<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
Man Sang Holdings, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
MAN SANG HOLDINGS, INC.
21/F RAILWAY PLAZA
39 CHATHAM ROAD SOUTH
TSIMSHATSUI, KOWLOON, HONG KONG
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 12, 1998
To the Shareholders of Man Sang Holdings, Inc. :
An Annual Meeting of Shareholders of Man Sang Holdings, Inc. (the
"Company") will be held at 21/F, Railway Plaza, 39 Chatham Road South,
Tsimshatsui, Kowloon, Hong Kong, at 10:00 a.m., on Wednesday, August 12, 1998
for the following purposes:
To elect seven Directors of the Company to hold office until the next
annual meeting of shareholders or until their successors are duly elected and
qualified.
To ratify the appointment of Deloitte Touche Tohmatsu as the Company's
independent accountants.
To transact such other business as may properly come before the meeting or
any adjournment thereof.
Shareholders of record at the close of business on July 13, 1998 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you are
planning to attend the meeting, you are urged to complete, date and sign the
enclosed proxy card and return it promptly.
YOUR VOTE IS IMPORTANT! PLEASE PROMPTLY MARK, DATE, SIGN, AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE. IF YOU ARE ABLE TO ATTEND THE MEETING AND WISH
TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY IS
VOTED.
By Order of the Board of Directors
/s/ Sophia Ho
Sophia Ho
Secretary
Hong Kong
July 13, 1998
<PAGE> 3
MAN SANG HOLDINGS, INC.
21/F RAILWAY PLAZA
39 CHATHAM ROAD SOUTH
TSIMSHATSUI, KOWLOON, HONG KONG
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 12, 1998
PURPOSE
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Man Sang Holdings, Inc., a Nevada
corporation (the "Company"), to be voted at the 1998 Annual Meeting of
Shareholders of the Company and at any adjournment thereof (the "Annual
Meeting"). The Annual Meeting is scheduled to be held at 21/F, Railway Plaza, 39
Chatham Road South, Tsimshatsui, Kowloon, Hong Kong, on Wednesday, August 12,
1998 at 10:00 a.m. local time. The accompanying enclosed notice of the Annual
Meeting, this Proxy Statement and the enclosed proxy are being mailed to
shareholders on or about July 17, 1998. All of the expenses in connection with
soliciting proxies from shareholders, including the reimbursement of brokerage
firms and others for their expenses in forwarding proxies and this Proxy
Statement to the beneficial owners of the Company's common stock, will be borne
by the Company.
PROXIES AND REVOCATION OF PROXIES
The shares represented by any proxy in the enclosed form, if such proxy is
properly executed and is received by the Company, and not properly revoked,
prior to or at the Annual Meeting prior to the closing of the polls, will be
voted in accordance with the specifications made thereon. Proxies on which no
specification has been made by the shareholder will be voted FOR the election to
the Board of Directors of the nominees of the Board of Directors named herein,
and FOR the ratification of the appointment of the designated independent
accountants. Any proxy given pursuant to this solicitation may be revoked by the
person giving it anytime before it is voted. Proxies may be revoked by (i)
filing with the Secretary of the Company, at or before the taking of the vote at
the Annual Meeting, a written notice of revocation bearing a later date than the
date of the proxy; or (ii) attending the Annual Meeting and voting in person.
VOTING SECURITIES
The Board of Directors has fixed July 13, 1998 as the record date (the
"Record Date") for the determination of holders of common stock, $.001 par
value, of the Company (the "Common Stock") entitled to notice of and to vote at
the Annual Meeting. At the close of business on that date, there were
outstanding and entitled to vote 4,305,960 shares of the Common Stock. The
holders of the Common Stock will be entitled to one vote per share of the Common
Stock registered in their names on the books of the Company at the close of
business on the Record Date. In addition to the Common Stock, there were 100,000
shares of Series A Preferred Stock (the "Series A Preferred Stock") outstanding
and entitled to vote as of the Record Date. The holders of Series A Preferred
Stock, as a class, are entitled to one-third voting control, or an aggregate of
2,152,980 votes at the Annual Meeting, in all matters voted on by the
shareholders of the Company.
