HISTORY, REORGANIZATION AND CORPORATE STRUCTURE OUR HISTORY AND DEVELOPMENT History and Development Our business operations commenced in 1987 when Jinan Chemicals was established in Zibo, Shandong Province, the PRC, to engage in the production of small quantities of AHF. Jinan Chemicals was then under collective ownership with a management team which included Mr. Zhang Jianhong (head of the factory) and Mr. Liu Chuanqi (deputy head of the factory). Mr. Cui Tongzheng joined the management team at the end of the 1980s. Jinan Chemicals was funded by Jinan Chemical Factory ( ) and by Huantai Constructions Engineering (Tang Shan) Company ( ), an enterprise under collective ownership which was ultimately controlled by the PRC government. The principal businesses of Huantai Constructions Engineering (Tang Shan) Company are construction, decoration and renovation. Huantai Constructions Engineering (Tang Shan) Company funded Jinan Chemicals because Jinan Chemicals was an enterprise which was wholly owned by the PRC county government and operated under the guidance of the PRC county government. The PRC county government decided to inject more funds into Jinan Chemicals as part of its then policy to develop Huantai’s economy. Huantai Constructions Engineering (Tang Shan) Company was chosen by Huantai county government as one of the candidates which could invest in Jinan Chemicals. Jinan Chemical Factory was established in 1914 and, after the establishment of the PRC government in 1949, became a state-owned enterprise ( ) ultimately owned by the PRC government. Jinan Chemicals was established in 1987 by Huantai Constructions Engineering (Tang Shan) Company and Jinan Chemicals Factory. However Jinan Chemical Factory was not registered with the Huantai Administration for Industry and Commerce as a contributor to Jinan Chemicals. Jinan Chemical Factory contributed to Jinan Chemicals by way of equipment and technology know-how whilst Huantai Constructions Engineering (Tang Shan) Company contributed by way of cash and land. Jinan Chemical Factory’s principal business was the production of organic fluorine, nitro compound, and organic chlorine, and was nominated as National Second-Tier Enterprise in 1988 by the PRC government. It was involved in the management of Jinan Chemicals to the extent Huantai Tang Shan Economic Planning Committee ( ), being the department in charge of Jinan Chemical Factory, was responsible for appointment of members of the management team of Jinan Chemicals. This management team was responsible for the carrying out of Jinan Chemicals’ business at the time and was the governing body of Jinan Chemicals. As Jinan Chemicals was a collectively owned enterprise, there was no equity interest ownership in Jinan Chemicals. By the mid 1990s, Mr. Zhang Jianhong, Mr. Liu Chuanqi and Mr. Cui Tongzheng decided to expand the operations of Jinan Chemicals, and formed a partnership with Macrolink as a strategic investor. Macrolink, a Malaysian incorporated company, owns a variety of business interests in Malaysia, Hong Kong and China. Its investments in China include participation in the ceramic, real estate, catering and chemicals industries. In August 2007, Macrolink sold its indirect controlling stake in Macro-Link International Holdings Limited, a company listed on the Main Board of the Hong Kong Stock Exchange and which, with effect from November 15, 2007 has passed a special resolution to change its name to JLF Investment Company Limited ( ), but continues to be its substantial shareholder. Macro-Link International Holdings Limited is an investment company with its principal subsidiaries engaged in the manufacturing and trading of grape wine. The controlling shareholder of Macrolink has been Mr. Fu Kwan, who owns a 40% interest in Macrolink. The shareholders of the remaining 60% shareholding in Macrolink are Mr. Wu Xiang Dong ( )asto 15%, Mr. Fang Ming Li ( ) as to 5%, Mr. Yang Yun Hua ( ) as to 26%, Mr. Zeng Xian Hui ( ) as to 6%, Mr. Zeng Xian Guang ( ) as to 6% and Mr. Li Bing Kun ( ) as to 2%. Save for Zeng Xian Hui and Zeng Xian Guang who are brothers, and Wu Xiang Dong who is a relative of 93 HISTORY, REORGANIZATION AND CORPORATE STRUCTURE Mr. Fu Kwan, the shareholders of Macrolink are independent of each other. Mr. Fu Kwan has been the chairman, executive director and single largest shareholder of Macrolink and some of the other shareholders (apart from Mr. Fu Kwan), namely Mr. Zeng Xian Hui, Mr. Yang Yan Hua, Mr. Zeng Xian Guang and Mr. Li Bing Kun, who together hold 40% of Macrolink, have confirmed that throughout the Track Record Period and so long as they continue to be shareholders of Macrolink, they had and will vote in favour of resolutions supported by Mr. Fu Kwan, thus giving Mr. Fu Kwan effective control of Macrolink throughout the Track Record Period. Further details of the backgrounds of our founders and management team are set out in the section headed “Directors, Senior Management and Employees” in this prospectus. Set out below is the company structure chart of Macrolink as at June 30, 