 represented the
combined share capital of the Company, WME Assets Group, and AMTD Group (Canada) Inc.
F-68
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
28.SHARE CAPITAL (cont.)
Share capital of the Company
Voting Ordinary shares
Number of shares
Share capital
US$’000
Ordinary shares of US$0.0001 each
Authorized
As of February 7, 2023 (date of incorporation) and December 31, 2023
500,000,000
50,000
Transferred (note (i))
(1,680)
—*
As of December 31, 2024
499,998,320
50,000
Issued and full paid
As of February 7, 2023 (date of incorporation) and December 31, 2023
1
—*
Issue of shares to AMTD (note (ii))
9,999
—*
Issue of shares to other shareholders (note (iii))
1,245
—*
As of December 31, 2024
11,245
—*
*Less than US$1,000
Notes:
(i)On November 25, 2024, the Company reclassified and re-designated
1,680 authorized shares into non-voting redeemable preferred shares.
(ii)In October 2024, World Media and Entertainment Group
Inc., the then immediate holding company of the Company transferred 5,107, 4,880 and 12 shares of the Company to AMTD Digital Inc., AMTD
IDEA Group and AMTD Group Inc., respectively, and, at the same time, World Media and Entertainment Group Inc. repurchased its shares
from AMTD Digital Inc., AMTD IDEA Group and AMTD Group Inc.
(iii)In November 2024, the Company issued 857 and 388 shares
to two shareholders with the consideration on the injection of listed shares in Hong Kong and a unit of a property located in New York,
respectively, into the Company.
Non-voting redeemable preferred shares
On November 25, 2024, the Company reclassified and re-designated
1,680 authorized share into non-voting redeemable preferred shares. On the same date, the Company issued 1,680 non-voting redeemable preferred
shares to AMTD Digital Inc. and AMTD Digital Inc. issued 13,333,333 Class A shares to the Company at a consideration of US$100 million.
AMTD Digital Inc., as the holder of non-voting redeemable preferred shares shall:
(a)not entitle to vote of any other matters subject to the vote
at the general meeting of the Company except for any transaction that may result in a change of control;
(b)not be entitled to any dividends, unless the board of directors
of the Company may otherwise declare;
(c)in the event of a liquidation, winding-up or dissolution of
the Company, be entitled, prior and in preference to holders of the voting ordinary shares, to the distribution of the assets of the
Company available for distribution;
(d)be subject to redemption and repurchase of the non-voting
redeemable preferred shares after one year of issuance at par value at the option of the Company; and
F-69
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
28.SHARE CAPITAL (cont.)
(e)not be entitled to be have any non-voting redeemable preferred
shares redeemed, repurchased or converted into any other class or series of shares at the option of the holder.
The non-voting redeemable shares are classified as equity
despite their redeemable nature due to their fixed-for-fixed redemption feature. No shares were redeemed during the year, and there are
no plans or obligations to redeem these shares in the foreseeable future.
29.RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details changes in the Group’s liabilities
arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for
which cash flows were, or future cash flows will be, classified in the Group’s consolidated statements of cash flows as cash flows
from financing activities.
Borrowings
Lease liabilities
Amount due to subsidiaries’ non- controlling shareholders
Amount due to ultimate holding company
Total
US$’000
US$’000
US$’000
US$’000
US$’000
As of January 1, 2022
45,809
—
58,041
59,464
163,314
Finance costs
1,550
—
1,036
—
2,586
Acquisition of subsidiaries
585
—
—
—
585
Recognition of lease liabilities
—
219
—
—
219
Cash flows
3,753
—
(6,432)
3,743
1,064
Exchange realignment
—
1
(34)
(397)
(430)
As of December 31, 2022
51,697
220
52,611
62,810
167,338
Finance costs
3,862
6
3,268
—
7,136
Non-cash transactions
9,970
—
—
4,682
14,652
Acquisition of subsidiaries
37
244
—
—
281
Cash flows
(3,140)
(87)
(2,059)
2,814
(2,472)
Exchange realignment
(122)
—
(93)
(110)
(325)
As of December 31, 2023
62,304
383
53,727
70,196
186,610
Finance costs
9,367
130
1,115
—
10,612
Acquisition of subsidiaries
159,722
—
23,107
—
182,829
Disposal of subsidiaries
(392)
(127)
—
(7,828)
(8,347)
Non-cash transactions
(643)
544
2,066
4,138
6,105
Cash flows
(10,481)
(410)
(17,741)
34,864
6,232
Exchange realignment
(268)
—
745
1,252
1,729
As of December 31, 2024
219,609
520
63,019
102,622
385,770
30.RELATED PARTY TRANSACTIONS
In addition to the transactions disclosed elsewhere in these
consolidated financial statements, the Group had the following transactions with related parties during the year:
Year ended December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Marketing services income
2,888
2,726
2,737
F-70
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
31.FINANCIAL INSTRUMENTS BY CATEGORY
The carrying amounts of each of the categories of financial
instruments as of the end of the reporting period are as follows:
Financial assets
Financial assets at FVTPL
Financial assets at amortized cost
Total
US$’000
US$’000
US$’000
As of December 31, 2022
Accounts receivable
—
2,831
2,831
Financial assets at FVTPL
123,921
—
123,921
Derivative financial assets
185,069
—
185,069
Amounts due from joint ventures
—
30,554
30,554
Deposits and other receivables
—
1,892
1,892
Restricted cash
—
415
415
Cash and bank balances
—
1,208
1,208
308,990
36,900
345,890
As of December 31, 2023
Accounts receivable
—
5,339
5,339
Financial assets at FVTPL
77,801
—
77,801
Amounts due from joint ventures
—
23,810
23,810
Deposits and other receivables
—
2,139
2,139
Restricted cash
—
135
135
Cash and bank balances
—
6,121
6,121
77,801
37,544
115,345
As of December 31, 2024
Accounts receivable
—
6,457
6,457
Financial assets at FVTPL
420,544
—
420,544
Derivative financial instruments
30,339
—
30,339
Deposits and other receivables
—
1,315
1,315
Cash and bank balances
—
19,978
19,978
450,883
27,750
478,633
Financial liabilities at amortized costs
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Accounts payable
9,846
8,808
2,785
Other payables and accruals
9,804
17,151
7,309
Borrowings
51,697
62,304
219,609
Amounts due to subsidiary’s non-controlling shareholders
52,611
53,727
63,019
Amount due to ultimate holding company
62,810
70,196
102,622
186,768
212,186
395,344
F-71
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
32.FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the Group’s
financial instruments measured at fair value are as follows:
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Financial assets at FVTPL
123,921
77,801
420,544
Derivative financial instruments
185,069
—
30,339
308,990
77,801
450,883
Management has assessed that the fair values of bank balances,
accounts receivable, deposits and other receivables, amounts due from joint ventures, restricted cash, accounts payable, other payables
and accruals, borrowings, amounts due to subsidiaries’ non-controlling shareholders and amount due to ultimate holding company approximate
to their carrying amounts largely due to the short-term maturities of these instruments or repayable on demand, or that they are interest-bearing
at market rates.
The Group’s finance department headed by the chief financial
officer is responsible for determining the policies and procedures for the fair value measurement of financial instruments. The finance
director reports directly to the chief financial officer. At each reporting date, the finance department analyzes the movements in the
values of financial instruments and determines the major inputs applied in the valuation. The valuation is reviewed and approved by the
chief financial officer.
Some of the Group’s financial instruments are measured
at fair value for financial reporting purposes. The management of the Company is responsible for determining the appropriate valuation
techniques and inputs for fair value measurements.
In estimating the fair value, the Group uses observable market
data to the extent it is available. Where Level 1 inputs are not available, the Group refers to the prices of recent transactions or engages
third-party qualified valuers to perform the valuation.
The management of the Company works closely with the qualified
external valuers to establish the appropriate valuation techniques and inputs to the model. The management reports the findings to the
directors of the Company to explain the cause of fluctuations in the fair value.
Below is summary of significant unobservable inputs to valuation
of financial instruments together with a quantitative sensitivity analysis:
F-72
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
32.FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL
INSTRUMENTS (cont.)
Valuation
Technique
Significant
unobservable input
Sensitivity of value
to the input
As of December 31, 2022
Movie income right investments of US$13,247,000
Discount cash flow model
Discount rate takes into account weighted average cost of capital using a Capital Asset Pricing Model ranged from 10.40% to 12.59% and expected ticket sales performance and expected movie production costs
5% increase/decrease in the discount rate results in decrease/increase in fair value by 0.2%/0.1%
Derivative financial instruments of US$185,069,000
Monte Carlo Simulation (“MCS”)
Expected volatility of the underlying assets of 49.78%
5% increase/decrease in the discount rate results in decrease/increase in fair value by 0.1%/0.1%
As of December 31, 2023
Movie income right investments of US$3,936,000
Discount cash flow model
Discount rate takes into account weighted average cost of capital using a Capital Asset Pricing Model ranged from 10.40% to 12.59% and expected ticket sales performance and expected movie production costs
5% increase/decrease in the discount rate results in decrease/increase in fair value by 0.2%/0.1%
As of December 31, 2024
Movie income right investments of US$5,863,000
Discount cash flow model
Discount rate takes into account weighted average cost of capital using a Capital Asset Pricing Model ranged from 10.40% to 12.59% and expected ticket sales performance and expected movie production costs
5% increase/decrease in the discount rate results in decrease/increase in fair value by 0.2%/0.1%
Fair value hierarchy
The following table illustrates the fair value measurement
hierarchy of the Group’s financial instruments:
Assets measured at fair value:
Fair value measurement using
Quoted prices in active markets (Level 1)
Recent transaction price (Level 2)
Significant unobservable inputs (Level 3)
Total
US$’000
US$’000
US$’000
US$’000
As of December 31, 2022
Financial assets at FVTPL
110,474
200
13,247
123,921
Derivative financial instruments
—
—
185,069
185,069
As of December 31, 2023
Financial assets at FVTPL
72,052
1,813
3,936
77,801
As of December 31, 2024
Financial assets at FVTPL
407,510
7,171
5,863
420,544
Derivative financial instruments
—
30,339
—
30,339
F-73
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
32.FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS
(cont.)
The movements in fair value measurements within Level 3 on
financial assets at FVTPL during the years are as follow:
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
As of January 1,
10,773
13,247
3,936
Additions
4,785
—
90
Transfer from Level 2
—
—
1,612
Change in fair value
350
—
—
Gain on disposal
—
16,274
—
Disposals
—
(25,539)
—
Distribution of profits
(2,669)
—
—
Exchange realignment
8
(46)
225
As of December 31,
13,247
3,936
5,863
The movement in Level 3 on derivative financial instruments
during the years is disclosed in note 17.
33.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group has various financial assets and liabilities such
as financial assets at FVTPL, accounts receivable, deposits and other receivables, amounts due from joint ventures, restricted cash, cash
and bank balances, accounts payable, other payables and accruals, borrowings, amounts due to subsidiaries’ non-controlling shareholders
and amount due to ultimate holding company.
The main risks arising from the Group’s financial instruments
are price risk, foreign currency risk, interest rate risk, credit risk and liquidity risk. Management manages and monitors these risks
to ensure appropriate measures are implemented on a timely and effective manner.
Price risk
Equity price risk is the risk that the fair values of equity
investments decrease as a result of changes in the levels of equity indices and the value of individual securities.
The Group is exposed to equity securities price risk because
certain investments held by the Group are classified in the consolidated statements of financial position as financial assets at FVTPL. Profit
for the year would increase/decrease as a result of gains/losses on equity securities classified as financial assets at FVTPL.
As of December 31, 2022, 2023 and 2024, if there had
been a 5% increase/decrease in the equity price of listed equity shares, included in financial assets at FVTPL, with all other variables
held constant, the Group’s profit before tax would have been approximately US$5,524,000, US$3,603,000 and US$20,376,000, respectively,
higher/lower.
The Group had concentration risk in two listed equity shares
as of December 31, 2022 and 2023. As of December 31, 2024, the Group had concentration risk in equity shares in AMTD Digital
Inc. and two listed equity shares.
On April 1, 2019, the Group entered Agreements with the
counterparty in relation to the movement of the share price of the entirety of the Underlying Assets to reduce the Group’s exposure
the changes in fair value of financial assets. The derivative financial asset is initially recognized at fair value and are subsequently
remeasured at fair value. Any gains or losses arising from changes in fair value of derivative financial asset are taken directly to profit
or loss.
F-74
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
33.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(cont.)
No sensitivity analysis is prepared on unlisted equity shares
and movie income right investments as the directors of the Company consider that the impact on the price risk of the Group is insignificant.
Foreign currency risk
Certain transactions of the Group are denominated in foreign
currencies which are different from the functional currency of group entities, and therefore the Group is exposed to foreign currency
risk. The Group currently does not have a foreign currency hedging policy. However, management monitors foreign exchange exposure and
will consider hedging significant foreign exchange exposure should the need arise.
The Group’s key currency risk exposure primarily arises
from accounts receivable, accounts payable and bank balances denominated in other currencies. As of December 31, 2022, 2023 and 2024,
the Group had no significant exposure to foreign currency risk. Consequently, no sensitivity analysis has been performed and disclosed.
Interest rate risk
The Group is exposed to cash flow interest rate risk in relation
to variable-rate bank balances and variable-rate borrowings. The Group aims to keep borrowings at variable rates. The Group manages its
interest rate exposures by assessing the potential impact arising from any interest rate movements based on interest rate level and outlook.
The management will review the proportion of borrowings in fixed and floating rates and ensure they are within reasonable range.
No sensitivity analysis has been presented for variable rate
bank balances and variable rate borrowings as the bank balances and borrowings as the cash flow interest rate risk exposure is insignificant.
Credit risk and impairment assessment
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy
counterparties, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure of its counterparties is
continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is
controlled by counterparty limits that are reviewed and approved by the management periodically.
The Group has credit risk exposure in relation the Agreements
entered into with a counterparty amounting to US$167,388,000 as of December 31, 2022 (Note 17). As of December 31, 2022,
the directors of the Company consider that the credit risk is not significant because the market value of listed securities pledged to
the Group in relation to the Agreement is higher than the outstanding carrying amounts of the Agreement.
The Group performed impairment assessment for financial assets
under ECL model. Information about the Group’s credit risk management, maximum credit risk exposures and the related impairment
assessment, if applicable, are summarized as below:
Accounts receivable
Before accepting any new customer, the Group uses an internal
credit scoring system to assess the potential customer’s credit quality and defines credit limits by customer. Limits and scoring
attributed to customers are reviewed twice a year. Other monitoring procedures are in place to ensure that follow-up action is taken to
recover overdue debts. Also, the management of the Group has delegated a team responsible for determination of credit limits and credit
approvals. In this regard, the management considers that the Group’s credit risk is significantly reduced.
F-75
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
33.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(cont.)
The Group performs impairment assessment under ECL model on
other accounts receivable collectively and grouped based on shared credit risk characteristics by reference to the Group’s past
due status of outstanding balances, nature, size and industry of debtors and external credit ratings. The Group assesses the ECL of accounts
receivable based on historical observed default rates over the expected life of the debtors and forward-looking information (including
macroeconomic data such as GDP growth and unemployment rate) that is available without undue cost or effort.
Bank balances and restricted cash
Credit risk on bank balances and restricted cash is limited
because the counterparties are reputable banks with high credit ratings assigned by international credit agencies. The Group assessed
12-month ECL for bank balances and restricted cash by reference to information relating to probability of default and loss given default
of the respective credit rating grades published by external credit rating agencies. Based on the average loss rates, the 12-month ECL
on bank balances and restricted cash is insignificant and therefore no loss allowance was recognized.
Amounts due from joint ventures
The Group regularly evaluates the business performance of
joint ventures. The Group’s credit risks in these balances are considered low due to the strong financial positions of these entities.
The management believes that there are no significant increases in credit risk of these amounts since initial recognition and the Group
provided impairment based on 12-month ECL. The Group assessed the ECL for amounts due from joint ventures to be insignificant and
thus no loss allowance is recognized.
Deposits and other receivables
For deposits and other receivables, the Group makes periodic
individual assessment on the recoverability of other receivables and deposits based on historical settlement records, past experience,
and also quantitative and qualitative information that is reasonable and supportive forward-looking information. The Group believes that
there is no significant increase in credit risk of these amounts since initial recognition and the Group provided impairment based on
12-month ECL. For year ended December 31, 2022, the Group recognized ECL on deposits and other receivables of US$501,000 and
there is no movement on the allowance of ECL on deposits and other receivables during the year ended December 31, 2022, 2023 and
2024.
The tables below detail the credit risk exposures of the Group’s
financial assets at amortized costs, which are subject to ECL assessment:
12-month or lifetime
As of December 31,
ECL
2022
2023
2024
US$’000
US$’000
US$’000
Accounts receivable (note (i))
Lifetime ECL (collective assessment)
2,831
5,339
6,457
Deposits and other receivables
12-month ECL
1,892
2,139
1,816
Amounts due from joint ventures
12-month ECL
30,554
23,810
—
Restricted cash
12-month ECL
415
135
—
Cash and balance balances
12-month ECL
1,208
6,121
19,978
36,900
37,544
28,251
Notes:
(i)For accounts receivable, the Group has applied the simplified
approach in IFRS 9 to measure the loss allowance at lifetime ECL.
(ii)The financial assets at amortized costs have a low risk of
default as the counterparties do not have default history and there is no information indicating that these financial assets have a significant
increase in credit risk since initial recognition.
F-76
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
33.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(cont.)
Liquidity risk
The Group aims to maintain cash and credit lines to meet its
liquidity requirements. The Group finances its working capital requirements through a combination of funds generated from operations,
loans and equity financing.
The following tables detail the Group’s remaining contractual
maturity for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based
on the earliest date on which the Group can be required to pay. Variable rate instruments are subject to change if change in variable
rates differ from the estimated interest rate determined at the end of the reporting period.
As of December 31, 2022
Weighted Average interest rate
On demand or less than 3 months
3 months to 1 year
1 to 5 years
Total undiscounted cash flows
Carrying amount
%
US$’000
US$’000
US$’000
US$’000
US$’000
Accounts payable
—
6,100
—
3,746
9,846
9,846
Other payables and accruals
—
9,804
—
—
9,804
9,804
Borrowings
3.18
456
1,758
54,797
57,011
51,697
Amounts due to subsidiaries’ non-controlling shareholders
1.58
19,271
34,179
—
53,450
52,611
Amount due to ultimate holding company
—
—
—
62,810
62,810
62,810
35,631
35,937
121,353
192,921
186,768
As of December 31, 2023
Weighted Average interest rate
On demand or less than 3 months
3 months to 1 year
1 to 5 years
Over 5 years
Total undiscounted cash flows
Carrying amount
%
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Accounts payable
—
5,794
—
3,014
—
8,808
8,808
Other payables and accruals
—
17,151
—
—
—
17,151
17,151
Borrowings
9.11
1,465
4,979
59,821
19,459
85,724
62,304
Amounts due to subsidiaries’ non-controlling shareholders
4.71
22,463
35,823
—
—
58,286
53,727
Amount due to ultimate holding company
—
—
—
70,196
—
70,196
70,196
46,873
40,802
133,031
19,459
240,165
212,186
F-77
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
33.FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(cont.)
As of December 31, 2024
Weighted Average interest rate
On demand or less than 3 months
3 months to 1 year
1 to 5 years
Over 5 years
Total undiscounted cash flows
Carrying amount
%
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Accounts payable
2,785
—
—
—
2,785
2,785
Other payables and accruals
—
7,309
—
—
—
7,309
7,309
Borrowings
4.03
2,276
6,829
231,297
17,870
258,272
219,609
Amounts due to subsidiaries’ non-controlling shareholders
63,019
—
—
—
63,019
63,019
Amount due to ultimate holding company
—
—
—
102,622
—
102,622
102,622
75,389
6,829
333,919
17,870
434,007
395,344
Capital risk management
The Group manages its capital to ensure that the Group will
be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.
The capital structure of the Group consists of debts and equity
attributable to equity holders of the Group, comprising share capital and reserves, as disclosed in consolidated statements of changes
in equity.
There were no changes on the Group’s approach to capital
risk management during the years.
34.ACQUISITIONS OF SUBSIDIARIES
For the year ended December 31, 2022
Acquisition of L’Officiel Inc SAS
In April 2022, the intermediate holding company acquired
100% equity interest of L’Officiel Inc SAS. The consideration of the acquisition amounting to US$62,800,000 was paid by ultimate
holding company on behalf of the Group. The transaction was completed in April 2022 and accounted for using acquisition accounting.
No acquisition-related cost has been recognized as an expense for the year December 31, 2022.
Assets and liabilities at the date of acquisition
US$’000
Cash and cash balances
247
Restricted cash
477
Accounts receivable
1,855
Prepayments, deposits and other receivables
2,745
Intangible assets
92,294
Accounts payable
(11,489)
Other payables and accruals
(11,033)
Provisions
(4,094)
Borrowings
(585)
Deferred tax liabilities
(2,769)
Net assets acquired
67,648
F-78
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
34.ACQUISITIONS OF SUBSIDIARIES (cont.)
The fair values and gross contractual amounts of accounts
receivable and other receivables at the date of acquisition amounted to approximately US$1,855,000 and US$2,492,000, respectively. No
accounts receivable and other receivables were expected to be uncollectible.
Gain arising on acquisition
US$
Recognized amounts of net assets acquired
67,648
Less: consideration transferred by ultimate holding company
(62,800)
4,848
Bargain purchase gain amounting to approximately US$4,848,000
on acquisition of L’Officiel Inc SAS is recognized in profit or loss within the other gain line item in the consolidated statement
of profit or loss and other comprehensive income. The transaction resulted in a bargain purchase gain, reflecting the financial and operating
conditions of the acquiree at the time of acquisition.
Impact of acquisition on the results of the Group
Included in the consolidated profit for the year ended December 31,
2022 is the profit of US$2.7 million attributable to the business generated by L’Officiel Inc SAS. Revenue for the year
ended December 31, 2022 includes US$4.7 million generated from the acquisition.
Had the acquisition of L’Officiel Inc SAS been completed
on January 1, 2022, revenue for the year of the Group would have been US$33.1 million, and profit for the year would have been
US$21.7 million. The pro forma information is for illustrative purposes only and is not necessarily an indication of revenue and
results of the operations of the Group that actually would have been achieved had the acquisition been completed on January 1, 2022,
nor is it intended to be a projection of future events.
For the year ended December 31, 2023
Acquisition of The Art Newspaper SA
During the year ended December 31, 2023, the Company
acquired 100% equity interest of The Art Newspaper SA, a limited company incorporated in Switzerland. The consideration of the acquisition
was paid by cash amounting to US$2,540,000, which is paid by ultimate holding company, 8,688,525 shares of the intermediate holding company
and 380,065 shares of the immediate holding company as well as a bonus element of Euro 2,888,888 which will be settled by the intermediate
holding company on the 540th day following the completion of acquisition. The total consideration is approximately US$16,831,000.
The transaction was completed in October 2023 using acquisition accounting.
No acquisition-related cost has been recognized as an expense
for the year ended December 31, 2023.
Consideration transferred
US$’000
Cash through amount due to ultimate holding company
2,540
Ordinary shares of the intermediate holding company
5,607
Ordinary shares of immediate holding company
5,607
Other consideration payable
3,077
Net assets acquired
16,831
F-79
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
34.ACQUISITIONS OF SUBSIDIARIES (cont.)
Assets and liabilities at the date of acquisition
US$’000
Cash and cash balances
27
Accounts receivable
674
Prepayments, deposits and other receivables
301
Property, plant and equipment
333
Intangible assets
25,752
Accounts payable
(402)
Other payables and accruals
(1,724)
Borrowings
(37)
Lease liabilities
(244)
Contract liabilities
(419)
Deferred tax liabilities
(2,961)
Net assets acquired
21,300
The fair values and gross contractual amounts of accounts
receivable and other receivables at the date of acquisition amounted to of approximately US$674,000 and US$301,000, respectively. No accounts
receivable and other receivables were expected to be uncollectible.
Gain arising on acquisition
US$
Recognized amounts of net assets acquired
21,300
Less: consideration transferred by ultimate holding company
(16,831)
4,469
Bargain purchase gain amounting to approximately US$4,469,000
acquisition of The Art Newspaper SA is recognized in profit or loss within the other gain line item in the consolidated statement of profit
or loss and other comprehensive income. The transaction resulted in a bargain purchase gain, reflecting the financial and operating conditions
of the acquiree at the time of acquisition and our competitive bargaining strategy over the seller.
Net cash inflow on acquisition of The Art Newspaper
SA
Cash and cash equivalents balances acquired
27
Impact of acquisition on the results of the Group
Included in the consolidated profit for the year ended December 31,
2023 is the profit of US$45,000 attributable to the business generated by The Art Newspaper SA. Revenue for the year ended December 31,
2023 includes US$2 million generated from the acquisition.
Had the acquisition of The Art Newspaper SA been completed
on January 1, 2023, revenue for the year of the Group would have been US$46.6 million, and profit for the year would have been
US$16.2 million. The pro forma information is for illustrative purposes only and is not necessarily an indication of revenue and
results of the operations of the Group that actually would have been achieved had the acquisition been completed on January 1, 2023,
nor is it intended to be a projection of future events.
F-80
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
34.ACQUISITIONS OF SUBSIDIARIES (cont.)
For the year ended December 31, 2024
Acquisition of Singapore hotel companies
On April 1, 2024, the Group agreed with another shareholder
of Singapore hotel companies that the Group owns the controlling interests of Singapore hotel companies, accordingly, Singapore hotel
companies became the non-wholly owned subsidiaries of the Group without change of the percentage of ownership.
Assets and liabilities at the date of acquisition
US$’000
Cash and cash balances
4,273
Accounts receivable
920
Prepayments, deposits and other receivables
622
Property, plant and equipment
349,061
Accounts payable
(116)
Other payables and accruals
(467)
Provisions
(1,406)
Borrowings
(159,722)
Contract liabilities
(471)
Tax payables
(214)
Amounts due to shareholders
(47,157)
Non-controlling interest
(71,136)
Net assets acquired
74,187
Investment in joint ventures eliminated
74,187
The fair values and gross contractual amounts of accounts
receivable and other receivables at the date of acquisition amounted to of approximately US$920,000 and US$622,000, respectively. No accounts
receivable and other receivables were expected to be uncollectible.
Net cash inflow on acquisition of Singapore hotel companies
Cash and cash equivalents balances acquired
4,273
Impact of acquisition on the results of the Group
Included in the consolidated profit for the year is the loss
of US$6.3 million attributable to the business generated by Singapore hotel companies. Revenue for the year includes US$17.3 million
generated from the acquisition.
Had the acquisition of Singapore hotel companies been completed
on January 1, 2024, revenue for the year of the Group would have been US$82.9 million, and profit for the year would have been
US$43.0 million. The pro forma information is for illustrative purposes only and is not necessarily an indication of revenue and
results of the operations of the Group that actually would have been achieved had the acquisition been completed on January 1, 2024,
nor is it intended to be a projection of future events.
F-81
THE GENERATION ESSENTIALS GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2023 AND 2024
35.NON-CONTROLLING INTERESTS
The table below shows details of non-wholly owned subsidiaries
of the Group which have material non-controlling interests:
As of December 31,
2022
2023
2024
US$’000
US$’000
US$’000
Fine Cosmos Development Limited (note (i))
24,949
26,942
26,602
Singapore hotel companies (note (ii))
—
—
70,054
Other non-controlling interests (note (iii))
172,429
147,112
7,197
197,378
174,054
103,853
Notes:
(i)Fine Cosmos Development Limited is 50% owned by the Group
for the years.
(ii)Singapore hotel companies is 51% owned by the Group for the years.
(iii)The consolidated financial statements represent a combination
of entities and business under common control of AMTD Group, as such, the assets and liabilities of the consolidated entities are subject
to the non-controlling shareholders of immediate holding company (i.e. AMTD Digital Inc.) and the intermediate holding company (i.e.
AMTD IDEA Group). Upon the completion of the reorganization of the Group subsequent to the end of the reporting period, and accordingly,
the amounts of non-controlling interests of AMTD IDEA Group and AMTD Digital Inc. are then transferred to the reverses attributable to
the owners of the Company.
36.SUBSEQUENT EVENTS
Other than disclosed elsewhere in the consolidated financial
statements, the Group has the following subsequent events:
In January 2025, the Company and Black Spade Acquisition II
Co, a special purpose acquisition company founded by Black Spade Capital, entered into a business combination agreement.
F-82
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 6. Indemnification
of Directors and Officers
The laws of the Cayman Islands
do not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers
and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such
as to provide indemnification against willful default, willful neglect, civil fraud or the consequences of committing a crime.
The Amended Articles provides
that every director (including alternate director), secretary, assistant secretary, or other officer for the time being and from time
to time of The Generation Essentials Group (but not including its auditors) and the personal representatives of the same (each an “Indemnified
Person”) shall be indemnified and secured harmless against all actions, proceedings, costs, charges, expenses, losses, damages or
liabilities incurred or sustained by such Indemnified Person, other than by reason of such Indemnified Person’s own dishonesty,
willful default or fraud, in or about the conduct of The Generation Essentials Group’s business or affairs (including as a result
of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice
to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such Indemnified Person in defending (whether
successfully or otherwise) any civil proceedings concerning The Generation Essentials Group or its affairs in any court whether in the
Cayman Islands or elsewhere.
The Generation Essentials
Group has also entered into indemnification agreements with its directors and executive officers, pursuant to which The Generation Essentials
Group has agreed to indemnify each such person and hold him harmless against expenses, judgments, fines and amounts payable under settlement
agreements in connection with any threatened, pending or completed action, suit or proceeding to which he or she has been made a party
or in which he became involved by reason of the fact that he or she is or was The Generation Essentials Group’s director or officer.
Except with respect to expenses to be reimbursed by The Generation Essentials Group in the event that the indemnified person has been
successful on the merits or otherwise in defense of the action, suit or proceeding, The Generation Essentials Group’s obligations
under the indemnification agreements will be subject to certain customary restrictions and exceptions.
In addition, The Generation
Essentials Group maintains standard policies of insurance under which coverage is provided to its directors and officers against loss
rising from claims made by reason of breach of duty or other wrongful act, and to The Generation Essentials Group with respect to payments
which may be made by it to such directors and officers pursuant to the above indemnification provision or otherwise as a matter of law.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing
provisions, The Generation Essentials Group has been informed that in the opinion of the SEC such indemnification is against public policy
as expressed in the Securities Act and is theretofore unenforceable.
Item 7. Recent Sales
of Unregistered Securities.
In the past three years, we
have issued the following securities that were not registered under the Securities Act. Each of these securities were issued in reliance
upon the exemptions provided by Section 4(a)(2) and/or Regulation S under the Securities Act. No underwriters were involved
in these issuances of securities.
II-1
Ordinary Shares and Preferred
Shares
Securities/Purchaser
Date of Issuance
Number of Securities
Consideration
Ordinary shares
AMTD Digital Inc.
October 25, 2024
5,108 ordinary shares
Issue upon swapping the shares of World Media and Entertainment Group Inc.
AMTD IDEA Group
October 25, 2024
4,880 ordinary shares
Issue upon swapping the shares of World Media and Entertainment Group Inc.
AMTD Group Inc.
October 25, 2024
12 ordinary shares
Issue upon swapping the shares of World Media and Entertainment Group Inc.
South Horizon Oceans (Group) Co. Inc.
November 2, 2024
857 ordinary shares
US$50.8 million
Radisson Everton Venture Fund
November 14, 2024
388 ordinary shares
US$23.0 million
AMTD Digital Inc.
November 26, 2024
1,680 non-voting redeemable ordinary shares
US$100.0 million
In connection with the Business
Combination and on the Closing Date, The Generation Essentials Group issued 23,171,033 Class A Ordinary Shares, 19,285,911 Class B Ordinary
Shares and 6,343,056 Preferred Shares to then existing shareholders of The Generation Essentials Group as a part of the Recapitalization.
Options and Restricted
Shares
See “Item 6. Management—B.
Compensation—Share Incentive Plans” of our 2022 20-F.
II-2
Item 8. Exhibits
Incorporation
by Reference
Exhibit No.
Description
Form
File No.
No.
Filing Date
2.1
Business Combination Agreement, dated as of January 27, 2025 and among The Generation Essentials Group (formerly known as World Media and Entertainment Universal Inc.), Black Spade Acquisition II Co, and WME Merger Sub Limited
F-4
333-286501
2.1
May 6, 2025
2.2
Form of Plan of Merger
F-4
333-286501
2.2
May 6, 2025
3.1*
Fourth Amended and Restated Memorandum and Articles of Association of The Generation Essentials Group
4.1
Warrant Agreement, dated as of August 27, 2024, between Black Spade Acquisition II Co and Continental Stock Transfer & Trust Company
F-4
333-286501
4.4
May 6, 2025
4.2
Specimen Class A Ordinary Share Certificate of The Generation Essentials Group
F-4
333-286501
4.5
May 6, 2025
4.3
Specimen Warrant Certificate of The Generation Essentials Group
F-4
333-286501
4.6
May 6, 2025
4.4*
Assignment, Assumption and Amendment Agreement, dated as of June 3, 2025, by and among Black Spade Acquisition II Co, The Generation Essentials Group, and Continental Stock Transfer & Trust Company
4.5
Registration Rights Agreement, dated as of August 27, 2024, by and among Black Spade Acquisition II Co, Black Spade Sponsor LLC II and certain shareholders of Black Spade Acquisition II Co
F-4
333-286501
4.8
May 6, 2025
4.6*
Registration Rights Agreement, dated as of June 3, 2025, by and among The Generation Essentials Group, Black Spade Sponsor LLC II and other parties named therein
4.7
Form of Non-redemption Agreement
F-4
333-286501
4.10
May 6, 2025
5.1*
Opinion of Conyers Dill & Pearman Pte. Ltd. as to validity of ordinary shares of The Generation Essentials Group
5.2*
Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to the warrants of The Generation Essentials Group
10.1
Investment Management Trust Agreement, dated as of August 27, 2024, by and between Continental Stock & Trust Company and Black Spade Acquisition II Co
F-4
333-286501
10.1
May 6, 2025
10.2
Administrative Services Agreement, dated as of August 27, 2024, by and between Black Spade Sponsor LLC II and Black Spade Acquisition II Co
F-4
333-286501
10.2
May 6, 2025
10.3
Letter Agreement, dated as of August 27, 2024, among Black Spade Sponsor LLC II, Black Spade Acquisition II Co and certain security holders
F-4
333-286501
10.3
May 6, 2025
10.4
Sponsor Support Agreement and Deed, dated as of January 27, 2025, by and among The Generation Essentials Group, Black Spade Acquisition II Co, Black Spade Sponsor LLC II and other parties named therein
F-4
333-286501
10.4
May 6, 2025
10.5
Shareholder Support and Lock-up Agreement and Deed, dated as of January 27, 2025, by and among The Generation Essentials Group, Black Spade Acquisition II Co, and other parties named therein
F-4
333-286501
10.5
May 6, 2025
10.6#
Intellectual Property License Agreement between The Generation Essentials Group and AMTD Group Inc.
F-4
333-286501
10.8
May 6, 2025
10.7*†
The Generation Essentials Group 2025 Share Incentive Plan
10.8
Form of Indemnification Agreement between The Generation Essentials Group and each director and executive officer of The Generation Essentials Group
F-4
333-286501
10.7
May 6, 2025
21.1
List of subsidiaries of The Generation Essentials Group
F-4
333-286501
21.1
May 6, 2025
23.1*
Consent of WithumSmith+Brown, PC, independent registered accounting firm for Black Spade Acquisition II Co
23.2*
Consent of Assentsure PAC, independent registered accounting firm for The Generation Essentials Group
23.3*
Consent of Maples and Calder (Hong Kong) LLP (included in Exhibit 5.1).
23.4*
Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.2).
24.1*
Power of Attorney (included on the signature page of this Registration Statement).
99.1*
Code of Business Conduct and Ethics of The Generation Essentials Group
107*
Filing Fee Table
*Filed herewith
#Schedules and certain portions of the exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K.
The Company agrees to furnish supplementally a copy of such schedules, or any section thereof, to the SEC upon request.
†Indicates a management contract or compensatory plan.
II-3
Item 9. Undertakings
(a) The
undersigned Registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration
Fee” table in the effective registration statement; and
(iii) To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.
(4) To
file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F
at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3)
of the Securities Act of 1933 need not be furnished, provided, that the Registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those financial statements.
(5) That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date
it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part
of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such date of first use.
II-4
(6) That,
for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of the
securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered
or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser:
(i) any
preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by such
undersigned Registrant;
(iii) the
portion of any other free writing prospectus relating to the offering containing material information about such undersigned Registrant
or its securities provided by or on behalf of the undersigned Registrant; and
(iv) any
other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(b) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The
undersigned Registrant hereby undertakes that:
(1) For
purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time
it was declared effective.
(2) For the purpose
of determining any liability under the Securities Act of 1933, each post- effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-5
SIGNATURE
Pursuant to the requirements
of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in France, on June 24, 2025.
The Generation Essentials Group
By:
/s/ Giampietro
Baudo
Name:
Giampietro Baudo
Title:
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE
PRESENTS, that each of the undersigned constitutes and appoints each of Giampietro Baudo and Samuel Chau, each acting alone, his or her
true and lawful attorneys- in-fact and agents, with full power of substitution and resubstitution, for such person and in his or her name,
place and stead, in any and all capacities, to sign this Registration Statement on Form F-1, or other appropriate form, and all amendments
thereto, including post-effective amendments, of The Generation Essentials Group, and to file the same, with all exhibits thereto, and
other document in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents,
each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that any
such attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements
of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates
indicated.
SIGNATURE
CAPACITY
DATE
/s/ Giampietro Baudo
Chief Executive Officer
June 24, 2025
Giampietro Baudo
(Principal Executive Officer)
/s/ Feridun Hamdullahpur
Co-Chairperson and Independent Director
June 24, 2025
Feridun Hamdullahpur
/s/ Joanne Shoveller
Co-Chairperson and Independent Director
June 24, 2025
Joanne Shoveller
/s/ Calvin Choi
Director
June 24, 2025
Calvin Choi
/s/ Samuel Chau
Director and Chief Financial Officer
June 24, 2025
Samuel Chau
(Principal Financial and Accounting Officer)
II-6
AUTHORIZED REPRESENTATIVE
Pursuant to the requirement of the Securities Act of 1933,
the undersigned, solely in his capacity as the duly authorized representative of The Generation Essentials Group, has signed this registration
statement in Newark, Delaware, United States, on June 24, 2025.
By:
/s/ Donald J. Puglisi
Name:
Donald J. Puglisi
Title:
Managing Director
II-7
EX-3.1
2
ea024654301ex3-1_gener.htm
FOURTH AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE GENERATION ESSENTIALS GROUP
Exhibit 3.1
THE COMPANIES ACT (AS REVISED)
OF THE CAYMAN ISLANDS
EXEMPTED COMPANY LIMITED BY
SHARES
THE FOURTH AMENDED AND RESTATED
MEMORANDUM OF ASSOCIATION
OF
The Generation Essentials
Group
(adopted by a
Special Resolution dated 27 May 2025 and effective on 3 June 2025)
1.The name of the Company is The Generation Essentials Group.
2.The Registered Office of the Company will be situated at the offices of Conyers
Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands, or at such other
location within the Cayman Islands as the Directors may from time to time determine.
3.The objects for which the Company is established are unrestricted and the Company
shall have full power and authority to carry out any object not prohibited by the Companies Act or any other law of the Cayman Islands.
4.The Company shall have and be capable of exercising all the functions of a natural
person of full capacity irrespective of any question of corporate benefit as provided by the Companies Act.
5.The Company will not trade in the Cayman Islands with any person, firm or corporation
except in furtherance of the business of the Company carried on outside the Cayman Islands; provided that nothing in this section shall
be construed as to prevent the Company effecting and concluding contracts in the Cayman Islands, and exercising in the Cayman Islands
all of its powers necessary for the carrying on of its business outside the Cayman Islands.
6.The liability of each Shareholder is limited to the amount, if any, unpaid on the
Shares held by such Shareholder.
7.The authorised share capital of the Company is US$50,000 divided into
1,887,814,313,346.23 shares of a par value of US$0.0000000264856557377049 each, comprising of (i) 1,791,048,851,868.47 voting class A
ordinary shares of a par value of US$0.0000000264856557377049 each, (ii) 72,816,437,663.4429 voting class B ordinary shares of a par value of
US$0.0000000264856557377049 each and (iii) 23,949,023,814.3133
non-voting redeemable preferred shares of a par value of US$0.0000000264856557377049 each. Subject to the Companies Act and the Articles
of Association of the Company, the Company shall have power to redeem or purchase any of its Shares and to increase or reduce its authorised
share capital and to sub-divide or consolidate the said Shares or any of them and to issue all or any part of its capital whether original,
redeemed, increased or reduced with or without any preference, priority, special privilege or other rights or subject to any postponement
of rights or to any conditions or restrictions whatsoever in accordance with articles 8 and 9 of the Articles of Association of the Company,
and so that unless the conditions of issue shall otherwise expressly provide every issue of shares whether stated to be ordinary, preference
or otherwise shall be subject to the powers on the part of the Company hereinbefore provided.
8.The Company has the power contained in the Companies Act to deregister in the Cayman
Islands and be registered by way of continuation in some other jurisdiction.
9.Capitalised terms that are not defined in this Memorandum of Association bear the
same meanings as those given in the Articles of Association of the Company.
Filed: 04-Jun-2025 08:00 EST www.verify.gov.ky File#: 397376 Auth Code: H40443682373
THE COMPANIES ACT (AS REVISED)
OF THE CAYMAN ISLANDS
EXEMPTED COMPANY LIMITED BY
SHARES
THE FOURTH AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
The Generation Essentials
Group
(adopted by a
Special Resolution dated 27 May 2025 and effective on 3 June 2025)
TABLE A
The regulations
contained or incorporated in Table ‘A’ in the First Schedule of the Companies Act shall not apply to the Company and the following
Articles shall comprise the Articles of Association of the Company.