<PAGE> 4
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
COMMON STOCK
The information furnished in the following table indicates beneficial
ownership of shares of the Company's Common Stock, as of July 8, 1998, by (i)
each shareholder of the Company who is known by the Company to be beneficial
owner of more than 5% of the Company's Common Stock, (ii) each director, nominee
for director and Named Officer (defined in "Information Regarding Executive
Officers" in Proposal 1 below) of the Company, individually, and (iii) all
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
- ------------------- ----------------------- ----------------
<S> <C> <C>
Cafoong Limited(2)(3)..................................... 2,750,000 64%
Cheng Chung Hing, Ricky(2)(3)............................. 2,750,000 64%
Cheng Tai Po(2)(3)........................................ 2,750,000 64%
Yan Sau Man, Amy(3)....................................... -0- *
Hung Kwok Wing, Sonny(3).................................. -0- *
Ng Hak Yee, Patrick(3).................................... -0- *
Lai Chau Ming, Matthew(3)................................. -0- *
Yuen Ka Lok, Ernest(3).................................... -0- *
Ho Suk Han, Sophia(3)..................................... -0- *
All executive officers and directors as a group (8
persons)................................................ 2,750,000 64%
</TABLE>
- ---------------
* Less than 1%
(1) This disclosure is made pursuant to certain rules and regulations
promulgated by the Securities and Exchange Commission and the number of
shares shown as beneficially owned by any person may not be deemed to be
beneficially owned for other purposes. Unless otherwise indicated in these
footnotes, each named individual has sole voting and investment power with
respect to such shares of Common Stock, subject to community property laws,
where applicable.
(2) Cafoong Limited owns directly 1,357,875 shares of Common Stock of the
Company. Cafoong Limited also owns indirectly 1,392,125 shares of Common
Stock of the Company by virtue of holding all issued and outstanding shares
of certain British Virgin Islands companies which own such shares of Common
Stock of the Company. Because Cheng Chung Hing, Ricky and Cheng Tai Po own
60% and 40%, respectively, of all issued and outstanding stock, and are
directors, of Cafoong Limited, they may be deemed to be the beneficial
owners of the shares of Common Stock of the Company which are owned,
directly or indirectly, by Cafoong Limited.
(3) Address is 21st Floor, Railway Plaza, 39 Chatham Road South, Tsimshatsui,
Kowloon, Hong Kong.
PREFERRED STOCK
The following table is furnished as of July 8, 1998, to indicate beneficial
ownership of the Company's Series A Preferred Shares by each shareholder of the
Company who is known by the Company to be a beneficial owner of more than 5% of
the Company's Series A Preferred Shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------- ----------------------- ----------------
<S> <C> <C>
Cafoong Limited(1)(2)..................................... 100,000 100%
</TABLE>
- ---------------
(1) Cheng Chung Hing, Ricky and Cheng Tai Po own 60% and 40%, respectively, of
all issued and outstanding stock, and are directors, of Cafoong Limited and,
accordingly, are deemed to be the beneficial owners of the shares of Series
A Preferred Stock of the Company owned by Cafoong Limited.
(2) Address is 21st Floor, Railway Plaza, 39 Chatham Road South, Tsimshatsui,
Kowloon, Hong Kong.
2
<PAGE> 5
CHANGES IN CONTROL
To the knowledge of management, there are no present arrangements or
pledges of securities of the Company which may result in a change in control of
the Company.
QUORUM AND VOTING PROCEDURES
The presence at the Annual Meeting, in person or by proxy, of the holders
representing a majority of voting powers of the outstanding shares of the Common
Stock and Series A Preferred Stock entitled to vote at the Annual Meeting is
required to constitute a quorum for the transaction of business at the Annual
Meeting. Abstentions and broker non-votes will be considered represented at the
meeting for the purpose of determining a quorum. Shares of Common Stock and
Series A Preferred Stock represented by a properly dated, signed and returned
proxy will be counted as present at the Annual Meeting for purposes of
determining a quorum, without regard to whether the proxy is marked as casting a
vote or abstaining.
The shares represented by each proxy will be voted in accordance with the
instructions given therein. Where no instructions are indicated, the proxy will
be voted for the nominees to the Board of Directors named in this Proxy
Statement, for the ratification of the appointment of Deloitte Touche Tohmatsu
as the Company's independent accountants; and at the discretion of the persons
named in the accompanying proxy on any other business that may properly come
before the Annual Meeting.
Under applicable law and the Company's Articles of Incorporation and
Bylaws, if a quorum is present at the Annual Meeting, the seven nominees for
election to the Board of Directors who receive a plurality of votes cast for the
election of directors present in person or represented by proxy shall be elected
directors. The appointment of Deloitte Touche Tohmatsu as the Company's
independent accountants will be ratified if a plurality of votes cast in the
Annual Meeting in person or by proxy are in favor of Proposal 2 hereof.
Abstentions and broker non-votes will not affect the outcome of the voting
because they will not represent votes cast.