2007: Fu Kwan Wu Xiang Dong Fang Ming Li Yang Yun Hua Zeng Xian HuiZeng Xian Guang Li Bing Kun 40% 15% 5% 26% 6% 6% 2% Macrolink After approximately ten years’ production of AHF, the management team decided to expand the scope of business of Jinan Chemicals to include the production of downstream fluorochemical products in order to meet the growing market demand for such products and capture new market opportunities. Accordingly, Dongyue Chemicals was established in December 1996 in Zibo, Shandong Province, the PRC, as a sino-foreign joint venture company with registered capital and total investment being RMB23,580,000. In addition to production and sales of AHF, Dongyue Chemicals also commenced the production and sales of a series of fluorochemical products, mainly refrigerants. The shareholders of Dongyue Chemicals then were Zibo Dongyue Fluorine and Macrolink, which held 65.73% and 34.27%, respectively, and contributed RMB15,500,000 and RMB8,080,000 to Dongyue Chemicals’ then registered capital, respectively. Set out below is the company structure chart of Dongyue Chemicals at the time when it was established in December 1996: Zibo Dongyue Macrolink Fluorine 65.73% 34.27% Dongyue Chemicals The then management team of Dongyue Chemicals consisted of Mr. Zhang Jianhong, Mr. Liu Chuanqi and Mr. Cui Tongzheng. 94 HISTORY, REORGANIZATION AND CORPORATE STRUCTURE On February 27, 1993, Zibo Dongyue Fluorine was established as a sino-foreign joint venture, with a registered capital of US$1,500,000. It was principally engaged in the business of manufacturing AHF. The 66% equity interest in Zibo Dongyue Fluorine was then held by Zibo Tangshan Constructions Company Limited ( ), an enterprise under collective ownership and ultimately controlled by the PRC government, and the remaining 34% equity interest held by Hong Kong Wah Fai Industrial Company Limited ( ). The ultimate owners of Zibo Tangshan Construction Company Limited and Hong Kong Wah Fai Industrial Company Limited are independent third parties. Zibo Tangshan Construction Company Limited then changed its name to Shandong Wanxin Group Company Limited ( ) in 1997, and was reorganized again in January 2002 upon approval by CSRC to transform from a collectively owned enterprise to a limited liability company called Shandong Tongji Wanxin Construction Company Limited ( ). Set out below is the company structure chart of Zibo Dongyue Fluorine at the time when it was established in February 1993: Hong Kong Zibo Tangshan Wah Fai Construction Industrial Company Company Limited Limited 66% 34% Zibo Dongyue Fluorine As most of the business activities of Jinan Chemicals were then assumed by Zibo Dongyue Fluorine, after the establishment of Zibo Dongyue Fluorine, Jinan Chemicals was deregistered on December 21, 1993 subject to the approval issued by Huantai Administration for Industry and Commerce. 95 HISTORY, REORGANIZATION AND CORPORATE STRUCTURE The management team of Dongyue Chemicals, including Zhang Jianhong, Cui Tongzheng, Liu Chuanqi, did not hold any equity interest in Dongyue Chemicals prior to June 29, 2000. On June 29, 2000, Dongyue Chemicals obtained regulatory approval from the Zibo Foreign Economic Relation and Trade Commission ( ) to change its equity holders to Shandong Wanxin Group Company Limited ( ) as to 33.5% equity interest and Zibo Huantai Dadi as to 19.5%, Zibo Huantai Dawei as to 12.7%, and Macrolink as to 34.3%. Hong Kong Wah Fai Industrial Company Limited sold its equity interests in Dongyue Chemicals as it decided to conduct investments in industries other than manufacturing chemicals, whilst Shandong Wanxin Group Company Limited decided to reduce its equity interest in light of its then economical policy as a collectively owned enterprise. The considerations involved for these transactions were the corresponding value of the paid- up registered capital and were funded by internal financial resources of the respective purchasers . The total registered capital then was RMB23,580,000. Set out below is the company structure chart of Dongyue Chemicals as at June 29, 2000: Shandong Zibo Zibo Wanxin Group Huantai Huantai Macrolink Company Dadi Dawei Limited 33.5% 19.5% 12.7% 34.3% Dongyue Chemicals In 2004, Zibo Huantai Dawei was an investment vehicle for the sole purpose to invest in Dongyue Chemicals. The investment fund of Zibo Huantai Dawei was contributed by 192 employees of Dongyue Chemicals. Mr. Zhang Jianhong, Mr. Cui Tongzheng and Mr. Liu Chuanqi were among the 192 employees of Dongyue Chemicals and each of them held 4.33%, 13.3% and 6.67% (24.3% in aggregate) of the interest in Zibo Huantai Dawei respectively. Together with certain family members of Mr. Zhang Jianhong (wife and brothers-in-law) and Mr. Liu Chuanqi (son) who held 11% of the interest in Zibo Huantai Dawei in total, the economic interest held by these 3 shareholders and their relatives amounted to 35.3% in total. The interests in Zibo Huantai Dawei held by the remaining employee shareholders range from 0.1% to 3% and are registered through the names of six nominee shareholders.