Important Notice Regarding the Implementation of the Uncertificated Securities Market Regime in Hong Kong

(1)   Implementation Date of the Uncertificated Securities Market (USM)

The Securities and Futures Commission ("SFC") has announced that the Uncertificated Securities Market ("USM") will be formally implemented on 16 November 2026. The USM initiative provides an efficient means for investors to hold and manage securities in their own names and electronically, using platforms that are operated by Approved Securities Registrars (ASRs) and connected to systems of Hong Kong Securities Clearing Company Limited (HKSCC).

(2)   Scope of Securities Covered by the USM Regime

The USM initiative applies only to "Prescribed Securities", being securities that:

a)     are listed on the SEHK; and

b)      fall within one of the following categories:

• shares – shares of both Hong Kong incorporated and non-Hong Kong incorporated companies are covered;
• depositary receipts;
• stapled securities;
• interests in SFC-authorised collective investment schemes (CIS) – these include listed real estate investment trusts (REITs), but exclude exchange-traded funds (ETFs) unless they are withdrawable from the Central Clearing and Settlement System (CCASS);
• subscription warrants to subscribe for any of the above types of securities; and
• rights under a rights issue to subscribe for any of the above types of securities.

Callable Bull/Bear Contracts ("CBBCs"), derivative warrants and ETFs that cannot be withdrawn from CCASS do not fall within the scope of Prescribed Securities.

(3)   Arrangements for Participating Securities

The USM regime will not cover all listed companies simultaneously.

Prescribed Securities constituted under the laws of Hong Kong, Mainland China, Bermuda or the Cayman Islands will be subject to specified implementation timelines:

a)     Prescribed Securities that are listed for the first time after the implementation of the USM regime (i.e. IPO securities) must be issued and held in uncertificated form from the date of listing.

b)     Prescribed Securities already listed as at the implementation date of the USM regime will be subject to a five-year transition period commencing from the implementation date, during which they must become Participating Securities. The relevant implementation date for each issuer will be announced separately by the issuer.

To facilitate an orderly transition under item (b) above, Approved Securities Registrars, Hong Kong Securities Clearing Company Limited ("HKSCC") and SEHK will develop a detailed implementation timetable. Such timetable will take into account factors including the size of the issuer, the volume of title instruments in circulation, upcoming corporate actions, and whether amendments to issue terms are required.

(4)   No Change to Existing Arrangements for Securities Held Through Our Company

Where clients currently hold Hong Kong-listed securities through securities accounts maintained with our Company, the implementation of the USM regime will not affect existing arrangements:

1.     Clients may continue to hold and trade securities through our Company;

2.     The existing CCASS and nominee structure will remain in place;

3.     Clients are not required to change their method of shareholding; and

4.     Clients are not required to open a USI account.

(5)   Existing Physical Share Certificates Remain Valid

For clients who currently hold physical share certificates in their own names:

1.     Existing share certificates will remain valid;

2.     Clients may continue to hold the relevant securities in certificated form;

3.     The USM regime does not require investors to convert existing physical share certificates into uncertificated form; and

4.     Dematerialisation is entirely voluntary.

(6)   Uncertificated Holdings as an Additional Option

Following implementation of the USM, investors will be able to choose from three methods of holding securities:

1)     Hold physical share certificates in their own names;

2)     Hold securities through a broker (for example our Company) or a bank within CCASS;

3)     Hold securities electronically in their own names through a USI account maintained with an Approved Securities Registrar (ASR).

Investors choosing the third option will be able to hold securities directly in their own names and exercise shareholder rights directly.

(7)   Matters to Note for Clients Choosing Uncertificated Holdings

Clients who choose to hold Participating Securities in uncertificated form should note that:

• A USI account must be opened with the relevant Approved Securities Registrar (ASR);
• As different issuers of Participating Securities may appoint different ASRs, investors may be required to open separate USI Accounts with different ASRs;
• Service fees may be charged by the relevant ASRs;
• Clients must properly safeguard their login credentials and electronic authentication tools.

(8)   Transfer of Securities from a USI Account to your Securities Account in our Company

When a client wishes to sell Participating Securities held in uncertificated form:The client must submit a transfer-in instruction to our Company;

1. Our Company will submit the transfer application through CCASS;
2. The client must confirm the transfer within the specified period as required by the Approved Securities Registrar (failure to complete the confirmation within the prescribed period may result in cancellation of the transfer application);
3. The securities may only be sold or used for trade settlement after the transfer is completed.
4. For transfers involving a USI account, the client must make a No Change in Beneficial Ownership (NCBO) declaration.

(9)   Transfer of Securities from your Securities Account in our Company to your USI Account

When a client transfers uncertificated securities from the securities account in our Company to a USI account:

1. The client must submit a transfer-out instruction to our Company;
2. Our Company will submit the transfer application through CCASS;
3. The client must confirm the transfer within the specified period as required by the Approved Securities Registrar (failure to complete the confirmation within the prescribed period may result in cancellation of the transfer application);
4. For transfers involving a USI account, the client must make a No Change in Beneficial Ownership (NCBO) declaration.

(10)         Fees and Charges

Following implementation of the USM, various fees and charges will be revised, including:

• Stock Custody Fee;
• Transfer and Registration Fee;
• Transactional Dematerialisation Fee;
• Stock Withdrawal Fee; and
• Scrip Fee.

Please refer to our prevailing General Service Fees and Transaction Charges for the applicable fees.

For "Prescribed Securities" held with our Company, our Company will charge a stock custody fee at an annualised rate of 0.005%. The stock custody fee is accrued daily (Note 1) based on the daily portfolio value of the client's account. The daily portfolio value is determined by: (i) the Prescribed Securities held in the client's account at the end of that calendar day; and (ii) the latest available closing prices of such securities at the end of that day. The custody fee accrued during each calendar month will be aggregated and debited on the last business day of that calendar month (Note 2).

Note 1: The Custody Fee accrues on every calendar day, including Saturdays, Sundays and Hong Kong public holidays (i.e. non-trading days of the Hong Kong stock market). The daily fee is calculated on the market value of the settled Prescribed Securities held in the client's account at the end of that day, based on the latest available closing prices; for non-trading days, the closing prices of the most recent trading day apply.

Note 2: The Custody Fee is charged on the last business day of each month. If the last business day of a month is not the last calendar day of that month, the fee for the remaining non-business days of that month will be accrued on the last business day and charged in one lump sum. For example, the last business day of January 2027 is 29 January (Friday); the fee for 30 and 31 January (Saturday and Sunday) will be accrued on 29 January and charged together with the rest of the fee for January.

Fees for Transfer, Deposit and Withdrawal of Securities

*USI account holders may be required to pay Transfer & Registration Fees to the relevant approved securities registrar. Please contact the relevant registrar for details.

All fees are subject to the latest charges announced by the relevant institutions and our Company's prevailing fee schedule.

(11)   Dematerialised Securities Generally Cannot Be Reconverted into Physical Certificates

Clients should note that:

• Participating Securities that have been dematerialised and held in uncertificated form generally cannot be converted back into physical share certificates;
• Except under special circumstances (such as delisting), once securities are dematerialised, they will continue to be held in electronic form thereafter.

In the event of any discrepancy between the Chinese and English versions of this notice, the Chinese version shall prevail.

Yours faithfully,

CITIC Securities Brokerage (HK) Limited

28 October 2026