The Board of Directors is not aware of any matters that are expected to
come before the Annual Meeting other than those referred to in this Proxy
Statement. If any other matter should come before the Annual Meeting, the
persons named in accompanying proxy intend to vote such proxies in accordance
with their best judgment.
Under the laws of the State of Nevada, dissenters rights are not available
to shareholders of the Company with respect to any matter scheduled to be
brought before the Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
Seven directors are to be elected to serve until the next annual meeting of
shareholders or until their successors are elected and shall have been
qualified. The Board of Directors has nominated Cheng Chung Hing, Ricky; Cheng
Tai Po; Yan Sau Man, Amy; Hung Kwok Wing, Sonny; Ng Hak Yee, Patrick; Lai Chau
Ming, Matthew and Yuen Ka Lok, Ernest to serve as directors (the "Nominees").
Directors shall be elected by shareholders holding a plurality of the votes
represented by the shares of Common Stock and Series A Preferred Stock present
at the Annual Meeting. In the event that any one of the Nominees is unable or
declines to serve as a director, the Board of Directors intends to substitute
another person of their choice as nominee, in his place and stead, or to present
such lesser number of directors in accordance with the Company's Bylaws. The
Board of Directors has no reason to believe that any Nominee will be unable to
serve or decline to serve as a director. Any vacancy occurring between
shareholders' meetings, including vacancies resulting from an increase in the
number of directors, may be filled by the Board of Directors. A director elected
to fill a vacancy shall hold office until the next annual shareholders' meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE TO THE BOARD OF DIRECTORS.
3
<PAGE> 6
INFORMATION REGARDING NOMINEES
The following table sets forth, as of July 8, 1998, the name and age,
position held with the Company and term of office, of each director or executive
officer of the Company and the period or periods during which he or she has
served in his or her respective position(s).
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD TERM OF OFFICE
---- --- ----------------------------------- ----------------
<S> <C> <C> <C>
CHENG Chung Hing, Ricky.......... 37 President and Chairman of the Board 1/96 - present
Chief Executive Officer 1/98 - present
CHENG Tai Po..................... 46 Vice Chairman of the Board 1/96 - present
YAN Sau Man, Amy................. 35 Vice President and Director 1/96 - present
HUNG Kwok Wing, Sonny............ 34 Vice President and Director 11/96 - present
NG Hak Yee, Patrick.............. 36 Chief Financial Officer 12/95 - 3/96
and
3/97 - present
Director 9/97 - present
LAI Chau Ming, Matthew........... 45 Director 11/96 - present
YUEN Ka Lok, Ernest.............. 35 Director 11/96 - present
</TABLE>
TERM OF OFFICE
Each of the directors of the Company serves until his or her successor is
duly elected at the next annual meeting of shareholders or until his or her
earlier resignation or removal.
INFORMATION REGARDING EXECUTIVE OFFICERS
The following table sets forth the names, ages and offices of the present
executive officers of the Company. The periods during which such persons have
served in such capacities and information with respect to non-employee directors
are indicated in the description of business experience of such persons below.
<TABLE>
<CAPTION>
NAME AGE POSITION HELD
- ---- --- -----------------------
<S> <C> <C>
Cheng Chung Hing, Ricky..................................... 37 President, Chairman and
Chief Executive Officer
Cheng Tai Po................................................ 46 Vice Chairman
Yan Sau Man, Amy............................................ 35 Vice President
Hung Kwok Wing, Sonny....................................... 34 Vice President
Ng Hak Yee, Patrick......................................... 36 Chief Financial Officer
Ho Suk Han Sophia........................................... 29 Secretary
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS AND EXECUTIVE OFFICERS
CHENG Chung Hing, Ricky, co-founder of the Man Sang Group, has served as
Chairman of the Board of Directors and President of the Company since January 8,
1996, and of Man Sang International (B.V.I.) Limited ("Man Sang BVI") since
December 1995. He was appointed a member of the Compensation Committee of the
Board of Directors on September 8, 1997. On January 2, 1998, he was appointed
Chief Executive Officer of the Company. Mr. Cheng was appointed as Chairman and
a Director of Man Sang International Limited ("MSIL"), an indirect subsidiary
listed on The Stock Exchange of Hong Kong Limited, on August 8, 1997 and August
4, 1997, respectively. Prior to the reorganization of the Group in late 1995
which culminated in the Company's issuance of Common Stock and Series A
Preferred Stock in exchange for all the outstanding securities of Man Sang BVI
in January 1996 (the "Group Reorganization"), he had served as chairman and
president of various companies within the Man Sang Group. Mr. Cheng has over 15
years' experience in the pearl business and is responsible for overall planning,
strategic formulation and business development of the Company.
