Lianhua Supermarket Holdings Co., Ltd. announced that its two major shareholders—Bailian Group Co., Ltd. and Shanghai Bailian Group Co., Limited—are planning to terminate the Equity Entrustment Agreement signed on 17 April 2015.

The agreement currently allows Shanghai Bailian to exercise shareholder rights (excluding income and disposal rights) over 614.16 million domestic shares of Lianhua Supermarket originally held by Bailian Group, in return for a fixed annual fee of RMB 300,000. These entrusted shares account for roughly 43.91% of Lianhua Supermarket’s total issued capital. Shanghai Bailian itself directly holds 224.21 million shares, or 15.15% of total equity. Bailian Group is the controlling shareholder of Shanghai Bailian, with an approximate 50.51% stake.

Upon completion of the termination, all shareholder rights attached to the 614.16 million entrusted shares will revert to Bailian Group, and Shanghai Bailian will cease to consolidate Lianhua Supermarket into its financial statements.

The Securities and Futures Commission has granted Bailian Group a waiver from the obligation to make a mandatory general offer under Note 6(a) to Rule 26.1 of the Hong Kong Takeovers Code; therefore, the planned termination will not trigger a general offer requirement.

The two parties have not yet executed a formal termination agreement, and the proposal remains subject to further deliberation, necessary decision-making procedures, and regulatory approvals. Lianhua Supermarket stated that it will issue additional announcements in accordance with Hong Kong listing rules.

Investors are advised to exercise caution when trading the company’s securities.