INTERPRETATION
1.In these Articles the following defined terms will have the meanings ascribed to them,
if not inconsistent with the subject or context:
“Affiliate”
means in respect of
a Person, any other Person that, directly or indirectly, through one (1) or more intermediaries, controls, is controlled by, or is under
common control with, such Person, and (i) in the case of a natural person, shall include, without limitation, such person’s spouse,
parents, children, siblings, mother-in-law, father-in- law, brothers-in-law and sisters-in-law, a trust for the benefit of any of the
foregoing, and a corporation, partnership or any other entity wholly or jointly owned by any of the foregoing, and (ii) in the case of
an entity, shall include a partnership, a corporation or any other entity or any natural person which directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common control with, such entity. The term “control”
shall mean the ownership, directly or indirectly, of shares possessing more than fifty percent (50%) of the voting power of the corporation,
partnership or other entity (other than, in the case of a corporation, securities having such power only by reason of the happening of
a contingency), or having the power to control the management or elect a majority of members to the board of directors or equivalent
decision-making body of such corporation, partnership or other entity;
2 Filed: 04-Jun-2025 08:00 EST www.verify.gov.ky File#: 397376 Auth Code: H40443682373
“Articles”
means these
articles of association of the Company, as amended or substituted from time to time;
“Board” and “Board of Directors”
and “Directors”
means the directors
of the Company for the time being, or as the case may be, the directors assembled as a board or as a committee thereof;
“Chairman of the meeting”
means the Chairman
presiding at any meeting of Members or of the Directors;
“Chairman of the Board”
means the chairman
of the Board of Directors, or if more than one chairman of the Board has been appointed, together, the Co- Chairmen of the Board;
“Change of Control”
means (i) any consolidation,
amalgamation or merger of the Company with or into any other Person or other corporate reorganization including any issue of shares, in
which the members of the Company immediately prior to such consolidation, amalgamation, merger or reorganization or issue of shares own
less than fifty percent (50%) of the voting power in the Voting Ordinary Shares immediately after such consolidation, merger, amalgamation,
or reorganization or issue of shares, or any transaction or series of related transactions to which the Company is a party in which in
excess of fifty percent (50%) of the voting power in the Voting Ordinary Shares is transferred, but excluding any transaction effected
solely for tax purposes or to change the Company’s domicile, or (ii) a sale, lease or other disposition of all or substantially
all of the assets of the Company and its subsidiaries; provided that none of the following shall constitute a Change of Control: (a) a
consolidation with a wholly-owned subsidiary of the Company, (b) a merger effected exclusively to change the domicile of the Company,
and (c) an equity financing consummated solely for capital-raising purposes in which the Company is the surviving corporation and which
is approved by the Board;
“Class” or “Classes”
means any class
or classes of Shares as may from time to time be issued by the Company;
“Class A Ordinary Share”
means a voting
class A ordinary share of a par value of US$0.0000000264856557377049 in the share capital of the Company and having the rights provided
for in these Articles;
3 Filed: 04-Jun-2025 08:00 EST www.verify.gov.ky File#: 397376 Auth Code: H40443682373
“Class B Ordinary Share”
means a voting
class B ordinary share of a par value of US$0.0000000264856557377049 in the share capital of the Company and having the rights provided
for in these Articles;
“Company”
means The
Generation Essentials Group, a Cayman Islands exempted company;
“Companies Act”
means the Companies
Act (as revised) of the Cayman Islands;
“Designated Stock Exchange”
means the stock
exchange in the United States on which any equity securities of the Company are listed for trading;
“Designated Stock Exchange Rules”
means the relevant
code, rules and regulations, as amended, from time to time, applicable as a result of the original and continued listing of any equity
securities of the Company on the Designated Stock Exchange;
“electronic”
has
the meaning given to it in the Electronic Transactions Act and any amendment thereto or re-enactments thereof for the time being in force
and includes every other law incorporated therewith or substituted therefor;
“electronic communication”
means electronic
posting to the Company’s Website, transmission to any number, address or internet website or other electronic delivery methods as
otherwise decided and approved by not less than two- thirds of the vote of the Board;
“electronic meeting”
means a general
meeting held and conducted wholly and exclusively by virtual attendance and participation by Members and/or proxies by means of electronic
facilities;
“Electronic Transactions Act”
means the Electronic
Transactions Act (As Revised) of the Cayman Islands and any statutory amendment or re-enactment thereof;
“electronic record”
has the meaning
given to it in the Electronic Transactions Act and any amendment thereto or re-enactments thereof for the time being in force and includes
every other law incorporated therewith or substituted therefor;
“Exempt Persons”
means Mr. Calvin
Chi Kin Choi and any other Person designated by Mr. Calvin Chi Kin Choi;
“hybrid meeting”
a general meeting
convened for (i) physical attendance by Members and/or proxies at the Principal Meeting Place and where applicable, one or more Meeting
Locations and (ii) virtual attendance and participation
by Members and/or proxies by means of electronic facilities;
4 Filed: 04-Jun-2025 08:00 EST www.verify.gov.ky File#: 397376 Auth Code: H40443682373
“Independent Directors”
has the same
meaning as in the Designated Stock Exchange Rules or in Rule 10A-3 under the United States Securities Exchange Act of 1934, as amended,
as the case may be;
“Meeting Location”
has the meaning given
to it in Article 76;
“Memorandum of Association”
means the memorandum
of association of the Company, as amended or substituted from time to time;
“Non-Voting Preferred Shares”
the non-voting
redeemable preferred shares of a par value of US$0.0000000264856557377049 each in the share capital of the Company and having the rights
provided for in these Articles;
“Ordinary Resolution”
means a resolution:
(a)
passed by a simple majority of the votes cast by such Shareholders as, being entitled
to do so, vote in person or, where proxies are allowed, by proxy or, in the case of corporations, by their duly authorised representatives,
at a general meeting of the Company held in accordance with these Articles; or
(b)
approved in writing by all of the Shareholders entitled to vote at a general meeting
of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the resolution so adopted
shall be the date on which the instrument, or the last of such instruments, if more than one, is executed;
“Voting Ordinary Share”
means a Class A Ordinary
Share or a Class B Ordinary Share;
“paid up”
means paid up as to the par value in respect of the issue of any Shares and includes credited as paid up;
“Preferred Shares Liquidation Preference”
means US$100,000,000.
“Person”
means
any natural person, firm, company, joint venture, partnership, corporation, association or other entity (whether or not having a separate
legal personality) or any of them as the context so requires;
5 Filed: 04-Jun-2025 08:00 EST www.verify.gov.ky File#: 397376 Auth Code: H40443682373
“physical meeting”
a general meeting held and conducted by physical attendance and participation by Members and/or proxies at the Principal Meeting Place and/or where applicable, one or more Meeting Locations;
“Principal Meeting Place”
shall have the meaning given to it in Article 64(2);
“Register”
means the register of Members of the Company and where applicable, any branch register of Members of the Company to be maintained at such place within or outside the Cayman Islands as the Board shall determine from time to time in accordance with the Companies Act;
“Registered Office”
means the registered office of the Company as required by the Companies Act;
“Seal”
means the common seal of the Company (if adopted) including any facsimile thereof;
“Secretary”
means any Person appointed by the Directors to perform any of the duties of the secretary of the Company;
“Securities Act”
means the Securities Act of 1933 of the United States, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time;
“Share”
means a share in the share capital of the Company. All references to “Shares” herein shall be deemed to be Shares of any or all Classes or series as the context may require. For the avoidance of doubt in these Articles the expression “Share” shall include a fraction of a Share;
“Shareholder” or “Member”
means a Person who is registered as the holder of one or more Shares in the Register;
“Share Premium Account”
means the share premium account established in accordance with these Articles and the Companies Act;
“signed”
means bearing a signature or representation of a signature affixed by mechanical means or an electronic symbol or process attached to or logically associated with an electronic communication and executed or adopted by a person with the intent to sign the electronic communication;
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“Special Resolution”
means a special resolution of the Company passed in accordance with the Companies Act, being a resolution:
(a)
passed by not less than two-thirds of the votes cast by such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy or, in the case of corporations, by their duly authorised representatives, at a general meeting of the Company of which notice specifying the intention to propose the resolution as a special resolution has been duly given; or
(b)
approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the special resolution so adopted shall be the date on which the instrument or the last of such instruments, if more than one, is executed;
“Statutes”
means the Act
and every other law of the Legislature of the Cayman Islands for the time being in force applying to or affecting the Company, its Memorandum
of Association and/or these Articles; and
“Treasury Share”
means a Share held in the name of the Company
as a treasury share in accordance with the Companies Act.
2.In these Articles, save where the context requires otherwise:
(a)words importing the singular number shall include the plural number and vice versa;
(b)words importing the masculine gender only shall include the feminine gender and
any Person as the context may require;
(c)the word “may” shall be construed as permissive and the word “shall”
shall be construed as imperative;
(d)reference to a dollar or dollars (or US$) and to a cent or cents is reference
to dollars and cents of the United States;
(e)reference to a statutory enactment shall include reference to any amendment or
re- enactment thereof for the time being in force;
(f)reference to any determination by the Directors shall be construed as a determination
by the Directors in their sole and absolute discretion and shall be applicable either generally or in any particular case;
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(g)reference to “in writing” shall be construed as written or represented
by any means reproducible in writing, including any form of print, lithograph, email, facsimile, photograph or telex or represented by
any other substitute or format for storage or transmission for writing including in the form of an electronic record or partly one and
partly another;
(h)any requirements as to delivery under the Articles include delivery in the form
of an electronic record or an electronic communication;
(i)the right of a Member to speak at an electronic meeting or a hybrid meeting shall
include the right to raise questions or make statements to the Chairman of the meeting by means of electronic facilities. Such a right
shall be deemed to have been duly exercised if the questions or statements may be heard or seen by all persons present at the meeting;
(j)a reference to a meeting shall mean a meeting convened and held in any manner
permitted by these Articles and any Member or Director attending and participating at a meeting by means of electronic facilities shall
be deemed to be present at that meeting for all purposes of the Statutes and these Articles, and “attend”, “participate”,
“attending”, “participating”, “attendance” and “participation” shall be construed accordingly;
(k)references to electronic facilities include without limitation website addresses,
webinars, webcast, video or any form of conference call systems via telephone, video, web or otherwise;
(l)where a Member is a corporation, any reference in these Articles to a Member shall,
where the context requires, refer to a duly authorised representative of such Member;
(m)any requirements as to execution or signature under the Articles, including the
execution of the Articles themselves, may be satisfied in the form of an electronic signature as defined in the Electronic Transaction
Act; and
(n)Sections 8 and 19(3) of the Electronic Transactions Act shall not apply.
3.Subject to the last two preceding Articles, any words defined in the Companies
Act shall, if not inconsistent with the subject or context, bear the same meaning in these Articles.
PRELIMINARY
4.The business of the Company may be conducted as the Directors see fit.
5.The Registered Office shall be at such address in the Cayman Islands as the Directors
may from time to time determine. The Company may in addition establish and maintain such other offices and places of business and agencies
in such places as the Directors may from time to time determine.
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6.The expenses incurred in the formation of the Company and in connection with the
offer for subscription and issue of Shares shall be paid by the Company. Such expenses may be amortised over such period as the Directors
may determine and the amount so paid shall be charged against income and/or capital in the accounts of the Company as the Directors shall
determine.
7.The Directors shall keep, or cause to be kept, the Register at such place as the
Directors may from time to time determine and, in the absence of any such determination, the Register shall be kept at the Registered
Office.
SHARES
8.Subject to these Articles, all Shares for the time being unissued shall be under
the control of the Directors who may, in their absolute discretion and without the approval of the Members, cause the Company to:
(a)allot and issue Shares (including, without limitation, preferred shares) (whether
in certificated form or non-certificated form) to such Persons, in such manner, on such terms and conditions and for such consideration,
and at such times as they may from time to time determine;
(b)grant rights over Shares or other securities to be issued in one or more classes
or series as they deem necessary or appropriate and determine the designations, powers, preferences, privileges and other rights attaching
to such Shares or securities, including dividend rights, voting rights, conversion rights, terms of redemption and liquidation preferences,
any or all of which may be greater than the powers, preferences, privileges and rights associated with the then issued and outstanding
Shares, at such times and on such other terms as they think proper; and
(c)grant options with respect to Shares and issue warrants or similar instruments
with respect thereto.
9.The Directors may from time to time authorise the creation of new Classes or series
of Shares and the re-designation and re-classification of Shares of any Classes or series into any number of existing or new Classes or
series of Shares (including Classes or series of preferred Shares) and any new Classes or series of Shares shall be authorised, created
and designated with such rights (including, without limitation, voting, dividend and redemption rights), restrictions, preferences, privileges
and payment obligations as may be fixed and determined by the Directors or by an Ordinary Resolution. The Directors may create and issue
any new Class or series of Shares with such preferred or other rights, all or any of which may be greater than the rights of the Voting
Ordinary Shares and the Non-Voting Preferred Shares, at such time and on such terms as they may think appropriate. Notwithstanding Article
18, the Directors may create and issue from time to time, out of the authorised share capital of the Company, series of preferred Shares
in their absolute discretion and without approval of the Members; provided, however, before any preferred Shares of any such series are
issued, the Directors shall by resolution of Directors determine, with
respect to any series of preferred Shares, the terms and rights of that series, including:
(a)the designation of such series, the number of preferred Shares to constitute such
series and the subscription price thereof if different from the par value thereof;
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(b)whether the preferred Shares of such series shall have voting rights, in addition
to any voting rights provided by law, and, if so, the terms of such voting rights, which may be general or limited;
(c)the dividends, if any, payable on such series, whether any such dividends shall
be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, and the preference or
relation which such dividends shall bear to the dividends payable on any Shares of any other class or any other series of Shares;
(d)whether the preferred Shares of such series shall be subject to redemption by
the Company, and, if so, the times, prices and other conditions of such redemption;
(e)whether the preferred Shares of such series shall have any rights to receive any
part of the assets available for distribution amongst the Members upon the liquidation of the Company, and, if so, the terms of such liquidation
preference, and the relation which such liquidation preference shall bear to the entitlements of the holders of Shares of any other class
or any other series of Shares;
(f)whether the preferred Shares of such series shall be subject to the operation
of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to
the purchase or redemption of the preferred Shares of such series for retirement or other corporate purposes and the terms and provisions
relative to the operation thereof;
(g)whether the preferred Shares of such series shall be convertible into, or exchangeable
for, Shares of any other class or any other series of preferred Shares or any other securities and, if so, the price or prices or the
rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion
or exchange;
(h)the limitations and restrictions, if any, to be effective while any preferred
Shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption
or other acquisition by the Company of, the existing Shares or Shares of any other class of Shares or any other series of preferred Shares;
(i)the conditions or restrictions, if any, upon the creation of indebtedness of the
Company or upon the issue of any additional Shares, including additional Shares of such series or of any other class of Shares or any
other series of preferred Shares; and
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(j)any other powers, preferences and relative, participating, optional and other
special rights, and any qualifications, limitations and restrictions thereof;
and, for such
purposes, the Directors may reserve an appropriate number of Shares for the time being unissued. The Company shall not issue Shares to
bearer.
10.The Company may insofar as may be permitted by law, pay a commission to any Person
in consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any Shares. Such commissions may
be satisfied by the payment of cash or the lodgement of fully or partly paid-up Shares or partly in one way and partly in the other. The
Company may also pay such brokerage as may be lawful on any issue of Shares.
11.The Directors may refuse to accept any application for Shares, and may accept any
application in whole or in part, for any reason or for no reason.
CLASS A ORDINARY SHARES AND CLASS
B ORDINARY SHARES
12.Holders of Class A Ordinary Shares and Class B Ordinary Shares shall at all times
vote together as a single class on all resolutions submitted to a vote by the Members (including Ordinary Resolutions and Special Resolutions).
Each Class A Ordinary Share shall entitle the holder thereof to one (1) vote on all matters subject to vote at general meetings of the
Company. Each Class B Ordinary Share shall entitle the holder thereof to twenty (20) votes on all matters subject to vote at general meetings
of the Company.
13.Each Class B Ordinary Share is convertible into one (1) Class A Ordinary Share
at any time by the holder thereof. The right to convert shall be exercisable by the holder of the Class B Ordinary Share delivering a
written notice to the Company electing conversion and specifying the number of Class B Ordinary Shares that the holder elects to convert
into Class A Ordinary Shares.
14.Any number of Class B Ordinary Shares held by a holder thereof will be automatically
and immediately converted into an equal number of Class A Ordinary Shares upon the occurrence of any of the following:
(a)any direct or indirect sale, transfer, assignment or disposition of such number
of Class B Ordinary Shares by the holder thereof or the direct or indirect transfer or assignment of the voting power attached to such
number of Class B Ordinary Shares through voting proxy or otherwise to any person other than an Exempt Person;
for the avoidance
of doubt, the creation of any pledge, charge, encumbrance or other third party right of whatever description on any of Class B Ordinary
Shares to secure contractual or legal obligations shall not be deemed as a sale, transfer, assignment or disposition unless and until
any such pledge, charge, encumbrance or other third party right is enforced and results in a third party that is not an Exempt Person
holding directly or indirectly beneficial ownership or voting power through voting proxy or otherwise to the related Class B Ordinary
Shares, in which case all the related Class B Ordinary Shares shall be automatically converted into the same number of Class A Ordinary
Shares; or
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(b)the direct or indirect sale, transfer, assignment or disposition of a majority of the issued and
outstanding voting securities of, or the direct or indirect transfer or assignment of the voting power attached to such voting
securities through voting proxy or otherwise, or the direct or indirect sale, transfer, assignment or disposition of all or
substantially all of the assets of, a holder of Class B Ordinary Shares that is an entity to any person other than an Exempt Person;
for the avoidance
of doubt, the creation of any pledge, charge, encumbrance or other third party right of whatever description on the issued and outstanding
voting securities or the assets of a holder of Class B Ordinary Shares that is an entity to secure contractual or legal obligations shall
not be deemed as a sale, transfer, assignment or disposition under this clause (b) unless and until any such pledge, charge, encumbrance
or other third party right is enforced and results in a third party that is not an Exempt Person holding directly or indirectly beneficial
ownership or voting power through voting proxy or otherwise to the related issued and outstanding voting securities or the assets.
15.Any conversion of Class B Ordinary Shares into Class A Ordinary Shares pursuant
to these Articles shall be effected in any manner available under applicable law, including by means of the re-designation and re-classification
of each relevant Class B Ordinary Share as a Class A Ordinary Share. Such conversion shall become effective forthwith upon entries being
made in the Register to record the re-designation and re-classification of the relevant Class B Ordinary Shares as Class A Ordinary Shares.
16.Class A Ordinary Shares are not convertible into Class B Ordinary Shares under
any circumstances.
17.Save and except for voting rights and conversion rights as set out in Articles
12 to 16 (inclusive), the Class A Ordinary Shares and the Class B Ordinary Shares shall rank pari passu with one another and shall have
the same rights, preferences, privileges and restrictions.
NON-VOTING PREFERRED SHARES
17A.Holders of Non-Voting Preferred Shares shall:
(a)only on any transaction that may result in a Change of Control, be entitled to cast one (1) vote per
Non-Voting Preferred Share and shall vote at a separate general meeting of the holders of the Non-Voting Preferred Shares at which
meeting the necessary quorum shall be one or more Persons holding or representing by proxy at least one-third (1/3) of the issued
Non-Voting Preferred Shares or by a written resolution signed by all holders of Non-Voting Preferred Shares (or of the sole holder,
in the event that there is only one holder thereof), and no transaction that may result in a Change of Control may proceed unless
and until so approved with the sanction of an Ordinary Resolution passed by the holders of the Non-Voting Preferred Shares or by
written resolutions of the holders of the non-Voting Preferred Shares passed in accordance with the above. Save for the above and except as provided
in the Memorandum of Association or other provisions of these Articles, each Non-Voting Preferred Share shall not be entitled to vote
on any other matters subject to a vote at general meetings of the Company;
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(b)not be entitled to any dividends for a period of twelve (12) months following the
date of effectiveness of these Articles;
(c)in the event of a liquidation, winding-up or dissolution of the Company, be entitled,
prior and in preference to holders of the Voting Ordinary Shares, to the distribution of the assets of the Company available for distribution
in the amount of the Preferred Shares Liquidation Preference (ratably based on the Non-Voting Preferred Shares held by each holder thereof),
and the assets (if any) available for distribution after the full distribution of the Preferred Shares Liquidation Preference shall be
distributed ratably among holders of the Voting Ordinary Shares;
(d)be subject to redemption and repurchase of the Non-Voting Preferred Shares after
one (1) year of issuance at par value at the option of the Company; and
(e)not be entitled to be have any Non-Voting Preferred Share redeemed, repurchased
or converted into any other class or series of shares at the option of the holder.
MODIFICATION OF RIGHTS
18.Whenever the share capital of the Company is divided into different Classes and
series the rights attached to any such Class or series may, subject to any rights or restrictions for the time being attached to any Class
or series, only be materially adversely varied with the consent in writing of the holders of all of the issued Shares of that Class or
series or with the sanction of an Ordinary Resolution passed at a separate meeting of the holders of the Shares of that Class or series.
To every such separate meeting all the provisions of these Articles relating to general meetings of the Company or to the proceedings
thereat shall, mutatis mutandis, apply, except that the necessary quorum shall be one or more Persons holding or representing by proxy
at least one-third in nominal or par value amount of the issued Shares of the relevant Class or series (but so that if at any adjourned
meeting of such holders a quorum as above defined is not present, those Shareholders who are present shall form a quorum) and that, subject
to any rights or restrictions for the time being attached to the Shares of that Class or series, every Shareholder of the Class or series
shall on a poll have one vote for each Share of the Class or series held by him. For the purposes of this Article the Directors may treat
all the Classes or series or any two or more Classes or series as forming one Class or series if they consider that all such Classes or
series would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate Classes
or series.
19.The rights conferred upon the holders of the Shares of any Class or series issued
with preferred or other rights shall not, subject to any rights or restrictions for the time being attached to the Shares of that Class
or series, be deemed to be materially adversely varied by, inter alia, the creation, allotment or issue of further Shares ranking pari
passu with or subsequent to them or the redemption or purchase of any Shares of any Class or series by the Company.
The rights of the holders of Shares shall not be deemed to be materially adversely varied by the creation or issue of Class or series
of Shares with preferred or other rights including, without limitation, the creation of Class or series of Shares with enhanced or weighted
voting rights.
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CERTIFICATES
20.Every Person whose name is entered as a Member in the Register may, without payment
and upon its written request, request a certificate within two (2) calendar months after allotment or lodgement of transfer (or within
such other period as the conditions of issue shall provide) in the form determined by the Directors. All certificates shall specify the
Share or Shares held by that Person, provided that in respect of a Share or Shares held jointly by several persons the Company shall not
be bound to issue more than one certificate, and delivery of a certificate for a Share to one of several joint holders shall be sufficient
delivery to all. All certificates for Shares shall be delivered personally or sent through the post addressed to the Member entitled thereto
at the Member’s registered address as appearing in the Register.
21.Every share certificate of the Company shall bear legends required under the applicable
laws, including the Securities Act.
22.Any two or more certificates representing Shares of any one Class or series held
by any Member may at the Member’s request be cancelled and a single new certificate for such Shares issued in lieu on payment (if
the Directors shall so require) of one dollar (US$1) or such smaller sum as the Directors shall determine.
23.If a share certificate shall be damaged or defaced or alleged to have been lost,
stolen or destroyed, a new certificate representing the same Shares may be issued to the relevant Member upon request, subject to delivery
up of the old certificate or (if alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity
and the payment of out-of-pocket expenses of the Company in connection with the request as the Directors may think fit.
24.In the event that Shares are held jointly by several persons, any request may be
made by any one of the joint holders and if so made shall be binding on all of the joint holders.
FRACTIONAL SHARES
25.The Directors may issue fractions of a Share and, if so issued, a fraction of
a Share shall be subject to and carry the corresponding fraction of liabilities (whether with respect to nominal or par value, premium,
contributions, calls or otherwise), limitations, preferences, privileges, qualifications, restrictions, rights (including, without prejudice
to the generality of the foregoing, voting and participation rights) and other attributes of a whole Share. If more than one fraction
of a Share of the same Class or series is issued to or acquired by the same Shareholder such fractions shall be accumulated.
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LIEN
26.The Company has a first and paramount lien on every Share (whether or not fully
paid) for all amounts (whether presently payable or not) payable at a fixed time or called in respect of that Share. The Company also
has a first and paramount lien on every Share registered in the name of a Person indebted or under liability to the Company (whether he
is the sole registered holder of a Share or one of two or more joint holders) for all amounts owing by him or his estate to the Company
(whether or not presently payable). The Directors may at any time declare a Share to be wholly or in part exempt from the provisions of
this Article. The Company’s lien on a Share extends to any amount payable in respect of it, including but not limited to dividends.
27.The Company may sell, in such manner as the Directors in their absolute discretion
think fit, any Share on which the Company has a lien, but no sale shall be made unless an amount in respect of which the lien exists is
presently payable nor until the expiration of fourteen (14) calendar
days after a notice in writing, demanding payment of such part of the amount in respect of which the lien exists as is presently payable,
has been given to the registered holder for the time being of the Share, or the Persons entitled thereto by reason of his death or bankruptcy.
28.For giving effect to any such sale the Directors may authorise a Person to transfer
the Shares sold to the purchaser thereof. The purchaser shall be registered as the holder of the Shares comprised in any such transfer
and he shall not be bound to see to the application of the purchase money, nor shall his title to the Shares be affected by any irregularity
or invalidity in the proceedings in reference to the sale.
29.The proceeds of the sale after deduction of expenses, fees and commission incurred
by the Company shall be received by the Company and applied in payment of such part of the amount in respect of which the lien exists
as is presently payable, and the residue shall (subject to a like lien for sums not presently payable as existed upon the Shares prior
to the sale) be paid to the Person entitled to the Shares immediately prior to the sale.
CALLS ON SHARES
30.Subject to the terms of the allotment, the Directors may from time to time make
calls upon the Shareholders in respect of any moneys unpaid on their Shares, and each Shareholder shall (subject to receiving at least
fourteen (14) calendar days’ notice specifying the time or times of payment) pay to the Company at the time or times so specified
the amount called on such Shares. A call shall be deemed to have been made at the time when the resolution of the Directors authorising
such call was passed.
31.The joint holders of a Share shall be jointly and severally liable to pay calls
in respect thereof.
32.If a sum called in respect of a Share is not paid before or on the day appointed
for payment thereof, the Person from whom the sum is due shall pay interest upon the sum at the rate of eight percent per annum from the
day appointed for the payment thereof to the time of the actual payment,
but the Directors shall be at liberty to waive payment of that interest wholly or in part.
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33.The provisions of these Articles as to the liability of joint holders and as to
payment of interest shall apply in the case of non-payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed
time, whether on account of the amount of the Share, or by way of premium, as if the same had become payable by virtue of a call duly
made and notified.
34.The Directors may make arrangements with respect to the issue of partly paid Shares
for a difference between the Shareholders, or the particular Shares, in the amount of calls to be paid and in the times of payment.
35.The Directors may, if they think fit, receive from any Shareholder willing to advance
the same all or any part of the moneys uncalled and unpaid upon any partly paid Shares held by him, and upon all or any of the moneys
so advanced may (until the same would, but for such advance, become presently payable) pay interest at such rate (not exceeding without
the sanction of an Ordinary Resolution, eight percent per annum) as may be agreed upon between the Shareholder paying the sum in advance
and the Directors. No such sum paid in advance of calls shall entitle the Member paying such sum to any portion of a dividend declared
in respect of any period prior to the date upon which such sum would, but for such payment, become presently payable.
FORFEITURE OF SHARES
36.If a Shareholder fails to pay any call or instalment of a call in respect of partly
paid Shares on the day appointed for payment, the Directors may, at any time thereafter during such time as any part of such call or instalment
remains unpaid, serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest
which may have accrued.
37.The notice shall name a further day (not earlier than the expiration of fourteen
(14) calendar days from the date of the notice) on or before which the payment required by the notice is to be made, and shall state that
in the event of non-payment at or before the time appointed, the Shares in respect of which the call was made will be liable to be forfeited.
38.If the requirements of any such notice as aforesaid are not complied with, any
Share in respect of which the notice has been given may at any time thereafter, before the payment required by notice has been made, be
forfeited by a resolution of the Directors to that effect.
39.A forfeited Share may be sold or otherwise disposed of on such terms and in such
manner as the Directors think fit, and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the Directors
think fit.
40.A Person whose Shares have been forfeited shall cease to be a Shareholder in respect
of the forfeited Shares, but shall, notwithstanding, remain liable to pay to the Company all moneys which at the date of forfeiture were
payable by him to the Company in respect of the Shares forfeited,
but his liability shall cease if and when the Company receives payment in full of the amount unpaid on the Shares forfeited.
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41.A certificate in writing under the hand of a Director that a Share has been duly
forfeited on a date stated in the certificate shall be conclusive evidence of the facts in the declaration as against all Persons claiming
to be entitled to the Share.
42.The Company may receive the consideration, if any, given for a Share on any sale
or disposition thereof pursuant to the provisions of these Articles as to forfeiture and may execute a transfer of the Share in favour
of the Person to whom the Share is sold or disposed of and that Person shall be registered as the holder of the Share and shall not be
bound to see to the application of the purchase money, if any, nor shall his title to the Shares be affected by any irregularity or invalidity
in the proceedings in reference to the disposition or sale.
43.The provisions of these Articles as to forfeiture shall apply in the case of non-payment
of any sum which by the terms of issue of a Share becomes due and payable, whether on account of the amount of the Share, or by way of
premium, as if the same had been payable by virtue of a call duly made and notified.
TRANSFER OF SHARES
44.The instrument of transfer of any Share shall be in writing and in any usual or
common form or such other form as the Directors may, in their absolute discretion, approve and be executed by or on behalf of the transferor
and if in respect of a nil or partly paid up Share, or if so required by the Directors, shall also be executed on behalf of the transferee
and shall be accompanied by the certificate (if any) of the Shares to which it relates and such other evidence as the Directors may reasonably
require to show the right of the transferor to make the transfer. The transferor shall be deemed to remain a Shareholder until the name
of the transferee is entered in the Register in respect of the relevant Shares.
45.(a)
The Directors may in their absolute discretion decline to register any transfer of Shares which is not fully paid up or on which the
Company has a lien.
(b)The Directors may also decline to register any transfer of any Share unless:
(i)the instrument of transfer is lodged with the Company, accompanied by the certificate
for the Shares to which it relates and such other evidence as the Board may reasonably require to show the right of the transferor to
make the transfer;
(ii)the instrument of transfer is in respect of only one Class or series of Shares;
(iii)the instrument of transfer is properly stamped, if required;
(iv)in the case of a transfer to joint holders, the number of joint holders to whom
the Share is to be transferred does not exceed four; and
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(v)a fee of such maximum sum as the Designated Stock Exchange may determine to be
payable, or such lesser sum as the Board of Directors may from time to time require, is paid to the Company in respect thereof.
46.The registration of transfers may, on ten (10) calendar days’ notice being
given by advertisement in such one or more newspapers, by electronic means or by any other means in accordance with the Designated Stock
Exchange Rules, be suspended and the Register closed at such times and for such periods as the Directors may, in their absolute discretion,
from time to time determine, provided always that such registration of transfer shall not be suspended nor the Register closed for more
than thirty (30) calendar days in any calendar year.
47.All instruments of transfer that are registered shall be retained by the Company.
If the Directors refuse to register a transfer of any Shares, they shall within three (3) calendar months after the date on which the
transfer was lodged with the Company send notice of the refusal to each of the transferor and the transferee.
TRANSMISSION OF SHARES
48.The legal personal representative of a deceased sole holder of a Share shall be
the only Person recognised by the Company as having any title to the Share. In the case of a Share registered in the name of two or more
holders, the survivors or survivor, or the legal personal representatives of the deceased survivor, shall be the only Person recognised
by the Company as having any title to the Share.
49.Any Person becoming entitled to a Share in consequence of the death or bankruptcy
of a Shareholder shall, upon such evidence being produced as may from time to time be required by the Directors, have the right either
to be registered as a Shareholder in respect of the Share or, instead of being registered himself, to make such transfer of the Share
as the deceased or bankrupt Person could have made; but the Directors shall, in either case, have the same right to decline or suspend
registration as they would have had in the case of a transfer of the Share by the deceased or bankrupt Person before the death or bankruptcy.
50.A Person becoming entitled to a Share by reason of the death or bankruptcy of a
Shareholder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered Shareholder,
except that he shall not, before being registered as a Shareholder in respect of the Share, be entitled in respect of it to exercise any
right conferred by membership in relation to meetings of the Company, provided however, that the Directors may at any time give notice
requiring any such person to elect either to be registered himself or to transfer the Share, and if the notice is not complied with within
ninety (90) calendar days, the Directors may thereafter withhold payment of all dividends, bonuses or other monies payable in respect
of the Share until the requirements of the notice have been complied with.
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REGISTRATION OF EMPOWERING INSTRUMENTS
51.The Company shall be entitled to charge a fee not exceeding one dollar (US$1.00)
on the registration of every probate, letters of administration, certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
ALTERATION OF SHARE CAPITAL
52.The Company may from time to time by Ordinary Resolution increase the share capital
by such sum, to be divided into Shares of such Classes or series and amount, as the resolution shall prescribe.
53.(1)
The Company may by Ordinary Resolution:
(a)increase its share capital by new Shares of such amount as it thinks expedient;
(b)consolidate and divide all or any of its share capital into Shares of a larger
amount than its existing Shares;
(c)subdivide its Shares, or any of them, into Shares of an amount smaller than that
fixed by the Memorandum of Association, provided that in the subdivision the proportion between the amount paid and the amount, if any,
unpaid on each reduced Share shall be the same as it was in case of the Share from which the reduced Share is derived; and
(d)cancel any Shares that, at the date of the passing of the resolution, have not
been taken or agreed to be taken by any Person and diminish the amount of its share capital by the amount of the Shares so cancelled.
(2)No alteration may be made pursuant to Article 53(1) or otherwise
to the nominal or par value of the Class A Ordinary Shares, the Class B Ordinary Shares or the Non- Voting Preferred Shares unless an
identical alteration is made to the nominal or par value of the Class A Ordinary Shares, the Class B Ordinary Shares or the Non- Voting
Preferred Shares, as the case may be.
54.The Company may by Special Resolution reduce its share capital and any capital
redemption reserve in any manner authorised by law.
REDEMPTION, PURCHASE AND SURRENDER
OF SHARES
55.Subject to the provisions of the Companies Act and these Articles, the Company may:
(a)issue Shares that are to be redeemed or are liable to be redeemed at the option
of the Shareholder or the Company. The redemption of Shares shall be effected in such manner and upon such terms as may be determined,
before the issue of such Shares, by either the Board or by the Shareholders by Special Resolution;
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(b)purchase its own Shares (including any redeemable Shares) on such terms and in
such manner and terms as have been approved by the Board or by the Members by Ordinary Resolution, or are otherwise authorised by these
Articles; and
(c)make a payment in respect of the redemption or purchase of its own Shares in any
manner permitted by the Companies Act, including out of capital.
56.The purchase of any Share shall not oblige the Company to purchase any other Share
other than as may be required pursuant to applicable law and any other contractual obligations of the Company.
57.The holder of the Shares being purchased shall be bound to deliver up to the Company
the certificate(s) (if any) thereof for cancellation and thereupon the Company shall pay to him the purchase or redemption monies or consideration
in respect thereof.
58.The Directors may accept the surrender for no consideration of any fully paid Share.
TREASURY SHARES
59.The Directors may, prior to the purchase, redemption or surrender of any Share,
determine that such Share shall be held as a Treasury Share.
60.The Directors may determine to cancel a Treasury Share or transfer a Treasury Share
on such terms as they think proper (including, without limitation, for nil consideration).
GENERAL MEETINGS
61.All general meetings other than annual general meetings shall be called extraordinary
general meetings.
62.(a)
The Company may but shall not be obliged to hold a general meeting in each calendar year as its annual general meeting. The Company shall
specify an annual general meeting as such in the notices calling the meeting. All general meetings (including an annual general meeting,
any adjourned general meeting or postponed meeting) may be held as a physical meeting at such times and in any part of the world and
at one or more locations as provided in Article 76, as a hybrid meeting or as an electronic meeting, as may be determined by the Board
in its absolute discretion.
(b)At these meetings the report of the Directors (if any) shall
be presented.
63.(a)
The Chairman of the Board or the Directors, acting by a resolution of the Board, may call general meetings, and they shall on a Shareholders’
requisition forthwith proceed to convene an extraordinary general meeting of the Company.
(b)A Shareholders’ requisition is a requisition of Members holding at the date
of deposit of the requisition Shares which carry in aggregate not less than one-third (1/3) of all votes attaching to all issued and outstanding
Shares of the Company that as at the date of
the deposit carry the right to vote at general meetings of the Company.
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(c)The requisition must state the objects of the meeting and must be signed by the
requisitionists and deposited at the Registered Office, and may consist of several documents in like form each signed by one or more requisitionists.
(d)If there are no Directors as at the date of the deposit of the Shareholders’
requisition, or if the Directors do not within twenty-one (21) calendar days from the date of the deposit of the requisition duly proceed
to convene a general meeting to be held within a further twenty-one (21) calendar days, the requisitionists, or any of them representing
more than one-half (1/2) of the total voting rights of all of them, may themselves convene a general meeting, but any meeting so convened
shall not be held after the expiration of three (3) calendar months after the expiration of the said twenty-one (21) calendar days.
(e)A general meeting convened as aforesaid by requisitionists shall be convened in
the same manner as nearly as possible as that in which general meetings are to be convened by Directors.
NOTICE OF GENERAL MEETINGS
64.(1) At least seven (7) calendar days’ notice shall be given for any general
meeting. Every notice shall be exclusive of the day on which it is given or deemed to be given and of the day for which it is given and
shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a
general meeting of the Company shall, whether or not the notice specified in this Article has been given and whether or not the provisions
of these Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed:
(a)in the case of an annual general meeting, by all the Shareholders (or their proxies)
entitled to attend and vote thereat; and
(b)in the case of an extraordinary general meeting, by a majority of the Shareholders
having a right to attend and vote at the meeting, present in person or by proxy or, in the case of a corporation or other non-natural
person, by its duly authorised representative or proxy.
(2) The notice
for any general meeting shall specify the time and date of the meeting and, save for an electronic meeting, the place of the meeting
and if there is more than one meeting location as determined by the Board pursuant to Article 76, the principal place of the meeting
(the “Principal Meeting Place”). If the general meeting is to be a hybrid meeting or an electronic meeting, the
notice shall state the form of the general meeting and include details of the electronic facilities for attendance and participation
by electronic means at the meeting or where such details will be made available by the Company prior to the meeting. The notice
shall state the general nature of the business to be discussed at the meeting. Notice of every general meeting shall be given to all
Members other than to such Members as,
under the provisions of these Articles or the terms of issue of the shares they hold, are not entitled to receive such notices from the
Company.
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65.The accidental omission to give notice of a meeting to or the non-receipt of a
notice of a meeting by any Shareholder shall not invalidate the proceedings at any meeting.
PROCEEDINGS AT GENERAL
MEETINGS
66.No business except for the appointment of a Chairman for the meeting shall be transacted
at any general meeting unless a quorum of Shareholders is present at the time when the meeting proceeds to business. One or more Shareholders
holding Shares which carry in aggregate (or representing by proxy) not less than one-third (1/3) of all votes attaching to all Shares
in issue and entitled to vote at such general meeting, present in person or by proxy or, if a corporation or other non-natural person,
by its duly authorised representative, shall be a quorum for all purposes; provided, that the presence in person or by proxy of holders
of a majority of Class B Ordinary Shares shall be required in any event.
67.If within half an hour from the time appointed for the meeting a quorum is not
present, the meeting shall be dissolved.
68.If the Directors wish to make this facility available for a specific general meeting
or all general meetings of the Company, participation in any general meeting of the Company may be by means of a telephone or similar
communication equipment by way of which all Persons participating in such meeting can communicate with each other and such participation
shall be deemed to constitute presence in person at the meeting.
69.The Chairman of the Board, if any, shall preside as chairman at every general
meeting of the Company. The Chairman of the Board (if any) or, if there is more than one Chairman of the Board present, any one of them
as may be agreed amongst themselves or failing such agreement, any one of them elected by simple majority of all the Directors present
or, if such Chairman of the Board is or are absent or declines to take the chair at such meeting, the deputy chairman or vice chairman
(if any) shall take the chair at every general meeting.
70.If there be no such Chairman of the Board or deputy or vice chairman, or, if at
any general meeting none of such Chairman of the Board or deputy or vice chairman is present within fifteen minutes after the time appointed
for holding such meeting, or all such persons decline to take the chair at such meeting, the Directors present shall choose one of their
number as Chairman of the meeting, and if no Director be present or if all the Directors present decline to take the chair or if the Chairman
of the meeting chosen shall retire from the chair, then the Members present shall choose one of their number to be Chairman of the meeting.
For the avoidance of doubt, only one person shall take the chair of any general meeting.
71.The Chairman
of the meeting may with the consent of any general meeting at which a quorum is present (and shall if so directed by the meeting) adjourn
a meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business
left unfinished at the meeting from which the adjournment took place. When a meeting, or adjourned meeting, is adjourned for fourteen
(14) calendar days or more, notice
of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned meeting.
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72.The Directors may cancel or postpone any duly convened general meeting at any
time prior to such meeting, except for general meetings requisitioned by the Shareholders in accordance with these Articles, for any reason
or for no reason, upon notice in writing to Shareholders. A postponement may be for a stated period of any length or indefinitely as the
Directors may determine.
73.At any general meeting a resolution put to the vote of the meeting shall be decided
by way of a poll and not on a show of hands.
74.A poll shall be taken in such manner as the Chairman of the meeting directs, and
the result of the poll shall be deemed to be the resolution of the meeting.
75.All questions submitted to a meeting shall be decided by an Ordinary Resolution
except where a greater majority is required by these Articles or by the Companies Act. In the case of an equality of votes, whether on
a show of hands or on a poll, the Chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall
be entitled to a second or casting vote.
76.(1)
The Board may, at its absolute discretion, arrange for persons entitled to attend a general meeting to do so by simultaneous attendance
and participation by means of electronic facilities at such location or locations (“Meeting Location(s)”) determined
by the Board at its absolute discretion. Any Member or any proxy attending and participating in such way or any Member or proxy attending
and participating in an electronic meeting or a hybrid meeting by means of electronic facilities is deemed to be present at and shall
be counted in the quorum of the meeting.
(2)All general meetings are subject to the following and, where appropriate, all
references to a “Member” or “Members” in this sub-paragraph (2) shall include a proxy or proxies respectively:
(a)where a Member is attending a Meeting Location and/or in the case of a hybrid meeting,
the meeting shall be treated as having commenced if it has commenced at the Principal Meeting Place;
(b)Members present in person or by proxy at a Meeting Location and/or Members attending
and participating in an electronic meeting or a hybrid meeting by means of electronic facilities shall be counted in the quorum for and
entitled to vote at the meeting in question, and that meeting shall be duly constituted and its proceedings valid provided that the Chairman
of the meeting is satisfied that adequate electronic facilities are available throughout the meeting to ensure that Members at all Meeting
Locations and Members participating in an electronic meeting or a hybrid meeting by means of electronic
facilities are able to participate in the business for which the meeting has been convened;
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(c)where Members attend a meeting by being present at one of the Meeting Locations
and/or where Members are participating in an electronic meeting or a hybrid meeting by means of electronic facilities, a failure (for
any reason) of the electronic facilities or communication equipment, or any other failure in the arrangements for enabling those in a
Meeting Location other than the Principal Meeting Place to participate in the business for which the meeting has been convened or in the
case of an electronic meeting or a hybrid meeting, the inability of one or more Members or proxies to access, or continue to access, the
electronic facilities despite adequate electronic facilities having been made available by the Company, shall not affect the validity
of the meeting or the resolutions passed, or any business conducted there or any action taken pursuant to such business provided that
there is a quorum present throughout the meeting.
(d)if any of the Meeting Locations is not in the same jurisdiction as the Principal
Meeting Place and/or in the case of a hybrid meeting, the provisions of these Articles concerning the service and giving of notice for
the meeting, and the time for lodging proxies, shall apply by reference to the Principal Meeting Place; and in the case of an electronic
meeting, the time for lodging proxies shall be as stated in the notice for the meeting.
76A.The Board and, at any general meeting, the Chairman of the meeting
may from time to time make arrangements for managing attendance and/or participation and/or voting at the Principal Meeting Place, any
Meeting Location(s) and/or participation in an electronic meeting or a hybrid meeting by means of electronic facilities (whether involving
the issue of tickets or some other means of identification, passcode, seat reservation, electronic voting or otherwise) as it shall in
its absolute discretion consider appropriate, and may from time to time change any such arrangements, provided that a Member who, pursuant
to such arrangements, is not entitled to attend, in person or by proxy, at any Meeting Location shall be entitled so to attend at one
of the other Meeting Locations; and the entitlement of any Member so to attend the meeting or adjourned meeting or postponed meeting
at such Meeting Location or Meeting Locations shall be subject to any such arrangement as may be for the time being in force and by the
notice of meeting or adjourned meeting or postponed meeting stated to apply to the meeting.
76B.If it appears to the Chairman of the meeting that:
(a)the electronic facilities at the Principal Meeting Place or at such other Meeting
Location(s) at which the meeting may be attended have become inadequate for the purposes referred to in Article 76(1) or are otherwise
not sufficient to allow the meeting to be conducted substantially in accordance with the provisions set out in the notice of the meeting;
or
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(b)in the case of an electronic meeting or a hybrid meeting, electronic facilities
being made available by the Company have become inadequate; or
(c)it is not possible to ascertain the view of those present or to give all persons
entitled to do so a reasonable opportunity to communicate and/or vote at the meeting; or
(d)there is violence or the threat of violence, unruly behaviour or other disruption
occurring at the meeting or it is not possible to secure the proper and orderly conduct of the meeting;
then, without
prejudice to any other power which the Chairman of the meeting may have under these Articles or at common law, the Chairman of the meeting
may, at his absolute discretion, without the consent of the meeting, and before or after the meeting has started and irrespective of whether
a quorum is present, interrupt or adjourn the meeting (including adjournment for indefinite period). All business conducted at the meeting
up to the time of such adjournment shall be valid.