4
<PAGE> 7
CHENG Tai Po, co-founder of the Man Sang Group, has served as Vice Chairman
of the Company since January 8, 1996 and of Man Sang BVI since December 1995. He
was appointed as Deputy Chairman and a Director of MSIL on August 8 and August
4, 1997, respectively. Prior to the Group Reorganization, he had served as
vice-chairman of various companies within the Man Sang Group. Mr. Cheng has over
15 years' experience in the pearl business and is responsible for purchasing and
production of Chinese cultured pearls as well as overall planning, strategic
formulation and business development of the Company.
YAN Sau Man, Amy, has served as Vice President and a Director of the
Company since January 8, 1996 and of Man Sang BVI since December 1995. She was
appointed as a Director of MSIL on August 12, 1997. Ms. Yan joined the Man Sang
Group in 1984 and has been responsible for overall marketing and sales
activities of the Company.
HUNG Kwok Wing, Sonny, has served as Vice President and a Director of the
Company since November 1, 1996. He was appointed as a Director of MSIL on August
12, 1997. Prior to joining the Company, Mr. Hung was employed as Deputy Manager
of Dah Sing Bank from February 1996 to October 1996 and as Branch Manager of The
Hongkong and Shanghai Banking Corporation Limited from 1991 to February 1996.
Mr. Hung is responsible for formulation and execution of corporate policies and
participates in the development and implementation of corporate planning
programs. Mr. Hung received his bachelor's degree in Finance and Banking from
San Francisco State University and master's degree in Business Administration
from the University of Strathclyde, U.K.
NG Hak Yee, Patrick, has served as Chief Financial Officer of the Company
since March 7, 1997 and as a Director of the Company since September 8, 1997. He
was appointed as Company Secretary and a Director of MSIL on August 8, 1997 and
August 12, 1997 respectively. He initially joined the Man Sang Group as
Controller in April 1994 and served as Chief Financial Officer of Man Sang BVI
from December 1995 to March 1996. Mr. Ng is responsible for financial management
and participates in formulation and execution of corporate policies. From April
1996 to March 1997, Mr. Ng first joined Termbray Industries International
(Holdings) Ltd., a listed company in Hong Kong, and served as Group Financial
Controller, and then established and managed an independent accounting firm in
which he is still a principal, although he is no longer involved in the
day-to-day operations of the firm. From April 1993 to March 1994, Mr. Ng was the
Financial Controller of Paxar Far East Limited in Hong Kong. Mr. Ng was an
auditor at KPMG Peat Marwick, an international accounting firm from 1985 to
1991. He is a certified public accountant, a fellow of the Association of
Chartered Certified Accountants and also an associate of the Hong Kong Society
of Accountants.
LAI Chau Ming, Matthew, has served as a Director of the Company since
November 1996. He was appointed a Member of the Compensation Committee of the
Board of Directors on September 8, 1997. Mr. Lai is currently employed as Senior
Manager of Vickers Ballas Hong Kong Limited ("Vickers Ballas"). Prior to his
joining Vickers Ballas in July 1996, Mr. Lai served from 1972 to 1996 as a
Senior Manager of Sun Hung Kai Investment Company Limited, one of the biggest
investment companies in Hong Kong. Mr. Lai has over 25 years' experience in
investment. He is experienced in the areas of financial management and planning.
YUEN Ka Lok, Ernest, has served as a Director of the Company since November
1996. He was appointed Chairman of the Compensation Committee of the Board of
Directors on September 8, 1997. Mr. Yuen was also appointed a Director of MSIL
on August 12, 1997. Mr. Yuen is a solicitor and is currently a Partner in the
law firm of Messrs. Yuen & Partners. Mr. Yuen joined Messrs. Ivan Tang & Co.
("ITC") as a Consultant in August 1994 and became a Partner in January 1996.
ITC, Hong Kong office changed its practice name to Yuen & Partners in August,
1997. Prior to his joining ITC, from March 1992 to August 1994, Mr. Yuen was
employed as Assistant Solicitor at Messrs. Van Langenbery & Lau ("VLL") and
Messrs. AB Nasir, respectively. Prior to his joining VLL, Mr. Yuen was an
Articled Clerk at Messrs. Robin Bridge & John Liu. From 1985 to 1987, Mr. Yuen
was an audit trainee at Price Waterhouse, an international accounting firm. Mr.
Yuen is experienced in civil and criminal litigations as well as the general
commercial transactions.
