History, Reorganization and Corporate Structure
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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT HISTORY, REORGANIZATION AND CORPORATE STRUCTURE OVERVIEW Our Company was incorporated in the Cayman Islands on May 19, 2020 as an exempted company with limited liability. Our Group primarily engages in the provision of (i) consumer ophthalmic services and (ii) basic ophthalmic services through our hospitals and optical centers. For details of our facilities, see “— Our Operation Network — Our Hospitals — Our Facilities” and “— Our Operation Network — Our Optical Centers — Our Facilities” in the section headed “Business” in this document. Our history could be traced back to the period when the grandfather of our Chairman, Mr. Zhang Xinghuan, started to practice as a Chinese medicine physician. He was born in 1893 and studied medical science when he was young. Subsequently, by integrating the practices of Traditional Chinese medicine and western medicine, he founded a Chinese medical clinic named Zhonghetang in 1921. Following his father’s footprint, our founder, Mr. Zhang Chaoju, a pioneer of modern ophthalmology in Inner Mongolia and an entrepreneur in the field of Chinese ophthalmological services, founded the predecessor of our Company, a clinic providing ophthalmic services in Baotou, Inner Mongolia in 1988. Since then, we have deeply rooted in North China and built a broad network of ophthalmic hospitals and optical centers spanning across five provinces or autonomous region in China. Our Individual Shareholders, namely, Mr. Zhang Bozhou, Ms. Zhang Xiaoli, Mr. Zhang Junfeng and Mr. Zhang Fengsheng, being the children, and Ms. Zhang Yumei, being the niece, inherited the business from Mr. Zhang Chaoju prior to the Track Record Period. As of the Latest Practicable Date, we operated a network of 17 ophthalmic hospitals and 23 optical centers. In addition to our organic growth in the Inner Mongolia and other regions, we expanded our business through acquisitions. Our acquisitions of hospitals were mainly concentrated in the regions of Zhejiang Province, which allowed us to obtain the controlling rights of Ningbo Hospital, Xiangshan Hospital and Ninghai Hospital. In preparation for the [REDACTED], we implemented a series of corporate restructurings such that our Company became the holding company of our current businesses. For details of our business development and corporate restructurings, see “— Key Milestones” and “— Corporate Reorganization” below. KEY MILESTONES The following is a summary of key development milestones of our businesses: Month/Year Milestone Event 1988 Our founder established the predecessor of our Company, a clinic providing ophthalmic services in Baotou, Inner Mongolia 1994 We conducted one of the first cataract surgeries and myopia correction surgeries in Inner Mongolia 1995 We were one of the first to use laser therapy technology on the fundus of eye in Inner Mongolia 1998 We conducted one of the first excimer laser surgeries in Inner Mongolia 2009 Baotou Hospital was relocated to its new premises totaling an area of approximately 17,000 square feet May 2010 We expanded outside of Inner Mongolia and established Jiaxing Hospital — 114 — THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT HISTORY, REORGANIZATION AND CORPORATE STRUCTURE Month/Year Milestone Event July 2012 Baotou Hospital was designated as a national key clinical specialty construction project unit November 2015 We became a designated unit of the “Brightness Action” in Inner Mongolia, and conducted cataract restoration and myopia prevention and control work throughout the region, which achieved both social and economic benefits December 2015 We introduced our first round of external investors and further improved our group organizational structure and a consolidated group management and control system The pharmaceutical preparation room of Baotou Hospital first received its Medical Institution Pharmaceutical Preparation Permit (醫療機構製劑許可證) December 2017 to We decided to expand our business into eastern Zhejiang, and acquired June 2018 Xiangshan Hospital and Ningbo Hospital in December 2017 and Ninghai Hospital in June 2018 April 2019 The “Belt and Road: Bright Tour” project was jointly initiated by us, the Red Cross Society of Inner Mongolia Autonomous Region (內蒙古自治區紅十字會) and Chinese Red Cross Foundation (中國紅十字基金會) to help cure poor cataract patients in Mongolia July 2020 We signed a cooperation agreement with the Red Cross Society of Inner Mongolia Autonomous Region (內蒙古自治區紅十字會) and certain other parties to help train Mongolian ophthalmologists and facilitate the development of ophthalmology in Mongolia April 2020 to We signed a cooperation agreement with Inner Mongolia Medical University October 2020 (內蒙古醫科大學) and Baotou Medical College (包頭醫學院) in April and October, respectively, which laid the talent pools for our further development Please refer to the section headed “Business — Awards, Recognitions and Social Responsibility” in this document for further details of the major awards, recognitions and accreditations received by our hospitals and optical centers. — 115 — THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT HISTORY, REORGANIZATION AND CORPORATE STRUCTURE OUR GROUP Our Company Our Company was incorporated in the Cayman Islands on May 19, 2020 as an exempted company with limited liability with a share capital of HK$380,000 divided into 38,000,000 shares with a par value of HK$0.01 each. Upon incorporation, our Company allotted and issued at par value one Share to Harneys Fiduciary (Cayman) Limited, an Independent Third Party, 1,673,002 Shares to Sihai Medical Management, 1,535,320 Shares to Jutong Medical Management, 1,191,053 Shares to Xiwang Medical Management, 1,191,053 Shares to Guangming Medical Management, 172,133 Shares to Sitong Medical Management, 92,391 Shares to Goodhope Capital Investment, 881,380 Shares to Xiamen Chaoxi, 640,359 Shares to Light Medical Limited, 425,000 Shares to Xiamen Juludazhou Equity Investment, 652,174 Shares to Orchid Asia VII, 434,783 Shares to Riverhead Capital I, 652,174 Shares to FountainVest Chuangying, 271,739 Shares to Riverhead Runfeng, 62,479 Shares to Ming Da Management, and 124,959 Shares to Vilelarr Management, respectively. The one Share held by Harneys Fiduciary (Cayman) Limited was subsequently transferred to Sihai Medical Management on the same day. Upon completion of the above allotment and transfer, the shareholding structure of our Company was as follows: Number of Shareholding Shareholder Shares held Percentage Sihai Medical Management ................................ 1,673,003 16.73% Jutong Medical Management ............................... 1,535,320 15.35% Xiwang Medical Management .............................. 1,191,053 11.91% Guangming Medical Management. .......................... 1,191,053 11.91% Sitong Medical Management ............................... 172,133 1.72% Goodhope Capital Investment .............................. 92,391 0.92% Xiamen Chaoxi ........................................... 881,380 8.81% Light Medical Limited .................................... 640,359 6.40% Xiamen Juludazhou Equity Investment ...................... 425,000 4.25% Orchid Asia VII .......................................... 652,174 6.52% Riverhead Capital I ....................................... 434,783 4.35% FountainVest Chuangying .................................. 652,174 6.52% Riverhead Runfeng ....................................... 271,739 2.72% Ming Da Management ..................................... 62,479 0.62% Vilelarr Management ...................................... 124,959 1.25% Total ................................................... 10,000,000 100% On September 18, 2020, our Company allotted and issued 652,174 Shares to Orchid Asia VII, pursuant to the agreement entered into between the then existing shareholders of Chaoju Medical Technology and Orchid Asia VII on November 14, 2018. See the section headed “— [REDACTED] Investments — 2. Principal terms of the [REDACTED] Investments and [REDACTED] Investors’ rights” for details of the [REDACTED] investment. For details of changes in the share capital of our Company, see the section headed “Statutory and General Information — A. Further Information about our Group — 2. Changes in our share capital” in Appendix IV to this document. — 116 — THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT HISTORY, REORGANIZATION AND CORPORATE STRUCTURE Our principal subsidiaries We currently operate and manage our businesses through our subsidiaries in the PRC. The following table sets out the details of all our principal subsidiaries during the Track Record Period and as of the Latest Practicable Date: Date of Establishment and Commencement of Entity Business Registered Capital Principal Business Activity Chaoju Medical Technology . November 16, 2015 RMB135.29 Provision of hospital management million services and enterprise management consulting services Baotou Hospital .......... May12,2016; RMB16.88 Provision of ophthalmic service December 6, 2016 million (Commencement