76C.The Board and, at any general meeting, the Chairman of the meeting
may make any arrangement and impose any requirement or restriction the Board or the Chairman of the meeting, as the case may be, considers
appropriate to ensure the security and orderly conduct of a meeting (including, without limitation, requirements for evidence of identity
to be produced by those attending the meeting, the searching of their personal property and the restriction of items that may be taken
into the meeting place, determining the number and frequency of and the time allowed for questions that may be raised at a meeting).
Members shall also comply with all requirements or restrictions imposed by the owner of the premises at which the meeting is held. Any
decision made under this Article shall be final and conclusive and a person who refuses to comply with any such arrangements, requirements
or restrictions may be refused entry to the meeting or ejected (physically or electronically) from the meeting.
76D.If, after the sending of notice of a general meeting but before
the meeting is held, or after the adjournment of a meeting but before the adjourned meeting is held (whether or not notice of the adjourned
meeting is required), the Board, in its absolute discretion, consider that it is inappropriate, impracticable, unreasonable or undesirable
for any reason to hold the general meeting on the date or at the time or place or by means of electronic facilities specified in the
notice calling the meeting, the Board may change or postpone the meeting to another date, time and/or place and/or change the electronic
facilities and/or change the form of the meeting (a physical meeting, an electronic meeting or a hybrid meeting) without approval from
the Members. This Article shall be subject to the following:
(a)when only the form of the meeting or electronic facilities specified in the notice
are changed, the Board shall notify the Members of details of such change in such manner as the Board may determine;
(b)when a meeting is postponed or changed in accordance with this Article, subject
to and without prejudice to Article 71, unless already specified in the original notice of the meeting, the Board shall fix the date,
time, place (if applicable) and electronic facilities
(if applicable) for the postponed or changed meeting and shall notify the Members of such details in such manner as the Board may determine;
further, all proxy forms shall be valid (unless revoked or replaced by a new proxy) if they are received as required by these Articles
not less than 48 hours before the time of the postponed meeting; and
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(c)Notice of the business to be transacted at the postponed or changed meeting shall
not be required, nor shall any accompanying documents be required to be recirculated, if the business to be transacted at the postponed
or changed meeting is the same as that set out in the original notice of general meeting circulated to the Members.
76E.All persons seeking to attend and participate in an electronic
meeting or a hybrid meeting shall be responsible for maintaining adequate facilities to enable them to do so. Subject to Article 76B,
any inability of a person or persons to attend or participate in a general meeting by way of electronic facilities shall not invalidate
the proceedings of and/or resolutions passed at that meeting.
VOTES OF SHAREHOLDERS
77.Subject to any rights and restrictions for the time being attached to any Share,
on a show of hands every Shareholder present in person or by proxy (or, if a corporation or other non- natural person, by its duly authorised
representative or proxy) shall, at a general meeting of the Company, each have one vote and on a poll every Shareholder present in person
or by proxy (or, if a corporation or other non-natural person, by its duly authorised representative or proxy) shall have one (1) vote
for each Class A Ordinary Share of which he is the holder and [twenty] ([20]) votes for each Class B Ordinary Share of which he is the
holder.
78.In the case of joint holders the vote of the senior who tenders a vote whether
in person or by proxy (or, if a corporation or other non-natural person, by its duly authorised representative or proxy) shall be accepted
to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the
names stand in the Register.
79.Shares carrying the right to vote that are held by a Shareholder of unsound mind,
or in respect of whom an order has been made by any court having jurisdiction in lunacy, may be voted, whether on a show of hands or on
a poll, by his committee, or other Person in the nature of a committee appointed by that court, and any such committee or other Person
may vote in respect of such Shares by proxy.
80.No Shareholder shall be entitled to vote at any general meeting of the Company
unless all calls, if any, or other sums presently payable by him in respect of Shares carrying the right to vote held by him have been
paid.
81.On a poll votes may be given either personally or by proxy.
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82.Each Shareholder, other than a recognised clearing house (or its nominee(s)) or
depositary (or its nominee(s)), may only appoint one proxy on a show of hand. The instrument appointing a proxy shall be in writing under
the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under Seal or under
the hand of an officer or attorney duly authorised. A proxy need not be a Shareholder.
83.An instrument appointing a proxy may be in any usual or common form or such other
form as the Directors may approve.
84.The instrument appointing a proxy shall be deposited at the Registered Office or
at such other place as is specified for that purpose in the notice convening the meeting, or in any instrument of proxy sent out by the
Company:
(a)not less than forty-eight (48) hours before the time for holding the meeting or
adjourned meeting at which the person named in the instrument proposes to vote; or
(b)in the case of a poll taken more than forty-eight (48) hours after it is demanded,
be deposited as aforesaid after the poll has been demanded and not less than twenty- four (24) hours before the time appointed for the
taking of the poll; or
(c)where the poll is not taken forthwith but is taken not more than forty-eight (48)
hours after it was demanded be delivered at the meeting at which the poll was demanded to the Chairman of the meeting or to the secretary
or to any director;
provided that
the Directors may in the notice convening the meeting, or in an instrument of proxy sent out by the Company, direct that the instrument
appointing a proxy may be deposited at such other time (no later than the time for holding the meeting or adjourned meeting) at the Registered
Office or at such other place as is specified for that purpose in the notice convening the meeting, or in any instrument of proxy sent
out by the Company. The Chairman of the meeting may in any event at his discretion direct that an instrument of proxy shall be deemed
to have been duly deposited. An instrument of proxy that is not deposited in the manner permitted shall be invalid.
85.The instrument appointing a proxy shall be deemed to confer authority to demand
or join in demanding a poll.
86.A resolution in writing signed by all the Shareholders for the time being entitled
to receive notice of and to attend and vote at general meetings of the Company (or being corporations by their duly authorised representatives)
shall be as valid and effective as if the same had been passed at a general meeting of the Company duly convened and held.
CORPORATIONS ACTING BY REPRESENTATIVES
AT MEETINGS
87.Any corporation which is a Shareholder or a Director may by resolution of its
directors or other governing body authorise such Person as it thinks fit to act as its representative at any meeting of the Company or
of any meeting of holders of a Class or series of Shares or of the Directors
or of a committee of Directors, and the Person so authorised shall be entitled to exercise the same powers on behalf of the corporation
which he represents as that corporation could exercise if it were an individual Shareholder or Director.
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DEPOSITARY AND CLEARING
HOUSES
88.If a recognised clearing house (or its nominee(s)) or depositary (or its nominee(s))
is a Member of the Company it may, by resolution of its directors or other governing body or by power of attorney, authorise such Person(s)
as it thinks fit to act as its representative(s) at any general meeting of the Company or of any Class or series of Shareholders provided
that, if more than one Person is so authorised, the authorisation shall specify the number and Class or series of Shares in respect of
which each such Person is so authorised. A Person so authorised pursuant to this Article shall be entitled to exercise the same powers
on behalf of the recognised clearing house (or its nominee(s)) or depositary (or its nominee(s)) which he represents as that recognised
clearing house (or its nominee(s)) or depositary (or its nominee(s)) could exercise if it were an individual Member holding the number
and Class or series of Shares specified in such authorisation, including the right to vote individually on a show of hands.
DIRECTORS
89.(a)
Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than three (3) Directors, the
exact number of Directors to be determined from time to time by the Board of Directors, including not less than two Independent Directors,
all of whom should meet the director qualification and eligibility criteria of applicable laws and the applicable Designated Stock Exchange
Rules.
(b)The Directors may from time to time elect or otherwise appoint one or more of them
to the office of Chairman of the Board and another to be the deputy or vice chairman (or two or more deputy or vice chairman) of the Board
and determine the period for which each of them is to hold office. The Chairman of the Board, or if there is more than one Chairman of
the Board present, any one of them as may be agreed amongst themselves or failing such agreement, any one elected by simple majority of
all the Directors present, shall preside as chairman at a meeting of the Board, or if such Chairman of the Board is or are absent or declines
to take the chair at a meeting of the Board, the deputy or vice chairman (if any) shall preside as chairman at such meeting of the Board,
but if no such Chairman of the Board or deputy or vice chairman be elected or appointed, or if at any meeting of the Board none of the
Chairman of the Board or deputy or vice chairman is present or all such persons decline to take the chair of such meeting of the Board
within five minutes after the time appointed for holding the same, the Directors present shall choose one of their number to be chairman
of such meeting. All the provisions of Article 98 shall mutatis mutandis apply to any Directors elected or otherwise appointed to any
office in accordance with the provisions of this Article. For the avoidance of doubt, only one person shall take the chair of any meeting
of the Board.
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(c)Whenever there is for the time being more than one Director elected or appointed
as Chairman of the Board, they shall together be the “Co- Chairmen of the Board” and each of them shall be referred to as
“Co-Chairman of the Board” and entitled to discharge separately all the functions and duties of the position to which he is
appointed, and references in these Articles to the “Chairman of the Board” shall, unless the context requires otherwise, be
to each of the Directors for the time being elected or appointed to that position.
(d)The Company may by Ordinary Resolution appoint any person to be a Director.
(e)The Board may, by the affirmative vote of a simple majority of the remaining Directors
present and voting at a Board meeting, appoint any person as a Director, to fill a vacancy on the Board arising from the office of any
Director being vacated in any of the circumstances described in Article 110, or as an addition to the existing Board.
(f)An appointment of a Director may be on terms that the Director shall automatically
retire from office (unless he has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event
or after any specified period in a written agreement between the Company and the Director, if any; but no such term shall be implied in
the absence of express provision. Each Director whose term of office expires shall be eligible for re-election at a meeting of the Shareholders
or re-appointment by the Board.
90.A Director may be removed from office by Ordinary Resolution of the Company, notwithstanding
anything in these Articles or in any agreement between the Company and such Director (but without prejudice to any claim for damages under
such agreement). A vacancy on the Board created by the removal of a Director under the previous sentence may be filled by Ordinary Resolution
or by the affirmative vote of a simple majority of the remaining Directors present and voting at a Board meeting.
91.The Board may, from time to time, and except as required by applicable law or Designated
Stock Exchange Rules, adopt, institute, amend, modify or revoke the corporate governance policies or initiatives of the Company and determine
on various corporate governance related matters of the Company as the Board shall determine by resolution of Directors from time to time.
92.A Director shall not be required to hold any Shares in the Company by way of qualification.
A Director who is not a Member of the Company shall nevertheless be entitled to attend and speak at general meetings.
93.The remuneration of the Directors may be determined by the Directors or by Ordinary
Resolution.
94.The Directors shall be entitled to be paid for their travelling, hotel and other expenses properly incurred by them in going to, attending
and returning from meetings of the Directors, or any committee of the Directors, or general meetings of the Company, or otherwise in connection
with the business of the Company, or to receive such fixed allowance in respect thereof as may be determined by the Directors from time to time, or a combination partly of one such method and partly
the other.
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ALTERNATE DIRECTOR OR PROXY
95.Any Director may in writing appoint another Person to be his alternate and, save
to the extent provided otherwise in the form of appointment, such alternate shall have authority to sign written resolutions on behalf
of the appointing Director, but shall not be required to sign such written resolutions where they have been signed by the appointing director,
and to act in such Director’s place at any meeting of the Directors at which the appointing Director is unable to be present. Every
such alternate shall be entitled to attend and vote at meetings of the Directors as a Director when the Director appointing him is not
personally present and where he is a Director to have a separate vote on behalf of the Director he is representing in addition to his
own vote. A Director may at any time in writing revoke the appointment of an alternate appointed by him. Such alternate shall be deemed
for all purposes to be a Director and shall not be deemed to be the agent of the Director appointing him. The remuneration of such alternate
shall be payable out of the remuneration of the Director appointing him and the proportion thereof shall be agreed between them.
96.Any Director may appoint any Person, whether or not a Director, to be the proxy
of that Director to attend and vote on his behalf, in accordance with instructions given by that Director, or in the absence of such instructions
at the discretion of the proxy, at a meeting or meetings of the Directors which that Director is unable to attend personally. The instrument
appointing the proxy shall be in writing under the hand of the appointing Director and shall be in any usual or common form or such other
form as the Directors may approve, and must be lodged with the Chairman of the meeting of the Directors at which such proxy is to be used,
or first used, prior to the commencement of the meeting.
POWERS AND DUTIES OF DIRECTORS
97.Subject to the Companies Act, these Articles and any resolutions passed in a general
meeting, the business of the Company shall be managed by the Directors, who may pay all expenses incurred in setting up and registering
the Company and may exercise all powers of the Company. No resolution passed by the Company in general meeting shall invalidate any prior
act of the Directors that would have been valid if that resolution had not been passed.
98.Subject to these Articles, the Directors may from time to time appoint any natural
person or corporation, whether or not a Director to hold such office in the Company as the Directors may think necessary for the administration
of the Company, including but not limited to, chief executive officer, one or more other executive officers, president, one or more vice-presidents,
treasurer, assistant treasurer, manager or controller, and for such term and at such remuneration (whether by way of salary or commission
or participation in profits or partly in one way and partly in another), and with such powers and duties as the Directors may think fit.
Any natural person or corporation so appointed by the Directors may be removed by the Directors. The Directors may also appoint one or
more of their number to the office of managing director upon like terms, but any such appointment shall ipso facto terminate
if any managing director ceases for any cause to be a Director, or if the Company by Ordinary Resolution resolves that his tenure of office
be terminated.
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99.The Directors may appoint any natural person or corporation to be a Secretary (and
if need be an assistant Secretary or assistant Secretaries) who shall hold office for such term, at such remuneration and upon such conditions
and with such powers as they think fit. Any Secretary or assistant Secretary so appointed by the Directors may be removed by the Directors
or by the Company by Ordinary Resolution.
100.The Directors may delegate any of their powers to committees consisting of such
member or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to
any regulations that may be imposed on it by the Directors.
101.The Directors may from time to time and at any time by power of attorney (whether
under Seal or under hand) or otherwise appoint any company, firm or Person or body of Persons, whether nominated directly or indirectly
by the Directors, to be the attorney or attorneys or authorised signatory (any such person being an “Attorney” or “Authorised
Signatory”, respectively) of the Company for such purposes and with such powers, authorities and discretion (not exceeding those
vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit,
and any such power of attorney or other appointment may contain such provisions for the protection and convenience of Persons dealing
with any such Attorney or Authorised Signatory as the Directors may think fit, and may also authorise any such Attorney or Authorised
Signatory to delegate all or any of the powers, authorities and discretion vested in him.
102.The Directors may from time to time provide for the management of the affairs
of the Company in such manner as they shall think fit and the provisions contained in the three next following Articles shall not limit
the general powers conferred by this Article.
103.The Directors from time to time and at any time may establish any committees, local
boards or agencies for managing any of the affairs of the Company and may appoint any natural person or corporation to be a member of
such committees or local boards and may appoint any managers or agents of the Company and may fix the remuneration of any such natural
person or corporation.
104.The Directors from time to time and at any time may delegate to any such committee,
local board, manager or agent any of the powers, authorities and discretions for the time being vested in the Directors and may authorise
the members for the time being of any such local board, or any of them to fill any vacancies therein and to act notwithstanding vacancies
and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit and the
Directors may at any time remove any natural person or corporation so appointed and may annul or vary any such delegation, but no Person
dealing in good faith and without notice of any such annulment or variation shall be affected thereby.
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105.Any such delegates as aforesaid may be authorised by the Directors to sub-delegate
all or any of the powers, authorities, and discretion for the time being vested in them.
BORROWING POWERS OF DIRECTORS
106.The Directors may from time to time at their discretion exercise all the powers
of the Company to raise or borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled
capital or any part thereof, to issue debentures, debenture stock, bonds and other securities, whether outright or as collateral security
for any debt, liability or obligation of the Company or of any third party.
THE SEAL
107.The Seal shall not be affixed to any instrument except by the authority of a resolution
of the Directors provided always that such authority may be given prior to or after the affixing of the Seal and if given after may be
in general form confirming a number of affixings of the Seal. The Seal shall be affixed in the presence of a Director or a Secretary (or
an assistant Secretary) or in the presence of any one or more Persons as the Directors may appoint for the purpose and every Person as
aforesaid shall sign every instrument to which the Seal is so affixed in their presence.
108.The Company may maintain a facsimile of the Seal in such countries or places as
the Directors may appoint and such facsimile Seal shall not be affixed to any instrument except by the authority of a resolution of the
Directors provided always that such authority may be given prior to or after the affixing of such facsimile Seal and if given after may
be in general form confirming a number of affixings of such facsimile Seal. The facsimile Seal shall be affixed in the presence of such
Person or Persons as the Directors shall for this purpose appoint and such Person or Persons as aforesaid shall sign every instrument
to which the facsimile Seal is so affixed in their presence and such affixing of the facsimile Seal and signing as aforesaid shall have
the same meaning and effect as if the Seal had been affixed in the presence of and the instrument signed by a Director or a Secretary
(or an assistant Secretary) or in the presence of any one or more Persons as the Directors may appoint for the purpose.
109.Notwithstanding the foregoing, a Secretary or any assistant Secretary shall have
the authority to affix the Seal, or the facsimile Seal, to any instrument for the purposes of attesting authenticity of the matter contained
therein but which does not create any obligation binding on the Company.
DISQUALIFICATION OF DIRECTORS
110.The office of Director shall be vacated, if the Director:
(a)becomes bankrupt or makes any arrangement or composition with his creditors;
(b)dies or is found to be or becomes of unsound mind;
(c)resigns his office by notice in writing to the Company;
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(d)without leave of absence from the Board, is absent from meetings of the Board for
three (3) consecutive meetings and the Board resolves that his office be vacated; or
(e)is removed from office pursuant to any other provision of these Articles.
PROCEEDINGS OF DIRECTORS
111.The Directors may meet together, either in or outside the Cayman Islands, for the
despatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes. At any meeting of the Directors, each Director present in person or represented by his proxy
or alternate shall be entitled to one (1) vote. In case of an equality of votes the Chairman of the Board shall have a second or casting
vote. A Director may, and a Secretary or assistant Secretary on the requisition of a Director shall, at any time summon a meeting of the
Directors.
112.A Director may participate in any meeting of the Directors, or of any committee
appointed by the Directors of which such Director is a member, by means of telephone or similar communication equipment by way of which
all Persons participating in such meeting can communicate with each other and such participation shall be deemed to constitute presence
in person at the meeting.
113.The quorum necessary for the transaction of the business of the Board may be fixed
by the Directors, and unless so fixed, the quorum shall be a majority of Directors then in office, including the Chairman of the Board;
provided, that a quorum shall nevertheless exist at a meeting at which a quorum would exist but for the fact that the Chairman of the
Board is voluntarily absent from the meeting and notifies the Board of his decision to be absent from that meeting, before or at the meeting.
A Director represented by proxy or by an alternate Director at any meeting shall be deemed to be present for the purposes of determining
whether or not a quorum is present.
114.A Director who is in any way, whether directly or indirectly, interested in a
contract or transaction or proposed contract or transaction with the Company shall declare the nature of his interest at a meeting of
the Directors. A general notice given to the Directors by any Director to the effect that he is a member of any specified company or firm
and is to be regarded as interested in any contract or transaction which may thereafter be made with that company or firm shall be deemed
a sufficient declaration of interest in regard to any contract so made or transaction so consummated. Subject to the Designated Stock
Exchange Rules and disqualification by the Chairman of the meeting of the Directors, a Director may vote in respect of any contract or
transaction or proposed contract or transaction notwithstanding that he may be interested therein and if he does so his vote shall be
counted and he may be counted in the quorum at any meeting of the Directors at which any such contract or transaction or proposed contract
or transaction shall come before the meeting for consideration.
115.A Director may hold any other office or place of profit under the Company (other
than the office of auditor) in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise)
as the Directors may determine and no Director or intending
Director shall be disqualified by his office from contracting with the Company either with regard to his tenure of any such other office
or place of profit or as vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the
Company in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested
be liable to account to the Company for any profit realised by any such contract or arrangement by reason of such Director holding that
office or of the fiduciary relation thereby established. A Director, notwithstanding his interest, may be counted in the quorum present
at any meeting of the Directors whereat he or any other Director is appointed to hold any such office or place of profit under the Company
or whereat the terms of any such appointment are arranged and he may vote on any such appointment or arrangement.
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116.Any Director may act by himself or through his firm in a professional capacity
for the Company, and he or his firm shall be entitled to remuneration for professional services as if he were not a Director; provided
that nothing herein contained shall authorise a Director or his firm to act as auditor to the Company.
117.The Directors shall cause minutes to be made for the purpose of recording:
(a)all appointments of officers made by the Directors;
(b)the names of the Directors present at each meeting of the Directors and of any committee
of the Directors; and
(c)all resolutions and proceedings at all meetings of the Company, and of the Directors
and of committees of Directors.
118.When the Chairman of the meeting of the Directors signs the minutes of such meeting
the same shall be deemed to have been duly held notwithstanding that all the Directors have not actually come together or that there may
have been a technical defect in the proceedings.
119.A resolution in writing signed by all the Directors or all the members of a committee
of Directors entitled to receive notice of a meeting of Directors or committee of Directors, as the case may be (an alternate Director,
subject as provided otherwise in the terms of appointment of the alternate Director, being entitled to sign such a resolution on behalf
of his appointer), shall be as valid and effectual as if it had been passed at a duly called and constituted meeting of Directors or committee
of Directors, as the case may be. When signed a resolution may consist of several documents each signed by one or more of the Directors
or his duly appointed alternate.
120.The continuing Directors may act notwithstanding any vacancy in their body but
if and for so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors,
the continuing Directors may act for the purpose of increasing the number, or of summoning a general meeting of the Company, but for no
other purpose.
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121.Subject to any regulations imposed on it by the Directors, a committee appointed
by the Directors may elect a chairman of its meetings. If no such chairman is elected, or if at any meeting the chairman is not present
within fifteen minutes after the time appointed for holding the meeting, the committee members present may choose one of their number
to be chairman of the meeting.
122.A committee appointed by the Directors may meet and adjourn as it thinks proper.
Subject to any regulations imposed on it by the Directors, questions arising at any meeting shall be determined by a majority of votes
of the committee members present and in case of an equality of votes the chairman shall have a second or casting vote.
123.All acts done by any meeting of the Directors or of a committee of Directors, or
by any Person acting as a Director, shall notwithstanding that it be afterwards discovered that there was some defect in the appointment
of any such Director or Person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such Person
had been duly appointed and was qualified to be a Director.
PRESUMPTION OF ASSENT
124.A Director who is present at a meeting of the Board of Directors at which an action
on any Company matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent from such action with the person acting as the Chairman of the meeting or secretary
of the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment
of the meeting. Such right to dissent shall not apply to a Director who voted in favour of such action.
DIVIDENDS
125.Subject to the Act, these Articles (including but without limitation, Article
17A) and any rights and restrictions for the time being attached to any Shares, the Directors may from time to time declare dividends
(including interim dividends) and other distributions on Shares in issue and authorise payment of the same out of the funds of the Company
lawfully available therefor.
126.Subject to any rights and restrictions for the time being attached to any Shares,
the Company by Ordinary Resolution may declare dividends, but no dividend shall exceed the amount recommended by the Directors.
127.The Directors may, before recommending or declaring any dividend, set aside out
of the funds legally available for distribution such sums as they think proper as a reserve or reserves which shall, in the absolute discretion
of the Directors, be applicable for meeting contingencies or for equalising dividends or for any other purpose to which those funds may
be properly applied, and pending such application may in the absolute discretion of the Directors, either be employed in the business
of the Company or be invested in such investments (other than Shares of the Company) as the Directors may from time to time think fit.
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128.Any dividend payable in cash to the holder of Shares may be paid in any manner
determined by the Directors. If paid by cheque it will be sent by mail addressed to the holder at his address in the Register, or addressed
to such person and at such addresses as the holder may direct. Every such cheque or warrant shall, unless the holder or joint holders
otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands
first on the Register in respect of such Shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank
on which it is drawn shall constitute a good discharge to the Company.
129.The Directors may determine that a dividend shall be paid wholly or partly by
the distribution of specific assets (which may consist of the shares or securities of any other company) and may settle all questions
concerning such distribution. Without limiting the generality of the foregoing, the Directors may fix the value of such specific assets,
may determine that cash payment shall be made to some Shareholders in lieu of specific assets and may vest any such specific assets in
trustees on such terms as the Directors think fit.
130.Subject to any rights and restrictions for the time being attached to any Shares,
all dividends shall be declared and paid according to the amounts paid up on the Shares, but if and for so long as nothing is paid up
on any of the Shares dividends may be declared and paid according to the par value of the Shares. No amount paid on a Share in advance
of calls shall, while carrying interest, be treated for the purposes of this Article as paid on the Share.
131.If several Persons are registered as joint holders of any Share, any of them may
give effective receipts for any dividend or other moneys payable on or in respect of the Share.
132.No dividend shall bear interest against the Company.
133.Any dividend unclaimed after a period of six (6) calendar years from the date of
declaration of such dividend may be forfeited by the Board of Directors and, if so forfeited, shall revert to the Company.
ACCOUNTS, AUDIT AND ANNUAL RETURN
AND DECLARATION
134.The books of account relating to the Company’s affairs shall be kept in
such manner as may be determined from time to time by the Directors.
135.The books of account shall be kept at the Registered Office, or at such other place
or places as the Directors think fit, and shall always be open to the inspection of the Directors.
136.The Directors may from time to time determine whether and to what extent and at
what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the
inspection of Shareholders not being Directors, and no Shareholder (not being a Director) shall have any right to inspect any account
or book or document of the Company except as conferred by law or authorised by the Directors or by Ordinary Resolution.
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137.The accounts relating to the Company’s affairs shall be audited in such manner
and with such financial year end as may be determined from time to time by the Directors or failing any determination as aforesaid shall
not be audited.
138.The Directors may appoint an auditor of the Company who shall hold office until
removed from office by a resolution of the Directors and may fix his or their remuneration.
139.Every auditor of the Company shall have a right of access at all times to the
books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information
and explanation as may be necessary for the performance of the duties of the auditors.
140.The auditors shall, if so required by the Directors, make a report on the accounts
of the Company during their tenure of office at the next annual general meeting following their appointment, and at any time during their
term of office, upon request of the Directors or any general meeting of the Members.
141.The Directors in each calendar year shall prepare, or cause to be prepared, an
annual return and declaration setting forth the particulars required by the Companies Act and deliver a copy thereof to the Registrar
of Companies in the Cayman Islands.
CAPITALISATION OF RESERVES
142.Subject to the Companies Act, the Directors may:
(a)resolve to capitalise an amount standing to the credit of reserves (including a
Share Premium Account, capital redemption reserve and profit and loss account), which is available for distribution;
(b)appropriate the sum resolved to be capitalised to the Shareholders in proportion
to the nominal amount of Shares (whether or not fully paid) held by them respectively and apply that sum on their behalf in or towards:
(i)paying up the amounts (if any) for the time being unpaid on Shares held by them respectively,
or
(ii)paying up in full unissued Shares or debentures of a nominal amount equal to that
sum,
and allot the
Shares or debentures, credited as fully paid, to the Shareholders (or as they may direct) in those proportions, or partly in one way and
partly in the other, but the Share Premium Account, the capital redemption reserve and profits which are not available for distribution
may, for the purposes of this Article, only be applied in paying up unissued Shares to be allotted to Shareholders credited as fully paid;
(c)make any arrangements they think fit to resolve a difficulty arising in the distribution
of a capitalised reserve and in particular, without limitation, where Shares or debentures
become distributable in fractions the Directors may deal with the fractions as they think fit;
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(d)authorise a Person to enter (on behalf of all the Shareholders concerned) into
an agreement with the Company providing for either:
(i)the allotment to the Shareholders respectively, credited as fully paid, of Shares
or debentures to which they may be entitled on the capitalisation, or
(ii)the payment by the Company on behalf of the Shareholders (by the application of
their respective proportions of the reserves resolved to be capitalised) of the amounts or part of the amounts remaining unpaid on their
existing Shares,
and any such agreement
made under this authority being effective and binding on all those Shareholders; and
(e)generally do all acts and things required to give effect to the resolution.
143.Notwithstanding any provisions in these Articles, the Directors may resolve to
capitalise an amount standing to the credit of reserves (including the share premium account, capital redemption reserve and profit and
loss account) or otherwise available for distribution by applying such sum in paying up in full unissued Shares to be allotted and issued
to:
(a)employees (including Directors) or service providers of the Company or its Affiliates
upon exercise or vesting of any options or awards granted under any share incentive scheme or employee benefit scheme or other arrangement
which relates to such persons that has been adopted or approved by the Directors or the Members;
(b)any trustee of any trust or administrator of any share incentive scheme or employee
benefit scheme to whom shares are to be allotted and issued by the Company in connection with the operation of any share incentive scheme
or employee benefit scheme or other arrangement which relates to such persons that has been adopted or approved by the Directors or Members;
or
(c)any depositary of the Company for the purposes of the issue, allotment and delivery
by the depositary of shares to employees (including Directors) or service providers of the Company or its Affiliates upon exercise or
vesting of any options or awards granted under any share incentive scheme or employee benefit scheme or other arrangement which relates
to such persons that has been adopted or approved by the Directors or the Members.
SHARE PREMIUM ACCOUNT
144.The Directors shall in accordance with the Companies Act establish a Share Premium
Account and shall carry to the credit of such account from time to time a sum equal to the amount or value of the premium paid on the
issue of any Share.
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145.There shall be debited to any Share Premium Account on the redemption or purchase
of a Share the difference between the nominal value of such Share and the redemption or purchase price provided always that at the discretion
of the Directors such sum may be paid out of the profits of the Company or, if permitted by the Companies Act, out of capital.
NOTICES
146.Except as otherwise provided in these Articles, any notice or document may be
served by the Company or by the Person entitled to give notice to any Shareholder either personally, or by posting it by airmail or a
recognised courier service in a prepaid letter addressed to such Shareholder at his address as appearing in the Register, or by electronic
mail to any electronic mail address such Shareholder may have specified in writing for the purpose of such service of notices, or by facsimile
to any facsimile number such Shareholder may have specified in writing for the purpose of such service of notices, or by placing it on
the Company’s Website should the Directors deem it appropriate. In the case of joint holders of a Share, all notices shall be given
to that one of the joint holders whose name stands first in the Register in respect of the joint holding, and notice so given shall be
sufficient notice to all the joint holders.
147.Notices sent from one country to another shall be sent or forwarded by prepaid
airmail or a recognized courier service.
148.Any Shareholder present, either personally or by proxy, at any meeting of the Company
shall for all purposes be deemed to have received due notice of such meeting and, where requisite, of the purposes for which such meeting
was convened.
149.Any notice or other document, if served by:
(a)post, shall be deemed to have been served five (5) calendar days after the time
when the letter containing the same is posted;
(b)facsimile, shall be deemed to have been served upon production by the transmitting
facsimile machine of a report confirming transmission of the facsimile in full to the facsimile number of the recipient;
(c)recognised courier service, shall be deemed to have been served 48 hours after
the time when the letter containing the same is delivered to the courier service; or
(d)electronic mail, shall be deemed to have been served immediately (i) upon the
time of the transmission to the electronic mail address supplied by the Shareholder to the Company or (ii) upon the time of its placement
on the Company’s Website.
In proving service
by post or courier service it shall be sufficient to prove that the letter containing the notice or documents was properly addressed and
duly posted or delivered to the courier service.
150.Any notice or document delivered or sent by post to or left at the registered
address of any Shareholder in accordance with the terms of these Articles shall notwithstanding that such Shareholder be
then dead or bankrupt, and whether or not the Company has notice of his death or bankruptcy, be deemed to have been duly served in respect
of any Share registered in the name of such Shareholder as sole or joint holder, unless his name shall at the time of the service of the
notice or document have been removed from the Register as the holder of the Share, and such service shall for all purposes be deemed a
sufficient service of such notice or document on all Persons interested (whether jointly with or as claiming through or under him) in
the Share.
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151.Notice of every general meeting of the Company shall be given to:
(a)all Shareholders holding Shares with the right to receive notice and who have
supplied to the Company an address for the giving of notices to them; and
(b)every Person entitled to a Share in consequence of the death or bankruptcy of
a Shareholder, who but for his death or bankruptcy would be entitled to receive notice of the meeting.
No other Person shall be
entitled to receive notices of general meetings.
INFORMATION
152.No Member shall be entitled to require discovery of any information in respect
of any detail of the Company’s trading or any information which is or may be in the nature of a trade secret or secret process which
may relate to the conduct of the business of the Company and which in the opinion of the Board would not be in the interests of the Members
of the Company to communicate to the public.
153.The Board shall be entitled to release or disclose any information in its possession,
custody or control regarding the Company or its affairs to any of its Members including, without limitation, information contained in
the Register and transfer books of the Company.
INDEMNITY
154.Every Director (including for the purposes of this Article any alternate Director
appointed pursuant to the provisions of these Articles), Secretary, assistant Secretary, or other officer for the time being and from
time to time of the Company (but not including the Company’s auditors) and the personal representatives of the same (each an “Indemnified
Person”) shall be indemnified and secured harmless against all actions, proceedings, costs, charges, expenses, losses, damages or
liabilities incurred or sustained by such Indemnified Person, other than by reason of such Indemnified Person’s own dishonesty,
wilful default or fraud, in or about the conduct of the Company’s business or affairs (including as a result of any mistake of judgment)
or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the
foregoing, any costs, expenses, losses or liabilities incurred by such Indemnified Person in defending (whether successfully or otherwise)
any civil proceedings concerning the Company or its affairs in any court whether in the Cayman Islands or elsewhere.
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155.No Indemnified Person shall be liable:
(a)for the acts, receipts, neglects, defaults or omissions of any other Director or
officer or agent of the Company; or
(b)for any loss on account of defect of title to any property of the Company; or
(c)on account of the insufficiency of any security in or upon which any money of
the Company shall be invested; or
(d)for any loss incurred through any bank, broker or other similar Person; or
(e)for any loss occasioned by any negligence, default, breach of duty, breach of
trust, error of judgement or oversight on such Indemnified Person’s part; or
(f)for any loss, damage or misfortune whatsoever which may happen in or arise from
the execution or discharge of the duties, powers, authorities, or discretions of such Indemnified Person’s office or in relation
thereto;
unless the same
shall happen through such Indemnified Person’s own dishonesty, willful default or fraud.
FINANCIAL YEAR
156.Unless the Directors otherwise prescribe, the financial year of the Company shall
end on December 31 in each calendar year and shall begin on January 1 in each calendar year.
NON-RECOGNITION OF TRUSTS
157.No Person shall be recognised by the Company as holding any Share upon any trust
and the Company shall not, unless required by law, be bound by or be compelled in any way to recognise (even when having notice thereof)
any equitable, contingent, future or partial interest in any Share or (except only as otherwise provided by these Articles or as the Companies
Act requires) any other right in respect of any Share except an absolute right to the entirety thereof in each Shareholder registered
in the Register.
WINDING UP
158.If the Company shall be wound up the liquidator may, with the sanction of a Special
Resolution of the Company and any other sanction required by the Companies Act, divide amongst the Members in species or in kind the whole
or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for that purpose value
any assets and determine how the division shall be carried out as between the Members or different Classes or series of Members. The liquidator
may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as
the liquidator, with the like sanction, shall think fit, but so that no Member shall be compelled to accept any asset upon which there
is a liability.
159.If the Company shall be wound up, and the assets available for distribution amongst
the Members shall be insufficient to repay the whole of the share capital, such assets shall be distributed so
that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them. If in a
winding up the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the share capital
at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares
held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due,
of all monies payable to the Company for unpaid calls or otherwise. This Article is without prejudice to the rights of the holders of
Shares issued upon special terms and conditions.
41 Filed: 04-Jun-2025 08:00 EST www.verify.gov.ky File#: 397376 Auth Code: H40443682373
AMENDMENT OF ARTICLES OF ASSOCIATION
160.Subject to the Companies Act, the Company may at any time and from time to time
by Special Resolution alter or amend these Articles in whole or in part.
CLOSING OF REGISTER OR FIXING RECORD
DATE
161.For the purpose of determining those Shareholders that are entitled to receive
notice of, attend or vote at any meeting of Shareholders or any adjournment thereof, or those Shareholders that are entitled to receive
payment of any dividend, or in order to make a determination as to who is a Shareholder for any other purpose, the Directors may provide
that the Register shall be closed for transfers for a stated period which shall not exceed in any case thirty (30) calendar days in any
calendar year.
162.In lieu of or apart from closing the Register, the Directors may fix in advance
a date as the record date for any such determination of those Shareholders that are entitled to receive notice of, attend or vote at a
meeting of the Shareholders and for the purpose of determining those Shareholders that are entitled to receive payment of any dividend
the Directors may, at or within ninety (90) calendar days prior to the date of declaration of such dividend, fix a subsequent date as
the record date for such determination.
163.If the Register is not so closed and no record date is fixed for the determination
of those Shareholders entitled to receive notice of, attend or vote at a meeting of Shareholders or those Shareholders that are entitled
to receive payment of a dividend, the date on which notice of the meeting is posted or the date on which the resolution of the Directors
declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination
of those Shareholders that are entitled to receive notice of, attend or vote at a meeting of Shareholders has been made as provided in
this Article, such determination shall apply to any adjournment thereof.
REGISTRATION BY WAY OF CONTINUATION
164.The Company may by Special Resolution resolve to be registered by way of continuation
in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or
existing. In furtherance of a resolution adopted pursuant to this Article, the Directors may cause an application to be made to the Registrar
of Companies to deregister the Company in the Cayman Islands or such other jurisdiction in which it is for the time being incorporated,
registered or existing and may cause all such further steps as
they consider appropriate to be taken to effect the transfer by way of continuation of the Company.
42 Filed: 04-Jun-2025 08:00 EST www.verify.gov.ky File#: 397376 Auth Code: H40443682373
DISCLOSURE
165.The Directors, or any service providers (including the officers, the Secretary
and the registered office agent of the Company) specifically authorised by the Directors, shall be entitled to disclose to any regulatory
or judicial authority or to any stock exchange on which securities of the Company may from time to time be listed any information regarding
the affairs of the Company including without limitation information contained in the Register and books of the Company.
EXCLUSIVE FORUM
166.Unless the Company consents in writing to the selection of an alternative forum,
the courts of the Cayman Islands shall have exclusive jurisdiction to hear, settle and determine any dispute, controversy or claim (including
any non-contractual dispute, controversy or claim) whether arising out of or in connection with these Articles or otherwise, including
any questions regarding their existence, validity, formation or termination. Without limiting the jurisdiction of the Cayman Courts to
hear, settle and determine disputes related to the Company, the courts of the Cayman Islands shall be the sole and exclusive forum for
(i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty
owed by any Director, officer, or other employee of the Company to the Company or the Shareholders, (iii) any action asserting a claim
arising pursuant to any provision of the Companies Act or these Articles including but not limited to any purchase or acquisition of Shares,
security, or guarantee provided in consideration thereof, or (iv) any action asserting a claim against the Company which if brought in
the United States would be a claim arising under the internal affairs doctrine (as such concept is recognized under the laws of the United
States from time to time).
167.Unless the Company
consents in writing to the selection of an alternative forum, the United States District Court for the Southern District of New York (or,
if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute,
the state courts in New York County, New York) shall be the exclusive forum within the United States for the resolution of any complaint
asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, regardless of whether
such legal suit, action, or proceeding also involves parties other than the Company. Any person or entity purchasing or otherwise acquiring
any Share or other securities in the Company, or purchasing or otherwise acquiring depositary shares representing the Company’s
Shares issued pursuant to relevant deposit agreements, shall be deemed to have notice of and consented to the provisions of this Article
and Article 166 above. Without prejudice to the foregoing, if any part of this Article and Article 166 is held to be illegal, invalid
or unenforceable under applicable law, the legality, validity or enforceability of the rest of these Articles shall not be affected and
this Article and Article 166 shall be interpreted and construed to the maximum extent possible to apply in the relevant jurisdiction with
whatever modification or deletion may be necessary so as best to give effect to the intention of the Company.
43 Filed: 04-Jun-2025 08:00 EST www.verify.gov.ky File#: 397376 Auth Code: H40443682373
EX-4.4
3
ea024654301ex4-4_gener.htm
ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT, DATED AS OF JUNE 3, 2025, BY AND AMONG BLACK SPADE ACQUISITION II CO, THE GENERATION ESSENTIALS GROUP, AND CONTINENTAL STOCK TRANSFER & TRUST COMPANY
Exhibit 4.4
ASSIGNMENT,
ASSUMPTION AND AMENDMENT AGREEMENT
THIS
ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (this “Agreement”), dated as of June 3, 2025, is entered into by and
among The Generation Essentials Group (formerly known as World Media and Entertainment Universal Inc.), an exempted company incorporated
with limited liability under the laws of the Cayman Islands (the “Company”), Black Spade Acquisition II Co, an exempted
company incorporated with limited liability under the laws of the Cayman Islands (“BSII”), and Continental Stock Transfer
& Trust Company, a New York corporation, as warrant agent (the “Warrant Agent”) and amends the Warrant Agreement
(the “Existing Warrant Agreement”), dated as of August 27, 2024, by and between BSII and the Warrant Agent, a copy
of which is attached hereto as Annex A. Capitalized terms used but not defined herein shall have the meaning ascribed to such
terms in the Existing Warrant Agreement.
WHEREAS,
as of the date hereof and pursuant to the Existing Warrant Agreement, BSII issued 11,120,000 Private Placement Warrants to Sponsor and
5,100,000 Public Warrants;
WHEREAS,
all of the Warrants are governed by the Existing Warrant Agreement;
WHEREAS,
the Company, WME Merger Sub Limited, a Cayman Islands exempted company with limited liability and a wholly-owned direct subsidiary of
the Company (“Merger Sub”) and BSII entered into the Business Combination Agreement on January 27, 2025, (the “Business
Combination Agreement”), pursuant to which, among other things, Merger Sub will merge with and into BSII (the “Merger”),
with BSII surviving the Merger as a wholly-owned subsidiary of the Company;
WHEREAS,
the consummation of the transactions contemplated by the Business Combination Agreement, including the Merger, will constitute a Business
Combination as defined in the Existing Warrant Agreement;
WHEREAS,
upon consummation of the Merger, as provided in Section 4.5 of the Existing Warrant Agreement and Section 3.06 of the Business Combination
Agreement, the Warrants will no longer be exercisable for Class A ordinary shares of BSII, par value $0.0001 per share, but instead exchanged
for a warrant to subscribe for one Class A ordinary share, par value $0.0001 per share, of the Company (“Company Class A ordinary
share”, such warrant, “Company Warrant”) and the Company Warrants will be exercisable (subject to the terms
and conditions of the Existing Warrant Agreement, as amended hereby) for Company Class A ordinary shares;
WHEREAS,
in connection with the transactions contemplated by the Business Combination Agreement, BSII desires to assign to the Company, and the
Company desires to assume, all of BSII’s rights, interests and obligations under the Existing Warrant Agreement;
WHEREAS,
Section 9.8(iii) of the Existing Warrant Agreement provides that all parties to the Existing Warrant Agreement may amend the Existing
Warrant Agreement without the consent of any Registered Holder with respect to matters or questions arising under the Existing Warrant
Agreement as the parties thereto may deem necessary or desirable and that the parties thereto deem do not adversely affect the rights
of the Registered Holders under the Existing Warrant Agreement in any material respect; and
WHEREAS,
as a result of this Agreement, each Warrant will be exchanged for a warrant for one Company Class A ordinary share pursuant to the terms
and conditions of the Existing Warrant Agreement (as amended by this Agreement).
NOW,
THEREFORE, in consideration of the mutual agreements herein contained, the receipt and sufficiency of which is hereby acknowledged and
intending to be legally bound, the parties hereto agree as follows:
1.
Assignment and Assumption; Consent.
1.1.