Ho Suk Han, Sophia, has served as the Secretary of the Company since
January 1998. Miss Ho has over 7 years' experience in company secretarial work
in an international accounting firm and various listed
5
<PAGE> 8
companies in Hong Kong. She is an associate of The Hong Kong Institute of
Company Secretaries and The Institute of Chartered Secretaries and
Administrators in Hong Kong Limited.
FAMILY RELATIONSHIPS
Cheng Chung Hing, Ricky and Cheng Tai Po are brothers. Other than the
foregoing, there are no family relationships among the above-named directors and
executive officers of the Company.
COMPLIANCE WITH SECTION 16(a) OF EXCHANGE ACT
Based solely on a review of copies of the forms provided to the Company, or
written representations that no other filing of forms was required, the Company
has found that: (i) Cafoong Limited became the beneficial owner of more than 10%
of the Common Stock on January 8, 1996 and such company filed Form 3 in respect
thereof in February 1997; (ii) Cheng Chung Hing, Ricky and Cheng Tai Po became
the indirect beneficial owners of more than 10% of the Company's Common Stock on
January 8, 1996 by virtue of their respective holding of 60% and 40% of all the
issued and outstanding stock of Cafoong Limited and such individuals filed Forms
3 in respect thereof on February 20, 1997; and (iii) Cheng Chung Hing, Ricky;
Cheng Tai Po; Yan Sau Man, Amy; Ng Hak Yee, Patrick; Hung Kwok Wing, Sonny; and
Sio Kam Seng, Sam were granted non-qualified stock options to purchase Common
Stock on September 16, 1997 and such individuals filed Forms 4 in respect
thereof on April 9, 1998. See "Executive Compensation -- Option Grants in Fiscal
Year 1998".
COMMITTEES AND ATTENDANCE OF THE BOARD OF DIRECTORS
A Compensation Committee was set up on September 8, 1997 with Yuen Ka Lok,
Ernest as Chairman, and Cheng Chung Hing, Ricky and Lai Chau Ming, Matthew as
Committee Members. The Compensation Committee is to deliberate and stipulate the
compensation policy for the Company and to administer the 1996 Stock Option
Plan. During the year ended March 31, 1998, the Compensation Committee held one
meeting to grant stock options to directors and certain senior employees of the
Company. See "Executive Compensation -- Option Grants in Fiscal Year 1998".
Besides the Compensation Committee, the Company presently maintains no other
standing committees of its Board of Directors. The Board intends to evaluate the
creation of a standing Audit Committee at such time as it deems appropriate.
During the year ended March 31, 1998, the Board of Directors held five
meetings and passed six unanimous written consents of action. Yuen Ka Lok,
Ernest and Lai Chau Ming, Matthew do not engage in daily management of the
Company and hence they attended less than 75% of the aggregate of the total
number of meetings as mentioned.
EXECUTIVE COMPENSATION
Overview and the Compensation Committee of the Board of Directors
While for convenience of reference this Proxy Statement and the annual
report on Form 10-K has used "the Company" when referring to the overall
business of the Group, the Company itself actually has no employees. For fiscal
1998, all executive officers received their salaries and half of their bonus (if
applicable) from MSIL. In September 1997, the Company's Board of Directors
established a Compensation Committee. However, the total salary and bonus of
each executive officer for fiscal 1998 was determined by Cheng Chung Hing,
Ricky; Cheng Tai Po; Yan Sau Man, Amy; Hung Kwok Wing, Sonny and Ng Hak Yee,
Patrick (the "Five Directors") at the beginning of fiscal 1998. The Five
Directors, who are also directors of MSIL, in determining the overall
compensation of the executive officers, (i) recognized that from fiscal 1994
through fiscal 1997, the Company was consistently profitable -- its net income
increased by 175.6%, its gross profit margin increased from 24.6% to 38.9%, and
its net book value per share increased from HK$9.42 to HK$43.92, (ii) considered
the importance of attracting and retaining the highly skilled executive officers
in the management team that has been responsible for such financial performance,
(iii) acknowledged the efforts, skills and responsibilities of, and
contributions made by, each such executive officer, and (iv) considered the
competitiveness of the Company's compensation packages.
6
<PAGE> 9
With respect to the Chairman and the Vice Chairman, the Five Directors
acknowledged that they have brought to the Company not only their expertise and
personal relationships in the pearl industry, but also their vision, foresight
and efforts to bring about the Company's financial performance over the past
several years, and to steer the Company toward the more profitable cultured
pearl business. The Five Directors also took into account the need to retain
such highly qualified officers by providing competitive compensation packages,
and granted a bonus to each of Cheng Chung Hing, Ricky, President, Chief
Executive Officer and Chairman of the Board and Cheng Tai Po, Vice Chairman.
In September 1997, the newly established Compensation Committee of the
Company's Board of Directors, the Company's Board of Directors, and the Board of
MSIL recognized that over the past several years, the price of the Company's
Common Stock has not reflected the Company's year-after-year improvements in
financial performance. As an incentive to the executives to improve the
relationship between stock price and financial performance, when MSIL entered
into employment agreements with certain executives of the Company, the salaries
of these executives were fixed at their 1998 levels, but each such executive was
granted options to purchase the Company's Common Stock and MSIL's shares. See
"Executive Compensation -- Employment Agreements" and "Executive
Compensation -- Option Grants in Fiscal Year 1998." One of the Compensation
Committee's objectives is to make a portion of the executives' compensation more
dependent on the performance of the Company's Common Stock, in addition to its
financial performance and results of operations.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth information concerning cash and non-cash
compensation paid or accrued for services in all capacities to the Company and
its subsidiaries during the three years ended March 31, 1998 of the Company's
Chief Executive Officer and each of its other most highly compensated executive
officers whose compensation exceeded $100,000 (the "Named Officers") during
fiscal 1998.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------------
------------------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING
SALARY BONUS COMPENSATION(3) OPTIONS GRANTED(5)
NAME AND PRINCIPAL POSITION YEAR(1) ($) ($) ($) (#)
- --------------------------- ------- ------- ------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Cheng Chung Hing, Ricky...... 1998 388,100 323,400(2) 92,135(4) 100,000&
Chairman of the Board, (4) 11,800,000
President and CEO 1997 388,100 323,400 45,650 0
1996 194,049 -- 41,000(4) N/A
Cheng Tai Po................. 1998 388,100 323,400(2) -- 100,000&
Vice Chairman 11,800,000
1997 388,100 323,400 -- 0
1996 194,049 -- -- N/A
Yan Sau Man, Amy............. 1998 129,366 -- -- 100,000&
Vice President and Director 1997 5,000,000
1996 124,191 -- -- 0
88,394 -- -- N/A
Hung Kwok Wing, Sonny........ 1998 129,366 -- -- 100,000&
Vice President and 4,000,000
Director(6)
Ng Hak Yee, Patrick.......... 1998 129,366 -- -- 100,000&
Chief Financial Officer and 4,000,000
Director(6)
Sio Kam Seng, Sam(7)......... 1998 100,976 -- -- 100,000&
(resigned on Jan 2, 1998) 2,000,000
1997 129,366 -- -- 0
1996 55,727 -- -- N/A
</TABLE>
- ---------------
(1) Information is shown for the March 31 fiscal years of the Company, and,
prior to January 8, 1996, of Man Sang BVI, which employed the Named
Officers. Each of the Named Officers began serving the Company in his or her
capacity as indicated in the description of business experience above. The
compensation shown for the Named Officers for the period commencing on April
1, 1995 through January 7, 1996 was paid by Man Sang BVI.
(2) Half of the bonus of each of Cheng Chung Hing, Ricky and Cheng Tai Po for
fiscal 1998 is paid by the Company, and half of which is paid by MSIL.
(3) Although the officers receive certain perquisites such as Company provided
life insurance and medical insurance, the value of such perquisites did not
exceed the lesser of $50,000 or 10% of the officer's salary and bonus.
(4) In addition to the amounts referred to in note (1) above, Cheng Chung Hing,
Ricky is provided the right to use a leasehold property of the Company at no
cost as his personal residence. The estimated fair rental value of such
leasehold property was $92,135. The estimated fair rental value is based on
the "rateable value" assessed by the Rating and Valuation Department of The
Government of Hong Kong Special Administrative Region. According to the Hong
Kong Rating Ordinance (Cap. 116), rateable value is an estimate of the
annual rental of the relevant premises at a designated valuation reference
date. When assessing a rateable value, all factors which would affect rental
value, such as age and size of the premises, quality of finishes, location,
transport facilities, amenities and open market rents, are considered.
8
<PAGE> 11
(5) Each Named Executive received options from both the Company and MSIL. See
"Executive Compensation -- Option Grants in Fiscal Year 1998."
(6) In fiscal 1998, each of Hung Kwok Wing, Sonny and Ng Hak Yee, Patrick
became, for the first time, a person whose compensation is to be reported in
this table. Therefore, their compensation in prior years is not reported.
(7) Subsequent to the resignation of Sio Kam Seng, Sam, the options granted to
him by the Company and MSIL expired on April 2, 1998, and February 2, 1998
respectively.