Assignment and Assumption. As of and with effect on and from the effective time of the Merger (the “Merger Effective
Time”), BSII hereby assigns to the Company all of BSII’s right, title and interest in and to the Existing Warrant Agreement;
and the Company hereby assumes, and agrees to pay, perform, satisfy and discharge in full, as the same become due, all of BSII’s
liabilities and obligations under the Existing Warrant Agreement arising on, from and after the Merger Effective Time. As a result of
the preceding sentence, each Warrant outstanding immediately prior to the Merger Effective Time, which was exercisable for one Class
A ordinary shares of BSII, will be exchanged for a warrant for one Company Class A ordinary share pursuant to the terms and conditions
of the Existing Warrant Agreement (as amended by this Agreement).
1.2.
Consent. The Warrant Agent hereby consents to (a) the assignment of the Existing Warrant Agreement by BSII to the Company and
the assumption of the Existing Warrant Agreement by the Company from BSII, in each case pursuant to Section 1.1, and (b)
the continuation of the Existing Warrant Agreement (as amended by this Agreement), in full force and effect from and after the Merger
Effective Time.
2.
Amendment of Existing Warrant Agreement. Effective as of the Merger Effective Time, the Company and the Warrant Agent hereby amend
the Existing Warrant Agreement as provided in this Section 2, and acknowledge and agree that the amendments to the Existing
Warrant Agreement set forth in this Section 2 (a) are necessary and desirable and do not adversely affect the rights of
the Registered Holders under the Existing Warrant Agreement in any material respect and (b) are to provide for the Alternative Issuance
pursuant to Section 4.5 of the Existing Warrant Agreement (in connection with the Merger and the other transactions contemplated by the
Business Combination Agreement).
2.1.
References Change.
2.1.1.
“Agreement” or “Warrant Agreement”. Each reference to “this Agreement,” “Warrant Agreement,”
“hereof,” “herein,” “hereunder,” “hereby” and each other similar reference contained
in the Existing Warrant Agreement (including all exhibits thereto) shall, from and after the effectiveness of this Agreement, refer to
the Existing Warrant Agreement as amended by this Agreement. Notwithstanding the foregoing, references to the date of the Existing Warrant
Agreement and references in the Existing Warrant Agreement to “the date hereof,” “the date of this Agreement”
and other similar references shall in all instances continue to refer to August 27, 2024.
2.1.2.
“Business Combination”. All references to “Business Combination” in the Existing Warrant Agreement (including
all exhibits thereto) shall be references to the transactions contemplated by the Business Combination Agreement, and references to “the
completion of the Business Combination” and all variations thereof in the Existing Warrant Agreement
(including all exhibits thereto) shall be references to the Closing (as defined in the Business Combination Agreement).
2
2.1.3.
“Company”. All references to the “Company” in the Existing Warrant Agreement (including all exhibits thereto)
shall be references to (a) prior to the Merger Effective Time, BSII, and (b) from and after the Merger Effective Time, the Company.
2.2.
Other Amendments.
2.2.1.
Company ordinary shares. All references to “Class A ordinary shares” in the Existing Warrant Agreement (including
all exhibits thereto) shall be references to (a) prior to the Merger Effective Time, Class A ordinary shares of BSII, par value $0.0001
per share, and (b) from and after the Merger Effective Time, Company Class A ordinary shares.
2.2.2.
Physical Certificates. The sentence “Physical certificates, if issued, shall be signed by, or bear the facsimile signature
of, the Chairman of the Board, Co-Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Secretary or other principal
officer of the Company.” in subsection 2.3.1 of the Existing Warrant Agreement is hereby deleted and replaced with “Physical
certificates shall be signed by, or bear the facsimile signatures of, a Director of the Company.”
2.2.3.
Duration of Warrants. Section 3.2 of the Existing Warrant Agreement is hereby deleted and replaced with the following:
“A
Warrant may be exercised only during the period (the “Exercise Period”) (A) commencing on the date that is thirty
(30) days after the first date on which the Company completes a Business Combination, and (B) terminating at the earliest to occur of
(i) 5:00 p.m., New York City time on the date that is five (5) years after the date on which the Company completes its initial Business
Combination, (ii) the liquidation of the Company in accordance with the Company’s amended and restated memorandum and articles
of association (as amended from time to time, the “Articles”) if the Company fails to complete a Business Combination,
and (iii) other than with respect to the Private Placement Warrants, 5:00 p.m., New York City time on the Redemption Date (as defined
below) as provided in Section 6.2 hereof (the “Expiration Date”); provided, however, that the exercise of any Warrant
shall be subject to the satisfaction of any applicable conditions, as set forth in subsection 3.3.2 below, with respect to an effective
registration statement or a valid exemption therefrom being available. Except with respect to the right to receive the Redemption Price
(as defined below) (other than with respect to a Private Placement Warrant) in the event of a redemption (as set forth in Section 6 hereof),
each Warrant (other than a Private Placement Warrant) not exercised on or before the Expiration Date shall become void, and all rights
thereunder and all rights in respect thereof under this Agreement shall cease at 5:00 p.m. New York City time on the Expiration Date.
The Company in its sole discretion may extend the duration of the Warrants by delaying the Expiration Date; provided that the Company
shall provide at least twenty (20) days prior written notice of any such extension to Registered Holders of the Warrants and, provided
further that any such extension shall be identical in duration among all the Warrants.”
2.2.4.
SEC Filings. All references to “Annual Report on Form 10-K” and “Current Report on Form 8-K” in subsection
3.3.5 of the Existing Warrant Agreement are hereby deleted and replaced with “Annual Report on Form 20-F” and “Current
Report on Form 6-K”, respectively. The reference to “Quarterly Report on Form 10-Q” in subsection 3.3.5 of the Existing
Warrant Agreement is hereby deleted. The reference to “Current Report on Form 8-K” in Section 4.5 of the Existing Warrant
Agreement is hereby deleted and replaced with “Current Report on Form 6-K”.
3
2.2.5.
Company’s Officers. The reference to “the Co-Chief Executive Officer, Chief Financial Officer, Chief Operating Officer,
Secretary or the Chairman of the Board” in subsection 8.4.1 of the Existing Warrant Agreement is hereby deleted and replaced with
“the Chairman of the Board or the Chief Executive Officer of the Company.”
2.2.6.
Notices. Section 9.2 of the Existing Warrant Agreement is hereby deleted and replaced with the following:
“Any
notice, statement or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant to
or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private
courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing
by the Company with the Warrant Agent), as follows:
The
Generation Essentials Group
Cricket
Square, Hutchins Drive, PO Box 2681, Grand Cayman,
KY1-1111,
Cayman Islands
Attention:
Feridun Hamdullahpur
Email:
feridun.hamdullahpur@amtd.world
With
a copy to:
Skadden,
Arps, Slate, Meagher & Flom LLP
c/o
42/F Edinburgh Tower, The Landmark 15 Queen’s Road
Central,
Hong Kong
Attention:
Shu Du
Email:
shu.du@skadden.com
Any
notice, statement or demand authorized by this Agreement to be given or made by the holder of any Warrant or by the Company to or on
the Warrant Agent shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private
courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing
by the Warrant Agent with the Company), as follows:
Continental
Stock Transfer & Trust Company
One
State Street, 30th Floor
New
York, New York 10004
Attention:
Compliance Department”
2.2.7.
Exhibit A. Exhibit A (Form of Warrant Certificate) annexed to the Existing Warrant Agreement is hereby deleted and replaced with
Exhibit A (Form of Warrant Certificate) annexed to this Agreement.
4
3.
Miscellaneous Provisions.
3.1.
Effectiveness of the Agreement. Each of the parties hereto acknowledges and agrees that the effectiveness of this Agreement shall
be expressly subject to the occurrence of the Merger and the immediate subsequent occurrence of the Closing (as defined in the Business
Combination Agreement) and shall automatically be terminated and shall be null and void if the Business Combination Agreement shall be
terminated for any reason.
3.2.
Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company, BSII or the Warrant Agent
shall bind and inure to the benefit of their respective successors and assigns.
3.3.
Applicable Law and Exclusive Forum. The validity, interpretation, and performance of this Agreement and of the Warrants shall
be governed in all respects by the laws of the State of New York, without giving effect to conflicts of law principles that would result
in the application of the substantive laws of another jurisdiction. Subject to applicable law, the Company hereby agrees that any action,
proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of
the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. The Company hereby waives any objection to
such exclusive jurisdiction and that such courts represent an inconvenient forum.
3.4.
Appointment of Agent for Service of Process. The Company will at all times have an authorized agent in the City of New York to
receive on its behalf service of any and all process, notices or other documents that may be served in any suit, action or proceeding
arising out of or relating to the Warrants, the Existing Warrant Agreement or this Agreement. Service of process upon such agent shall
to the fullest extent permitted by applicable law be deemed in every respect effective service of process upon the Company, in any such
suit, action or proceeding. The Company hereby appoints Puglisi & Associates as its agent for such purpose, and covenants and agrees
that all service of process in any suit, action or proceeding may be made upon it at the office of such agent at 850 Library Avenue,
Suite 204, Newark, Delaware 19711. Notwithstanding the foregoing, the Company may, with prior written notice to the Warrant Agent, terminate
the appointment of Puglisi & Associates and appoint another agent for the above purposes so that the Company shall at all times have
an agent for the above purposes in the City of New York. The Company hereby agrees to take any and all action as may be necessary to
maintain the designation and appointment of such agent in full force and effect until the sixth anniversary of the later of (a) the date
on which the last outstanding Warrant is exercised and (b) the last occurring Expiration Date.
3.5.
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of
which together shall constitute one instrument. Delivery of this Agreement by one party to the other may be made by facsimile, electronic
mail (including any electronic signature complying with the New York Electronic Signatures and Records Act (N.Y. State Tech. §§
301-309), as amended from time to time, or other applicable law) or other transmission method, and the parties hereto agree that any
counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
3.6.
Effect of Headings. The section headings herein are for convenience only and are not part of this Agreement and shall not affect
the interpretation thereof.
3.7. Severability.
This Agreement shall be severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable
term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and enforceable.
[Signature
Pages Follow]
5
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
THE GENERATION ESSENTIALS GROUP
By:
/s/ Feridun Hamdullahpur
Name:
Feridun Hamdullahpur
Title:
Co- Chairperson
6
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
BLACK SPADE ACQUISITION II CO
By:
/s/ Chi
Wai Dennis Tam
Name:
Chi Wai Dennis Tam
Title:
Chairman and Co-Chief Executive Officer
[Signature
Page to Assignment, Assumption and Amendment Agreement]
7
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
CONTINENTAL
STOCK TRANSFER & TRUST COMPANY, as Warrant Agent
By:
/s/ Henry Farrell
Name:
Henry Farrell
Title:
Vice President
8
EXHIBIT
A
Form
of Warrant Certificate
[FACE]
Number
WARRANTS
THIS WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO
THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR
IN THE WARRANT AGREEMENT DESCRIBED BELOW
THE GENERATION ESSENTIALS GROUP
Incorporated Under the Laws of the Cayman Islands
CUSIP
[●]
Warrant
Certificate
This
Warrant Certificate certifies that, or registered assigns, is the registered holder of warrant(s) (the “Warrants”
and each, a “Warrant”) to purchase Class A ordinary shares, par value $0.0001 per share (“Company
Class A ordinary shares”), of The Generation Essentials Group, an exempted company incorporated with limited liability
under the laws of the Cayman Islands (the “Company”). Each Warrant entitles the holder, upon exercise during
the period set forth in the Warrant Agreement referred to below, to subscribe for and receive from the Company that number of fully paid
Company Class A ordinary shares as set forth below, at the exercise price (the “Exercise Price”) as determined
pursuant to the Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided for
in the Warrant Agreement) of the United States of America upon surrender of this Warrant Certificate and payment of the Exercise Price
at the office or agency of the Warrant Agent referred to below, subject to the conditions set forth herein and in the Warrant Agreement.
Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.
Each
whole Warrant is initially exercisable for one fully paid Company Class A ordinary share. No fractional shares will be issued upon exercise
of any Warrant. If, upon the exercise of Warrants, a holder would be entitled to subscribe for and receive a fractional interest in a
Company Class A ordinary share, the Company will, upon exercise, round down to the nearest whole number the number of Company Class A
ordinary shares to be issued to the Warrant holder. The number of Company Class A ordinary shares issuable upon exercise of the Warrants
is subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement.
The
initial Exercise Price per one Company Class A ordinary share for any Warrant is equal to $11.50 per share. The Exercise Price is subject
to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement.
Subject
to the conditions set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent
not exercised by the end of such Exercise Period, such Warrants shall become void. The Warrants may be redeemed, subject to certain conditions,
as set forth in the Warrant Agreement.
9
Reference
is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This
Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.
This
Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York.
EXECUTED AND DELIVERED
AS A DEED FOR AND ON BEHALF OF THE GENERATION ESSENTIALS GROUP
By:
Name:
Title:
IN THE PRESENCE OF:
Name:
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY, AS WARRANT AGENT
By:
Name:
Title:
IN THE PRESENCE OF:
Name:
10
Form
of Warrant Certificate
[Reverse]
The
Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to subscribe
for and receive Company Class A ordinary shares and are issued or to be issued pursuant to the warrant agreement by and between Black
Spade Acquisition II Co (“BSII”) and the Warrant Agent (as defined below), dated August 27, 2024, as amended
by the Assignment, Assumption and Amendment Agreement, dated as of June 3, 2025 (the “Warrant Agreement”),
duly executed by and among the Company, BSII and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent
(the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder
of the Warrant Agent, the Company and the holders (the words “holders” or “holder”
meaning the Registered Holders or Registered Holder, respectively) of the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate but not defined herein shall have
the meanings given to them in the Warrant Agreement.
Warrants
may be exercised at any time during the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon
properly completed and executed, together with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless
exercise” as provided for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent. In the
event that upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number
of Warrants not exercised.
Notwithstanding
anything else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a
registration statement covering the issuance of the Company Class A ordinary shares to be issued upon exercise is effective under the
Securities Act and (ii) a prospectus thereunder relating to the Company Class A ordinary shares is current, except through “cashless
exercise” as provided for in the Warrant Agreement or if another exemption from registration is available.
The
Warrant Agreement provides that upon the occurrence of certain events the number of Company Class A ordinary shares issuable upon exercise
of the Warrants set forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder
thereof would be entitled to subscribe for and receive a fractional interest in a Company Class A ordinary share, the Company shall,
upon exercise, round down to the nearest whole number of Company Class A ordinary shares to be issued to the holder of the Warrant.
Warrant
Certificates, when surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person
or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided
in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
11
Upon
due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate
or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s)
in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any
tax or other governmental charge imposed in connection therewith.
The
Company and the Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution
to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a shareholder of the Company.
Election
to Purchase
(To
Be Executed Upon Exercise of Warrant)
The
undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to subscribe for and receive Company
Class A ordinary shares and herewith tenders payment for such Company Class A ordinary shares to the order of The Generation Essentials
Group (the “Company”) in the amount of $[●] in accordance with the terms hereof. The undersigned requests that
a certificate for such Company Class A ordinary shares be issued and registered in the name of [●], whose address is [●]
and that such Company Class A ordinary shares be delivered to [●] whose address is [●]. If said number of Company Class A
ordinary shares is less than all of the Company Class A ordinary shares purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such Company Class A ordinary shares be issued and registered in the name of [●],
whose address is [●] and that such Warrant Certificate be delivered to [●], whose address is [●].
In
the event that the Warrant is a Public Warrant that is to be exercised on a “cashless basis” as required by the Company pursuant
to Section 6.1 of the Warrant Agreement, the number of Company Class A ordinary shares that this Warrant is exercisable for shall be
determined in accordance with subsection 3.3.1(b) of the Warrant Agreement.
In
the event that the Warrant is a Private Placement Warrant that is to be exercised on a “cashless” basis pursuant to subsection
3.3.1(c) of the Warrant Agreement, the number of Company Class A ordinary shares that this Warrant is exercisable for shall be determined
in accordance with subsection 3.3.1(c) of the Warrant Agreement.
In
the event that the Warrant is a Public Warrant that is to be exercised on a “cashless” basis pursuant to Section 7.4 of the
Warrant Agreement, the number of Company Class A ordinary shares that this Warrant is exercisable for shall be determined in accordance
with Section 7.4 of the Warrant Agreement.
12
In
the event that the Warrant may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number
of Company Class A ordinary shares that this Warrant is exercisable for would be determined in accordance with the relevant section of
the Warrant Agreement which allows for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned
hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of
the Warrant Agreement, to subscribe for and receive Company Class A ordinary shares. If said number of shares is less than all of the
Company Class A ordinary shares purchasable hereunder (after giving effect to the cashless exercise), the undersigned requests that a
new Warrant Certificate representing the remaining balance of such Company Class A ordinary shares be issued and registered in the name
of [●], whose address is [●] and that such Warrant Certificate be delivered to [●], whose address is [●].
[Signature
Page Follows]
Date: _______, 20
(Signature)
(Name)
(Address)
(Tax Identification Number)
Signature
Guaranteed:
THE
SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE) UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED).
13
ANNEX
A
EXISTING
WARRANT AGREEMENT
14
WARRANT
AGREEMENT
BLACK SPADE ACQUISITION II CO
and
CONTINENTAL
STOCK TRANSFER & TRUST COMPANY
THIS
WARRANT AGREEMENT (this “Agreement”), dated
August 27, 2024, is by and between Black Spade Acquisition II Co, a Cayman Islands exempted company (the “Company”), and
Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (in such capacity, the “Warrant Agent”).
WHEREAS,
it is proposed that the Company enter into that certain Private Placement Warrants Purchase Agreement with Black Spade Sponsor LLC
II, a Cayman Islands limited liability company (the “Sponsor”),
dated August 27, 2024, pursuant to
which the Sponsor will purchase an aggregate of 11,000,000 warrants (or up to 11,675,000 warrants if the Over-allotment Option (as
defined below) in connection with the Company’s Offering (as defined below) is exercised in full) simultaneously with the
closing of the Offering (and the closing of the Over-allotment Option, if applicable), bearing the legend set forth in Exhibit
B hereto (the “Private Placement Warrants”) at a purchase price of $0.50 per Private Placement Warrant. Each
Private Placement Warrant entitles the holder thereof to purchase one Class A ordinary share (as defined below) at a price of $11.50
per share, subject to adjustment as described herein;
WHEREAS,
in order to finance the Company’s transaction costs in connection with an intended initial merger, share exchange, asset acquisition,
share purchase, reorganization or similar business combination, involving the Company and one or more businesses (a “Business
Combination”), the Sponsor, any of its affiliates or certain of the Company’s directors and officers may, but are not
obligated to, loan the Company funds as the Company may require, of which up to $2,000,000 of such loans may be convertible into up to
an additional 4,000,000 Private Placement Warrants at a price of $0.50 per Private Placement Warrant; and
WHEREAS,
the Company is engaged in an initial public offering (the “Offering”) of units of the Company’s equity securities,
each such unit comprised of one Class A ordinary share of the Company, par value $0.0001 per share (“Class A ordinary shares”),
and one-third of one Public Warrant (as defined below) (the “Units”) and, in connection therewith, has determined
to issue and deliver up to 5,750,000 redeemable warrants (including up to 750,000 redeemable warrants subject to the Over-allotment Option)
to public investors in the Offering (the “Public Warrants” and, together with the Private Placement Warrants, the
“Warrants”). Each whole Warrant entitles the holder thereof to purchase one Class A ordinary share at a price of $11.50
per share, subject to adjustment as described herein. Only whole Warrants are exercisable. A holder of the Public Warrants will not be
able to exercise any fraction of a Warrant;
WHEREAS,
the Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form
S-1 (File No. 333-280385) (the “Registration Statement”) and a prospectus (the “Prospectus”), for
the registration, under the Securities Act of 1933, as amended (the “Securities Act”), of the Units, the Public Warrants
and the Class A ordinary shares included in the Units;
WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with
the issuance, registration, transfer, exchange, redemption and exercise of the Warrants;
15
WHEREAS,
the Company desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised,
and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent and the holders of the Warrants; and
WHEREAS,
all acts and things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and
countersigned by or on behalf of the Warrant Agent (if a physical certificate is issued), as provided herein, the valid, binding and
legal obligations of the Company, and to authorize the execution and delivery of this Agreement.
NOW,
THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:
1.
Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants,
and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set
forth in this Agreement.
2.
Warrants.
2.1
Form of Warrant. Each Warrant shall initially be issued in registered form only.
2.2
Effect of Countersignature. If a physical certificate is issued, unless and until countersigned by the Warrant Agent pursuant
to this Agreement, a certificated Warrant shall be invalid and of no effect and may not be exercised by the holder thereof.
2.3
Registration.
2.3.1
Warrant Register. The Warrant Agent shall maintain books (the “Warrant Register”), for the registration of
original issuance and the registration of transfer of the Warrants. Upon the initial issuance of the Warrants in book-entry form, the
Warrant Agent shall issue and register the Warrants in the names of the respective holders thereof in such denominations and otherwise
in accordance with instructions delivered to the Warrant Agent by the Company. Ownership of beneficial interests in the Public Warrants
shall be shown on, and the transfer of such ownership shall be effected through, records maintained by institutions that have accounts
with The Depository Trust Company (the “Depositary”) (such institution, with respect to a Warrant in its account,
a “Participant”).
If
the Depositary subsequently ceases to make its book-entry settlement system available for the Public Warrants, the Company may instruct
the Warrant Agent regarding making other arrangements for book-entry settlement. In the event that the Public Warrants are not eligible
for, or it is no longer necessary to have the Public Warrants available in, book-entry form, the Warrant Agent shall provide written
instructions to the Depositary to deliver to the Warrant Agent for cancellation each book-entry Public Warrant, and the Company shall
instruct the Warrant Agent to deliver to the Depositary definitive certificates in physical form evidencing such Warrants (“Definitive
Warrant Certificates”) which shall be in the form annexed hereto as Exhibit A.
Physical
certificates, if issued, shall be signed by, or bear the facsimile signature of, the Chairman of the Board, Co-Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer, Secretary or other principal officer of the Company. In the event the person whose
facsimile signature has been placed upon any Warrant shall have ceased to serve in the capacity in which such person signed the Warrant
before such Warrant is issued, it may be issued with the same effect as if he or she had not ceased to be such at the date of issuance.
16
2.3.2
Registered Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may
deem and treat the person in whose name such Warrant is registered in the Warrant Register (the “Registered Holder”) as
the absolute owner of such Warrant and of each Warrant represented thereby, for the purpose of any exercise thereof, and for all other
purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.
2.4
Detachability of Warrants. The Class A ordinary shares and Public Warrants comprising the Units shall begin separate trading on
the 52nd day following the date of the Prospectus or, if such 52nd day is not on a day, other than a Saturday, Sunday or federal holiday,
on which banks in New York City are generally open for normal business (a “Business Day”), then on the immediately
succeeding Business Day following such date, or earlier (the “Detachment Date”) with the consent of Clear Street LLC
and J.V.B. Financial Group, LLC, but in no event shall the Class A ordinary shares and the Public Warrants comprising the Units be separately
traded until (A) the Company has filed a Current Report on Form 8-K with the Commission containing an audited balance sheet reflecting
the receipt by the Company of the gross proceeds of the Offering, including the proceeds then received by the Company from the exercise
by the underwriters of their right to purchase additional Units in the Offering (the “Over-allotment Option”), if
the Over-allotment Option is exercised prior to the filing of the Current Report on Form 8-K, and (B) the Company issues a press release
announcing when such separate trading shall begin.
2.5
Fractional Warrants. The Company shall not issue fractional Warrants other than as part of the Units, each of which is comprised
of one Class A ordinary share and one-third of one whole Public Warrant. If, upon the detachment of Public Warrants from the Units or
otherwise, a holder of Warrants would be entitled to receive a fractional Warrant, the Company shall round down to the nearest whole
number the number of Warrants to be issued to such holder.
2.6
Private Placement Warrants. The Private Placement Warrants shall be identical to the Public Warrants, except that (i) the Private
Placement Warrants may be exercised for cash or on a “cashless basis,” pursuant to subsection 3.3.1(c) hereof, (ii)
the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants may be subject
to certain transfer restrictions contained in the letter agreement by and among the Company, the Sponsor and the other parties thereto,
as amended from time to time, (iii) the Private Placement Warrants shall not be redeemable by the Company pursuant to Section 6.1
hereof and (iv) the holders of the Private Placement Warrants (including the Class A ordinary shares issuable upon exercise of such warrants)
may be entitled to certain registration rights. The Private Placement Warrants shall not become Public Warrants as a result of any transfer
of the Private Placement Warrants, regardless of the transferee.
3.
Terms and Exercise of Warrants.
3.1
Warrant Price. Each whole Warrant shall entitle the Registered Holder thereof; subject to the provisions of such Warrant and of
this Agreement, to purchase from the Company the number of Class A ordinary shares stated therein, at the price of $11.50 per share,
subject to the adjustments provided in Section 4 hereof and in the last sentence of this Section 3.1. The term “Warrant
Price” as used in this Agreement shall mean the price per share (including in cash or by payment of Warrants pursuant to a
“cashless exercise,” to the extent permitted hereunder) described in the prior sentence at which Class A ordinary shares
may be purchased at the time a Warrant is exercised. The Company in its sole discretion may lower the Warrant Price at any time prior
to the Expiration Date (as defined below) for a period of not less than twenty (20) business days (unless otherwise required by the Commission,
any national securities exchange on which the Warrants are listed or applicable law); provided that the Company shall provide
at least twenty (20) days prior written notice of such reduction to Registered Holders of the Warrants and, provided further that any
such reduction shall be identical among all of the Warrants.
17
3.2
Duration of Warrants. A Warrant may be exercised only during the period (the “Exercise Period”) (A) commencing
on the later of (i) the date that is thirty (30) days after the first date on which the Company completes a Business Combination, and
(ii) the date that is twelve (12) months from the date of the closing of the Offering, and (B) terminating at the earliest to occur of
(x) 5:00 p.m., New York City time on the date that is five (5) years after the date on which the Company completes its initial Business
Combination, (y) the liquidation of the Company in accordance with the Company’s amended and restated memorandum and articles of
association (as amended from time to time, the “Articles”) if the Company fails to complete a Business Combination,
and (z) other than with respect to the Private Placement Warrants, 5:00 p.m., New York City time on the Redemption Date (as defined below)
as provided in Section 6.2 hereof (the “Expiration Date”); provided, however, that the exercise of any Warrant shall
be subject to the satisfaction of any applicable conditions, as set forth in subsection 3.3.2 below, with respect to an effective registration
statement or a valid exemption therefrom being available. Except with respect to the right to receive the Redemption Price (as defined
below) (other than with respect to a Private Placement Warrant) in the event of a redemption (as set forth in Section 6 hereof), each
Warrant (other than a Private Placement Warrant) not exercised on or before the Expiration Date shall become void, and all rights thereunder
and all rights in respect thereof under this Agreement shall cease at 5:00 p.m. New York City time on the Expiration Date. The Company
in its sole discretion may extend the duration of the Warrants by delaying the Expiration Date; provided that the Company shall provide
at least twenty (20) days prior written notice of any such extension to Registered Holders of the Warrants and, provided further that
any such extension shall be identical in duration among all the Warrants.
3.3
Exercise of Warrants
3.3.1
Payment. Subject to the provisions of the Warrant and this Agreement, a Warrant may be exercised by the Registered Holder thereof
by delivering to the Warrant Agent at its corporate trust department (i) the Definitive Warrant Certificate evidencing the Warrants to
be exercised, or, in the case of a Warrant represented by a book-entry, the Warrants to be exercised (the “Book-Entry Warrants”)
on the records of the Depositary to an account of the Warrant Agent at the Depositary designated for such purposes in writing by
the Warrant Agent to the Depositary from time to time, (ii) an election to purchase (“Election to Purchase”) any Class
A ordinary shares pursuant to the exercise of a Warrant, properly completed and executed by the Registered Holder on the reverse of the
Definitive Warrant Certificate or, in the case of a Book-Entry Warrant, properly delivered by the Participant in accordance with the
Depositary’s procedures, and (iii) the payment in full of the Warrant Price for each Class A ordinary share as to which the Warrant
is exercised and any and all applicable taxes due in connection with the exercise of the Warrant, the exchange of the Warrant for the
Class A ordinary shares and the issuance of such Class A ordinary shares, as follows:
(a)
in lawful money of the United States, in good certified check or good bank draft payable to the order of the Warrant Agent;
(b)
in the event of a redemption pursuant to Section 6.1 hereof in which the Company’s board of directors (the “Board”)
has elected to require all holders of the Public Warrants to exercise such Public Warrants on a “cashless basis,” by
surrendering the Public Warrants for that number of Class A ordinary shares equal to the quotient obtained by dividing (x) the product
of the number of Class A ordinary shares underlying the Public Warrants, multiplied by the difference between the Warrant Price and the
“Redemption Fair Market Value”, as defined in this subsection 3.3.1(b), by (y) the Redemption Fair Market Value. Solely
for purposes of this subsection 3.3.1(b) and Section 6.3, the “Redemption Fair Market Value” shall mean the volume-weighted
average price of the Class A ordinary shares as reported during the ten (10) trading day period ending on the trading day prior to the
date on which the notice of redemption is sent to the holders of the Public Warrants pursuant to Section 6.2 hereof;
18
(c)
with respect to any Private Placement Warrant, by surrendering the Warrants for that number of Class A ordinary shares equal to the quotient
obtained by dividing (x) the product of the number of Class A ordinary shares underlying the Warrants, multiplied by the excess of the
“Placement Exercise Fair Market Value” (as defined in this subsection 3.3.1(c)) less the Warrant Price by (y) the
Placement Exercise Fair Market Value. Solely for purposes of this subsection 3.3.1(c), the “Placement Exercise Fair Market
Value” shall mean the average of the last reported sale price of the Class A ordinary shares for the ten (10) trading days
ending on the tenth (10th) trading day prior to the date on which notice of exercise of the Private Placement Warrant is sent to the
Warrant Agent; or
(d)
as provided in Section 7.4 hereof
3.3.2
Issuance of Class A ordinary shares on Exercise. As soon as practicable after the exercise of any Warrant and the clearance of
the funds in payment of the Warrant Price (if payment is pursuant to subsection 3.3.1(a)), the Company shall issue to the Registered
Holder of such Warrant a book-entry position or certificate, as applicable, for the number of Class A ordinary shares to which he, she
or it is entitled, registered in such name or names as may be directed by him, her or it on the register of members of the Company, and
if such Warrant shall not have been exercised in full, a new book-entry position or countersigned Warrant, as applicable, for the number
of shares as to which such Warrant shall not have been exercised. Notwithstanding the foregoing, the Company shall not be obligated to
deliver any Class A ordinary shares pursuant to the exercise of a Warrant and shall have no obligation to settle such Warrant exercise
unless a registration statement under the Securities Act with respect to the Class A ordinary shares underlying the Public Warrants is
then effective and a prospectus relating thereto is current, or a valid exemption from registration is available. No Warrant shall be
exercisable and the Company shall not be obligated to issue Class A ordinary shares upon exercise of a Warrant unless the Class A ordinary
shares issuable upon such Warrant exercise have been registered, qualified or deemed to be exempt from registration or qualification
under the securities laws of the state of residence of the Registered Holder of the Warrants. For the avoidance of doubt, in no event
will the Company be required to net cash settle the Warrant exercise. Subject to Section 4.6 of this Agreement, a Registered Holder
of Warrants may exercise its Warrants only for a whole number of Class A ordinary shares. The Company may require holders of Public Warrants
to only settle such Warrants on a “cashless basis” pursuant to Section 7.4. If; by reason of any exercise of Warrants
on a “cashless basis”, the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional
interest in a Class A ordinary share, the Company shall round down to the nearest whole number, the number of Class A ordinary shares
to be issued to such holder.
3.3.3
Valid Issuance. All Class A ordinary shares issued upon the proper exercise of a Warrant in conformity with this Agreement and
the Articles shall be validly issued, fully paid and nonassessable.
19
3.3.4 Date
of Issuance. Each person in whose name any book-entry position or certificate, as applicable, for Class A ordinary shares is
issued and who is registered in the register of members of the Company shall for all purposes be deemed to have become the holder of
record of such Class A ordinary shares on the date on which the Warrant, or book-entry position representing such Warrant, was
surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such certificate in the case of a
certificated Warrant, except that, if the date of such surrender and payment is a date when the register of members of the Company
or book-entry system of the Warrant Agent are closed, such person shall be deemed to have become the holder of such Class A ordinary
shares at the close of business on the next succeeding date on which the share transfer books or book-entry system are
open.
3.3.5 Maximum Percentage.
A holder of a Warrant may notify the Company in writing in the event it elects to be subject to the provisions contained in this subsection
3.3.5; however, no holder of a Warrant shall be subject to this subsection 3.3.5 unless he, she or it makes such election.
If the election is made by a holder, the warrant Agent shall not effect the exercise of the holder’s Warrant, and such holder shall not
have the right to exercise such Warrant, to the extent that after giving effect to such exercise, such person (together with such person’s
affiliates), to the Warrant Agent’s actual knowledge, would beneficially own in excess of 4.9% or 9.8%, as specified by such holder, or
such other amount as a holder may specify (the “Maximum Percentage”), of the Class A ordinary shares outstanding immediately
after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of Class A ordinary shares beneficially
owned by such person and its affiliates shall include the number of Class A ordinary shares issuable upon exercise of the Warrant with
respect to which the determination of such sentence is being made, but shall exclude Class A ordinary shares that would be issuable upon
(x) exercise of the remaining, unexercised portion of the Warrant beneficially owned by such person and its affiliates and (y) exercise
or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such person and its
affiliates (including, without limitation, any convertible notes or convertible preferred shares or warrants) subject to a limitation
on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of
this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). For purposes of the Warrant, in determining the number of outstanding Class A ordinary shares,
the holder may rely on the number of outstanding Class A ordinary shares as reflected in (1) the Company’s most recent Annual Report on
Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the Commission as the case may be, (2)
a more recent public announcement by the Company or (3) any other notice by the Company or Continental Stock Transfer & Trust Company,
as transfer agent (in such capacity, the “Transfer Agent”), setting forth the number of Class A ordinary shares outstanding.
For any reason at any time, upon the written request of the holder of the Warrant, the Company shall, within two (2) business days, confirm
orally and in writing to such holder the number of Class A ordinary shares then outstanding. In any case, the number of issued and outstanding
Class A ordinary shares shall be determined after giving effect to the conversion or exercise of equity securities of the Company by the
holder and its affiliates since the date as of which such number of issued and outstanding Class A ordinary shares was reported. By written
notice to the Company, the holder of a Warrant may from time to time increase or decrease the Maximum Percentage applicable to such holder
to any other percentage specified in such notice; provided, however, that any such increase shall not be effective until the sixty-first
(61st) day after such notice is delivered to the Company.
20
4. Adjustments.
4.1 Share Capitalizations.
4.1.1
Sub-Divisions. If after the date hereof, and subject to the provisions of Section 4.6 below, the number of issued and outstanding
Class A ordinary shares is increased by a capitalization or share dividend of Class A ordinary shares, or by a sub-division of Class
A ordinary shares or other similar event, then, on the effective date of such share capitalization, sub-division or similar event, the
number of Class A ordinary shares issuable on exercise of each Warrant shall be increased in proportion to such increase in the issued
and outstanding Class A ordinary shares. A rights offering made to all holders of Class A ordinary shares entitling holders to purchase
Class A ordinary shares at a price less than the “Historical Fair Market Value” (as defined below) shall be deemed a capitalization
of a number of Class A ordinary shares equal to the product of (i) the number of Class A ordinary shares actually sold in such rights
offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for the
Class A ordinary shares) multiplied by (ii) one (1) minus the quotient of (x) the price per Class A ordinary share paid in such rights
offering divided by (y) the Historical Fair Market Value. For purposes of this subsection 4.1.1, (i) if the rights offering is
for securities convertible into or exercisable for Class A ordinary shares, in determining the price payable for Class A ordinary shares,
there shall be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise
or conversion and (ii) “Historical Fair Market Value” means the volume-weighted average price of the Class A ordinary
shares during the ten (10) trading day period ending on the trading day prior to the first date on which the Class A ordinary shares
trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights. No Class A ordinary
shares shall be issued at less than their par value.
4.1.2 Extraordinary
Dividends. If the Company, at any time while the Warrants are outstanding and unexpired, pays to all of the holders of the Class A
ordinary shares a dividend or make a distribution in cash, securities or other assets on account of such Class A ordinary shares (or other
shares into which the Warrants are convertible), other than (a) as described in subsection 4.1.1 above, (b) Ordinary Cash Dividends
(as defined below), (c) to satisfy the redemption rights of the holders of the Class A ordinary shares in connection with a proposed initial
Business Combination, (d) to satisfy the redemption rights of the holders of the Class A ordinary shares in connection with a shareholder
vote to amend the Articles (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the
Company’s initial Business Combination or to redeem 100% of the Company’s public shares if it does not complete its initial Business Combination
within the time period required by the Articles, or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial
Business Combination activity or (e) in connection with the redemption of public shares upon the failure of the Company to complete its
initial Business Combination and any subsequent distribution of its assets upon its liquidation (any such non-excluded event being referred
to herein as an “Extraordinary Dividend”), then the Warrant Price shall be decreased, effective immediately after the
effective date of such Extraordinary Dividend, by the amount of cash and/or the fair market value (as determined by the Board), in good
faith) of any securities or other assets paid on each Class A ordinary share in respect of such Extraordinary Dividend. For purposes of
this subsection 4.1.2, “Ordinary Cash Dividends” means any cash dividend or cash distribution which, when combined
on a per share basis, with the per share amounts of all other cash dividends and cash distributions paid on the Class A ordinary shares
during the 365-day period ending on the date of declaration of such dividend or distribution to the extent it does not exceed $0.50 per
share (which amount shall be adjusted to appropriately reflect any of the events referred to in other subsections of this Section 4
and excluding cash dividends or cash distributions that resulted in an adjustment to the Warrant Price or to the number of Class A ordinary
shares issuable on exercise of each Warrant) but only with respect to the amount of the aggregate cash dividends or cash distributions
equal to or less than $0.50 per share.
21
4.2 Aggregation of Shares. If after the date
hereof, and subject to the provisions of Section 4.6 hereof, the number of issued and outstanding Class A ordinary shares is
decreased by a consolidation, combination, reverse share split or reclassification of Class A ordinary shares or other similar
event, then, on the effective date of such consolidation, combination, reverse share split, reclassification or similar event, the
number of Class A ordinary shares issuable on exercise of each Warrant shall be decreased in proportion to such decrease in issued
and outstanding Class A ordinary shares.
4.3 Adjustments in
Exercise Price. Whenever the number of Class A ordinary shares purchasable upon the exercise of the Warrants is adjusted, as
provided in subsection 4.1.1 or Section 4.2 above, the Warrant Price shall be adjusted (to the nearest cent) by multiplying such
Warrant Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of Class A ordinary
shares purchasable upon the exercise of the Warrants immediately prior to such adjustment, and (y) the denominator of which shall be
the number of Class A ordinary shares so purchasable immediately thereafter.
4.4 Raising of the
Capital in Connection with the Initial Business Combination. If (x) the Company issues additional Class A ordinary shares or
equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue
price or effective issue price of less than $9.50 per Class A ordinary share (with such issue price or effective issue price to be
determined in good faith by the Board and, in the case of any such issuance to the Sponsor or its affiliates, without taking into
account any Class B ordinary shares, par value $0.0001 per share, of the Company held by the Sponsor or its affiliates, as
applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such
issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s
initial Business Combination on the date of the completion of the Company’s initial Business Combination (net of redemptions), and
(z) the volume-weighted average trading price of Class A ordinary shares during the twenty (20) trading day period starting on the
trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market
Value”) is below $9.50 per share, the Warrant Price shall be adjusted (to the nearest cent) to be equal to 115% of the
higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described in Section 6.1
shall be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
22
4.5
Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the issued and outstanding
Class A ordinary shares (other than a change under Section 4.1 or Section 4.2 hereof or that solely affects the par value
of such Class A ordinary shares), or in the case of any merger or consolidation of the Company with or into another entity or conversion
of the Company into another type of entity (other than a merger or consolidation in which the Company is the continuing entity and that
does not result in any reclassification or reorganization of the issued and outstanding Class A ordinary shares), or in the case of any
sale or conveyance to another corporation or entity of the assets or other property of the Company as an entirety or substantially as
an entirety, in connection with which the Company is dissolved, the holders of the Warrants shall thereafter have the right to purchase
and receive, upon the basis and upon the terms and conditions specified in the Warrants and in lieu of the Class A ordinary shares of
the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount
of shares, stock or other equity securities or property (including cash) receivable upon such reclassification, reorganization, merger
or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the Warrants would have received if such
holder had exercised his, her or its Warrant(s) immediately prior to such event the “Alternative Issuance”); provided,
however, that (i) if the holders of the Class A ordinary shares were entitled to exercise a right of election as to the kind or amount
of securities, cash or other assets receivable upon such merger or consolidation, then the kind and amount of securities, cash or other
assets constituting the Alternative Issuance for which each Warrant shall become exercisable shall be deemed to be the weighted average
of the kind and amount received per share by the holders of the Class A ordinary shares in such merger or consolidation that affirmatively
make such election, and (ii) if a tender, exchange or redemption offer shall have been made to and accepted by the holders of the Class
A ordinary shares (other than a tender, exchange or redemption offer made by the Company in connection with redemption rights held by
shareholders of the Company as provided for in the Articles or as a result of the redemption of Class A ordinary shares by the Company
if a proposed initial Business Combination is presented to the shareholders of the Company for approval) under circumstances in which,
upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1)
under the Exchange Act) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning
of Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially
(within the meaning of Rule 13d-3 under the Exchange Act) securities representing more than 50% of the aggregate voting power (including
the power to vote on the election of directors) of the issued and outstanding equity securities of the Company, and (for the avoidance
of doubt) such tender offer results in an change of control of the Company, the holder of a Warrant shall be entitled to receive as the
Alternative Issuance, the highest amount of shares, stock or other equity securities or property (including cash) to which such holder
would actually have been entitled as a shareholder if such Warrant holder had exercised the Warrant prior to the expiration of such tender
or exchange offer, accepted such offer and all of the Class A ordinary shares held by such holder had been purchased pursuant to such
tender or exchange offer, subject to adjustments (from and after the consummation of such tender or exchange offer) as nearly equivalent
as possible to the adjustments provided for in this Section 4; provided further that if less than 70% of the consideration receivable
by the holders of the Class A ordinary shares in the applicable event is payable in the form of shares in the successor entity that is
listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for
trading or quoted immediately following such event, and if the Registered Holder properly exercises the Warrant within thirty (30) days
following the public disclosure of the consummation of such applicable event by the Company pursuant to a Current Report on Form 8-K
filed with the Commission, the Warrant Price shall be reduced by an amount (in dollars) equal to the difference of (1) the Warrant Price
in effect prior to such reduction minus (ii) (A) the Per Share Consideration (as defined below) (but in no event less than zero) minus
(B) the Black-Scholes Warrant Value (as defined below). The “Blaek-Seholes Warrant Value” means (i) for the Public
Warrants, the value of a Public Warrant immediately prior to the consummation of the applicable event based on the Black-Scholes Warrant
Model for a Capped American Call on Bloomberg Financial Markets (“Bloomberg”) and (ii) for Private Placement Warrants,
the value of a Private Placement Warrant immediately prior to the consummation of the applicable event based on the Black-Scholes Warrant
Model for an uncapped American Call on Bloomberg, in each case, as calculated by an accounting, appraisal, investment banking firm or
consultant of nationally recognized standing that is, in the good faith judgment of the Board, qualified to make such calculation. For
purposes of calculating such amount, unless such accounting, appraisal, investment banking firm or consultant of nationally recognized
standing definitively determines that other factors are more appropriate, (i) Section 6 of this Agreement shall be taken into
account, (ii) the price of each Class A ordinary share shall be the volume weighted average price of the Class A ordinary shares during
the ten (10) trading day period ending on the trading day prior to the effective date of the applicable event, (iii) the assumed volatility
shall be the 90 day volatility obtained from the HVT function on Bloomberg determined as of the trading day immediately prior to the
day of the announcement of the applicable event unless the third party valuation firm definitively determines that a different volatility
is more appropriate, (iv) the assumed risk-free interest rate shall correspond to the U.S. Treasury rate for a period equal to the remaining
term of the Warrant and (v) the assumed dividends shall be zero. “Per Share Consideration” means (i) if the consideration
paid to holders of the Class A ordinary shares consists exclusively of cash, the amount of such cash per Class A ordinary share, and
(ii) in all other cases, the volume weighted average price of the Class A ordinary shares during the ten (10) trading day period ending
on the trading day prior to the effective date of the applicable event. If any reclassification or reorganization also results in a change
in Class A ordinary shares covered by subsection 4.1.1, then such adjustment shall be made pursuant to subsection 4.1.1
or Sections 4.2, 4.3 and this Section 4.5. The provisions of this Section 4.5 shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other transfers. In no event shall the Warrant Price be reduced
to less than the par value per share issuable upon exercise of such Warrant.
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4.6 Notices of
Changes in Warrant. Upon every adjustment of the Warrant Price or the number of Class A ordinary shares issuable upon exercise
of a Warrant, the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Warrant Price
resulting from such adjustment and the increase or decrease, if any, in the number of Class A ordinary shares purchasable at such
price upon the exercise of a Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such
calculation is based. Upon the occurrence of any event specified in Sections 4.1, 4.2, 4.3, 4.4, 4.5 or 4.9, the Company shall give
written notice of the occurrence of such event to each holder of a Warrant, at the last address set forth for such holder in the
Warrant Register, of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall
not affect the legality or validity of such event.
4.7 No Fractional
Shares. Notwithstanding any provision contained in this Agreement to the contrary, the Company shall not issue fractional Class
A ordinary shares upon the exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 4, the holder of any
Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a Class A ordinary share, the
Company shall, upon such exercise, round down to the nearest whole number the number of Class A ordinary shares to be issued to such
holder.
4.8 Form of
Warrant. The form of Warrant need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after
such adjustment may state the same Warrant Price and the same number of Class A ordinary shares as is stated in the Warrants
initially issued pursuant to this Agreement; provided, however, that the Company may at any time in its sole discretion make any
change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any Warrant
thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise, may be in the form
as so changed.
4.9 Other
Events. In case any event shall occur affecting the Company as to which none of the provisions of the preceding subsections of
this Section 4 are strictly applicable, but which would require an adjustment to the terms of the Warrants in order to (i) avoid an
adverse impact on the Warrants and (ii) effectuate the intent and purpose of this Section 4, then, in each such case, the Company
shall appoint a firm of independent registered public accountants, investment banking or other appraisal firm of recognized national
standing, which shall give its opinion as to whether or not any adjustment to the rights represented by the Warrants is necessary to
effectuate the intent and purpose of this Section 4 and, if they determine that an adjustment is necessary, the terms of such
adjustment; provided, however, that under no circumstances shall the Warrants be adjusted pursuant to this Section 4.9 as a result
of any issuance of securities in connection with a Business Combination. The Company shall adjust the terms of the Warrants in a
manner that is consistent with any adjustment recommended in such opinion.
5. Transfer and
Exchange of Warrants.
5.1 Registration of
Transfer. The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant upon the Warrant
Register, upon surrender of such Warrant for transfer, properly endorsed with signatures properly guaranteed and accompanied by
appropriate instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate number of Warrants
shall be issued and the old Warrant shall be cancelled by the Warrant Agent. In the case of certificated Warrants, the Warrants so
cancelled shall be delivered by the Warrant Agent to the Company from time to time upon request.
5.2 Procedure
for Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, together with a written request for exchange or
transfer, and thereupon the Warrant Agent shall issue in exchange therefor one or more new Warrants as requested by the Registered
Holder of the Warrants so surrendered, representing an equal aggregate number of Warrants; provided, however, that except as
otherwise provided herein or with respect to any Book-Entry Warrant, each Book-Entry Warrant may be transferred only in whole and
only to the Depositary, to another nominee of the Depositary, to a successor depository, or to a nominee of a successor depository;
provided further, however that in the event that a Warrant surrendered for
transfer bears a restrictive legend (as in the case, initially, of the Private Placement Warrants), the Warrant Agent shall not
cancel such Warrant and issue new Warrants in exchange thereof until the Warrant Agent has received an opinion of counsel for the
Company stating that such transfer may be made and indicating whether the new Warrants must also bear a restrictive
legend.
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5.3 Fractional
Warrants. The Warrant Agent shall not be required to effect any registration of transfer or exchange which shall result in the
issuance of a warrant certificate or book-entry position for a fraction of a warrant, except as part of the Units.
5.4 Service
Charges. No service charge shall be made for any exchange or registration of transfer of Warrants.
5.5 Warrant
Execution and Countersignature. The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the
terms of this Agreement, the Warrants required to be issued pursuant to the provisions of this Section 5, and the Company, whenever
required by the Warrant Agent, shall supply the Warrant Agent with Warrants duly executed on behalf of the Company for such
purpose.
5.6 Transfer
of Warrants. Prior to the Detachment Date, the Public Warrants may be transferred or exchanged only together with the Unit in
which such Warrant is included, and only for the purpose of effecting, or in conjunction with, a transfer or exchange of such Unit.
Furthermore, each transfer of a Unit on the register relating to such Units shall operate also to transfer the Warrants included in
such Unit. Notwithstanding the foregoing, the provisions of this Section 5.6 shall have no effect on any transfer of Warrants on and
after the Detachment Date.
6. Redemption.
6.1 Redemption
of Public Warrants. Not less than all of the outstanding Public Warrants may be redeemed for cash, at the option of the Company,
at any time during the Exercise Period, at the office of the Warrant Agent, upon notice to the Registered Holders of the Public
Warrants, as described in Section 6.2 below, at a Redemption Price of $0.01 per Public Warrant, provided that (a) the
Reference Value (as defined below) equals or exceeds $18.00 per share (subject to adjustment in compliance with Section 4
hereof) and (b) either (i) there is an effective registration statement covering the issuance of the Class A ordinary shares
issuable upon exercise of the Public Warrants, and a current prospectus relating thereto, available throughout the 30-day Redemption
Period (as defined in Section 6.2 below), or (ii) the Company has elected to require the exercise of the Public Warrants on a
“cashless basis” pursuant to subsection 3.3.1(b) hereof.
6.2 Date
Fixed for and Notice of, Redemption., Redemption Price., Reference Value. In the event that the Company
elects to redeem the Public Warrants pursuant to Section 6.1, the Company shall fix a date for the redemption (the “Redemption
Date”). Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than thirty (30)
days prior to the Redemption Date (the period lasting from such time until the Redemption Date, the “30-day Redemption
Period”) to the Registered Holders of the Public Warrants to be redeemed at their last addresses as they shall appear on
the registration books. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given
whether or not the Registered Holder received such notice. As used in this Agreement, (a) “Redemption Price” shall
mean the price per Warrant at which any Warrants are redeemed pursuant to Section 6.1 and (b) “Reference Value” shall
mean the last reported sale price of the Class A ordinary shares for any twenty (20) trading days within the thirty (30) trading-day
period ending on the third (3rd) trading day prior to the date on which notice of
the redemption is given.
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6.3 Exercise
After Notice of Redemption. The Public Warrants may be exercised, for cash (or, if the Company has elected to require
exercise on a “cashless basis” in accordance with subsection 3.3.1(b) of this Agreement, on such “cashless
basis”) at any time after notice of redemption shall have been given by the Company pursuant to Section 6.2 hereof and
prior to the Redemption Date. In the event that the Company determines to require all holders of Public Warrants to exercise their
Public Warrants on a “cashless basis” pursuant to subsection 3.3.1, the notice of redemption shall contain the
information necessary to calculate the number of Class A ordinary shares to be received upon exercise of the Public Warrants,
including the “Redemption Fair Market Value” (as such term is defined in subsection 3.3.1(b) hereof) in such case. On and
after the Redemption Date, the record holder of the Public Warrants shall have no further rights except to receive, upon surrender
of the Public Warrants, the Redemption Price.
7. Other Provisions
Relating to Rights of Holders of Warrants.
7.1 No
Rights as Shareholder. A Warrant does not entitle the Registered Holder thereof to any of the rights of a shareholder of the
Company, including, without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to
vote or to consent or to receive notice as shareholders in respect of the meetings of shareholders or the election of directors of
the Company or any other matter.
7.2 Lost,
Stolen, Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant
Agent may on such terms as to indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated
Warrant, include the surrender thereof), issue a new Warrant of like denomination, tenor, and date as the Warrant so lost, stolen,
mutilated, or destroyed. Any such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not
the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone.
7.3 Reservation
of Class A Ordinary Shares. The Company shall at all times reserve and keep available a number of its authorized but unissued
Class A ordinary shares that shall be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this
Agreement.
7.4 Registration
of Class A Ordinary Shares; Cashless Exercise at Company’s Option.
7.4.1 Registration
of the Class A Ordinary Shares. The Company agrees that as soon as practicable, but in no event later than thirty (30) business
days after the closing of its initial Business Combination, it shall use its best efforts to file with the Commission a registration
statement for the registration, under the Securities Act, of the issuance of the Class A ordinary shares issuable upon exercise of
the Warrants. The Company shall use its best efforts to cause the same to become effective within sixty (60) business days following
the closing of its initial Business Combination and to maintain the effectiveness of such registration statement, and a current
prospectus relating thereto, until the expiration or redemption of the Warrants in accordance with the provisions of this Agreement.
If any such registration statement has not been declared effective by the sixtieth (60th) Business Day following the
closing of the Business Combination, holders of the Public Warrants shall have the right, during the period beginning on the
sixty-first (61st) Business Day after the closing of the Business Combination and ending upon such registration statement being
declared effective by the Commission, and during any other period when the Company shall fail to have maintained an effective
registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the Public Warrants, to
exercise such Public Warrants on a “cashless basis,” by exchanging the Public Warrants (in accordance with Section 3(a)(9)
of the Securities Act or another exemption) for that number of Class A ordinary shares equal to the quotient obtained by dividing
(x) the product of the number of Class A ordinary shares underlying the
Public Warrants, multiplied by the excess of the “Fair Market Value” (as defined below) less the Warrant Price by (y) the
Fair Market Value. Solely for purposes of this subsection 7.4.1, “Fair Market Value” shall mean the
volume-weighted average price of the Class A ordinary shares as reported during the ten (10) trading day period ending on the
trading day prior to the date that notice of exercise is received by the Warrant Agent from the holder of such Warrants or its
securities broker or intermediary. The date that notice of “cashless exercise” is received by the Warrant Agent shall be
conclusively determined by the Warrant Agent. In connection with the “cashless exercise” of a Public Warrant, the Company
shall, upon request, provide the Warrant Agent with an opinion of counsel for the Company (which shall be an outside law firm with
securities law experience) stating that (i) the exercise of the Public Warrants on a “cashless basis” in accordance with
this subsection 7.4.1 is not required to be registered under the Securities Act and (ii) the Class A ordinary shares issued
upon such exercise shall be freely tradable under United States federal securities laws by anyone who is not an affiliate (as such
term is defined in Rule 144 under the Securities Act) of the Company and, accordingly, shall not be required to bear a restrictive
legend. Except as provided in subsection 7.41, for the avoidance of doubt, unless and until all of the Warrants have been
exercised or have expired, the Company shall continue to be obligated to comply with its registration obligations under the first
three sentences of this subsection 7.4.1.
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7.42 Cashless
Exercise at Company’s Option. If the Class A ordinary shares are at the time of any exercise of a Public Warrant not listed on a national
securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act,
the Company may, at its option, (i) require holders of Public Warrants who exercise Public Warrants to exercise such Public Warrants on
a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act as described in subsection 7.4.1 and (ii)
in the event the Company so elects, the Company shall (x) not be required to file or maintain in effect a registration statement for the
registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the Warrants, notwithstanding anything
in this Agreement to the contrary, and (y) use its best efforts to register or qualify for sale the Class A ordinary shares issuable upon
exercise of the Public Warrant under applicable blue sky laws to the extent an exemption is not available.
7.4.3 Notwithstanding
the foregoing, if at any time pursuant to this Agreement the Public Warrants may be exercised on a “cashless basis” pursuant
to this Section 7.4, the exercise of the Public Warrants must be completed pursuant to subsection 3.3.1(b) hereof.
8. Concerning
the Warrant Agent and Other Matters.
8.1 Payment
of Taxes. The Company shall from time to time promptly pay all taxes and charges that may be imposed upon the Company or the
Warrant Agent in respect of the issuance or delivery of Class A ordinary shares upon the exercise of the Warrants, but the Company
shall not be obligated to pay any transfer taxes in respect of the Warrants or such Class A ordinary shares.
8.2 Resignation,
Consolidation, or Merger of Warrant Agent.
8.2.1 Appointment
of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be
discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the
office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a
successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty
(30) days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder of a Warrant
(who shall, with such notice, submit his, her or its Warrant for inspection by the Company), then the holder of any Warrant may
apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at
the Company’s cost. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a corporation or other
entity organized and existing under the laws of the State of New York, in good standing and having its principal office in the
Borough of Manhattan, City and State of New York , and authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all
the authority, powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if
originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or
appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to
such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of
any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more
fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities,
duties, and obligations.
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8.2.2 Notice of Successor
Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the predecessor
Warrant Agent and the Transfer Agent for the Class A ordinary shares not later than the effective date of any such appointment.
8.2.3 Merger or Consolidation
of Warrant Agent. Any entity into which the Warrant Agent may be merged or with which it may be consolidated or any entity resulting
from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement
without any further act.
8.3 Fees
and Expenses of Warrant Agent.
8.3.1 Remuneration.
The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and shall, pursuant
to its obligations under this Agreement, reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably
incur in the execution of its duties hereunder.
8.3.2 Further Assurances.
The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such
further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing
of the provisions of this Agreement.
8.4 Liability
of Warrant Agent.
8.4.1 Reliance on Company
Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by
a statement signed by the Co-Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Secretary or the Chairman of the
Board and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered in good faith
by it pursuant to the provisions of this Agreement.
8.4.2
Indemnity. The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct, fraud or bad faith.
The Company agrees to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, out-of-pocket
costs and reasonable outside counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement, except
as a result of the Warrant Agent’s gross negligence, willful misconduct, fraud or bad faith.
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8.4.3 Exclusions.
The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution
of any Warrant (except its countersignature thereof). The Warrant Agent shall not be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible to make any adjustments
required under the provisions of Section 4 hereof or responsible for the manner, method, or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Class A ordinary shares to be issued pursuant to this Agreement
or any Warrant or as to whether any Class A ordinary shares shall, when issued, be valid and fully paid and nonassessable.
8.5 Acceptance
of Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the
terms and conditions herein set forth and among other things, shall account promptly to the Company with respect to Warrants
exercised and concurrently account for, and pay to the Company, all monies received by the Warrant Agent for the purchase of Class A
ordinary shares through the exercise of the Warrants.
8.6 Waiver.
The Warrant Agent has no right of set-off or any other right, title, interest or claim of any kind (“Claim”) in, or
to any distribution of, the Trust Account (as defined in that certain Investment Management Trust Agreement, dated as of the date
hereof, by and between the Company and Continental Stock Transfer & Trust Company as trustee thereunder) and hereby agrees not
to seek recourse, reimbursement, payment or satisfaction for any Claim against the Trust Account for any reason whatsoever. The
Warrant Agent hereby waives any and all Claims against the Trust Account and any and all rights to seek access to the Trust
Account.
9. Miscellaneous
Provisions.
9.1 Successors.
All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant’ Agent shall bind and inure
to the benefit of their respective successors and assigns.
9.2 Notices.
Any notice, statement or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any
Warrant to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified
mail or private courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address
is filed in writing by the Company with the Warrant Agent), as follows:
Black Spade Acquisition II Co
Suite 2902, 29/F The Centrium,
60 Wyndham Street, Central, Hong Kong
Attention: Dennis Tam
with a copy to the Company’s counsel at:
Latham & Watkins LLP
9 Raffles Place
#42-02 Republic Plaza, Singapore
Attn: Stacey Wong
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Any notice, statement or
demand authorized by this Agreement to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall
be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within
five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent
with the Company), as follows:
Continental Stock Transfer & Trust Company
One State
Street, 30th Floor
New York, New York 10004
Attention: Compliance Department
9.3 Applicable Law and Exclusive Forum. The validity,
interpretation, and performance of this Agreement and of the Warrants shall be governed in all respects by the laws of the State of New
York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction.
Subject to applicable law, the Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any
way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the
Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be the exclusive forum for any
such action, proceeding or claim. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum. Notwithstanding the foregoing, the provisions of this paragraph will not apply to suits brought to enforce any
liability or duty created by the Securities Act, the Exchange Act or any other claim for which the federal district courts of the United
States of America are the sole and exclusive forum.
Any person or entity purchasing
or otherwise acquiring any interest in the Warrants shall be deemed to have notice of and to have consented to the forum provisions in
this Section 9.3. If any action, the subject matter of which is within the scope of the forum provisions above, is filed in a court
other than a court located within the State of New York or the United States District Court for the Southern District of New York (a “foreign
action”) in the name of any warrant holder, such warrant holder shall be deemed to have consented to: (x) the personal
jurisdiction of the state and federal courts located within the State of New York or the United States District Court for the Southern
District of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement
action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon
such warrant holder’s counsel in the foreign action as agent for such warrant holder.
9.4 Persons Having Rights under
this Agreement. Nothing in this Agreement shall be construed to confer upon, or give to, any person, corporation or other entity
other than the parties hereto and the Registered Holders of the Warrants any right, remedy, or claim under or by reason of this Agreement
or of any covenant, condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements
contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors and assigns and of
the Registered Holders of the Warrants.
9.5 Examination of the Warrant
Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent in the Borough
of Manhattan, City and State of New York, for inspection by the Registered Holder of any Warrant. The Warrant Agent may require any
such holder to submit such holder’s Warrant for inspection by the Warrant Agent.
9.6 Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together
shall constitute one instrument. Delivery of this Agreement by one party to the other may be made by facsimile, electronic mail
(including any electronic signature complying with the New York Electronic Signatures and Records Act (N.Y. State Tech. §§
301-309), as amended from time to time, or other applicable law) or other transmission method, and the parties hereto agree that any
counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
30
9.7 Effect of
Headings. The section headings herein are for convenience only and are not part of this Agreement and shall not affect the
interpretation thereof.
9.8 Amendments.
This Agreement may be amended by the parties hereto without the consent of any Registered Holder for the purpose of (i) curing any
ambiguity or correcting any mistake, including conforming the provisions hereof to the description of the terms of the Warrants and
this Agreement set forth in the Prospectus, or defective provision contained herein, (ii) removing or reducing the Company’s ability
to redeem the Public Warrants, or (iii) adding or changing any provisions with respect to matters or questions arising under this
Agreement as the parties may deem necessary or desirable and that the parties deem shall not adversely affect the rights of the
Registered Holders under this Agreement in any material respect. This Agreement may be amended by the parties hereto with the vote
or written consent of the Registered Holders of at least 50% of the then outstanding Public Warrants and Private Placement Warrants,
voting together as a single class, to allow for the Warrants to be or continue to be, as applicable, classified as equity in the
Company’s financial statements. All other modifications or amendments, including any modification or amendment to increase the
Warrant Price or shorten the Exercise Period, with respect to (a) the terms of the Public Warrants or any provision of this
Agreement with respect to the Public Warrants, shall require the vote or written consent of the Registered Holders of at least 50%
of the then outstanding Public Warrants, and (b) the terms of the Private Placement Warrants or any provision of this Agreement with
respect to the Private Placement Warrants shall require the vote or written consent of holders of at least 50% of the then
outstanding Private Placement Warrants. Notwithstanding the foregoing, the Company may lower the Warrant Price or extend the
duration of the Exercise Period pursuant to and in accordance with Sections 3.1 and 3.2, respectively, without the consent of the
Registered Holders.
9.9 Severability.
This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect
the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid
or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as
similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.
Exhibit A Form of Warrant Certificate
Exhibit B Legend — Private Placement Warrants
31
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
BLACK SPADE ACQUISITION II CO
By:
/s/ Chi Wai Dennis Tam
Name:
Chi Wai Dennis Tam
Title:
Director
CONTINENTIAL STOCK TRANSFER & TRUST
COMPANY, AS WARRANT AGENT
By:
/s/ Henry Farrell
Name:
Henry Farrell
Title:
Vice President
[Signature Page to Warrant Agreement]
33
EXHIBIT
A
[FACE]
Number
WARRANTS
THIS WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO
THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR
IN THE WARRANT AGREEMENT DESCRIBED BELOW
BLACK SPADE ACQUISITION II CO
Incorporated Under the Laws of the Cayman Islands
CUSIP G1153L 117
Warrant Certificate
This
Warrant Certificate certifies that , or registered
assigns, is the registered holder of warrant(s) (the
“Warrants” and each, a “Warrant”) to purchase Class A ordinary shares, $0.0001 par value
(“Class A ordinary shares”), of Black Spade Acquisition II Co, a Cayman Islands exempted company (the
“Company”). Each Warrant entitles the holder, upon exercise during the period set forth in the Warrant Agreement
referred to below, to receive from the Company that number of fully paid and nonassessable Class A ordinary shares as set forth below,
at the exercise price (the “Exercise Price”) as determined pursuant to the Warrant Agreement, payable in lawful
money (or through “cashless exercise” as provided for in the Warrant Agreement) of the United States of America upon
surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent referred to below,
subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant Certificate but not defined
herein shall have the meanings given to them in the Warrant Agreement.
Each whole Warrant is initially
exercisable for one fully paid and non-assessable Class A ordinary share. Fractional shares shall not be issued upon exercise of any Warrant.
If, upon the exercise of Warrants, a holder would be entitled to receive a fractional interest in a Class A ordinary share, the Company
shall, upon exercise, round down to the nearest whole number the number of Class A ordinary shares to be issued to the Warrant holder.
The number of Class A ordinary shares issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events
as set forth in the Warrant Agreement.
The initial Exercise Price
per one Class A ordinary share for any Warrant is equal to $11.50 per share. The Exercise Price is subject to adjustment upon the occurrence
of certain events as set forth in the Warrant Agreement.
Subject to the conditions
set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the
end of such Exercise Period, such Warrants shall become void. The Warrants may be redeemed, subject to certain conditions, as set forth
in the Warrant Agreement.
Reference is hereby made to
the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes
have the same effect as though fully set forth at this place.
34
This
Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed by
and construed in accordance with the internal laws of the State of New York.
BLACK SPADE
ACQUISITION II CO
By:
Name:
Chi Wai Dennis Tam
Title:
CONTINENTIAL
STOCK TRANSFER & TRUST COMPANY, AS WARRANT AGENT
By:
Name:
Title:
35
[Form
of Warrant Certificate]
[Reverse]
The
Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive Class
A ordinary shares and are issued or to be issued pursuant to a Warrant Agreement dated as of August
27, 2024 (the “Warrant Agreement”), duly executed and delivered by the Company to Continental Stock Transfer
& Trust Company, a New York corporation, as warrant agent (the “Warrant Agent”), which Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders”
or “holder” meaning the Registered Holders or Registered Holder, respectively) of the Warrants. A copy of the
Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate
but not defined herein shall have the meanings given to them in the Warrant Agreement.
Warrants
may be exercised at any time during the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of Election to Purchase set forth hereon
properly completed and executed, together with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless
exercise” as provided for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent. In
the event that upon any exercise of Warrants evidenced hereby, the number of Warrants exercised shall be less than the total number of
Warrants evidenced hereby, there shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing
the number of Warrants not exercised.
Notwithstanding
anything else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a
registration statement covering the issuance of the Class A ordinary shares to be issued upon exercise is effective under the Securities
Act and (ii) a prospectus thereunder relating to the Class A ordinary shares is current, except through “cashless exercise”
as provided for in the Warrant Agreement or if another exemption from registration is available.
The Warrant Agreement
provides that upon the occurrence of certain events the number of Class A ordinary shares issuable upon exercise of the Warrants set forth
on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof would be entitled
to receive a fractional interest in a Class A ordinary share, the Company shall, upon exercise, round down to the nearest whole number
of Class A ordinary shares to be issued to the holder of the Warrant.
Warrant Certificates,
when surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by legal representative
or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement,
but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate
a like number of Warrants.
Upon due presentation
for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates
of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the Registered
Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon
made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and
neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate
entitles any holder hereof to any rights of a shareholder of the Company.
36
Election to Purchase
(To Be Executed Upon Exercise of Warrant)
The undersigned
hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive [●] Class A ordinary shares
and herewith tenders payment for such Class A ordinary shares to the order of Black Spade Acquisition II Co (the “Company”)
in the amount of $[●] in accordance with the terms hereof. The undersigned requests that a certificate for such Class
A ordinary shares be registered in the name of [●], whose address is [●] and that such Class A ordinary shares be delivered
to [●] whose address is [●]. If said number of Class A ordinary shares is less than all of the Class A ordinary shares purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such Class A ordinary shares
be registered in the name of [●], whose address is [●] and that such Warrant Certificate be delivered to [●], whose address
is [●].
In the event that
the Warrant is a Public Warrant that is to be exercised on a “cashless basis” as required by the Company pursuant to Section
6.1 of the Warrant Agreement, the number of Class A ordinary shares that this Warrant is exercisable for shall be determined in accordance
with subsection 3.3.1(c) of the Warrant Agreement.
In the event that
the Warrant is a Private Placement Warrant that is to be exercised on a “cashless” basis pursuant to subsection 3.3.1(c)
of the Warrant Agreement, the number of Class A ordinary shares that this Warrant is exercisable for shall be determined in accordance
with subsection 3.3.1(c) of the Warrant Agreement.
In the event that
the Warrant is a Public Warrant that is to be exercised on a “cashless” basis pursuant to Section 7.4
of the Warrant Agreement, the number of Class A ordinary shares that this Warrant is exercisable for shall be determined in accordance
with Section 7.4 of the Warrant Agreement.
In the event that
the Warrant may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of Class A ordinary
shares that this Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant Agreement which
allows for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably elects to
exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of the Warrant Agreement, to receive
Class A ordinary shares. If said number of shares is less than all of the Class A ordinary shares purchasable hereunder (after giving
effect to the cashless exercise), the undersigned requests that a new Warrant Certificate representing the remaining balance of such Class
A ordinary shares be registered in the name of [●], whose address is [●] and that such Warrant Certificate be delivered to [●],
whose address is N.
[Signature Page Follows]
37
Date: [●]
(Signature)
(Address)
(Tax Identification Number)
Signature Guaranteed:
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED).
38
EXHIBIT B
LEGEND
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. IN ADDITION, SUBJECT TO ANY ADDITIONAL LIMITATIONS ON TRANSFER DESCRIBED IN THE LETTER AGREEMENT (THE “LETTER
AGREEMENT”) BY AND AMONG BLACK SPADE ACQUISITION II CO (THE “COMPANY”), BLACK SPADE SPONSOR LLC II AND THE OTHER PARTIES
THERETO, THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD OR TRANSFERRED PRIOR TO THE DATE THAT IS THIRTY (30) DAYS AFTER THE DATE UPON
WHICH THE COMPANY COMPLETES ITS INITIAL BUSINESS COMBINATION (AS DEFINED IN THE RECITALS OF THE WARRANT AGREEMENT REFERRED TO HEREIN)
EXCEPT TO A PERMITTED TRANSFEREE (AS DEFINED IN THE LETTER AGREEMENT) WHO AGREES IN WRITING WITH THE COMPANY TO BE SUBJECT TO SUCH TRANSFER
PROVISIONS.
NO.WARRANT
39
EX-4.6
4
ea024654301ex4-6_gener.htm
REGISTRATION RIGHTS AGREEMENT, DATED AS OF JUNE 3, 2025, BY AND AMONG THE GENERATION ESSENTIALS GROUP, BLACK SPADE SPONSOR LLC II AND OTHER PARTIES NAMED THEREIN
Exhibit 4.6
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “Agreement”),
dated as of June 3, 2025, is made and entered into by and among The Generation Essentials Group (formerly known as World Media and Entertainment
Universal Inc.), an exempted company incorporated with limited liability under the laws of the Cayman Islands (the “Company”)
and each of the Persons listed on Schedule 1 hereto (each a “Holder”).
RECITALS
WHEREAS, pursuant to the terms of that
certain Business Combination Agreement (the “Business Combination Agreement”) dated as of January 27, 2025, by and
among the Company, WME Merger Sub Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands
(“Merger Sub”) and Black Spade Acquisition II Co, an exempted company incorporated with limited liability under the
laws of the Cayman Islands (“BSII”), among other matters, Merger Sub will merge with and into BSII, with BSII continuing
as the surviving entity and a wholly owned subsidiary of the Company (the consummation of such merger, the “Closing”);
WHEREAS, pursuant to the terms of the Business
Combination Agreement, prior to the effective time of the Closing, the Company will adopt the fourth amended and restated memorandum and
articles of association in the form attached to the Business Combination Agreement as Annex A (the “Listing Articles”);
WHEREAS, at the Closing, (i) all of the
outstanding shares of BSII (other than BSII Dissenting Shares) will automatically be cancelled and cease to exist in exchange for the
right to receive newly issued Company Class A Ordinary Shares; and (ii) each outstanding BSII Warrant will be exchanged for one Company
Warrant pursuant to the Business Combination Agreement and the Assignment, Assumption and Amendment Agreement;
WHEREAS, that certain
Registration Rights Agreement dated as of August 27, 2024, between BSII and the Sponsor (the “Prior SPAC Agreement”)
shall be terminated with effect from the Closing; and
WHEREAS, the parties
hereto desire to enter into this Agreement, pursuant to which the Company shall grant registration rights to the Holders on the terms
and conditions set out in this Agreement;
NOW,
THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 The
terms defined in this Section 1.1 shall, for all purposes of this Agreement, have the respective meanings set forth below. Capitalized
terms used but not defined in this Agreement shall have the meaning ascribed to such terms in the Business Combination Agreement:
“Adverse Disclosure”
shall mean any public disclosure of material non-public information, (a) which disclosure, in the good faith judgment of the Chief Executive
Officer or Chief Financial Officer of the Company, after consultation with counsel to the Company, (i) would be required to be made in
any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement
of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus
and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, and (ii) would not be required
to be made at such time if the Registration Statement were not being filed, declared effective or used, as the case may be, and (b) as
to which the Company has a bona fide business purpose for not making such information public.
“Agreement” shall have the meaning given
in the Preamble.
“Block Trade” shall have the meaning given in subsection 2.9.1.
“Board”
shall mean the Board of Directors of the Company.
“BSII” shall have the meaning given in the Preamble.
“BSII Warrants” means the Private Placement
Warrants and the Public Warrants.
“Business Combination Agreement” shall have the meaning given in the Recitals hereto.
“Business Day” shall
mean any day other than Saturday, Sunday or another day on which commercial banks located in the Cayman Islands, New York or Hong Kong
are authorized or required by law or executive order to be closed.
“Closing” shall have the meaning given
in the Recitals hereto.
“Commission” shall mean the Securities and Exchange Commission.
“Company”
shall have the meaning given in the Preamble.
“Company Class A Ordinary Shares”
shall mean the Class A Ordinary Shares as defined in the Listing Articles.
“Company Class B Ordinary Shares”
shall mean the Class B Ordinary Shares as defined in the Listing Articles.
2
“Company Shares” shall
mean, collectively, Company Class A Ordinary Shares and Company Class B Ordinary Shares.
“Company Warrants” shall
mean the warrants to acquire Company Class A Ordinary Shares issued to holders of Private Placement Warrants and Public Warrants pursuant
to the terms of the Assignment, Assumption and Amendment Agreement in connection with the consummation of the transactions contemplated
by the Business Combination Agreement.
“Demanding Holder” shall have the meaning
given in Section 2.4.
“Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended.
“Form F-1” shall mean
such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently
adopted by the Commission.
“Form F-1 Shelf” shall have the meaning
given in subsection 2.1.1.
“Form F-3” shall mean
such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted
by the Commission that permits forward incorporation of substantial information by reference to other documents filed by the Company with
the Commission.
“Form F-3 Shelf” shall have the meaning
given in subsection 2.1.3.
“Holder” shall have the meaning given in the Preamble.
“Lock-Up Agreements”
shall mean, collectively, the Shareholders Support Agreement and the Sponsor Support Agreement.
“Maximum Number of Securities”
shall mean, as to a given Underwritten Offering, the maximum dollar amount or maximum number of equity securities that can be sold in
such Underwritten Offering, in the reasonable determination of the managing Underwriter(s), without adversely affecting the proposed offering
price, the timing, the distribution method, or the probability of success of such offering.
“Merger Sub” shall have the meaning given
in the Recitals hereto.
“Misstatement” shall
mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement
or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus (in the case of a Prospectus, in the light
of the circumstances under which they were made) not misleading.
“New Registration Statement” shall have
the meaning given in subsection 2.2.1.
“Other Coordinated Offering” shall have the meaning given in Section
2.4.
3
“Permitted Transferees”
shall mean a person or entity to whom a Holder of Registrable Securities is permitted to transfer such Registrable Securities prior to
the expiration of the lock- up period under the applicable Lock-Up Agreements, and to any transferee thereafter.
“Person” means any individual,
firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company,
governmental authority or instrumentality or other entity of any kind.
“Piggyback Registration” shall
have the meaning given in subsection 2.8.1. “Private Placement Warrants” shall mean (i) the 11,000,000
warrants exercisable for shares of BSII issued pursuant to that certain Sponsor Warrants Purchase Agreement, dated August 27, 2024,
between BSII and the Sponsor and (ii) the 120,000 warrants exercisable for shares of BSII issued in connection with the
Sponsor’s partial exercise of the over-allotment option on September 26, 2024.
“Public Warrants” shall
mean the 5,100,000 warrants exercisable for shares of BSII sold as part of the units in BSII’s initial public offering.
“Prior SPAC Agreement” shall
have the meaning given in the Recitals hereto. “Pro Rata” shall mean, with respect to a given Registration,
offering or Transfer of Registrable Securities pursuant to this Agreement, pro rata based on (A) the number of Registrable
Securities that each Holder, as applicable, has requested or proposed to be included in such Registration, offering or Transfer and
(B) the aggregate number of Registrable Securities that all Holders have requested or proposed to be included in such Registration,
offering or Transfer.
“Prospectus” shall mean
the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and
all post- effective amendments and including all material incorporated by reference in such prospectus.
“Registrable Securities” shall mean:
(A) any
outstanding Company Shares or Company Warrants that are held by a Holder as of immediately following the Closing;
(B) any
Company Shares that may be acquired by a Holder upon the exercise of a Company Warrant or any other option or right to acquire Company
Shares that is held by a Holder as of immediately following the Closing;
(C) any
Company Shares or Company Warrants to purchase Company Shares otherwise acquired or owned by a Holder following the date hereof to the
extent that such securities are “restricted securities” (as defined in Rule 144) or are otherwise held by an “affiliate”
(as defined in Rule 144) of the Company; and
4
(D) any other equity security of the Company
issued or issuable with respect to any securities referenced in clauses (A) through (C) above by way of a stock dividend or stock
split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization or similar transaction; provided, however,
as to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (i) a Registration
Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall
have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (ii) such securities shall
have been otherwise transferred, new certificates for such securities not bearing a legend restricting further transfer shall have
been delivered by the Company and subsequent public distribution of such securities shall not require registration under the
Securities Act; (iii) such securities shall have ceased to be outstanding; (iv) such securities have been sold to, or through, a
broker, dealer or underwriter in a public distribution or other public securities transaction or (v) the holder of such securities
is able to immediately sell such securities under Rule 144 of the Securities Act without volume or manner of sale limitations; provided
that securities ceasing to be Registrable Securities by reason of this clause (v) shall again become Registrable Securities during
any period in which there is no adequate current public information with respect to the Company available under Rule 144 (c) of the
Securities Act or any period where sales of such securities under Rule 144 are again subject to volume or manner of sale
limitations.
“Registration” shall
mean a registration, including any related Underwritten Takedown, effected by preparing and filing a registration statement or similar
document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and
such registration statement becoming effective.
“Registration Expenses”
shall mean the out-of-pocket expenses of a Registration, including the following:
(A) all
registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority,
Inc.) and any securities exchange on which the Company Class A Ordinary Shares are then listed;
(B) fees
and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters
in connection with blue sky qualifications of Registrable Securities);
(C) printing, messenger, telephone and delivery expenses;
(D) reasonable fees and disbursements of counsel for the Company;
(E) reasonable
fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration;
(F) the Company’s roadshow and travel expenses, if any;
5
(G) the
fees and expenses of any special experts retained by the Company in connection with such Registration;
(H) the
Company’s internal expenses (including, without limitation, all salaries and expenses of the Company’s and its subsidiaries’
officers and employees and all overhead costs of the Company and its subsidiaries);
(I) reasonable
fees and expenses of one (1) legal counsel selected by the majority-in- interest of the Demanding Holders initiating a Underwritten Takedown;
and
(J) all other out-of-pocket expenses of a Registration, in each case, excluding Underwriters’ commissions
and any related transfer taxes attributable to the sale of Registrable Securities by a Holder, and the fees and disbursements of
legal counsel to the selling Holders, in an Underwritten Takedown, Block Trade or Other Coordinated Offering.
“Registration Statement”
shall mean any registration statement that covers the Registrable Securities pursuant to the provisions of this Agreement, including the
Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration
statement, and all exhibits to and all material incorporated by reference in such registration statement (other than a registration statement
on Form F-4, Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in
exchange for securities or assets of another entity).
“Remaining Securities” shall have the
meaning given in Section 2.3.1.
“Requesting Holder” shall have the meaning given in Section 2.5.
“SEC
Guidance” shall have the meaning given in subsection 2.2.1.
“Securities Act” shall mean the Securities
Act of 1933, as amended from time to time.
“Shelf” shall mean the
Form F-1 Shelf, the Form F-3 Shelf or any Subsequent Shelf, as the case may be.
“Shelf Registration”
shall mean a Registration of securities pursuant to a Registration Statement filed with the Commission in accordance with and pursuant
to Rule 415 promulgated under the Securities Act (or any successor rule then in effect).
“Significant Holder”
shall mean AMTD Digital Inc., AMTD IDEA Group and AMTD Group Inc.
“Sponsor” shall mean
Black Spade Sponsor LLC II, an exempted company incorporated with limited liability under the laws of the Cayman Islands.
“Sponsor Parties” means
(a) the Sponsor; and (b) each Person listed in rows 6 through 18 of Schedule 1.
6
“Sponsor Parties Representative”
shall have the meaning given in subsection 5.14.1.
“Subsequent Shelf” shall have the meaning given in subsection
2.3.2.
“Takedown Demand” shall have the meaning
given in subsection 2.4.1.
“Takedown Threshold” shall have the meaning given in Section 2.4.
“Transfer” shall mean
the (a) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose
of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect
to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security, (b) entry
into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any
security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement
of any intention to effect any transaction specified in clause (a) or (b).
“Underwriter” shall
mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s
market-making activities.
“Underwritten Registration”
or “Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter
in a firm commitment underwriting for distribution to the public.
“Underwritten Takedown” shall have the
meaning given in Section 2.4.
ARTICLE 2
REGISTRATIONS
2.1 Resale Shelf Registration.
2.1.1 The
Company shall use its reasonable best efforts to (a) file within thirty (30) days following the Closing, and use reasonable efforts to
cause to be declared effective as soon as practicable thereafter, a Registration Statement for a Shelf Registration on Form F-1 (the “Form
F-1 Shelf”) covering the resale of (i) all the Registrable Securities held by the Holders other than Significant Holders (determined
as of two (2) Business Days prior to such filing) unless as otherwise notified in writing by such Holder to the Company at least five
(5) Business Days prior to such filing; and (ii) all or part of the Registrable Securities held by the Significant Holders, as shall be
notified in writing by the relevant Significant Holder to the Company at least five (5) Business Days prior to such filing, on a delayed
or continuous basis, and shall use its reasonable best efforts to have such Shelf declared effective as soon as practicable after the
filing thereof, and (b) keep such Form F-1 Shelf continuously effective, available for use and in compliance with the provisions of the
Securities Act until such time as a Form F-3 Shelf is declared effective pursuant to Section 2.1.3.
7
2.1.2 Such
Shelf shall provide for the resale of the Registrable Securities included therein pursuant to any method or combination of methods legally
available to, and requested by, any Holder named therein.
2.1.3 Following
the filing of a Form F-1 Shelf, the Company shall use reasonable efforts to convert and/or file, and to cause to become effective, the
Form F-1 Shelf (and each Subsequent Shelf) to a Shelf Registration on Form F-3 (the “Form F-3 Shelf”) as soon as practicable,
and in any event within sixty (60) days, after the Company is eligible to use Form F- 3.
2.2 Rule 415 Cutback.
2.2.1 Notwithstanding
the registration obligations set forth in Section 2.1, in the event the Commission informs the Company that all requested Registrable
Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration
statement, the Company agrees to promptly (a) inform each of the Holders and use its reasonable efforts to file amendments to the Shelf
Registration as required by the Commission and/or (b) withdraw the Shelf Registration and file a new Registration Statement (a “New
Registration Statement”), on Form F-3, or if Form F-3 is not then available to the Company for such Registration Statement,
on such other form available to register for resale the Registrable Securities as a secondary offering; provided, however,
that prior to filing such amendment or New Registration Statement, the Company shall use its reasonable efforts to advocate with the Commission
for the registration of all requested Registrable Securities in accordance with any publicly-available written or oral guidance, comments,
requirements or requests of the Commission staff (the “SEC Guidance”), including the Manual of Publicly Available Telephone
Interpretations D.29.
2.2.2 Notwithstanding
any other provision of this Agreement, if from time to time any SEC Guidance sets forth a limitation of the number of Registrable Securities
permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used
reasonable efforts to advocate with the Commission for the registration of all or a greater number of Registrable Securities) (such maximum
number of Registrable Securities permitted to be registered, the “Maximum Registrable Number”), unless otherwise directed
in writing by a Holder as to its Registrable Securities and subject to a determination by the Commission that certain Holders must be
reduced first based on the number of Registrable Securities held by such Holders, the Company shall prioritize the Registration of (a)
first, all of the Registrable Securities held by the Sponsor Parties, and each Person listed in rows 4 and 5 of Schedule 1 on a Pro Rata
basis, and (b) second, to the extent the Maximum Registrable Number has not been reached, after the applicable of the foregoing limb
(a), the Registrable Securities held by the Significant Holders on a Pro Rata basis. For the avoidance of doubt, each Holder hereby acknowledges
and agrees that the Company may amend (or withdraw and refile) any Registration Statement filed pursuant to this Agreement in order to
give effect to this Section 2.2.
2.2.3 If the Company amends the Shelf
Registration or files a New Registration Statement, as the case may be, under this Section 2.2, the Company shall use its
reasonable efforts to file with the Commission, as promptly as allowed by the Commission or SEC Guidance, one or more registration
statements on Form F-3 or such other form available to register for resale those Registrable Securities that were not registered for
resale on the Shelf Registration, as amended, or the New Registration Statement.
8
2.3 Maintenance, Amendment, Supplement and Subsequent Shelf.
2.3.1 The
Company shall use reasonable efforts to maintain each Shelf in accordance with the terms of this Agreement, and shall prepare and file
with the Commission from time to time such amendments and supplements to the Shelf as may be necessary (a) to keep the Shelf continuously
effective, available for use and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable
Securities and (b) to register the resale of all or any Registrable Securities held by the Significant Holders that are not registered
for resale on the Form F-1 Shelf initially filed with the Commission pursuant to Section 2.1.1 (the “Remaining Securities”).