OPTION GRANTS IN FISCAL YEAR 1998
The Company
The Compensation Committee and the Board recognized the need for
continuously providing competitive compensation and strong incentives to the
directors and senior employees of the Company who have made significant
contribution to the operations and financial performance of the Company, and to
increase the portion of each executive's compensation that is related to the
performance of the Company's stock. In this respect, on September 16, 1997,
pursuant to the Company's 1996 Stock Option Plan, the Committee granted at no
consideration to certain directors and senior employees non-qualified options
(half of which vest on September 16, 1998 and half of which vest on September
16, 1999) to purchase a total of 850,000 shares of the Company's Common Stock,
at an exercise price of $1.22 per share (representing 85% of the fair market
value of the Common Stock on the date of grant as determined pursuant to Article
6.2 of the 1996 Stock Option Plan). On the same day, the Board unanimously
adopted a Consent of Action to approve, ratify and confirm such grant of options
to Cheng Chung Hing, Ricky, Chairman and President of the Company, and a member
of the Compensation Committee. These options are not intended to be eligible for
special tax treatment as an Incentive Stock Option under Section 422 of the
Internal Revenue Code of 1986, as amended.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------- ANNUAL RATE OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES EXERCISE EXPIRATION ---------------------
NAME AND PRINCIPAL POSITION GRANTED IN 1998 PRICE DATE 5% 10%
--------------------------- ---------- ------------- --------- ---------- --------- ---------
(#) (%) ($/SHARE) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Cheng Chung Hing, Ricky.......... 100,000 11.76 1.22 9/16/2007 110,932 248,905
Chairman of the Board,
President and Chief Executive
Officer
Cheng Tai Po..................... 100,000 11.76 1.22 9/16/2007 110,932 248,905
Vice Chairman
Yan Sau Man, Amy................. 100,000 11.76 1.22 9/16/2007 110,932 248,905
Vice President
Hung Kwok Wing, Sonny............ 100,000 11.76 1.22 9/16/2007 110,932 248,905
Vice President
Ng Hak Yee, Patrick.............. 100,000 11.76 1.22 9/16/2007 110,932 248,905
Chief Financial Officer
Sio Kam Seng, Sam*............... 100,000 11.76 1.22 9/16/2007 110,932 248,905
(Chief Executive Officer,
resigned on Jan 2, 1998)
</TABLE>
- ---------------
* Subsequent to the resignation of Sio Kam Seng, Sam, the options granted to him
expired on April 2, 1998, pursuant to the Company's 1996 Stock Option Plan.
MSIL
MSIL adopted a share option scheme (the "Share Option Scheme") on September
8, 1997. The Share Option Scheme is administered by the MSIL Board of Directors,
whose decisions are final and binding on all parties.
9
<PAGE> 12
Options to subscribe for MSIL shares of nominal value of HK$0.10 were
granted to the directors and certain senior employees of MSIL on October 16 and
December 3, 1997 at a subscription price of the HK$0.6208 and the HK$0.446 per
share respectively. The subscription price represented 80% of the average
closing prices of the shares on The Stock Exchange of Hong Kong Limited as
stated in such exchange's daily quotation sheets for the five trading days
immediately preceding the date on which the options were offered to the
directors and employees. The options can be exercised in a period of two years
commencing on the expiry of six months after the options are accepted in
accordance with the Share Option Scheme, and expiring on the last day of such
two-year period.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED ANNUAL
NUMBER OF TOTAL MSIL RATE OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED OPTION TERM
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION -----------------------
NAME AND PRINCIPAL POSITION GRANTED IN 1998 PRICE DATE 5% 10%
- --------------------------- ---------- ------------- ----------- ---------- ---------- ----------
(#) (%) (HK$/SHARE) (HK$) (HK$)
<S> <C> <C> <C> <C> <C> <C>
Cheng Chung Hing, Ricky... 10,000,000 21.16 0.6208 4/19/2000 2,561,285 3,651,080
Chairman of the Board, 1,800,000 3.81 0.446 6/08/2000 332,235 473,290
President and Chief
Executive Officer
Cheng Tai Po.............. 10,000,000 21.16 0.6208 4/19/2000 2,561,285 3,651,080
Vice Chairman 1,800,000 3.81 0.446 6/08/2000 332,235 473,290
Yan Sau Man, Amy.......... 5,000,000 10.58 0.6208 4/19/2000 1,280,643 1,825,540
Vice President
Hung Kwok Wing, Sonny..... 4,000,000 8.47 0.6208 4/19/2000 1,024,514 1,460,432
Vice President
Ng Hak Yee, Patrick....... 4,000,000 8.47 0.6208 4/19/2000 1,024,514 1,460,432
Chief Financial Officer
Sio Kam Seng, Sam*........ 2,000,000 4.23 0.6208 4/19/2000 512,257 730,216
(Chief Executive Officer,
resigned on Jan 2, 1998)
</TABLE>
- ---------------
* Subsequent to the resignation of Sio Kam Seng, Sam, the options granted to him
expired on February 2, 1998, pursuant to MSIL's Share Option Scheme.