2.3.2 If
a Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding,
the Company shall, subject to Section 3.4, use reasonable efforts to as promptly as is reasonably practicable (a) cause such Shelf
to again become effective under the Securities Act (including using reasonable efforts to obtain the prompt withdrawal of any order suspending
the effectiveness of such Shelf), (b) amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending
the effectiveness of such Shelf, or (c) prepare and file an additional Registration Statement for a Shelf Registration (a “Subsequent
Shelf”) registering the resale of (i) all the Registrable Securities held by the Holders other than the Significant Holders
(determined as of two (2) Business Days prior to such filing) unless as otherwise notified in writing by such Holder to the Company at
least five (5) Business Days prior to such filing; and (ii) all or part of the Remaining Securities, as shall be notified in writing by
the relevant Significant Holder(s) to the Company at least five (5) Business Days prior to such filing.
2.3.3 If
a Subsequent Shelf is filed pursuant to Section 2.3.2, the Company shall use reasonable efforts to (a) cause such Subsequent Shelf
to become effective under the Securities Act as promptly as is reasonably practicable after the filing thereof, and (b) keep such Subsequent
Shelf continuously effective, available for use and in compliance with the provisions of the Securities Act until such time as there are
no longer any Registrable Securities. Any such Subsequent Shelf shall be on Form F-3 to the extent that the Company is eligible to use
such form, and shall be an automatic shelf registration statement as defined in Rule 405 promulgated under the Securities Act if the Company
is a well-known seasoned issuer as defined in Rule 405 promulgated under the Securities Act at the most recent applicable eligibility
determination date. Otherwise, such Subsequent Shelf shall be on another appropriate form.
2.4 Demand for Underwritten Takedown.
Subject to the Lock-Up Agreements and to the provisions of this Section 2.4 and Sections 2.5 and 3.4, at any
time and from time to time when an effective Shelf is on file with the Commission, any Holder(s) of the then-outstanding number of
Registrable Securities (the “Demanding Holders”) may request to sell all or a portion of their Registrable
Securities in an Underwritten Offering, a Block Trade or an Other Coordinated Offering, in each case that is registered pursuant to
the Shelf (each, an “Underwritten Takedown”) in accordance with this Section 2.4; provided that,
the Company shall only be obligated to effect an Underwritten Takedown if such Underwritten Offering shall include Registrable
Securities proposed to be sold by the Demanding Holder with a total offering price reasonably expected to exceed, in the aggregate,
US$7,500,000.
9
2.4.1 Takedown
Demand Notice. All requests for an Underwritten Takedown shall be made by giving written notice to the Company, which notice shall
specify the number of Registrable Securities proposed to be sold in the Underwritten Takedown (such written notice, a “Takedown
Demand”).
2.4.2 Underwriters.
The majority-in-interest of the Demanding Holders initiating an Underwritten Takedown shall have the right to select the Underwriter(s)
for such Underwritten Offering (which shall consist of one or more reputable nationally recognized investment banks). The Company shall
not be required to include any Holder’s Registrable Securities in such Underwritten Takedown unless such Holder accepts the terms
of the underwriting as agreed between the Company and its Underwriter(s) in customary form and enters into and complies with an underwriting
agreement with such Underwriter(s) in customary form (after having considered and taken reasonable account of comments of a single U.S.
counsel for the Holders which are selling in the Underwritten Takedown). Notwithstanding anything to the contrary in this Agreement, the
Company may effect any Underwritten Takedown pursuant to any then effective Registration Statement, including a Form F-3, that is then
available for such offering.
2.4.3 Number and Frequency of
Underwritten Takedowns. Notwithstanding anything to the contrary in this Section 2.4, under no circumstances shall the
Company be obligated to effect (a) more than an aggregate of two (2) Underwritten Takedowns within the first year following the
Closing or (b) for the period commencing one year after the Closing, more than one (1) Underwritten Takedown within any three-month
period.
2.5 Reduction of
Underwritten Takedown. If the managing Underwriter or Underwriters in an Underwritten Offering pursuant to a Takedown Demand, in good
faith, advises the Company and the Demanding Holders and the Holders requesting piggy back rights pursuant to this Agreement with respect
to such Underwritten Offering (such Demanding Holders and other requesting Holders, the “Requesting Holders”) (if any)
in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire
to sell, taken together with all other Company Shares or other equity securities that the Company desires to sell and the Company Shares,
if any, as to which a Registration has been requested pursuant to separate written contractual piggy-back registration rights held by
any other shareholders who desire to sell, exceeds the Maximum Number of Securities, then the Company shall include in such Underwritten
Offering:
2.5.1 first, the Registrable Securities of
the Demanding Holders and the Requesting Holders (if any) that can be sold without exceeding the Maximum Number of Securities (to be
allocated Pro Rata among the Demanding Holders and Requesting Holders if the Registrable Securities desired to be sold by such
Holders in the aggregate would exceed the Maximum Number of Securities);
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2.5.2 second,
to the extent that the Maximum Number of Securities has not been reached under the foregoing subsection 2.5.1, the Company Shares
or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and
2.5.3 third,
to the extent that the Maximum Number of Securities has not been reached under the foregoing subsections 2.5.1 and 2.5.2,
any Company Shares or other equity securities of other persons or entities that the Company is obligated to register pursuant to any separate
written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Securities.
2.6 Effective Registration.
Notwithstanding any other provision in this Agreement, a Registration will not count as an Underwritten Takedown until the Registration
Statement filed with the Commission with respect to such Underwritten Takedown has been declared effective and the Company has complied
with all of its obligations under this Agreement with respect to such Underwritten Takedown; provided, however, that if,
after such Registration Statement has been declared effective, the offering of Registrable Securities pursuant to such Underwritten Takedown
is interfered with by any stop order or injunction of the Commission or any other governmental agency or court, the Registration Statement
with respect to such Demand Registration will be deemed not to have been declared effective, unless and until, (i) such stop order or
injunction is removed, rescinded or otherwise terminated, and (ii) a majority in interest of the Demanding Holders, thereafter elects
to continue the offering; provided, further, that the Company shall not be obligated to file a second Registration Statement until the
Registration Statement that has been previously filed with respect to such Demand Registration becomes effective or is subsequently terminated.
2.7 Withdrawal of Underwritten Takedown.
2.7.1 Prior
to the filing of the applicable preliminary or “red herring” Prospectus used for marketing an Underwritten Takedown, a majority-in-interest
of the relevant Demanding Holders shall have the right to withdraw from such Underwritten Takedown for any or no reason whatsoever upon
written notification to the Company, each other Demanding Holder and Requesting Holder, and the applicable Underwriter(s).
2.7.2 Following
the receipt of any notice of withdrawal pursuant to subsection 2.7.1, the other Demanding Holders and Requesting Holders, provided
they collectively qualify as Demanding Holders pursuant to Section 2.4 and the Takedown Threshold would still be satisfied, may
elect to continue with the Underwritten Offering and such continued Takedown Demand shall count as a Takedown Demand of the continuing
Demanding Holders for purposes of subsection 2.4.3 and not of the withdrawing Demanding Holders.
2.7.3 If following a request under subsection
2.7.1 an Underwritten Takedown is withdrawn and not continued pursuant to subsection 2.7.2, then the withdrawn Takedown
Demand shall count as an Underwritten Takedown for purposes of subsection 2.4.3 (unless one or more of the Demanding Holders
reimburse the Company for all Registration Expenses with respect to such Underwritten Takedown, in which case it shall not count as
an Underwritten Takedown).
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2.8 Piggyback Registration.
2.8.1 Piggyback
Rights. Subject to subsection 2.9.3, if the Company or any shareholder of the Company proposes to conduct a registered offering
of, or if the Company proposes to file a Registration Statement under the Securities Act with respect to the Registration of, equity securities,
or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for
the account of shareholders of the Company (or by the Company and by the shareholders of the Company, including an Underwritten Takedown
pursuant to Section 2.4), other than a Registration Statement (a) filed in connection with any employee share option or other benefit
plan, (b) for an exchange offer or offering of securities solely to the Company’s existing shareholders, (c) for an offering of
debt that is convertible into equity securities of the Company, (d) for a dividend reinvestment plan, or (e) for a rights offering, then
the Company shall give written notice of such proposed filing or offering to all of the Holders of Registrable Securities as soon as practicable
but not less than ten (10) days before the anticipated filing date of such Registration Statement, or, in the case of an Underwritten
Offering pursuant to a Shelf Registration, the applicable preliminary “red herring” Prospectus or prospectus supplement used
for marketing such offering, which notice shall (x) describe the amount and type of securities to be included in such offering, the intended
method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (y) offer
to all of the Holders of Registrable Securities the opportunity to register the sale of such number of Registrable Securities as such
Holders may request in writing within ten (10) days after receipt of such written notice (such Registration a “Piggyback Registration”).
Subject to subsection 2.8.2, the Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback
Registration and shall use reasonable best efforts to cause the managing Underwriter or Underwriters of a proposed Underwritten Offering
to permit the Registrable Securities requested by the Holders pursuant to this subsection 2.8.1 to be included in such Piggyback
Registration on the same terms and conditions as any similar securities of the Company included in such Registration and to permit the
sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. The inclusion
of any Holder’s Registrable Securities in a Piggyback Registration shall be subject to such Holder’s agreement to enter into
and comply with an underwriting agreement in customary form with the Underwriter(s) duly selected for such Underwritten Offering.
2.8.2 Reduction of Piggyback
Registration. If the managing Underwriter or Underwriters in an Underwritten Registration that is to be a Piggyback Registration
advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar
amount or number of the Company Shares or other equity securities that the Company desires to sell, taken together with (x) the
Company Shares or other equity securities, if any, as to which Registration or a registered offering has been demanded pursuant to
separate written contractual arrangements with persons or entities other than the Holders of Registrable Securities hereunder, (y)
the Registrable Securities as to which registration has been requested pursuant to Section 2.8 hereof, and (z) the Company
Shares or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate
written contractual piggy-back registration rights of other shareholders of the Company, exceeds the Maximum Number of Securities,
then:
(a) If
the Registration or registered offering is undertaken for the Company’s account, the Company shall include in any such Registration
or registered offering:
(i) first,
the Company Shares or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number
of Securities;
(ii) second,
to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Registrable Securities of
Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.8.1 that can be sold without
exceeding the Maximum Number of Securities (to be allocated Pro Rata among such Holders if the Registrable Securities desired to be sold
by such Holders in the aggregate, when combined with those desired to be sold by the Company, would exceed the Maximum Number of Securities);
and
(iii) third,
to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Company Shares
or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to written contractual
piggy-back registration rights of other shareholders of the Company, which can be sold without exceeding the Maximum Number of Securities;
and
(b) If
the Registration or registered offering is pursuant to a demand by persons or entities other than the Holders of Registrable Securities,
then the Company shall include in any such Registration or registered offering:
(i) first,
the Company Shares or other equity securities, if any, of such demanding persons or entities, other than the Holders of Registrable Securities,
which can be sold without exceeding the Maximum Number of Securities;
(ii) second,
to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Company Shares or other equity
securities that the Company desires to sell, Pro Rata, which can be sold without exceeding the Maximum Number of Securities;
(iii) third,
to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Registrable Securities
of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.8.1, which can be sold without
exceeding the Maximum Number of Securities; and
12
(iv) fourth, to the extent that the Maximum
Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the Company Shares or other equity securities
for the account of other persons or entities that the Company is obligated to register pursuant to separate written contractual arrangements
with such persons or entities, which can be sold without exceeding the Maximum Number of Securities.
(c) If
the Registration or registered offering is pursuant to a request by Holder(s) of Registrable Securities pursuant to Section 2.4,
then the Company shall include in any such Registration or registered offering securities pursuant to Section 2.5.
2.8.3 Piggyback
Registration Withdrawal. Any Holder of Registrable Securities shall have the right to withdraw from a Piggyback Registration for any
or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) prior to the effectiveness
of the Registration Statement filed with the Commission with respect to such Piggyback Registration or in the case of a Shelf Registration,
prior to the filing of the applicable preliminary or “red herring” Prospectus used for marketing of the relevant offering
or takedown thereunder. The Company (whether on its own good faith determination or as the result of a request for withdrawal by persons
pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with
a Piggyback Registration (excluding a Piggyback Registration by Holder(s) in connection with an Underwritten Takedown under Sections
2.1 to 2.6) at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary
in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration
prior to its withdrawal under this subsection 2.8.3.
2.8.4 Unlimited
Piggyback Registration Rights. For purposes of clarity, any Registration effected pursuant to Section 2.8 shall not be counted
as an Underwritten Takedown for purposes of subsection 2.4.3, and there shall be no limit on the number of Piggyback Registrations.
2.9 Block Trades; Other Coordinated Offerings.
2.9.1 Notwithstanding the foregoing (but
subject to Section 3.4), at any time and from time to time when an effective Shelf is on file with the Commission, if a
Demanding Holder wishes to engage in an underwritten or other coordinated registered offering not involving a
“roadshow,” including (i) an offer commonly known as a “block trade” (a “Block Trade”)
and (ii) an “at-the-market” or similar registered offering through a broker, sales agent or distribution agent, whether
as agent or principal (an “Other Coordinated Offering”), either (x) with a total offering price reasonably
expected to exceed, in the aggregate, US$5,000,000 or (y) where the Demanding Holder is a Significant Holder or the Sponsor, in
respect of all remaining Registrable Securities held by such Holder, then such Holder shall notify the Company and any Significant
Holders and the Sponsor of the Block Trade or Other Coordinated Offering at least five (5) Business Days prior to the day such
offering is to commence and the Company shall as expeditiously as possible use reasonable efforts to facilitate such Block Trade or
Other Coordinated Offering; provided that the Holders representing a majority of the Registrable Securities wishing to engage
in the Block Trade or Other Coordinated Offering shall use reasonable efforts to work with the Company and any Underwriters or
placement agents or sales agents prior to making such request in order to facilitate preparation of the Registration Statement,
Prospectus and other offering documentation related to the Block Trade or the Other Coordinated Offering and any related due
diligence and comfort procedures, in accordance with subsections 3.1.11 and 3.1.12.
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2.9.2 Prior to the filing of the applicable “red
herring” Prospectus or prospectus supplement used in connection with a Block Trade or an Other Coordinated Offering, a majority-
in-interest of the Holders initiating such Block Trade or Other Coordinated Offering shall have the right to withdraw upon written notification
to the Company and the Underwriter or Underwriters (if any) or placement agents or sales agents (if any). Notwithstanding anything to
the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Block Trade
or an Other Coordinated Offering prior to its withdrawal under this Section 2.9.2. A Block Trade or Other Coordinated Offering
withdrawn pursuant to this Section 2.9.2 shall nonetheless be counted as a demand for purposes of Section 2.9.5.
2.9.3 Only
Significant Holders or the Sponsor may exercise Piggyback Registration rights in connection with a Block Trade; with respect to any other
Holders from time to time, Section 2.8 hereof shall not apply to a Block Trade initiated by a Holder pursuant to this Agreement.
Notwithstanding the time periods provided for in Section 2.8, in a Significant Holder’s or the Sponsor’s exercise of
Piggyback Registration rights in connection with a Block Trade, the Company and the initiating Holder(s) shall not be obligated to include
such Significant Holder’s or the Sponsor’s Registrable Securities in such Block Trade unless requested to do so in writing
within the Business Day immediately following the date on which notice of the Block Trade is given pursuant to subsection 2.9.1.
2.9.4 The
initiating Holder(s) in a Block Trade shall have the right to select the Underwriters for such Block Trade (which shall consist of one
or more reputable nationally recognized investment banks).
2.9.5 Holders
in the aggregate may demand no more than one (1) Block Trade or Other Coordinated Offering pursuant to this Section 2.9 in any
three (3) month period, and no more than four (4) Block Trades or other Coordinated Offerings pursuant to this Section 2.9 within
the first twelve (12) months following the Closing. For the avoidance of doubt, any Block Trade pursuant to this Section 2.9 shall
not be counted as an Underwritten Takedown for purposes of subsection 2.4.3.
2.10 Market Stand-Off Agreement. The
Company and each Holder given an opportunity to participate in an Underwritten Offering of equity securities of the Company (other
than a Block Trade) pursuant to the terms of this Agreement agrees that it shall not Transfer any Company Shares or other equity
securities of the Company (other than those included in such offering pursuant to this Agreement, and excepting any Transfers
between or among Significant Holders or any Transfers between or among the Sponsor Parties), without the prior written consent of
the managing Underwriters, during the ninety (90)-day period (or such shorter time agreed to by the managing Underwriters) beginning
on the date of pricing of such offering. The Company and each Holder agrees to execute a customary lock-up agreement in favor of the
relevant Underwriters to such effect (in the case of a Holder, in each case on substantially the same terms and conditions as all
such Holders). If any Holder or any director or executive officer of such Holder participating in such Underwritten Offering enters
into an agreement relating to the subject matter set forth in this section on terms and conditions that are less restrictive than
those agreed to herein (or such terms and conditions are subsequently relaxed including as a result of a modification, waiver,
amendment, or written consent of the Board), then the less restrictive or relaxed terms and conditions shall apply to each other
Holder.
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ARTICLE 3
COMPANY PROCEDURES
3.1 General Procedures.
In connection with any Shelf and/or Underwritten Takedown, the Company shall use reasonable efforts to effect such Registration to permit
the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company
shall, as expeditiously as possible:
3.1.1 prepare
and file with the Commission a Registration Statement with respect to such Registrable Securities and use reasonable efforts to cause
such Registration Statement to become effective and remain effective until such time as there are no longer any Registrable Securities;
3.1.2 prepare
and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the
Prospectus, as may be reasonably requested by any Holder that holds at least five percent (5%) of the Registrable Securities registered
on such Registration Statement, or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions
applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration
Statement effective until all Registrable Securities covered by such Registration Statement are disposed of in accordance with the intended
plan of distribution set forth in such Registration Statement or supplement to the Prospectus;
3.1.3 prior
to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters,
if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal counsel, copies of such
Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all
exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each
preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration
or the legal counsel for any such Holders may reasonably request in order to facilitate the disposition of the Registrable Securities
owned by such Holders;
15
3.1.4 prior
to any public offering of Registrable Securities, (a) register or qualify the Registrable Securities covered by the Registration Statement
under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities
included in such Registration Statement (in light of their intended plan of distribution) may reasonably request and (b) take such action
necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental
authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that
may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the
disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required
to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action which would
subject it to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;
3.1.5 cause
all such Registrable Securities to be listed on the national securities exchange on which similar securities issued by the Company are
then listed;
3.1.6 provide
a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of
such Registration Statement;
3.1.7 advise
each seller of such Registrable Securities, promptly, and in no event later than one (1) Business Day, after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement
or the initiation or threatening of any proceeding for such purpose and promptly take all actions reasonably required to prevent the entry
of any stop order or to obtain its withdrawal if such stop order should be entered;
3.1.8 at
least five (5) Business Days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration
Statement or Prospectus or any document that is to be incorporated by reference into such Registration Statement or Prospectus, furnish
a copy thereof to each seller of such Registrable Securities or its counsel (excluding any exhibits thereto and any filing made under
the Exchange Act that is to be incorporated by reference therein), and providing copies promptly upon receipt of any comment letters received
with respect to any such Registration Statement or Prospectus or any amendments or supplements thereof, and thereafter, take reasonable
account of comments of counsel to such seller;
3.1.9 notify
the Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act,
of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes
a Misstatement, and then to promptly correct such Misstatement as set forth in Section 3.4 hereof;
3.1.10 permit a representative of the
Holders (such representative to be selected by a majority-in-interest of the participating Holders), the Underwriters, if any, and
any attorney or accountant retained by such Holders or Underwriter to participate, at each such person’s own expense (other
than with respect to Registration Expenses), in the preparation of the Registration Statement, and cause the Company’s
officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, attorney
or accountant in connection with the Registration; provided, however, that such representative, or Underwriters enter
into a confidentiality agreement, in customary form and substance reasonably satisfactory to the Company, prior to the release or
disclosure of any such information;
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3.1.11 obtain
a “cold comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten
Offering, a Block Trade, an Other Coordinated Offering or sale by a broker, placement agent or sales agent pursuant to such Registration
(subject to such broker, placement agent or sales agent providing such certification or representation reasonably requested by the Company’s
independent registered public accountants and the Company’s counsel) in customary form and covering such matters of the type customarily
covered by “cold comfort” letters for a transaction of its type as the managing Underwriter may reasonably request, and reasonably
satisfactory to a majority-in-interest of the participating Holders;
3.1.12 in
the event of an Underwritten Registration, on the date the Registrable Securities are delivered for sale pursuant to such Registration,
obtain (a) an opinion, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the participating
Holders, the placement agent or sales agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration
in respect of which such opinion is being given as the participating Holders, placement agent, sales agent, or Underwriter may reasonably
request and as are customarily included in such opinions, and reasonably satisfactory to a majority-in-interest of the participating Holders,
and (b) a negative assurance (“10b-5”) letter, dated such date, of counsel representing the Company for the purposes
of such Registration, addressed to the placement agent or sales agent, if any, and the Underwriters, if any, covering such legal matters
with respect to the Registration in respect of which such 10b-5 letter is being given as the placement agent, sales agent, or Underwriter
may reasonably request and as are customarily included in such 10b-5 letters;
3.1.13 in
the event of any Underwritten Offering, Block Trade or Other Coordinated Offering that is registered pursuant to a Registration Statement,
enter into and perform its obligations under an underwriting agreement, a sales agreement or a placement agreement, in usual and customary
form, with the managing Underwriter, sales agent or placement agent of such offering;
3.1.14 make
available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12)
months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement
which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule then in effect);
3.1.15 with respect to an Underwritten Offering
pursuant to Section 2.4, use reasonable efforts to make available senior executives of the Company to participate in customary
“road show” presentations that may be reasonably requested by the Underwriter in such Underwritten Offering; and
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3.1.16 otherwise,
in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the participating Holders,
consistent with the terms of this Agreement, in connection with such Registration.
3.2 Registration
Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that each
Holder shall bear any Underwriters’ commissions and discounts, brokerage fees and Underwriter marketing costs (if reimbursable to
the Underwriter(s)), and any related transfer taxes attributable to the sale of such Holder’s Registrable Securities in connection
with any Underwritten Takedown and that the selling Holders shall bear the fees and disbursements of legal counsel to the selling Holders.
3.3 Requirements
for Participation in Underwritten Offerings. Each Holder shall provide such information as may reasonably be required by the Company,
or the managing Underwriter or placement agent or sales agent, if any, in connection with the preparation of any Registration Statement
or Prospectus, including amendments and supplements thereto, in order to effect the Registration of any Registrable Securities under the
Securities Act pursuant to Article 2 and in connection with the Company’s obligation to comply with federal and applicable
state securities laws. Notwithstanding anything in this Agreement to the contrary, if any Holder does not provide such information, the
Company may exclude such Holder’s Registrable Securities from the applicable Registration Statement or Prospectus if the Company
determines, based on the advice of reputable external counsel, that such information is necessary to effect the Registration and such
Holder continues thereafter to withhold such information. No person may participate in any Underwritten Offering for equity securities
of the Company pursuant to a Registration initiated by the Company hereunder unless such person:
3.3.1 agrees
to sell such person’s securities on the basis provided in any customary underwriting arrangements approved by the Company (after
having considered and taken reasonable account of comments of a single U.S. counsel for the Holders which are selling in the Underwritten
Offering); and
3.3.2 completes
and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary
documents as may be reasonably required under the terms of such underwriting arrangements.
The exclusion of a Holder’s Registrable Securities as
a result of this Section 3.3 shall not affect the Registration of the other Registrable Securities to be included in such Registration.
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3.4 Suspension of Sales; Adverse
Disclosure. Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement
(including pursuant to subsection 3.1.9), each of the Holders shall forthwith discontinue disposition of Registrable
Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood
that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such
notice), or until it is advised in writing by the Company that the use of the Prospectus may be resumed. In addition, if the filing,
initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would (a) require the
inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the
Company’s control, or (b) in the good faith view of the Company, require the Company to make an Adverse Disclosure, the
Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness of, or
suspend use of, such Registration Statement for the period of time determined in good faith by the Company to be necessary for such
purpose; provided, however, that the Company shall not have the right to exercise the rights set forth in this Section
3.4 more than twice or for more than sixty (60) consecutive days or more than a total of one-hundred-and-twenty (120) days, in
each such case in any twelve (12)-month period. In the event the Company exercises its rights under the preceding sentence, the
Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to
any Registration in connection with any sale or offer to sell Registrable Securities. The Company shall promptly notify the Holders
of the expiration of any period during which it exercised its rights under this Section 3.4.
3.5 Reporting Obligations.
As long as any Holder shall own Registrable Securities, the Company, at all times while it remains a reporting company under the Exchange
Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required
to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders
with true and complete copies of all such filings; provided that any documents publicly filed or furnished with the Commission
pursuant to the Electronic Data Gathering, Analysis and Retrieval system shall be deemed to have been furnished or delivered to the Holders
pursuant to this Section 3.5. The Company further covenants that it shall take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder to sell Company Shares held by such Holder without registration
under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act (or any successor
rule then in effect). Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized
officer as to whether it has complied with such requirements.
ARTICLE 4
INDEMNIFICATION AND
CONTRIBUTION
4.1 Indemnification by the Company.
To the extent permitted by law, the Company agrees to indemnify and hold harmless each Holder of Registrable Securities, its
officers, directors, attorneys and agents, and each person, if any, who controls such Holder (within the meaning of the Securities
Act) (each, a “Holder Indemnified Party”), from and against all losses, judgments, claims, damages, liabilities
and expenses (including without limitation reasonable outside attorneys’ fees), whether joint or several, arising out of or
that are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or
preliminary Prospectus or any amendment thereof or supplement thereto, or arising out of or that are based upon any omission or
alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation promulgated thereunder applicable to the Company and
relating to action or inaction required of the Company in connection with any such registration, except insofar as the same are (x)
caused by or contained in any information or affidavit furnished in writing to the Company by such Holder expressly for use therein,
or (y) based on any such Holder’s violation of federal securities laws or failure to sell the Registrable Securities in
accordance with the intended plan of distribution contained in the Prospectus. The Company shall promptly reimburse the Holder
Indemnified Party for any reasonable expenses properly incurred by such Holder Indemnified Party in connection with investigating
and defending any proceeding or action to which this Section 4.1 applies (including the reasonable fees and disbursements of
legal counsel), loss, judgment, claim, damage, liability or action, except insofar as such proceeding or action (x) are caused by or
are based on any information or affidavit furnished in writing to the Company by such Holder expressly for use in the relevant
Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto, or (y) are based on any
such Holder’s violation of federal securities laws or failure to sell the Registrable Securities in accordance with the
intended plan of distribution contained in the Prospectus.
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4.2 Information
Provided by Holders. In connection with any Registration Statement in which a Holder of Registrable Securities is participating, such
Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection
with any such Registration Statement or Prospectus. To the extent permitted by law, each Holder shall indemnify and hold harmless the
Company, its officers, directors, attorneys and agents and each person, if any, who controls the Company (within the meaning of the Securities
Act) from and against all losses, judgements, claims, damages, liabilities and expenses (including without limitation reasonable outside
attorneys’ fees), whether joint or several, arising out of or that are based upon any untrue statement of material fact contained
in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission of
a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that
such untrue statement or omission was contained in any information or affidavit furnished in writing by such Holder to the Company expressly
for use therein, or if such losses, judgements, claims, damages, liabilities and expenses are based on any such Holder’s violation
of the federal securities laws or failure to sell the Registrable Securities in accordance with the intended plan of distribution contained
in the Prospectus; provided, however, that the obligation to indemnify shall be several, not joint or joint and several,
among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to
and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement.
4.3 Indemnification Process.
4.3.1 Any person entitled to indemnification herein shall:
(a) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt
notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not materially
prejudiced the indemnifying party); and
(b) permit
an indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party.
4.3.2 If
such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent shall not be unreasonably withheld, conditioned or delayed).
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4.3.3 The
indemnified party shall have the right to employ separate counsel (but no more than one (1) such separate counsel, which counsel is reasonably
acceptable to the indemnifying party) to represent the indemnified party and its controlling persons who may be subject to liability arising
out of any claim in respect of which indemnity may be sought by the indemnified party against the indemnifying party, with the reasonably
incurred fees and expenses of such counsel to be paid by such indemnifying party if the indemnified party and the indemnifying party are
named as defendants and, based upon the written opinion of counsel of such indemnified party, representation of both the indemnified party
and the indemnifying party by the same counsel would be inappropriate due to actual or potential differing interests between them.
4.3.4 No
indemnifying party shall, without the prior written consent of the indemnified party, consent to the entry of any judgment or enter into
any settlement of any claim or pending or threatened proceeding in respect of which the indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified party which (i) cannot be settled in all respects by the payment of
money (and if any such money is required to be paid under such judgment or settlement it shall be so paid by the indemnifying party pursuant
to the terms of such judgment or settlement), or (ii) settlement includes a statement or admission of fault or culpability on the part
of an indemnified party or (iii) settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff
to each indemnified party of a release from all liability in respect to such claim or litigation.
4.3.5 The
indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling person of such indemnified party and shall survive the transfer
of securities.
4.4 Contribution. If the indemnification
provided under Sections 4.1, 4.2, and 4.3 from the indemnifying party is judicially determined to be unavailable
or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and out-of-pocket expenses
referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages, liabilities and out-of-pocket expenses in such proportion
as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the actions or
omissions which resulted in such loss, claim, damage, liability or action, as well as any other relevant equitable considerations. The
relative fault of any indemnifying party and any indemnified party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material
fact, was made by (or omitted to be made by, in the case of an omission), or relates to information supplied by (or not supplied by,
in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s
relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided,
however, that the liability of any Holder under this subsection 4.4 shall be limited to the amount of the net proceeds
actually received by such Holder in such offering giving rise to such liability, and no Holder shall have any liability for contribution
to the extent that such Holder would not have been liable for indemnification pursuant to this Agreement. The amount paid or payable
by an indemnified party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations
set forth in subsections 4.1, 4.2 and 4.3 above, legal or other fees, charges or out- of-pocket expenses reasonably
incurred by such indemnified party in connection with any investigation or proceeding. The parties hereto agree that it would not be
just and equitable if contribution pursuant to this subsection 4.4 were determined by pro rata allocation or by any other method
of allocation, which does not take account of the equitable considerations referred to in this subsection 4.4. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant
to this subsection 4.4 from any person who was not guilty of such fraudulent misrepresentation.
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ARTICLE 5
MISCELLANEOUS
5.1 Notices. All general notices,
demands or other communications required or permitted to be given or made hereunder (“Notices”) shall be in
writing and delivered personally or sent by courier or sent by electronic mail to the intended recipient thereof. Any such Notice
shall be deemed to have been duly served (a) if given personally or sent by local courier, upon delivery during normal business
hours at the location of delivery or, if later, then on the next Business Day after the day of delivery; (b) if sent by electronic
mail during normal business hours at the location of delivery, immediately, or, if later, then on the next Business Day after the
day of delivery; or (c) the third Business Day following the day sent by reputable international overnight courier (with written
confirmation of receipt). Any notice or communication under this Agreement must be addressed, if to the Company, to the principal
office of the Company or to such email address or address as subsequently modified by written notice given in accordance with this Section
5.1, with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, 42/F, Edinburgh Tower, The Landmark, 15 Queen’s Road
Central, Hong Kong, to the attention of Shu Du, and if to any Holder, at such Holder’s address or contact information as set
forth in Schedule 1 (as updated from time to time, including pursuant to Section 5.2.5) or to such Holder’s
address as found in the Company’s books and records. Any party may change its address for notice at any time and from time to
time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) days after
delivery of such notice as provided in this Section 5.1. Any Holder not desiring to receive Notices at any time and from time
to time may so notify the other parties, who shall thereafter not make, give or deliver any Notice to such Holder until duly
notified otherwise (or until the expiry of any period specified in such Holder’s notice).
5.2 Assignment; No Third Party Beneficiaries.
5.2.1 This
Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or
in part.
5.2.2 No
Holder may assign or delegate such Holder’s rights, duties or obligations under this Agreement, in whole or in part, except in connection
with a transfer of Registrable Securities by such Holder to a Permitted Transferee but only if such Permitted Transferee agrees to become
bound by the terms and conditions of this Agreement. After the expiration of the lock- up period applicable to such Holder pursuant to
any Lock-Up Agreement, the Holder may assign or delegate such Holder’s rights, duties or obligations under this Agreement, in whole
or in part, to any person to whom it transfers Registrable Securities; provided that such Registrable Securities remain Registrable
Securities following such transfer, and such person agrees to be bound by the terms and conditions of this Agreement.
5.2.3 This
Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and
the permitted assigns of the Holders, which shall include Permitted Transferees.
5.2.4 This
Agreement shall not confer any rights or benefits on any persons that are not parties hereto, other than as expressly set forth in this
Agreement and Section 5.2 hereof.
5.2.5 No
assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company
unless and until the Company shall have received (i) written notice of such assignment as provided in Section 5.1 hereof and (ii)
the written agreement of the assignee, in the form attached as an Exhibit hereto (an “Addendum Agreement”), to be bound
by the terms and conditions of this Agreement. Any transfer or assignment made other than as provided in this Section 5.2 shall
be null and void. The execution of an Addendum Agreement by the parties thereto shall constitute a permitted amendment of this Agreement
notwithstanding the provisions of Section 5.9. Upon a transfer or assignment made in accordance with this Section 5.2, Schedule
1 shall be deemed updated accordingly to reflect the removal of the assignor and addition of the assignee.
5.3 Counterparts.
This Agreement may be executed in multiple counterparts (including by electronic means), each of which shall be deemed an original, and
all of which together shall constitute the same instrument, but only one of which need be produced. Counterparts may be delivered via
facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com)
or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and
effective for all purposes.
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5.4 Governing Law; Venue. Each party
expressly agrees that this Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or
the transactions contemplated hereby, shall be governed by, and construed in accordance with, the laws of the State of New York ,
without giving effect to principles or rules of conflict of laws to the extent such principles or rules would require or permit the
applicable of laws of another jurisdiction. Any claim or cause of action based upon, arising out of or related to this Agreement or
the transactions contemplated hereby may be brought in federal and state courts located in the State of New York, and each of the
parties irrevocably submits to the exclusive jurisdiction of each such court, waives any obligation it may now or hereafter have to
personal jurisdiction, venue or to convenience of forum, agrees that all claims in respect of any cause of action may be heard and
determined only in any such court, and agrees not to bring any cause of action arising out of or relating to this Agreement or the
transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to
serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against any other party in any
other jurisdiction, in each case, to enforce judgments obtained in any action brought pursuant to this Section 5.4. EACH OF
THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION BASED UPON, ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
5.5 Remedies.
The parties hereto agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would
occur in the event that the parties hereto do not perform their obligations under the provisions of this Agreement in accordance with
its specified terms or otherwise breach such provisions. The parties hereto acknowledge and agree that (a) such parties shall be entitled
to an injunction, specific performance, or other equitable relief, to prevent breaches of this Agreement and to enforce specifically the
terms and provisions hereof and thereof, without proof of damages and without posting a bond, prior to the valid termination of this Agreement,
this being in addition to any other remedy to which they are entitled under this Agreement, and (b) the right of specific enforcement
is an integral part of the transactions contemplated hereby and without that right, none of the parties hereto would have entered into
this Agreement. Each party agrees that it will not oppose the granting of specific performance and other equitable relief on the basis
that the other parties hereto have an adequate remedy at law or that an award of specific performance is not an appropriate remedy for
any reason at law or equity. The parties acknowledge and agree that any party seeking an injunction to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 5.5 shall not be required
to provide any bond or other security in connection with any such injunction.
5.6 Severability.
The invalidity or unenforceability of any specific provision of this Agreement shall not invalidate or render unenforceable any of its
other provisions. Any provision of this Agreement held invalid or unenforceable shall be deemed reformed, if practicable, to the extent
necessary to render it valid and enforceable and to the extent permitted by law and consistent with the intent of the parties to this
Agreement.
5.7 Entire Agreement. This Agreement
sets forth the entire understanding of the parties with respect to the subject matter hereof. There are no agreements,
representations, warranties, covenants or understandings among the parties with respect to the subject matter hereof other than
those expressly set forth herein and therein. This Agreement supersedes all other prior agreements and understandings between the
parties with respect to such subject matter.
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5.8 Construction.
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule
of strict construction will be applied against any party. Unless the context otherwise requires: (a) “or” is disjunctive but
not exclusive; (b) words in the singular include the plural, and in the plural include the singular; (c) the words “hereof,”
“herein,” “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement, and section and subsection references are to this Agreement unless otherwise specified;
(d) the term “including” is not limiting and means “including without limitation”; (e) whenever the context requires,
any pronouns used herein shall include the corresponding masculine, feminine or neuter forms; (f) references to agreements and other documents
shall be deemed to include all subsequent amendments and other modifications or supplements thereto; and (g) references to statutes shall
include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory
and regulatory provisions consolidating, amending or replacing the statute or regulation. The headings, subheadings and captions contained
in this Agreement are included for convenience of reference only, and in no way define, limit or describe the scope of this Agreement
or the intent of any provision hereof.
5.9 Amendments
and Modifications. Upon the written consent of the Company and the Holders of at least fifty percent (50%) of the Registrable Securities
at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or
any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the
foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in its capacity as a holder of the shares of
capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the prior
written consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure
or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of
any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a
party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.
5.10 Termination
of Existing Registration Rights. The registration rights granted under this Agreement shall supersede any registration, qualification
or similar rights of the Holders with respect to any shares or securities of BSII or the Company granted under any other agreement, and
any of such preexisting registration, qualification or similar rights and such agreements shall be terminated and of no further force
and effect.
5.11 Other Registration Rights. The
Company represents and warrants that no person, other than a Holder of Registrable Securities, has any right to require the Company
to register any securities of the Company for sale or to include such securities of the Company in any Registration filed by the
Company for the sale of securities for its own account or for the account of any other person, and that this Agreement supersedes
any other registration rights agreement or agreement with similar terms and conditions and in the event of a conflict between any
such agreement or agreements and this Agreement, the terms of this Agreement shall prevail.
24
5.12 Effectiveness of this Agreement.
5.12.1 This
Agreement shall take effect as of and from the Closing; provided, that if the Business Combination Agreement is terminated prior
to the Closing, this Agreement shall not become effective and shall be deemed void.
5.12.2 With
effect from the Closing, each party to this Agreement hereby irrevocably waives and agrees not to exercise or enforce any rights it may
have in respect of the registration of Registrable Securities pursuant to any other agreement including, without limitation, the Prior
SPAC Agreement.
5.13 Term.
This Agreement shall terminate, with respect to any Holder, on the date that such Holder no longer holds any Registrable Securities. Notwithstanding
the foregoing, the provisions of Section 3.2, Section 3.5 and ARTICLE 4 shall survive any termination.
5.14 Sponsor Parties Representative.
5.14.1 Each
Sponsor Party hereby irrevocably appoints the Sponsor to act as the Sponsor Parties’ representative (the “Sponsor Parties
Representative”) for all purposes under this Agreement. Any notice by any party to the Sponsor Parties Representative made in
accordance with this Agreement shall be deemed to be a notice to all of the Sponsor Parties, and any notice of any Sponsor Party to the
Company or any other party shall be valid only if given by the Sponsor Parties Representative. The Company and each other party shall
be entitled to rely on a notice or instruction from the Sponsor Parties Representative on behalf of a Sponsor Party.
5.14.2 The
Sponsor undertakes that, and the Sponsor Parties agree that, prior to the Sponsor (i) ceasing to hold any Registrable Securities or (ii)
undertaking any liquidation, dissolution or winding up, the Sponsor shall designate the Sponsor Party holding the largest number of Registrable
Securities at such time as the “Sponsor Parties Representative”, and the provisions of this sentence shall also apply
subsequently, mutatis mutandis, if any such Sponsor Party ceases to hold Registrable Securities or undertakes any liquidation, dissolution
or winding up.
[Signature Pages Follow]
25
IN WITNESS WHEREOF, the
undersigned have caused this Agreement to be executed as of the date first written above.
THE GENERATION ESSENTIALS GROUP
By:
/s/ Feridun Hamdullahpur
Name:
Feridun Hamdullahpur
Title:
Co-Chairperson
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
BLACK SPADE SPONSOR LLC II
By:
/s/ Chi Wai Dennis Tam
Name:
Chi Wai Dennis Tam
Title:
Manager
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
AMTD DIGITAL INC.
By:
/s/ Feridun Hamdullahpur
Name:
Feridun Hamdullahpur
Title:
Chairman
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
AMTD IDEA GROUP
By:
/s/ Feridun Hamdullahpur
Name:
Feridun Hamdullahpur
Title:
Chairman
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
AMTD GROUP INC.
By:
/s/ Feridun Hamdullahpur
Name:
Feridun Hamdullahpur
Title:
Director
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
SOUTH HORIZON OCEANS (GROUP) CO. INC.
By:
/s/ Cong Lin
Name:
Cong Lin
Title:
Director
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
RADISSON EVERTON VENTURE FUND
By:
/s/ Feridun Hamdullahpur
Name:
Feridun Hamdullahpur
Title:
Director
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
CHI WAI DENNIS TAM
/s/ Chi Wai Dennis Tam
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
SHING JOE KESTER NG
/s/ Shing Joe Kester Ng
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
RICHARD KIRBY TAYLOR
/s/ Richard Kirby Taylor
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
RUSSELL WILLIAM GALBUT
/s/ Russell William Galbut
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
ROBERT STEVEN MOORE
/s/ Robert Steven Moore
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
PO YI PATSY CHAN
/s/ Po Yi Patsy Chan
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
WING HONG SAMMY HSIEH
/s/ Wing Hong Sammy Hsieh
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
YUEN WAI SAMUEL TSANG
/s/ Yuen Wai Samuel Tsang
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
CHUNG YIK LEE
/s/ Chung Yik Lee
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
LUXI LI
/s/ Luxi Li
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
SEK YAN HO
/s/ Sek Yan Ho
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
CHIU YI ZOE TSE
/s/ Chiu Yi Zoe Tse
[Signature Page to Registration Rights Agreement]
SCHEDULE 1
1.AMTD Digital Inc.
Address: Cricket Square, Hutchins
Drive, PO
Box 2681, Grand
Cayman KY1-1111,
Cayman Islands
Email: feridun.hamdullahpur@amtd.world
2.AMTD IDEA Group
Address: Cricket Square, Hutchins
Drive, PO
Box 2681, Grand
Cayman KY1-1111,
Cayman Islands
Email: feridun.hamdullahpur@amtd.world
3.AMTD Group Inc.
Address: Commerce House, Wickhams Cay
1 P.O.
Box 3140, Road Town, Tortola
British Virgin Islands VG1110
Email: feridun.hamdullahpur@amtd.world
4.South Horizon Oceans (Group) Co Inc.
Address: Cricket Square, Hutchins Drive, PO
Box 2681, Grand Cayman KY1-1111,
Cayman Islands
Email: southhorizonoceans_enquiry@hotmail.com
5.Radisson Everton Venture Fund
Address: Cricket Square, Hutchins Drive, PO
Box 2681, Grand
Cayman KY1-1111,
Cayman Islands
Email: radisson_everton.ir@outlook.com
6.Black Spade Sponsor LLC II
Address: c/o Black Spade Acquisition II Co Ste
2902
29/F The Centrium 60 Wyndham Road
Central, Hong Kong
Attention: Dennis Tam
E-mail: dennis.tam@blackspadeacquisitionii.com
7.Chi Wai Dennis Tam
Address: c/o Black Spade Acquisition II Co Ste
2902
29/F The Centrium 60 Wyndham Road
Central, Hong Kong
Attention: Dennis Tam
E-mail: dennis.tam@blackspadeacquisitionii.com
8.Shing Joe Kester Ng
Address: Unit A, 4/F, Magazine Court
5-7 Magazine
Gap Road
The Peak, Hong Kong
Attention: Kester Ng
E-mail: kester.ng@blackspadeacquisitionii.com
9.Richard Kirby Taylor
Address: 1/F, 20 Stanley Mound Road
Stanley, Hong
Kong
Attention: Richard Taylor
E-mail: richard.taylor@blackspadeacquisitionii.com
10.Russell William Galbut
Address: 800 1st Street Unit 1
Miami Beach, FL 33139 USA
Attention: Russell Galbut
E-mail: rgalbut@CrescentHeights.com
11.Robert Steven Moore
Address: 6250 Hollywood Boulevard,
Unit 11 i,
Los Angeles, CA, 90028 USA
Attention: Rob Moore
E-mail: rsmoore705@gmail.com
12.Po Yi Patsy Chan
Address: Flat A 27/F Tower 2, Larvotto
8 Ap Lei
Chau Praya Road
Ap Lei Chau, Hong Kong
Attention: Patsy Chan
E-mail: patsychanpy@gmail.com
13.Wing Hong Sammy Hsieh
Address: Room 23, Floor 16, Block A
Fontana
Garden Ka Ning Path
Causeway Bay, Hong Kong
Attention: Sammy Hsieh
E-mail: sammy.hsieh@gmail.com
14.Yuen Wai Samuel Tsang
Address: c/o Black Spade Acquisition II Co Ste
2902
29/F The Centrium 60 Wyndham Road
Central, Hong Kong
Attention: Samuel Tsang
E-mail: samuel.tsang@blackspadecapital.com
15.Chung Yik Lee
Address: c/o Black Spade Acquisition II Co Ste
2902
29/F The Centrium 60 Wyndham Road
Central, Hong Kong
Attention: Brian Lee
E-mail: brian.lee@blackspadecapital.com
16.Luxi Li
Address: c/o Black Spade
Acquisition II Co Ste 2902
29/F The Centrium 60 Wyndham Road
Central, Hong Kong
Attention: Lucy Li
E-mail: lucy.li@blackspadecapital.com
17.Sek Yan Ho
Address: c/o Black Spade Acquisition II Co Ste
2902
29/F The Centrium 60 Wyndham Road
Central, Hong Kong
Attention: Margaret Ho
E-mail: margaret.ho@blackspadecapital.com
18.Chiu Yi Zoe Tse
Address: c/o Black Spade Acquisition II Co Ste
2902
29/F The Centrium 60 Wyndham Road
Central, Hong Kong
Attention: Zoe Tse
E-mail: zoe.tse@blackspadecapital.com
EXHIBIT
Addendum Agreement
This Addendum Agreement (“Addendum
Agreement”) is executed on ,
20 , by the undersigned (the “New Holder”) pursuant to the terms of that certain Registration Rights
Agreement dated as of [ ] (the “Agreement”), by and among The Generation Essentials Group, an exempted company
incorporated with limited liability under the laws of the Cayman Islands, having its registered office at [●] (the “Company”)
and each of the Persons listed on Schedule 1 thereto (each a “Holder”). Capitalized terms used but not defined in
this Addendum Agreement shall have the respective meanings ascribed to such terms in the Agreement. By the execution of this Addendum
Agreement, the New Holder agrees as follows:
Acknowledgment. The New Holder acknowledges
that the New Holder is acquiring certain Registrable Securities (as defined in the Agreement) as a transferee of such Registrable Securities
from a party in such party’s capacity as a holder of Registrable Securities under the Agreement, and after such transfer, the New
Holder shall be considered a “Holder” and a holder of Registrable Securities for all purposes under the Agreement.
Agreement. The New Holder hereby
(a) agrees that the Registrable Securities shall be bound by and subject to the terms of the Agreement and (b) adopts the Agreement with
the same force and effect as if the New Holder were originally a party thereto.
Notice. Any notice required or permitted
by the Agreement shall be given to the New Holder at the address or email address listed below the New Holder’s signature below.
NEW HOLDER:
ACCEPTED AND AGREED:
Print Name:_____________________________
The Generation Essentials Group
By: ___________________________________
By: ___________________________________
Address:
Email:
EX-5.1
5
ea024654301ex5-1_gener.htm
OPINION OF CONYERS DILL & PEARMAN PTE. LTD. AS TO VALIDITY OF ORDINARY SHARES OF THE GENERATION ESSENTIALS GROUP
Exhibit 5.1
CONYERS DILL & PEARMAN PTE. LTD.
9 Battery Road
#20-01 MYP Centre
Singapore 049910
T +65 6223 6006
conyers.com
24 June 2025
Matter No. 1004301
Ref: CB/AL/RLX/MY/AP_Legal#110959896
The Generation Essentials Group
Cricket Square, Hutchins Drive
P.O. Box 2681, Grand Cayman
KY1-1111, Cayman Islands
Dear Sir/Madam,
Re:The Generation Essentials Group (the “Company”)
We have acted as special Cayman Islands legal
counsel to the Company in connection with a registration statement on form F-1 to be filed with the U.S. Securities and Exchange Commission
(the “Commission”) on or about the date hereof (the “Registration Statement”, which term does not
include any other document or agreement whether or not specifically referred to therein or attached as an exhibit or schedule thereto)
relating to the registration under the U.S. Securities Act of 1933, as amended, (the “Securities Act”) of Class A Ordinary
Shares with a par value of US$0.0000000264856557377049 each of the Company (the “Class A Ordinary Shares”). The Registration
Statement contains a prospectus (the “Prospectus”) to be used for (a) the offering by the Company of up to 16,220,000
Class A Ordinary Shares (the “Offering Warrant Shares”) of the Company issuable upon exercise of the warrants to purchase
Class A Ordinary Shares (the “Warrants”) issued to the holders thereof on 3 June 2025 pursuant to the Business
Combination Agreement (as defined below); and (b) the resale by the Selling Securityholders (as defined therein) of up to 57,401,944 Class
A Ordinary Shares, including (i) up to 26,996,033 Class A Ordinary Shares (the “Resale Class A Ordinary Shares”) and
19,285,911 Class A Ordinary Shares (the “Conversion Class A Ordinary Shares”) issuable upon conversion of the 19,285,911
Class B Ordinary Shares in the Company (“Class B Ordinary Shares”) held by AMTD Digital Inc. in accordance with the
M&As (as defined below); and (ii) 11,120,000 Class A Ordinary Shares of the Company issuable upon exercise of the Warrants (the
“Resale Warrant Shares”, together with the Offering Warrant Shares, the “Warrant Shares”).
1.DOCUMENTS REVIEWED
For the purposes of giving this opinion, we have
examined copies of:
1.1.the Registration Statement;
1.2.a draft of the Prospectus contained in the Registration Statement which is in substantially final form;
and
1.3.the executed business combination agreement entered into, among others, the Company and Black Spade Acquisition
II Co (the “BSII”) dated as of January 27, 2025 (the “Business Combination Agreement”).
Company Registration Number: 200903993W
The documents referred to in items 1.1 to 1.3
are herein sometimes referred to as the “Documents” (which term does not include any other instrument or agreement
whether or not specifically referred to therein or attached as an exhibit or schedule thereto).
We have also reviewed copies
of:
1.4.the fourth amended and restated memorandum and articles of association of the Company certified by the
Secretary of the Company on 19 June 2025 (“M&As”);
1.5.the unanimous written resolutions of the directors of the Company dated 19 June 2025 (the “Resolutions”);
1.6.a certified true copy of the list of shareholders in respect of the Class A Ordinary Shares of the Company
as of 18 June 2025 (the “List of Shareholders”);
1.7.a certified true copy of the register of members in respect of the voting class B ordinary shares of the
Company (the “Class B Ordinary Shares”) as of 19 June 2025 (the “Class B Register of Members”);
1.8.a Certificate of Good Standing issued by the Registrar of Companies in relation to the Company on 9 June
2025 (the “Certificate Date”); and
1.9.such other documents and made such enquiries as to questions of law as we have deemed necessary in order
to render the opinion set forth below.
2.ASSUMPTIONS
We have assumed:
2.1.the genuineness and authenticity of all signatures, stamps and seals and the conformity to the originals
of all copies (whether or not certified) examined by us and the authenticity and completeness of the originals from which such copies
were taken;
2.2.that where a document has been examined by us in draft form, it will be or has been executed and/or filed
in the form of that draft, and where a number of drafts of a document have been examined by us all changes thereto have been marked or
otherwise drawn to our attention;
2.3.the capacity, power and authority of each of the parties to the Documents, other than the Company, to
enter into and perform its respective obligations under the Documents;
2.4.the due execution and delivery of the Documents by each of the parties thereto, other than the Company,
and the physical delivery thereof by the Company with an intention to be bound thereby;
2.5.the accuracy and completeness of all factual representations made in the Documents and other documents
reviewed by us;
2.6.that the Resolutions were passed at one or more duly convened, constituted and quorate meetings or by
unanimous written resolutions, will remain in full force and effect and will not be rescinded or amended;
conyers.com | 2
2.7.that there is no provision of the law of any jurisdiction, other than the Cayman Islands, which would
have any implication in relation to the opinions expressed herein;
2.8.that upon issue of any Class A Ordinary Shares or Warrant Shares by the Company, the Company will receive
consideration for the full issue price thereof which shall be equal to at least the par value thereof;
2.9.that the Company will have sufficient authorised but unissued Class A Ordinary Shares in its share capital
to effect the issue of any of the Class A Ordinary Shares at all relevant time, whether as a principal issue or on the conversion, exchange
of exercise of the Warrants;
2.10.that on the date of entering into the Documents and any issue of Class A Ordinary Shares, Warrants and
Warrant Shares (the “Securities”), the Company is, and after the date of entering into the Documents and any such issue
of Securities, and will be able to pay its debts;
2.11.that the issue of the Securities by the Company is in furtherance of its objects as set out in the Memorandum
of Association of the Company;
2.12.that the form and terms of the Warrants, the issuance and sale of any Securities by the Company, and the
Company’s incurrence and performance of its obligations thereunder or in respect thereof (including, without limitation, its obligations
under any related agreement, indenture or supplement thereto) in accordance with the terms thereof will not violate the Memorandum and
Articles of Association of the Company nor any applicable law, regulation, order or decree in the Cayman Islands;
2.13.that the M&As will not be amended in any manner that would affect the opinions expressed herein;
2.14.no invitation has been or will be made by or on behalf of the Company to the public in the Cayman Islands
to subscribe for any Securities, and that neither the Warrants nor the Warrants Shares to be issued pursuant to the Warrants will be issued
to residents of the Cayman Islands;
2.15.that all necessary corporate action will be taken to authorise and approve any issuance of the Securities,
the terms of any offering thereof and related matters, and that the Documents, and any other purchase, underwriting or similar agreement
thereto will be duly approved, executed and delivered by or on behalf of the Company and all other parties thereto;
2.16.that the Securities to be offered and sold, will be, legal, valid, binding and enforceable against all
relevant parties in accordance with their terms pursuant to the applicable governing law and jurisdiction (except to the extent that we
expressly opine herein on matters of Cayman Islands law);
2.17.the validity and binding effect under the laws of the United States of America or the laws of the State
of New York (as the case may be, the “Foreign Laws”) of the Documents and that the Registration Statement will be duly
filed with the Commission;
conyers.com | 3
2.18.that the Prospectus, when published, will be in substantially the same form as that examined by us for
purposes of this opinion;
2.19.the Company has not taken any action to appoint a restructuring officer;
2.20.the 19,285,911 Class B Ordinary Shares held by AMTD Digital Inc. will be converted into such number of
Class A Ordinary Shares in accordance with the M&As;
2.21.that the 3,825,000 Sponsor Shares (as defined in the Registration Statement) are registered in the name(s)
of the relevant Selling Securityholder(s) or Cede & Co (as the case may be);
2.22.the contents of the List of Shareholders are true and correct as of the date thereof and as of the date
hereof, and accurately reflect the content of the register of members of the Company as of the date hereof; and
2.23.no restrictions notice (the “Restrictions Notice”) under the Beneficial Ownership Transparency
Act has been issued or will be issued with respect to or that may affect, directly or indirectly, any of the shares, interests, rights
or obligations of the Company that are the subject of the transactions referred to in the Documents (the “Relevant Interests”).
3.QUALIFICATIONS
3.1.The term “enforceable” as used in this opinion means that an obligation is of a type which
the courts of the Cayman Islands enforce. It does not mean that those obligations will be enforced in all circumstances in accordance
with the terms of the Documents. In particular, the obligations of the Company under the Documents:
(a)will be subject to the laws from time to time in effect relating to bankruptcy, insolvency, liquidation,
possessory liens, rights of set off, reorganisation, amalgamation, merger, consolidation, moratorium, bribery, corruption, money laundering,
terrorist financing, proliferation financing or any other laws or legal procedures, whether of a similar nature or otherwise, generally
affecting the rights of creditors as well as applicable international sanctions;
(b)will be subject to statutory limitation of the time within which proceedings may be brought;
(c)will be subject to general principles of equity and, as such, specific performance and injunctive relief,
being equitable remedies, may not be available;
(d)may not be given effect to by a Cayman Islands court, whether or not it was applying the Foreign Laws,
if and to the extent they constitute the payment of an amount which is in the nature of a penalty; and
(e)may not be given effect by a Cayman Islands court to the extent that they are to be performed in a jurisdiction
outside the Cayman Islands and such performance would be illegal under the laws of that jurisdiction. Notwithstanding any contractual
submission to the exclusive or non-exclusive jurisdiction of specific courts, a Cayman Islands court has inherent discretion to stay or
allow proceedings in the Cayman Islands against the Company under the Documents if there are other proceedings in respect of the Documents
simultaneously underway against the Company in another jurisdiction.
conyers.com | 4
3.2.“Non-assessability” is not a legal concept under Cayman Islands law, but when we describe
the Class A Ordinary Shares herein as being “non-assessable” we mean, subject to any contrary provision in any agreement between
the Company and any one of its members holding any of the Class A Ordinary Shares (but only with respect to such member), that no further
sums are payable with respect to the issue of such Class A Ordinary Shares and no member shall be bound by an alteration in the constitutional
documents of the Company after the date upon which it became a member if and so far as the alteration requires such member to take or
subscribe for additional Class A Ordinary Shares or in any way increases its liability to contribute to the share capital of, or otherwise
pay money to, the Company.
3.3.We express no opinion as to the enforceability of any provision of the Documents which provides for the
payment of a specified rate of interest on the amount of a judgment after the date of judgment or which purports to fetter the statutory
powers of the Company.
3.4.Enforcement of any document to the extent it relates to the Relevant Interests may be affected or prohibited
if a Restrictions Notice is issued in respect of such Relevant Interests in accordance with the Beneficial Ownership Transparency Act.
3.5.We have made no investigation of and express no opinion in relation to the laws of any jurisdiction other
than the Cayman Islands. This opinion is to be governed by and construed in accordance with the laws of the Cayman Islands and is
limited to and is given on the basis of the current law and practice in the Cayman Islands. This opinion is issued solely for your benefit
and use in connection with the matter described herein and is not to be relied upon by any other person, firm or entity or in respect
of any other matter.
4.OPINION
On the basis of and subject to the foregoing,
we are of the opinion that:
4.1.The Company is duly incorporated and existing under the laws of the Cayman Islands and, based on the Certificate
of Good Standing, is in good standing as at the Certificate Date. Pursuant to the Companies Act (the “Act”),
a company is deemed to be in good standing if all fees and penalties under the Act have been paid and the Registrar of Companies has no
knowledge that the Company is in default under the Act.
4.2.When issued and paid for as contemplated by the Registration Statement, and registered in the register
of members of the Company, the Warrant Shares will be validly issued, fully paid and non-assessable (which term when used herein means
that no further sums are required to be paid by the holders thereof in connection with the issue of such shares).
4.3.The Resale Class A Ordinary Shares are validly issued, fully paid and non-assessable (which term when
used herein means that no further sums are required to be paid by the holders thereof in connection with the issue of such shares).
conyers.com | 5
4.4.When issued upon conversion of the Class B Ordinary Shares as contemplated by the M&As and the Registration
Statement, and registered in the register of members of the Company, the Conversion Class A Ordinary Shares will be validly issued, fully
paid and non-assessable (which term when used herein means that no further sums are required to be paid by the holders thereof in connection
with the issue of such shares).
We hereby consent to the filing
of this opinion as an exhibit to the Registration Statement and to the references to our firm under the caption “Legal Matters”
in the Prospectus forming a part of the Registration Statement. In giving this consent, we do not hereby admit that we are experts within
the meaning of Section 11 of the Securities Act or that we are within the category of persons whose consent is required under Section
7 of the Securities Act or the Rules and Regulations of the Commission promulgated thereunder.
Yours faithfully,
/s/ Conyers Dill & Pearman Pte. Ltd.
Conyers Dill & Pearman Pte. Ltd.
conyers.com | 6
EX-5.2
6
ea024654301ex5-2_gener.htm
OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP AS TO THE WARRANTS OF THE GENERATION ESSENTIALS GROUP
Exhibit 5.2
Skadden,
Arps, Slate, Meagher & Flom llp
One Manhattan
West
New York,
NY 10001
TEL: (212) 735-3000
FAX: (212) 735-2000
www.skadden.com
FIRM/AFFILIATE
OFFICES
-----------
BOSTON
CHICAGO
HOUSTON
LOS ANGELES
PALO ALTO
WASHINGTON, D.C.
WILMINGTON
-----------
ABU DHABI
BEIJING
BRUSSELS
FRANKFURT
HONG KONG
LONDON
MUNICH
PARIS
SÃO PAULO
SEOUL
SINGAPORE
TOKYO
TORONTO
June 24, 2025
Re:The Generation Essentials
Group
Registration Statement on Form F-1
Ladies and Gentlemen:
We have acted as special United
States counsel to The Generation Essentials Group, an exempted company limited by shares incorporated under the laws of the Cayman Islands
(the “Company”) in connection with (i) the issuance by the Company of up to 16,220,000 Class A ordinary shares, par
value US$0.0000000264856557377049 per share (the “Class A Ordinary Shares”) issuable upon exercises of certain warrants
to purchase Class A Ordinary Shares at an exercise price of $11.50 per share, subject to adjustment (the “Warrants”),
and (ii) the resale by certain selling securityholders of up to (a) 46,281,944 Class A Ordinary Shares (the “Legacy Shares”),
(b) 11,120,000 Warrants (the “Sponsor Warrants”), and (c) 11,120,000 Class A Ordinary Shares issuable upon exercises of the
Sponsor Warrants (the “Sponsor Warrant Shares” and together with the Legacy Shares and the Sponsor Warrants, the “Securities”).
This opinion letter is being
furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K of the General Rules and Regulations (the “Rules
and Regulations”) under the Securities Act of 1933 (the “Securities Act”).
In rendering the opinions
stated herein, we have examined and relied upon the following:
(a) the
Registration Statement on Form F-1 of the Company relating to the Securities filed on the date hereof with the Securities and Exchange
Commission (the “Commission”) under the Securities Act (such registration statement being hereinafter referred to as
the “Registration Statement”);
(b) the
Business Combination Agreement (the “Business Combination Agreement”), dated as of January 27, 2025, by and among
the Company, Black Spade Acquisition II Co. (“Black Spade II”), an exempted company limited by shares incorporated
under the laws of the Cayman Island, and WME Merger Sub Limited, a wholly-owned subsidiary of the Company
The Generation Essentials GroupJune 24, 2025Page 2
(c) the
Warrant Agreement, dated August 27, 2024, by and between Black Spade II and Continental Stock Transfer & Trust Company (“CST”)
as amended and assigned to the Company pursuant to the Assignment, Assumption and Amendment Agreement dated June 3, 2025, by and
among the Company, Black Spade II and CST (the “Assignment Agreement”) (as so amended and assigned, the “Warrant
Agreement”); and
(d) a
specimen Warrant Certificate (the “Warrant Certificate”) in the form of Exhibit 4.3 to the Registration Statement.
We have also examined originals
or copies, certified or otherwise identified to our satisfaction, of such records of the Company and such agreements, certificates and
receipts of public officials, certificates of officers or other representatives of the Company and others, and such other documents as
we have deemed necessary or appropriate as a basis for the opinions stated below.
In our examination, we have
assumed the genuineness of all signatures, including electronic signatures, the legal capacity and competency of all natural persons,
the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us
as facsimile, electronic, certified or photocopied copies, and the authenticity of the originals of such copies. As to any facts relevant
to the opinions stated herein that we did not independently establish or verify, we have relied upon statements and representations of
officers and other representatives of the Company and others and of public officials, including the factual representations and warranties
contained in the Transaction Documents (as defined below).
We do not express any opinion
with respect to the laws of any jurisdiction other than the laws of the State of New York (“Opined on Law”).
The Warrant Agreement, the
Assignment Agreement and the Warrant Certificate are referred to herein collectively as the “Transaction Documents.”
Based upon the foregoing and
subject to the qualifications and assumptions stated herein, we are of the opinion that the Sponsor Warrants constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with their terms under the laws of the State of New York.
The opinions stated herein
are subject to the following assumptions and qualifications:
(a) we
do not express any opinion with respect to the effect on the opinions stated herein of any bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer, preference and other similar laws or governmental orders affecting creditors’ rights generally, and the opinions
stated herein are limited by such laws and governmental orders and by general principles of equity (regardless of whether enforcement
is sought in equity or at law);
(b) we
do not express any opinion with respect to any law, rule or regulation that is applicable to any party to any of the Transaction Documents
or the transactions contemplated thereby solely because such law, rule or regulation is part of a regulatory regime applicable to any
such party or any of its affiliates as a result of the specific assets or business operations of such party or such affiliates;
The Generation Essentials GroupJune 24, 2025Page 3
(c) we
do not express any opinion with respect to the enforceability of any provision contained in any Transaction Document relating to any indemnification,
contribution, non-reliance, exculpation, release, limitation or exclusion of remedies, waiver or other provisions having similar effect
that may be contrary to public policy or violative of federal or state securities laws, rules or regulations, or to the extent any such
provision purports to, or has the effect of, waiving or altering any statute of limitations;
(d) the
opinions stated herein are limited to the agreements and documents specifically identified in the opinions contained herein (the “Specified
Documents”) without regard to any agreement or other document referenced in any such Specified Document (including agreements or
other documents incorporated by reference or attached or annexed thereto) and without regard to any other agreement or document relating
to any such Specified Document that is not a Transaction Document;
(e) this
opinion letter shall be interpreted in accordance with customary practice of United States lawyers who regularly give opinions in transactions
of this type;
(f) we
call to your attention that irrespective of the agreement of the parties to the Warrant Agreement, a court may decline to hear a case
on grounds of forum non conveniens or other doctrine limiting the availability of such court as a forum for resolution of disputes; in
addition, we call to your attention that we do not express any opinion with respect to the subject matter jurisdiction of the federal
courts of the United States of America in any action arising out of or relating to any Transaction Document;
(g) except
to the extent expressly stated in the opinion contained herein, we have assumed that each of the Transaction Documents constitutes the
valid and binding obligation of each party to such Transaction Document, enforceable against such party in accordance with its terms;
(h) we
have assumed that Puglisi & Associates has accepted appointment as agent to receive service of process and call to your attention
that we do not express any opinion if and to the extent such agent shall resign such appointment. Further, we do not express any opinion
with respect to the irrevocability of the designation of such agent to receive service of process;
(i) we
have assumed that the choice of New York law to govern the Transaction Documents is a valid and legal provision;
(j) we
call to your attention that the opinions stated herein are subject to possible judicial action giving effect to governmental actions or
laws of jurisdictions other than those with respect to which we express our opinion;
(k) to
the extent that any opinion relates to the enforceability of the choice of New York law and choice of New York forum provisions contained
in any Transaction Document, the opinions stated herein are subject to the qualification that such enforceability may be subject to, in
each case, (i) the exceptions and limitations in New York General Obligations Law Sections 5-1401 and 5-1402 and (ii) principles of comity
and constitutionality; and
(l) we
do not express any opinion whether the execution or delivery of any Transaction Document by the Company, or the performance by the Company
of its obligations under any Transaction Document will constitute a violation of, or a default under, any covenant, restriction or provision
with respect to financial ratios or tests or any aspect of the financial condition or results of operations of the Company or any of its
subsidiaries.
The Generation Essentials GroupJune 24, 2025Page 4
In addition, in rendering
the foregoing opinions we have also assumed that:
(a) the
Company (i) is, and as of January 27, 2025 and June 3, 2025 was, duly incorporated and is validly existing and in good standing, (ii)
has and as of January 27, 2025 and June 3, 2025, had requisite legal status and legal capacity under the laws of the jurisdiction of its
organization and (iii) has complied and will comply with all aspects of the laws of the jurisdiction of its organization in connection
with the transactions contemplated by, and the performance of its obligations under, the Transaction Documents;
(b) the
Company has, and as of January 27, 2025 and June 3, 2025, had the corporate power and authority to execute, deliver and perform all its
obligations under each of the Transaction Documents;
(c) each
of the Transaction Documents has been duly authorized, executed and delivered by all requisite corporate action on the part of the Company;
(d) none
of (i) the execution and delivery by the Company of the Transaction Documents, (ii) the performance by the Company of its obligations
under each of the Transaction Documents, including the issuance and sale of the Warrants or (iii) consummation of the transactions contemplated
by the Business Combination Agreement (collectively, the “Business Combination”): (a) conflicts or will conflict with
the Company fourth amended and restated memorandum and articles of association or any other comparable organizational document of the
Company, (b) constitutes or will constitute a violation of, or a default under, any lease, indenture, agreement or other instrument to
which the Company or its property is subject (except that we do not make the assumption set forth in this clause (b) with respect to those
agreements or instruments expressed to be governed by the laws of the State of New York which are listed in Part II of the Registration
Statement), (c) contravenes or will contravene any order or decree of any governmental authority to which the Company or its property
is subject, or (d) violates or will violate any law, rule or regulation to which the Company or its property is subject (except that we
do not make the assumption set forth in this clause (d) with respect to Opined on Law); and
(e) none
of (i) the execution and delivery by the Company of the Transaction Documents, (ii) the performance by the Company of its obligations
under each of the Transaction Documents, including the issuance and sale of the Warrants, (iii) the enforceability of each of the Transaction
Documents against the Company or (iv) consummation of the Business Combination, requires or will require the consent, approval, licensing
or authorization of, or any filing, recording or registration with, any governmental authority under any law, rule or regulation of any
jurisdiction.
We hereby consent to the reference
to our firm under the heading “Legal Matters” in the prospectus forming part of the Registration Statement. We also hereby
consent to the filing of this opinion letter with the Commission as an exhibit to the Registration Statement. In giving this consent,
we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or
the Rules and Regulations. This opinion letter is expressed as of the date hereof unless otherwise expressly stated, and we disclaim any
undertaking to advise you of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable laws.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
EX-10.7
7
ea024654301ex10-7_gener.htm
THE GENERATION ESSENTIALS GROUP 2025 SHARE INCENTIVE PLAN
Exhibit 10.7
The Generation Essentials Group
2025 Share Incentive Plan
ARTICLE
1
PURPOSE
The purpose of the Plan is to promote the success
and enhance the value of The Generation Essentials Group, an exempted company formed under the laws of the Cayman Islands (the “Company”),
by linking the personal interests of the Directors, Employees, and Consultants to those of the Company’s shareholders and by providing
such individuals with an incentive for outstanding performance to generate superior returns to the Company’s shareholders. The Plan
is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of recipients of
share incentives hereunder upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is
largely dependent.
ARTICLE
2
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan
they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural
where the context so indicates.
2.1 “Applicable
Laws” means the legal requirements relating to the Plan and the Awards under applicable provisions of the corporate, securities,
tax and other laws, rules, regulations and government orders, and the rules of any applicable stock exchange or national market system,
of any jurisdiction applicable to Awards granted to residents therein.
2.2 “Award”
means an Option, Restricted Share, Restricted Share Units or other types of award approved by the Committee granted to a Participant pursuant
to the Plan.
2.3 “Award
Agreement” means any written agreement, contract, or other instrument or document evidencing an Award, including through electronic
medium.
2.4 “Board”
means the Board of Directors of the Company.
2.5 “Cause”
with respect to a Participant means (unless otherwise expressly provided in the applicable Award Agreement, or another applicable contract
with the Participant that defines such term for purposes of determining the effect that a “for cause” termination has on the
Participant’s Awards) a termination of employment or service based upon a finding by the Service Recipient, acting in good faith
and based on its reasonable belief at the time, that the Participant:
(a) has
been negligent in the discharge of his or her duties to the Service Recipient, has refused to perform stated or assigned duties or is
incompetent in or (other than by reason of a disability or analogous condition) incapable of performing those duties;
(b) has
been dishonest or committed or engaged in an act of theft, embezzlement or fraud, a breach of confidentiality, an unauthorized disclosure
or use of inside information, customer lists, trade secrets or other confidential information;
(c) has
breached a fiduciary duty, or willfully and materially violated any other duty, law, rule, regulation or policy of the Service Recipient;
or has been convicted of, or plead guilty or nolo contendere to, a felony or misdemeanor (other than minor traffic violations or similar
offenses);
(d) has
materially breached any of the provisions of any agreement with the Service Recipient;
(e) has
engaged in unfair competition with, or otherwise acted intentionally in a manner injurious to the reputation, business or assets of, the
Service Recipient; or
(f) has
improperly induced a vendor or customer to break or terminate any contract with the Service Recipient or induced a principal for whom
the Service Recipient acts as agent to terminate such agency relationship.
A termination for Cause shall be deemed to occur
(subject to reinstatement upon a contrary final determination by the Committee) on the date on which the Service Recipient first delivers
written notice to the Participant of a finding of termination for Cause.
2.6 “Code”
means the Internal Revenue Code of 1986 of the United States, as amended.
2.7 “Committee”
means a committee of the Board described in Article 10.
2.8 “Consultant”
means any consultant or adviser if: (a) the consultant or adviser renders bona fide services to a Service Recipient; (b) the services
rendered by the consultant or adviser are not in connection with the offer or sale of securities in a capital-raising transaction and
do not directly or indirectly promote or maintain a market for the Company’s securities; and (c) the consultant or adviser is a
natural person who has rendered such services to the Service Recipient.
2.9 “Corporate
Transaction”, unless otherwise defined in an Award Agreement, means any of the following transactions, provided, however, that
the Committee shall determine under (d) and (e) whether multiple transactions are related, and its determination shall be final, binding
and conclusive:
(a) an
amalgamation, merger, arrangement or consolidation or scheme of arrangement (i) in which the Company is not the surviving entity, except
for a transaction the principal purpose of which is to change the jurisdiction in which the Company is incorporated or (ii) following
which the holders of the voting securities of the Company immediately prior to the transaction or their respective affiliates do not continue
to hold more than 50% of the combined voting power of the voting securities of the surviving entity;
2
(b) the
sale, transfer or other disposition of all or substantially all of the assets of the Company;
(c) the
complete liquidation or dissolution of the Company;
(d) any
reverse takeover or series of related transactions culminating in a reverse takeover (including, but not limited to, a tender offer followed
by a reverse takeover) in which the Company is the surviving entity but (A) the Company’s equity
securities outstanding immediately prior to such takeover are converted or exchanged by virtue of the takeover into other property, whether
in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined
voting power of the Company’s outstanding securities are transferred to a person or persons
(other than to an affiliate) different from those who held such securities immediately prior to such takeover or the initial transaction
culminating in such takeover, but excluding any such transaction or series of related transactions that the Committee determines shall
not be a Corporate Transaction; or
(e) acquisition
in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored
employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company’s outstanding securities
but excluding any such transaction or series of related transactions that the Committee determines shall not be a Corporate Transaction.
2.10 “Director”,
means a member of the Board or a member of the board of directors of any Subsidiary of the Company.
2.11 “Disability”,
unless otherwise defined in an Award Agreement, means that the Participant qualifies to receive long-term disability payments under the
Service Recipient’s long-term disability insurance program, as it may be amended from time to
time, to which the Participant provides services regardless of whether the Participant is covered by such policy. If the Service Recipient
to which the Participant provides service does not have a long-term disability plan in place, “Disability”
means that a Participant is unable to carry out the responsibilities and functions of the position held by the Participant by reason
of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. A Participant
will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Committee
in its discretion.
2.12 “Effective
Date” shall have the meaning set forth in Section 11.1.
2.13 “Employee”
means any person, including an officer or a Director, who is in the employment of a Service Recipient, subject to the control and
direction of the Service Recipient as to both the work to be performed and the manner and method of performance. The payment of a director’s
fee by a Service Recipient shall not be sufficient to constitute “employment”
by the Service Recipient.
3
2.14 “Exchange
Act” means the Securities Exchange Act of 1934 of the United States, as amended.
2.15 “Fair
Market Value” means, as of any date, the value of Shares determined as follows:
(a) If
the Shares are listed on one or more established stock exchanges or national market systems, including without limitation, the New York
Stock Exchange American, the New York Stock Exchange or the Nasdaq Stock Market, its Fair Market Value shall be the closing sales price
for such shares (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Shares are
listed (as determined by the Committee) on the date of determination (or, if no closing sales price or closing bid was reported on that
date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported on the website maintained
by such exchange or market system or such other source as the Committee deems reliable;
(b) If
the Shares are regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer,
its Fair Market Value shall be the closing sales price for such Shares as quoted on such system or by such securities dealer on the date
of determination, but if selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and
low asked prices for the Shares on the date of determination (or, if no such prices were reported on that date, on the last date such
prices were reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
(c) In
the absence of an established market for the Shares of the type described in (a) and (b) above, the Fair Market Value thereof shall be
determined by the Committee in good faith and in its discretion by reference to (i) the placing price of the latest private placement
of the Shares and the development of the Company’s business operations and the general economic and market conditions since such
latest private placement, (ii) other third party transactions involving the Shares and the development of the Company’s business
operation and the general economic and market conditions since such transaction, (iii) an independent valuation of the Shares, or (iv)
such other methodologies or information as the Committee determines to be indicative of Fair Market Value.
2.16 “Group
Entity” means any of the Company and Subsidiaries of the Company.
2.17 “Incentive
Share Option” means an Option that is intended to meet the requirements of Section 422 of the Code or any successor provision
thereto.
2.18 “Independent
Director” means (i) if the Shares or other securities representing the Shares are not listed on a stock exchange, a Director
of the Company who is a Non-Employee Director; and (ii) if the Shares or other securities representing the Shares are listed on one or
more stock exchange, a Director of the Company who meets the independence standards under the applicable corporate governance rules of
the stock exchange(s).
4
2.19 “Non-Employee
Director” means a member of the Board who qualifies as a “Non-Employee Director” as defined in Rule 16b-3(b)(3)
of the Exchange Act, or any successor definition adopted by the Board.
2.20 “Non-Qualified
Share Option” means an Option that is not intended to be an Incentive Share Option.
2.21 “Option”
means a right granted to a Participant pursuant to Article 5 of the Plan to purchase a specified number of Shares at a specified price
during specified time periods. An Option may be either an Incentive Share Option or a Non-Qualified Share Option.
2.22 “Parent”
means a parent corporation under Section 424(e) of the Code.
2.23 “Participant”
means a person who, as a Director, Consultant or Employee, has been granted an Award pursuant to the Plan.
2.24 “Plan”
means this 2025 Share Incentive Plan of The Generation Essentials Group, as amended and/or restated from time to time.
2.25 “Related
Entity” means any business, corporation, partnership, limited liability company or other entity in which the Company, a Parent
or Subsidiary of the Company holds a substantial ownership interest, directly or indirectly, or controls through contractual arrangements
and consolidates the financial results according to applicable accounting standards, but which is not a Subsidiary and which the Board
designates as a Related Entity for purposes of the Plan.
2.26 “Restricted
Share” means a Share awarded to a Participant pursuant to Article 6 that is subject to certain restrictions and may be subject
to risk of forfeiture.
2.27 “Restricted
Share Unit” means the right granted to a Participant pursuant to Article 7 to receive a Share at a future date.
2.28 “Securities
Act” means the Securities Act of 1933 of the United States, as amended.
2.29 “Service
Recipient” means the Company or Subsidiary of the Company to which a Participant provides services as an Employee, a Consultant
or a Director.
2.30 “Share”
means the ordinary shares of the Company, par value US$0.0000000264856557377049 per share, and such other securities of the Company that
may be substituted for Shares pursuant to Article 9.
2.31 “Subsidiary”
means any corporation or other entity of which a majority of the outstanding voting shares or voting power is beneficially owned directly
or indirectly by the Company.
2.32 “Trading
Date” means the closing of the first sale to the general public of the Shares pursuant to a registration statement filed with
and declared effective by the U.S. Securities and Exchange Commission under the Securities Act.
5
ARTICLE
3
SHARES SUBJECT TO THE PLAN
3.1 Number
of Shares.
(a) Subject
to the provisions of Article 9 and Section 3.1(b), the maximum aggregate number of Shares that may be issued pursuant to all Awards (including
Incentive Share Options) (the “Award Pool”) shall be 875,255. Subject to adjustment in accordance with Article 9, no
more than 875,255 Shares may be issued in the aggregate pursuant to the exercise of Incentive Share Options.
(b) To
the extent that an Award terminates, expires, or lapses for any reason, any Shares subject to the Award shall again be available for the
grant of an Award pursuant to the Plan. To the extent permitted by Applicable Laws, Shares issued in assumption of, or in substitution
for, any outstanding awards of any entity acquired in any form or combination by a Group Entity shall not be counted against Shares available
for grant pursuant to the Plan. Shares delivered by the Participant or withheld by the Company upon the exercise of any Award under the
Plan, in payment of the exercise price thereof or tax withholding thereon, may again be optioned, granted or awarded hereunder, subject
to the limitations of Section 3.1(a). If any Restricted Shares are forfeited by the Participant or repurchased by the Company, such Shares
may again be optioned, granted or awarded hereunder, subject to the limitations of Section 3.1(a). Notwithstanding the provisions of this
Section 3.1(b), no Shares may again be optioned, granted or awarded if such action would cause an Incentive Share Option to fail to qualify
as an incentive share option under Section 422 of the Code.
3.2 Shares
Distributed. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares, treasury
Shares (subject to Applicable Laws) or Shares purchased on the open market. Additionally, where applicable and at the discretion of the
Committee, any Shares distributed pursuant to an Award may be represented by American Depository Shares. If the number of Shares represented
by an American Depository Share is other than on a one-to-one basis, the limitations of Section 3.1 shall be adjusted to reflect the distribution
of American Depository Shares in lieu of Shares.
ARTICLE
4
ELIGIBILITY AND PARTICIPATION
4.1 Eligibility.
Persons eligible to participate in this Plan include Employees, Consultants, and Directors, as determined by the Committee.
4.2 Participation.
Subject to the provisions of the Plan, the Committee may, from time to time, select from among all eligible individuals, those to whom
Awards shall be granted and shall determine the nature and amount of each Award. No individual shall have any right to be granted an Award
pursuant to this Plan.
6
4.3 Jurisdictions.
In order to assure the viability of Awards granted to Participants employed in various jurisdictions, the Committee may provide for such
special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom applicable in
the jurisdiction in which the Participant resides, is employed, operates or is incorporated. Moreover, the Committee may approve such
supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary or appropriate for such
purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements,
amendments, restatements, or alternative versions shall increase the share limitations contained in Section 3.1 of the Plan. Notwithstanding
the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate any Applicable Laws.
ARTICLE
5
OPTIONS
5.1 General.
The Committee is authorized to grant Options to Participants on the following terms and conditions:
(a) Exercise
Price. The exercise price per Share subject to an Option shall be determined by the Committee and set forth in the Award Agreement
which may be a fixed price or a variable price related to the Fair Market Value of the Shares. The exercise price per Share subject to
an Option may be amended or adjusted in the absolute discretion of the Committee, the determination of which shall be final, binding and
conclusive. For the avoidance of doubt, to the extent not prohibited by Applicable Laws or any exchange rule, a downward adjustment of
the exercise prices of Options mentioned in the preceding sentence shall be effective without the approval of the Company’s
shareholders or the approval of the affected Participants.
(b) Time
and Conditions of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part,
including exercise prior to vesting; provided that the term of any Option granted under the Plan shall not exceed ten years, except as
provided in Section 12.1. The Committee shall also determine any conditions, if any, that must be satisfied before all or part of an Option
may be exercised.
(c) Payment. The
Committee shall determine the methods by which the exercise price of an Option may be paid, the form of payment, including, without
limitation (i) cash or check denominated in U.S. Dollars, (ii) to the extent permissible under the Applicable Laws, cash or check in
Hong Kong dollar, (iii) cash or check denominated in any other local currency as approved by the Committee, (iv) Shares held for
such period of time as may be required by the Committee in order to avoid adverse financial accounting consequences and having a
Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof, (v)
after the Trading Date the delivery of a notice that the Participant has placed a market sell order with a broker with respect to
Shares then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net
proceeds of the sale to the Company in satisfaction of the Option exercise price; provided that payment of such proceeds is then
made to the Company upon settlement of such sale, (vi) other property acceptable to the Committee with a Fair Market Value equal to
the exercise price, or (vii) any combination of the foregoing. Notwithstanding any other provision of the Plan to the contrary, no
Participant who is a member of the Board or an “executive officer” of
the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to pay the exercise price of an Option in any
method which would violate Section 13(k) of the Exchange Act.
7
(d) Evidence
of Grant. All Options shall be evidenced by an Award Agreement between the Company and the Participant. The Award Agreement shall
include such additional provisions as may be specified by the Committee.
(e) Effects
of Termination of Employment or Service on Options. Termination of employment or service shall have the following effects on Options
granted to the Participants:
(i) Dismissal
for Cause. Unless otherwise provided in the Award Agreement, if a Participant’s employment
by or service to the Service Recipient is terminated by the Service Recipient for Cause, the Participant’s
Options will terminate upon such termination, whether or not the Option is then vested and/or exercisable;
(ii) Death
or Disability. Unless otherwise provided in the Award Agreement, if a Participant’s employment
by or service to the Service Recipient terminates as a result of the Participant’s death or
Disability:
(a) the
Participant (or his or her legal representative or beneficiary, in the case of the Participant’s
Disability or death, respectively), will have until the date that is 12 months after the Participant’s
termination of Employment to exercise the Participant’s Options (or portion thereof) to the
extent that such Options were vested and exercisable on the date of the Participant’s termination
of Employment on account of death or Disability;
(b) the
Options, to the extent not vested and exercisable on the date of the Participant’s termination
of Employment or service, shall terminate upon the Participant’s termination of Employment
or service on account of death or Disability; and
(c) the
Options, to the extent exercisable for the 12-month period following the Participant’s termination
of Employment or service and not exercised during such period, shall terminate at the close of business on the last day of the 12-month
period.
(iii) Other
Terminations of Employment or Service. Unless otherwise provided in the Award Agreement, if a Participant’s
employment by or service to the Service Recipient terminates for any reason other than a termination by the Service Recipient for Cause
or because of the Participant’s death or Disability:
(a) the
Participant will have until the date that is 90 days after the Participant’s termination
of Employment or service to exercise his or her Options (or portion thereof) to the extent that such Options were vested and
exercisable on the date of the Participant’s termination of Employment or service;
8
(b) the
Options, to the extent not vested and exercisable on the date of the Participant’s termination
of Employment or service, shall terminate upon the Participant’s termination of Employment
or service; and
(c) the
Options, to the extent exercisable for the 90-day period following the Participant’s termination
of Employment or service and not exercised during such period, shall terminate at the close of business on the last day of the 90-day
period.
5.2 Incentive
Share Options. Incentive Share Options may be granted to Employees of the Company or a Subsidiary of the Company. Incentive Share
Options may not be granted to employees of a Related Entity or to Independent Directors or Consultants. The terms of any Incentive Share
Options granted pursuant to the Plan, in addition to the requirements of Section 5.1, must comply with the following additional provisions
of this Section 5.2:
(a) Individual
Dollar Limitation. The aggregate Fair Market Value (determined as of the time the Option is granted) of all Shares with respect to
which Incentive Share Options are first exercisable by a Participant in any calendar year may not exceed $100,000 or such other limitation
as imposed by Section 422(d) of the Code, or any successor provision. To the extent that Incentive Share Options are first exercisable
by a Participant in excess of such limitation, the excess shall be considered Non-Qualified Share Options.
(b) Exercise
Price. The exercise price of an Incentive Share Option shall be equal to the Fair Market Value on the date of grant. However, the
exercise price of any Incentive Share Option granted to any individual who, at the date of grant, owns Shares possessing more than ten
percent of the total combined voting power of all classes of shares of the Company or any Parent or Subsidiary of the Company may not
be less than 110% of Fair Market Value on the date of grant and such Option may not be exercisable for more than five years from the date
of grant.
(c) Transfer
Restriction. The Participant shall give the Company prompt notice of any disposition of Shares acquired by exercise of an Incentive
Share Option within (i) two years from the date of grant of such Incentive Share Option or (ii) one year after the transfer of such Shares
to the Participant, whichever is later.
(d) Expiration
of Incentive Share Options. No Award of an Incentive Share Option may be made pursuant to this Plan after the tenth anniversary of
the Effective Date.
(e) Right
to Exercise. During a Participant’s lifetime, an Incentive Share Option may be exercised
only by the Participant.
9
ARTICLE
6
RESTRICTED SHARES
6.1 Grant
of Restricted Shares. The Committee, at any time and from time to time, may grant Restricted Shares to Participants as the Committee,
in its sole discretion, shall determine. The Committee, in its sole discretion, shall determine the number of Restricted Shares to be
granted to each Participant.
6.2 Restricted
Shares Award Agreement. Each Award of Restricted Shares shall be evidenced by an Award Agreement that shall specify the period of
restriction, the number of Restricted Shares granted, and such other terms and conditions as the Committee, in its sole discretion, shall
determine. Unless the Committee determines otherwise, Restricted Shares shall be held by the Company as escrow agent until the restrictions
on such Restricted Shares have lapsed.
6.3 Issuance
and Restrictions. Restricted Shares shall be subject to such restrictions on transferability and other restrictions as the Committee
may impose (including, without limitation, limitations on the right to vote Restricted Shares or the right to receive dividends on the
Restricted Shares). These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments,
or otherwise, as the Committee determines at the time of the grant of the Award or thereafter.
6.4 Forfeiture/Repurchase.
Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted Shares that are at that time subject to restrictions shall be forfeited or
repurchased in accordance with the Award Agreement; provided, however, the Committee may (a) provide in any Restricted Share Award Agreement
that restrictions or forfeiture and repurchase conditions relating to Restricted Shares will be waived in whole or in part in the event
of terminations resulting from specified causes, and (b) in other cases waive in whole or in part restrictions or forfeiture and repurchase
conditions relating to Restricted Shares.
6.5 Certificates
for Restricted Shares. Restricted Shares granted pursuant to the Plan may be evidenced in such manner as the Committee shall determine.
If certificates representing Restricted Shares are registered in the name of the Participant, certificates must bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Restricted Shares, and the Company may, at its discretion, retain
physical possession of the certificate until such time as all applicable restrictions lapse.
6.6 Removal of
Restrictions. Except as otherwise provided in this Article 6, Restricted Shares granted under the Plan shall be released from
escrow as soon as practicable after the last day of the period of restriction. The Committee, in its discretion, may accelerate the
time at which any restrictions shall lapse or be removed. After the restrictions have lapsed, the Participant shall be entitled to
have any legend or legends under Section 6.5 removed from his or her Share certificate, and the Shares shall be freely transferable
by the Participant, subject to applicable legal restrictions. The Committee (in its discretion) may establish procedures regarding
the release of Shares from escrow and the removal of legends, as necessary or appropriate to minimize administrative burdens on the
Company.
10
ARTICLE
7
7.1 Grant
of Restricted Share Units. The Committee, at any time and from time to time, may grant Restricted Share Units to Participants as the
Committee, in its sole discretion, shall determine. The Committee, in its sole discretion, shall determine the number of Restricted Share
Units to be granted to each Participant.
7.2 Restricted
Share Units Award Agreement. Each Award of Restricted Share Units shall be evidenced by an Award Agreement that shall specify any
vesting conditions, the number of Restricted Share Units granted, and such other terms and conditions as the Committee, in its sole discretion,
shall determine.
7.3 Form
and Timing of Payment of Restricted Share Units. At the time of grant, the Committee shall specify the date or dates on which the
Restricted Share Units shall become fully vested and nonforfeitable. Upon vesting, the Committee, in its sole discretion, may pay Restricted
Share Units in the form of cash, Shares or a combination thereof.
7.4 Forfeiture/Repurchase.
Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted Share Units that are at that time unvested shall be forfeited or repurchased
in accordance with the Award Agreement; provided, however, the Committee may (a) provide in any Restricted Share Unit Award Agreement
that restrictions or forfeiture and repurchase conditions relating to Restricted Share Units will be waived in whole or in part in the
event of terminations resulting from specified causes, and (b) in other cases waive in whole or in part restrictions or forfeiture and
repurchase conditions relating to Restricted Share Units.
ARTICLE
8
PROVISIONS APPLICABLE TO AWARDS
8.1 Award
Agreement. Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions and limitations for each
Award which may include the term of an Award, the provisions applicable in the event the Participant’s
employment or service terminates, and the Company’s authority to unilaterally or bilaterally
amend, modify, suspend, cancel or rescind an Award.
8.2 No
Transferability; Limited Exception to Transfer Restrictions.
8.2.1 Limits
on Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 8.2, by applicable law and by the Award Agreement,
as the same may be amended:
(a) all
Awards are non-transferable and will not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance
or charge;
11
(b) Awards
will be exercised only by the Participant; and
(c) amounts
payable or shares issuable pursuant to an Award will be delivered only to (or for the account of), and, in the case of Shares, registered
in the name of, the Participant.
In addition, the shares shall
be subject to the restrictions set forth in the applicable Award Agreement.
8.2.2 Further
Exceptions to Limits on Transfer. The exercise and transfer restrictions in Section 8.2.1 will not apply to:
(a) transfers
to the Company or a Subsidiary;
(b) transfers
by gift to “immediate family” as that term is defined
in SEC Rule 16a-1(e) promulgated under the Exchange Act;
(c) the
designation of a beneficiary to receive benefits if the Participant dies or, if the Participant has died, transfers to or exercises by
the Participant’s beneficiary, or, in the absence of a validly designated beneficiary, transfers
by will or the laws of descent and distribution; or
(d) if
the Participant has suffered a disability, permitted transfers or exercises on behalf of the Participant by the Participant’s
duly authorized legal representative; or
(e) subject
to the prior approval of the Committee or an executive officer or director of the Company authorized by the Committee, transfer to one
or more natural persons who are the Participant’s family members or entities owned and controlled
by the Participant and/or the Participant’s family members, including but not limited to trusts
or other entities whose beneficiaries or beneficial owners are the Participant and/or the Participant’s
family members, or to such other persons or entities as may be expressly approved by the Committee, pursuant to such conditions and procedures
as the Committee or may establish. Any permitted transfer shall be subject to the condition that the Committee receives evidence satisfactory
to it that the transfer is being made for estate and/or tax planning purposes and on a basis consistent with the Company’s
lawful issue of securities.
Notwithstanding anything else in this Section 8.2.2
to the contrary, but subject to compliance with all Applicable Laws, Incentive Share Options, Restricted Shares and Restricted Share Units
will be subject to any and all transfer restrictions under the Code applicable to such Awards or necessary to maintain the intended tax
consequences of such Awards. Notwithstanding clause (b) above but subject to compliance with all Applicable Laws, any contemplated transfer
by gift to “immediate family” as referenced in clause
(b) above is subject to the condition precedent that the transfer be approved by the Committee in order for it to be effective.
12
8.3 Beneficiaries.
Notwithstanding Section 8.2, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights
of the Participant and to receive any distribution with respect to any Award upon the Participant’s
death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all
terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement
otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the Participant is married
and resides in a community property state, a designation of a person other than the Participant’s
spouse as his or her beneficiary with respect to more than 50% of the Participant’s interest
in the Award shall not be effective without the prior written consent of the Participant’s
spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant
to the Participant’s will or the laws of descent and distribution. Subject to the foregoing,
a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee.
8.4 Performance
Objectives and Other Terms. The Committee, in its discretion, shall set performance objectives or other vesting criteria which, depending
on the extent to which they are met, will determine the number or value of the Awards that will be granted or paid out to the Participants.
8.5 Share
Certificates.
(a) Notwithstanding
anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing the Shares pursuant
to the exercise of any Award, unless and until the Committee has determined, with advice of counsel, that the issuance and delivery of
such certificates is in compliance with all Applicable Laws, regulations of governmental authorities and, if applicable, the requirements
of any exchange on which the Shares are listed or traded. All Share certificates delivered pursuant to the Plan are subject to any stop-transfer
orders and other restrictions as the Committee deems necessary or advisable to comply with all Applicable Laws, and the rules of any national
securities exchange or automated quotation system on which the Shares are listed, quoted, or traded. The Committee may place legends on
any Share certificate to reference restrictions applicable to the Shares. In addition to the terms and conditions provided herein, the
Committee may require that a Participant make such reasonable covenants, agreements, and representations as the Committee, in its discretion,
deems advisable in order to comply with any such laws, regulations, or requirements. The Committee shall have the right to require any
Participant to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period
limitation, as may be imposed in the discretion of the Committee.
(b) Notwithstanding
anything herein to the contrary, unless otherwise determined by the Committee or required by Applicable Laws, the Company shall not deliver
to any Participant certificates evidencing Shares issued in connection with any Award and instead such Shares shall be recorded on the
books of the Company or, as applicable, its transfer agent or share plan administrator, or the register book of the depositary.
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8.6 Paperless
Administration Subject to Applicable Laws, the Committee may make Awards, provide applicable disclosure and procedures for exercise
of Awards by an internet website or interactive voice response system for the paperless administration of Awards.
ARTICLE
9
CHANGES IN CAPITAL STRUCTURE
9.1 Adjustments.
In the event of any dividend, share split, combination or exchange of Shares, amalgamation, arrangement or consolidation, spin-off, recapitalization
or other distribution (other than normal cash dividends) of Company assets to its shareholders, or any other change affecting the shares
of Shares or the share price of a Share, the Committee shall make such proportionate adjustments, if any, as the Committee in its discretion
may deem appropriate to reflect such change with respect to (a) the aggregate number and type of shares that may be issued under the Plan
(including, but not limited to, adjustments of the limitations in Section 3.1); (b) the terms and conditions of any outstanding Awards
(including, without limitation, any applicable performance targets or criteria with respect thereto); and (c) the grant or exercise price
per share for any outstanding Awards under the Plan.
9.2 Corporate
Transactions. Except as may otherwise be provided in any Award Agreement or any other written agreement entered into by and between
the Company and a Participant, if the Committee anticipates the occurrence, or upon the occurrence, of a Corporate Transaction, the Committee
may, in its sole discretion, provide for (i) any and all Awards outstanding hereunder to terminate at a specific time in the future and
shall give each Participant the right to exercise the vested portion of such Awards during a period of time as the Committee shall determine,
or (ii) the purchase of any Award for an amount of cash equal to the amount that could have been attained upon the exercise of such Award
(and, for the avoidance of doubt, if as of such date the Committee determines in good faith that no amount would have been attained upon
the exercise of such Award, then such Award may be terminated by the Company without payment), or (iii) the replacement of such Award
with other rights or property selected by the Committee in its sole discretion or the assumption of or substitution of such Award by the
successor or surviving corporation, or a Parent or Subsidiary thereof, with appropriate adjustments as to the number and kind of Shares
and prices, or (iv) payment of such Award in cash based on the value of Shares on the date of the Corporate Transaction plus reasonable
interest on the Award through the date as determined by the Committee when such Award would otherwise be vested or have been paid in accordance
with its original terms, if necessary to comply with Section 409A of the Code.
9.3 Outstanding
Awards – Other Changes. In the event of any other change in the capitalization of the Company or corporate change other than
those specifically referred to in this Article 9, the Committee may, in its absolute discretion, make such adjustments in the number and
class of shares subject to Awards outstanding on the date on which such change occurs and in the per share grant or exercise price of
each Award as the Committee may consider appropriate to prevent dilution or enlargement of rights.
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9.4 No Other
Rights. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or
consolidation of Shares of any class, the payment of any dividend, any increase or decrease in the number of shares of any class or
any dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the
Plan or pursuant to action of the Committee under the Plan, and no issuance by the Company of shares of any class, or securities
convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of
Shares subject to an Award or the grant or exercise price of any Award.
ARTICLE
10
ADMINISTRATION
10.1 Committee.
The Plan shall be administered by the Board or a committee of one or more members of the Board (the “Committee”) to
whom the Board shall delegate the authority to grant or amend Awards to Participants other than any of the Committee members, Independent
Directors and executive officers of the Company. Reference to the Committee shall refer to the Board in absence of the Committee. Notwithstanding
the foregoing, the full Board, acting by majority of its members in office, shall conduct the general administration of the Plan if required
by Applicable Laws, and with respect to Awards granted to the Committee members, Independent Directors and executive officers of the Company
and for purposes of such Awards the term “Committee” as
used in the Plan shall be deemed to refer to the Board.
10.2 Action
by the Committee. A majority of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting
at which a quorum is present, and acts approved unanimously in writing all members of the Committee in lieu of a meeting, shall be deemed
the acts of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of a Group Entity, the Company’s
independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist
in the administration of the Plan.
10.3 Authority
of the Committee. Subject to any specific designation in the Plan, the Committee has the exclusive power, authority and discretion
to:
(a) designate
Participants to receive Awards;
(b) determine
the type or types of Awards to be granted to each Participant;
(c) determine
the number of Awards to be granted and the number of Shares to which an Award will relate;
(d) determine
the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competition and recapture of gain
on an Award, based in each case on such considerations as the Committee in its sole discretion determines;
15
(e) determine
whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid
in, cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;
(f) prescribe
the form of each Award Agreement, which need not be identical for each Participant;
(g) decide
all other matters that must be determined in connection with an Award;
(h) establish,
adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;
(i) interpret
the terms of, and any matter arising pursuant to, the Plan or any Award Agreement;
(j) amend
terms and conditions of Award Agreements; and
(k) make
all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable to administer
the Plan, including design and adopt from time to time new types of Awards that are in compliance with Applicable Laws.
10.4 Decisions
Binding. The Committee’s interpretation of the Plan, any Awards granted pursuant to the
Plan, any Award Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive
on all parties.
ARTICLE
11
EFFECTIVE AND EXPIRATION DATE
11.1 Effective
Date. The Plan shall become effective as of June 3, 2025 (the “Effective Date”).
11.2 Expiration
Date. The Plan will expire on, and no Award may be granted pursuant to the Plan after, the tenth anniversary of the Effective Date.
Any Awards that are outstanding on the tenth anniversary of the Effective Date shall remain in force according to the terms of the Plan
and the applicable Award Agreement.
16
ARTICLE
12
AMENDMENT, MODIFICATION, AND TERMINATION
12.1 Amendment,
Modification, and Termination. At any time and from time to time, the Board may terminate, amend or modify the Plan; provided,
however, that (a) to the extent necessary and desirable to comply with Applicable Laws or stock exchange rules, the Company shall
obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required, unless the Company decides to
follow home country practice, and (b) unless the Company decides to follow home country practice, shareholder approval is required
for any amendment to the Plan that (i) increases the number of Shares available under the Plan (other than any adjustment as
provided by Article 9 or Section 3.1(a)), or (ii) permits the Committee to extend the term of the Plan or the exercise period for an
Option beyond ten years from the date of grant.
12.2 Awards
Previously Granted. Except with respect to amendments made pursuant to Section 12.1, no termination, amendment, or modification of
the Plan shall adversely affect in any material way any Award previously granted pursuant to the Plan without the prior written consent
of the Participant.
ARTICLE
13
GENERAL PROVISIONS
13.1 No
Rights to Awards. No Participant, employee, or other person shall have any claim to be granted any Award pursuant to the Plan, and
neither the Company nor the Committee is obligated to treat Participants, employees, and other persons uniformly.
13.2 No
Shareholders Rights. No Award gives the Participant any of the rights of a shareholder of the Company unless and until Shares are
in fact issued to such person in connection with such Award.
13.3 Taxes.
No Shares shall be delivered under the Plan to any Participant until such Participant has made arrangements acceptable to the Committee
for the satisfaction of any income and employment tax withholding obligations under Applicable Laws. The Company or any Subsidiary shall
have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy
all applicable taxes (including the Participant’s payroll tax obligations) required or permitted
by Applicable Laws to be withheld with respect to any taxable event concerning a Participant arising as a result of this Plan. The Committee
may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold Shares
otherwise issuable under an Award (or allow the return of Shares) having a Fair Market Value equal to the sums required to be withheld.
Notwithstanding any other provision of the Plan, the number of Shares which may be withheld with respect to the issuance, vesting, exercise
or payment of any Award (or which may be repurchased from the Participant of such Award after such Shares were acquired by the Participant
from the Company) in order to satisfy any income and payroll tax liabilities applicable to the Participant with respect to the issuance,
vesting, exercise or payment of the Award shall, unless specifically approved by the Committee, be limited to the number of Shares which
have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum
statutory withholding rates for the applicable income and payroll tax purposes that are applicable to such supplemental taxable income.
13.4 No
Right to Employment or Services. Nothing in the Plan or any Award Agreement shall interfere with or limit in any way the right of
the Service Recipient to terminate any Participant’s employment or services at any time, nor
confer upon any Participant any right to continue in the employment or services of any Service Recipient.
13.5 Unfunded
Status of Awards. The Plan is intended to be an “unfunded”
plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the relevant
Group Entity.
17
13.6 Indemnification.
To the extent allowable pursuant to Applicable Laws, each member of the Committee or of the Board shall be indemnified and held harmless
by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection
with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved
by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction
of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification
shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s
Memorandum of Association and Articles of Association, as a matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
13.7 Expenses.
The expenses of administering the Plan shall be borne by the Group Entities.
13.8 Fractional
Shares. No fractional Shares shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down as appropriate.
13.9 Government
and Other Regulations. The obligation of the Company to make payment of awards in Shares or otherwise shall be subject to all Applicable
Laws, and to such approvals by government agencies as may be required. The Company shall be under no obligation to register any of the
Shares paid pursuant to the Plan under the Securities Act or any other similar law in any applicable jurisdiction. If the Shares paid
pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the Securities Act or other Applicable Laws,
the Company may restrict the transfer of such Shares in such manner as it deems advisable to ensure the availability of any such exemption.
13.10 Governing
Law. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the Cayman Islands.
13.11 Section
409A. To the extent that the Committee determines that any Award granted under the Plan is or may become subject to Section 409A
of the Code, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the
Code. To the extent applicable, the Plan and the Award Agreements shall be interpreted in accordance with Section 409A of the Code
and the U.S. Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation
any such regulation or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the
contrary, in the event that following the Effective Date the Committee determines that any Award may be subject to Section 409A of
the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the
Effective Date), the Committee may adopt such amendments to the Plan and the applicable Award agreement or adopt other policies and
procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee
determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax
treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and
related U.S. Department of Treasury guidance.
13.12 Appendices.
The Committee may approve such supplements, amendments or appendices to the Plan as it may consider necessary or appropriate for purposes
of compliance with Applicable Laws or otherwise and such supplements, amendments or appendices shall be considered a part of the Plan;
provided, however, that no such supplements shall increase the share limitation contained in Section 3.1 of the Plan without the
approval of the Board.
18
EX-23.1
8
ea024654301ex23-1_gener.htm
CONSENT OF WITHUMSMITH+BROWN, PC, INDEPENDENT REGISTERED ACCOUNTING FIRM FOR BLACK SPADE ACQUISITION II CO
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We hereby consent to the use in the Prospectus constituting a part
of this Registration Statement on Form F-1 of our report dated March 4, 2025, relating to the financial statements of Black Spade Acquisition
II Co, which is contained in that Registration Statement. We also consent to the reference to us under the caption “Experts”
in the Registration Statement.
/s/ WithumSmith+Brown, PC
New York, New York
June 24, 2025
EX-23.2
9
ea024654301ex23-2_gener.htm
CONSENT OF ASSENTSURE PAC, INDEPENDENT REGISTERED ACCOUNTING FIRM FOR THE GENERATION ESSENTIALS GROUP
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We hereby consent to the incorporation of our
report dated March 21, 2025 in the Registration Statement on Form F-1, under the Securities Act of 1933, with respect to the consolidated
statements of financial position of The Generation Essentials Group and its subsidiaries and its subsidiaries (collectively referred to
as the “Group”) as of December 31, 2022, 2023 and 2024, the related consolidated statements of profit or loss and other
comprehensive income, changes in equity and cash flows the years ended December 31, 2022, 2023 and 2024 and the related notes.
We also consent to the reference to our firm under the heading “Experts” in such Registration Statement.
/s/ Assentsure PAC
Singapore
June 24, 2025
EX-99.1
10
ea024654301ex99-1_gener.htm
CODE OF BUSINESS CONDUCT AND ETHICS OF THE GENERATION ESSENTIALS GROUP
Exhibit 99.1
The
Generation Essentials Group
Code
of Business Conduct and Ethics
I.Purpose
This Code of Business Conduct
and Ethics (the “Code”) contains general guidelines for conducting the business of The Generation Essentials Group,
a Cayman Islands company, and its subsidiaries and affiliates (collectively, the “Company”) consistent with the highest
standards of business ethics, and is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley
Act of 2002 and the rules promulgated thereunder. To the extent this Code requires a higher standard than required by commercial practice
or applicable laws, rules or regulations, the Company adheres to these higher standards.
This Code is designed to deter
wrongdoing and to promote:
●honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships;
●full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company
files with, or submits to, the U.S. Securities and Exchange Commission (the “SEC”) and in other public communications
made by the Company;
●compliance with applicable laws, rules and regulations;
●strict prohibition of any bribes or kickbacks;
●prompt internal reporting of violations of the Code; and
●accountability for adherence to the Code.
II.Applicability
This Code applies to all directors,
officers, employees and consultants of the Company, whether they work for the Company on a full-time, part-time, consultative or temporary
basis (each, an “employee” and collectively, the “employees”). Certain provisions of the Code apply
specifically to our chief executive officer, chief financial officer, other executive officers, senior vice presidents, vice presidents,
and other members of the management of the Company who have reached a certain level of seniority (each, a “senior employee,”
and collectively, the “senior employees”). Certain provisions of the Code apply to relevant third parties in assistance
with the Company’s business.
The Board of Directors of
the Company (the “Board”) has appointed the Chief Financial Officer (or such other person designated by the Chief Financial
Officer) as the Compliance Officer for the Company (the “Compliance Officer”). If you have any questions regarding
the Code or would like to report any violation of the Code, please contact the Compliance Officer via email or through other channels
of communication. The Company encourages the reporting of any misconduct or inappropriate behavior, including potential violations of
the Code. The Company is committed to providing confidentiality, anonymity, and protection to whistleblowers, except when prohibited by
law.
III.Conflicts of Interest
Identifying Conflicts of Interest
A conflict of interest occurs
when an employee’s private interest interferes, or appears to interfere, in any way with the interests of the Company as a whole.
An employee should actively avoid any private interest that may impact such employee’s ability to act in the interests of the Company
or that may make it difficult to perform the employee’s work objectively and effectively. In general, the following are considered
conflicts of interest:
●Competing Business. No employee may be employed by a business that competes with the Company or
deprives it of any business. No employee may engage, or assist others (including family members) in engaging, any business activities
that compete with the Company or deprive it of any business. An employee should notify the Company promptly if he/she knows that any of
his or her family members are employed by or engaged in a competing business.
●Corporate Opportunity. No employee may use corporate property, information or his/her position
with the Company to secure a business opportunity that would otherwise be available to the Company. If an employee discovers a business
opportunity that is in the Company’s line of business through the use of the Company’s property, information or position,
the employee must first present the business opportunity to the Company before pursuing the opportunity in his/her individual capacity.
●Financial Interests.
(i)No employee may have any financial interest (ownership or otherwise), either directly or indirectly through
a spouse or other family member, in any other business or entity if such interest adversely affects the employee’s performance of
duties or responsibilities to the Company, or requires the employee to devote time to it during such employee’s working hours at
the Company;
(ii)No employee may hold any ownership interest in a privately held company that is in competition with the
Company;
(iii)An employee may hold up to 1% ownership interest in a publicly traded company that is in competition with
the Company; provided that if the employee’s ownership interest in such publicly traded company increases to more than 1%, the employee
must immediately report such ownership to the Compliance Officer;
2
(iv)No employee may hold any ownership interest in a company that has a business relationship with the Company
if such employee’s duties at the Company include managing or supervising the Company’s business relations with that company;
and
(v)Notwithstanding the other provisions of this Code,
(a) a director or any family member
of such director (collectively, “Director Affiliates”) or a senior employee or any family member of such senior employee
(collectively, “Officer Affiliates”) may continue to hold his/her investment or other financial interest in a business
or entity (an “Interested Business”) that:
(1) was made or
obtained either (A) before the Company invested in or otherwise became interested in such business or entity; or (B) before the director
or senior employee joined the Company (for the avoidance of doubt, regardless of whether the Company had or had not already invested in
or otherwise become interested in such business or entity at the time the director or senior employee joined the Company); or
(2) may in the future
be made or obtained by the director or senior employee, provided that at the time such investment or other financial interest is made
or obtained, the Company has not yet invested in or otherwise become interested in such business or entity;
provided that such director or senior
employee shall disclose such investment or other financial interest to the Board;
(b) an interested director or senior
employee shall refrain from participating in any discussion among senior employees of the Company relating to an Interested Business and
shall not be involved in any proposed transaction between the Company and an Interested Business; and
(c) before any Director Affiliate or
Officer Affiliate (i) invests, or otherwise acquires any equity or other financial interest, in a business or entity that is in competition
with the Company; or (ii) enters into any transaction with the Company, the related director or senior employee shall obtain prior approval
from the Audit Committee of the Board.
●Loans or Other Financial Transactions. No employee may obtain loans or guarantees of personal obligations
from, or enter into any other personal financial transaction with, any company that is a material customer, supplier or competitor of
the Company. This guideline does not prohibit arms-length transactions with recognized banks or other financial institutions.
3
●Service on Boards and Committees. No employee may serve on a board of directors or trustees or
on a committee of any entity (whether profit or not-for-profit) whose interests could reasonably be expected to conflict with those of
the Company. Employees must obtain prior approval from the Board before accepting any such board or committee position. The Company may
revisit its approval of any such position at any time to determine whether an employee’s service in such position is still appropriate.
The above is in no way a complete
list of situations where conflicts of interest may arise. The following questions might serve as a useful guide in assessing a potential
conflict of interest situation not specifically addressed above:
●Is the action to be taken legal?
●Is it honest and fair?
●Is it in the best interests of the Company?
Disclosure of Conflicts of Interest
The Company requires that
employees fully disclose any situations that could reasonably be expected to give rise to a conflict of interest. If an employee suspects
that he/she has a conflict of interest, or a situation that others could reasonably perceive as a conflict of interest, the employee must
report it immediately to the Compliance Officer. Conflicts of interest may only be waived by the Board, or the appropriate committee of
the Board, and will be promptly disclosed to the public to the extent required by law and applicable rules of the stock exchange where
the Company’s ordinary shares are listed and traded (the “Stock Exchange”).
Family Members and Work
The actions of family members
outside the workplace may also give rise to conflicts of interest because they may influence an employee’s objectivity in making
decisions on behalf of the Company. If a member of an employee’s family is interested in doing business with the Company, the criteria
as to whether to enter into or continue the business relationship and the terms and conditions of the relationship must be no less favorable
to the Company compared with those that would apply to an unrelated party seeking to do business with the Company under similar circumstances.
Employees should report any
situation involving family members that could reasonably be expected to give rise to a conflict of interest to their supervisor or the
Compliance Officer. For purposes of this Code, “family members” or “members of employee’s family” include
an employee’s spouse, parents, parents-in-law, children and siblings, whether by blood, marriage or adoption, and cousins of such
employee and his/her spouse, or anyone (other than domestic employees) who shares such employee’s home.
4
IV.Gifts and Entertainment
The giving and receiving of
appropriate gifts and entertainment may be considered common business practice. Appropriate business gifts and entertainment are welcome
courtesies designed to build relationships and understanding among business partners. However, gifts and entertainment should never compromise,
or appear to compromise, an employee’s ability to make objective and fair business decisions.
It is the responsibility of
employees to use good judgment in this area. As a general rule, employees may give or receive gifts or entertainment to or from customers
or suppliers only if the gift or entertainment is in compliance with applicable laws, regulations, and policies, insignificant in amount
and not given in consideration or expectation of any action by the recipient. All gifts and entertainment expenses made on behalf of the
Company must be properly accounted for on expense reports.
The Company encourages employees
to submit gifts received to the Company. While it is not mandatory to submit small gifts, gifts of over US$150 must be submitted immediately
to the organization performing compliance function of the respective entity of the Company.
An employee should contact
the Compliance Officer if he/she has any questions regarding any gifts or entertainment expenses. Bribes and kickbacks are criminal acts,
strictly prohibited by law. An employee must not offer, give, solicit or receive any form of bribe or kickback anywhere in the world.
V.ANTI-BRIBERY AND
FCPA Compliance
The U.S. Foreign Corrupt Practices
Act (“FCPA”) prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign
political candidates in order to obtain or retain business. A violation of FCPA does not only violate the Company’s policy but also
constitute a civil or criminal offense under FCPA. No employee shall give or authorize directly or indirectly any illegal payments to
government officials of any country. While the FCPA does, in certain limited circumstances, allow nominal “facilitating payments”
to be made, any such payment must be discussed with and approved by an employee’s supervisor in advance before it can be made.
No employee shall give or
authorize, directly or indirectly, any improper payments to any other person or entity to secure any improper advantage for the Company,
nor shall any employee solicit any improper payment from any other person or entity in exchange for any improper advantage.
VI.Protection and Use
of Company Assets
Employees should protect the
Company’s assets and ensure their efficient use for legitimate business purposes only. Theft, carelessness and waste have a direct
impact on the Company’s profitability and are strictly prohibited. Any use of the funds or assets of the Company, whether for personal
gain or not, for any unlawful or improper purpose is strictly prohibited.
5
To ensure the protection and
proper use of the Company’s assets, each employee should:
●exercise reasonable care to prevent theft, damage or misuse of the Company’s assets;
●promptly report any actual or suspected theft, damage or misuse of the Company’s assets;
●safeguard all electronic programs, data, communications and written materials from unauthorized access;
and
●use the Company’s assets only for legitimate business purposes.
Except as approved in advance
by the Chief Executive Officer or Chief Financial Officer of the Company, the Company prohibits political contributions (directly or through
trade associations) by any employee on behalf of the Company. Prohibited political contributions include:
●any contributions of the Company’s funds or other assets for political purposes;
●encouraging individual employees to make any such contribution; and
●reimbursing an employee for any political contribution.
VII.Intellectual Property
and Confidentiality
Employees should abide by
the Company’s rules and policies in protecting the intellectual property and confidential information, including the following:
●All inventions, creative works, computer software, and technical or trade secrets developed by an employee
in the course of performing the employee’s duties or primarily through the use of the Company’s assets or resources while
working at the Company shall be the property of the Company.
●Employees should maintain the confidentiality of information entrusted to them by the Company or entities
with which the Company has business relations, except when disclosure is authorized or legally mandated. Confidential information includes
all non-public information that might be of use to competitors, or harmful to the company or its business associates, if disclosed.
●The Company maintains a strict confidentiality policy. During an employee’s term of employment with
the Company, the employee shall comply with any and all written or unwritten rules and policies concerning confidentiality and shall fulfill
the duties and responsibilities concerning confidentiality applicable to the employee.
6
●In addition to fulfilling the responsibilities associated with his/her position in the Company, an employee
shall not, without obtaining prior approval from the Company, disclose, announce or publish trade secrets or other confidential business
information of the Company, nor shall an employee use such confidential information outside the course of his/her duties to the Company.
●Even outside the work environment, an employee must maintain vigilance and refrain from disclosing important
information regarding the Company or its business, business associates or employees.
●An employee’s duty of confidentiality with respect to the confidential information of the Company
survives the termination of such employee’s employment with the Company for any reason until such time as the Company discloses
such information publicly or the information otherwise becomes available in the public sphere through no fault of the employee.
●Upon termination of employment, or at such time as the Company requests, an employee must return to the
Company all of its property without exception, including all forms of medium containing confidential information, and may not retain duplicate
materials.
VIII.Accuracy of Financial
Reports and Other Public Communications
The Company will be required
to report its financial results and other material information about its business to the public and the SEC. It is the Company’s
policy to promptly disclose accurate and complete information regarding its business, financial condition and results of operations. Employees
must strictly comply with all applicable standards, laws, regulations and policies for accounting and financial reporting of transactions,
estimates and forecasts. Inaccurate, incomplete or untimely reporting will not be tolerated and can severely damage the Company and result
in legal liability.
Employees should be on guard
for, and promptly report, any possibility of inaccurate or incomplete financial reporting. Particular attention should be paid to:
●financial results that seem inconsistent with the performance of the underlying business;
●transactions that do not seem to have an obvious business purpose; and
●requests to circumvent ordinary review and approval procedures.
The Company’s senior
financial officers and other employees working in the finance department have a special responsibility to ensure that all of the Company’s
financial disclosures are full, fair, accurate, timely and understandable. Any practice or situation that might undermine this objective
should be reported to the Compliance Officer.
7
Employees are prohibited from
directly or indirectly taking any action to coerce, manipulate, mislead or fraudulently influence the Company’s independent auditors
for the purpose of rendering the financial statements of the Company materially misleading. Prohibited actions include but are not limited
to:
●issuing or reissuing a report on the Company’s financial statements that is not warranted in the
circumstances (due to material violations of U.S. GAAP, generally accepted auditing standards or other professional or regulatory standards);
●not performing audit, review or other procedures required by generally accepted auditing standards or
other professional standards;
●not withdrawing an issued report when withdrawal is warranted under the circumstances; or
●not communicating matters required to be communicated to the Company’s Audit Committee or Compliance
Officer.
IX.Company Records
Accurate and reliable records
are crucial to the Company’s business and form the basis of its earnings statements, financial reports and other disclosures to
the public. The Company’s records are a source of essential data that guides business decision-making and strategic planning. Company
records include, but are not limited to, booking information, payroll, timecards, travel and expense reports, e-mails, accounting and
financial data, measurement and performance records, electronic data files and all other records maintained in the ordinary course of
business.
All Company records must be
complete, accurate and reliable in all material respects. There is never an acceptable reason to make false or misleading entries. Undisclosed
or unrecorded funds, payments or receipts are strictly prohibited. An employee is responsible for understanding and complying with the
Company’s recordkeeping policy. An employee should contact the Compliance Officer if he/she has any questions regarding the recordkeeping
policy.
X.Compliance with Laws
and Regulations
Each employee has an obligation
to comply with the laws of the cities, provinces, regions and countries in which the Company operates. This includes, without limitation,
laws covering commercial bribery and kickbacks, patent, copyrights, trademarks and trade secrets, information privacy, insider trading,
offering or receiving gratuities, employment harassment, environmental protection, occupational health and safety, false or misleading
financial information, misuse of corporate assets and foreign currency exchange activities. Employees are expected to understand and comply
with all laws, rules and regulations that apply to their positions at the Company. If any doubt exists about whether a course of action
is lawful, the employee should seek advice immediately from the Compliance Officer.
8
XI.Discrimination and
Harassment
The Company is firmly committed
to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment based on race,
ethnicity, religion, gender, age, national origin or any other protected class. Any form of sexual harassment is also strictly forbidden.
For further information, employees should consult the Compliance Officer.
XII.FAIR DEALING
Each employee should endeavor
to deal fairly with the Company’s customers, suppliers, competitors and employees. No employee should take unfair advantage of anyone
through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice.
XIV.Health and Safety
The Company strives to provide
employees with a safe and healthy work environment. Each employee has responsibility for maintaining a safe and healthy workplace for
other employees by following environmental, safety and health rules and practices and reporting accidents, injuries and unsafe equipment,
practices or conditions. Violence or threats of violence are not permitted.
Each employee is expected
to perform his/her duty to the Company in a safe manner, not under the influence of alcohol, illegal drugs or other controlled substances.
The use of illegal drugs or other controlled substances in the workplace is prohibited.
XV.HUMAN RIGHTS
The Company is committed to
upholding internationally recognized human rights as outlined in United Nations’ Declaration of Human Rights and all applicable laws and
regulations. The Company respects and protects the freedom of association of its employees and strictly prohibits the use of child labor,
forced or compulsory labor, modern slavery and human trafficking in all forms. The Company respects the individual human rights of its
employees throughout their employment and in all other company activities. Additionally, the Company requires its suppliers to use reasonable
efforts to ensure that their parts and products do not contribute to human rights abuses, regardless of sourcing location.
XVi.aNTIRUST AND FAIR
COMPETITION
The Company is committed to
competing fairly and ensuring its business practice is in compliance with all applicable antitrust laws. The Company prohibits any exchange
of confidential or commercially sensitive information which may hinder fair competition between competitors or among self-owned stores,
joint-venture stores, partnership stores, and dealer stores. It is the Company’s policy to avoid practices that could have the effect
of limiting competition with competitors or among self-owned stores, joint-venture stores, partnership stores, and dealer stores. Prohibited
practices include any arrangement of price fixing, boycotting any third parties, and illegally allocating markets by product, territory
or customer.
9
XVIi.Violations of the
Code
All employees have a duty
to report any known or suspected violation of this Code, including any violation of laws, rules, regulations or policies that apply to
the Company. Reporting a known or suspected violation of this Code by others will not be considered an act of disloyalty, but an action
to safeguard the reputation and integrity of the Company and its employees.
If an employee knows of or
suspects a violation of this Code, it is such employee’s responsibility to immediately report the violation to the Compliance Officer,
who will work with the employee to investigate his/her concern. All questions and reports of known or suspected violations of this Code
will be treated with sensitivity and discretion. The Compliance Officer and the Company will protect the employee’s confidentiality
to the extent possible, consistent with the law and the Company’s need to investigate the employee’s concern.
It is the Company’s
policy that any employee who violates this Code will be subject to appropriate discipline, including termination of employment, based
upon the facts and circumstances of each particular situation. An employee’s conduct, if it does not comply with the law or with
this Code, can result in serious consequences for both the employee and the Company.
The Company strictly prohibits
retaliation against an employee who, in good faith, seeks help or reports known or suspected violations. An employee inflicting reprisal
or retaliation against another employee for reporting a known or suspected violation will be subject to disciplinary action, including
termination of employment.
XVIii.Waivers of the Code
Waivers of this Code will
be granted on a case-by-case basis and only in extraordinary circumstances. Waivers of this Code may be made only by the Board, or the
appropriate committee of the Board, and may be promptly disclosed to the public if so required by applicable laws and regulations and
rules of the Stock Exchange.
XiX.Conclusion
This Code contains general
guidelines for conducting the business of the Company consistent with the highest standards of business ethics. If employees have any
questions about these guidelines, they should contact the Compliance Officer. The Company expects all employees to adhere to these standards.
Each employee is separately responsible for his/her actions. Conduct that violates the law or this Code cannot be justified by claiming
that it was ordered by a supervisor or someone in higher management positions. If an employee engages in conduct prohibited by the law
or this Code, such employee will be deemed to have acted outside the scope of his/her employment. Such conduct will subject the employee
to disciplinary action, including termination of employment.
* * * * * * * * * * * * *
10
EX-FILING FEES
11
ea024654301ex-fee_gener.htm
FILING FEE TABLE
Exhibit 107
Calculation of Filing Fee Table
F-1
(Form Type)
The Generation Essentials Group
(Exact Name
of Registrant as Specified in its Charter)
Table 1—Newly Registered and Carry
Forward Securities
Security Type
Security Class Title
Fee Calculation
and Carry Forward Rule
Amount
Registered(1)
Proposed
Maximum Offering Price Per Unit
Maximum
Aggregate Offering Price
Fee
Rate
Amount
of Registration Fee
Carry
Forward Form Type
Carry
Forward File Number
Carry
Forward Initial effective date
Filing Fee Previously
Paid In Connection with Unsold Securities to be Carried Forward
Newly Registered Securities
Fees to be Paid
Equity
Class A Ordinary Share, par value
$0.0000000264856557377049 per share, underlying Warrants (Primary Offering)(2)
Other
11,120,000
$11.50(3)
$127,880,000
0.0001531
$19,578.43
Equity
Class A Ordinary Share, par value
$0.0000000264856557377049 per share, underlying Warrants (Primary Offering)(4)
Other
5,100,000
$11.50 (3)
$58,650,000
0.0001531
$8,979.32
Equity
Class A Ordinary Share, par value
$0.0000000264856557377049 per share (Secondary Offering)(5)
Rule 457(c)
57,401,944
$7.965 (6)
$457,206,483.96
0.0001531
$69,998.32
Equity
Warrants to purchase Class A Ordinary Share (Secondary Offering)(7)
Other
11,120,000
—
—
—
— (8)
Equity
Class A Ordinary Share, par value
$0.0000000264856557377049 per share, underlying Warrants (Secondary Offering)(9)
Other
11,120,000
—
—
—
— (8)
Fee Previously Paid
Carry Forward Securities
Carry Forward Securities
Total Offering Amounts
$643,736,483.96
$98,556.06
Total Fee Offsets
$31,603.00
Net Fee Due
$66,953.06
(1)Pursuant to Rule 416(a) under the Securities Act, this Registration
Statement shall also cover any additional Class A ordinary shares of the Registrant (“Class A Ordinary Shares”) that become
issuable as a result of any stock dividend, stock split, recapitalization, or other similar transaction effected without the receipt
of consideration that results in an increase to the number of outstanding Class A Ordinary Shares, as applicable.
(2)Consists of 11,120,000 Class A Ordinary Shares issuable by the
Registrant upon the exercise of the Sponsor Warrants (as defined in this Registration Statement).
(3)Calculated pursuant to Rule 457(g) under the Securities Act,
based on the exercise price of the warrants.
(4)Consists of 5,100,000 Class A Ordinary Shares issuable by the
Registrant upon the exercise of Public Warrants (as defined in this Registration Statement).
(5)Consists of an aggregate of 57,401,944 outstanding Class A Ordinary
Shares registered for resale by the Selling Securityholders named in this Registration Statement.
(6)Estimated solely for the purpose of calculating the registration
fee in accordance with Rule 457(c) under the Securities Act, based on the average of the high and low prices of Class A Ordinary Share
as reported on June 17, 2025, which was approximately $7.965 per share.
(7)Consists of 11,120,000 Sponsor Warrants registered for resale
by the Selling Securityholders named in this Registration Statement.
(8)Pursuant to Rule 457(g) of the Securities Act, no separate fee
is recorded for the warrants and the entire fee is allocated to the underlying Class A Ordinary Share.
(9)Consists of 11,120,000 Class A Ordinary Shares issuable upon
exercise of the Sponsor Warrants registered for resale by the Selling Securityholders named in this Registration Statement.
Table 2—Fee Offset Claims and Sources
Registrant or
Filer Name
Form or
Filing
Type
File Number
Initial Filing
Date
Filing Date
Fee Offset
Claimed
Security Type
Associated
with Fee Offset
Claimed
Security Title
Associated
with Fee Offset
Claimed
Unsold
Securities
Associated with
Fee Offset
Claimed
Unsold
Aggregate
Offering
Amount
Associated with
Fee Offset
Claimed
Fee Paid
with Fee
Offset
Source
Rules 457(b) and 0-11(a)(2)
Fee Offset Claims
Fee Offset Sources
Rule 457(p)
Fee Offset Claims
The Generation Essentials Group
Form F-4
333-286501 (1)
4/11/2025
$31,603.00
Equity
Shares underlying Warrants included as part of the Units
16,220,000
$190,235,459
Fee Offset Sources
The Generation Essentials Group
Form F-4
333-286501
4/11/2025
$58,597
(1)The Registrant previously registered 16,220,000 Class A Ordinary
Shares issuable on the exercise of the Public Warrants and Sponsor Warrants under a registration statement on Form 4 (File No. 333-286501)
(the “Prior Registration Statement”). None of these warrants have been exercised and, consequently, none of those Class A
Ordinary Shares have been issued or sold under the Prior Registration Statement. The Registrant has completed the offering that included
these unissued Class A Ordinary Shares under the Prior Registration Statement.
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12
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