PERFORMANCE GRAPH
The following graph summarizes cumulative total shareholder return
(assuming reinvestment of dividends) on the Common Stock of the Company and IWI
Holding Limited ("IWI"), a peer issuer selected by the Company. The Company's
Common Stock was first registered under Section 12(g) of the Securities Exchange
Act of 1934, as amended, on June 17, 1996. As there was no trading of the
Company's Common Stock on June 17 and June 18, 1996, the trading price of the
Common Stock of the Company was not available. Therefore, the measurement period
hereto commenced on June 19, 1996 and ended on March 31, 1998, the Company's
1998 fiscal year end date. The graph assumes that $100 was invested on June 19,
1996.
The comparisons in this graph are required by the Securities and Exchange
Commission and are not intended to forecast or be indicative of future stock
price performance or the financial performance of the
10
<PAGE> 13
Company. Shareholders are encouraged to review the Financial Statements of the
Company contained in the accompanying annual report on Form 10-K for the fiscal
year ended March 31, 1998.
<TABLE>
<CAPTION>
Measurement Period Man Sang Holdings Inc. IWI Holding Limited
(Fiscal Year Covered) Common Stock Common Stock
<S> <C> <C>
6/19/96 100.00 100.00
3/31/97 15.57 46.67
3/31/98 8.93 8.32
</TABLE>
As there is no broad equity market index for the OTC Bulletin Board where
the Company's Common Stock is traded and there is no published industry or
line-of-business index for the pearl or jewellery business in which the Company
is engaged, the Company has selected IWI as a peer issuer for comparison. IWI is
engaged primarily in the design, assembly, merchandising and wholesale
distribution of jewellery and whose shares are traded on NASDAQ.
EMPLOYMENT AGREEMENTS
The Company itself has no employment agreement with any of its officers or
employees. However, MSIL entered into Service Agreements with each of Cheng
Chung Hing, Ricky; Cheng Tai Po; Yan Sau Man, Amy; Hung Kwok Wing, Sonny; and Ng
Hak Yee, Patrick, on September 8, 1997. The major terms of these agreements are
as follows:-
- each service agreement is for an initial term of 3 years commencing on
September 1, 1997, and may be terminated by either party by giving the
other written notice of not less than 3 months;
- the annual basic salary payable to each of Cheng Chung Hing Ricky, Cheng
Tai Po, Yan Sau Man Amy, Hung Kwok Wing, Sonny and Ng Hak Yee, Patrick,
shall be HK$3 million, HK$3 million, HK$1 million, HK$1 million and HK$1
million respectively, subject to annual review by the Board of MSIL every
year; and
11
<PAGE> 14
- each of Cheng Chung Hing, Ricky, Cheng Tai Po, Yan Sau Man, Amy, Hung
Kwok Wing, Sonny and Ng Hak Yee, Patrick is also entitled to a
discretionary bonus in respect of each financial year. The amount of such
discretionary bonuses shall be determined by the MSIL Board each year,
provided that the aggregate of all discretionary bonuses payable by MSIL
to its executive directors in any financial year shall not exceed 10% of
the net profits (after tax and after extraordinary items) of MSIL for
such year as shown in its audited accounts.
COMPENSATION OF DIRECTORS
No employee of the Company receives any compensation for his service as a
Director. The non-employee directors of the Company were compensated for their
services as directors in fiscal 1998 as follows:-
<TABLE>
<CAPTION>
NON-EMPLOYEE DIRECTORS DIRECTORS' FEE
- ---------------------- --------------
<S> <C>
Lai Chau Ming, Matthew...................................... $12,937
Yuen Ka Lok, Ernest......................................... $19,564
</TABLE>
No additional compensation of any nature was paid to any non-employee
director of the Company for their services as directors. In addition, MSIL paid
$13,256 to Alexander Reid Hamilton (who is not a director of the Company) for
his services as a director of MSIL.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Cheng Chung Hing, Ricky, Chairman of the Board, Chief Executive Officer and
President of the Company, is a member of the Compensation Committee. The other
two members are not executives of the Company or any of its subsidiaries, but
Yuen Ka Lok, Ernest, is a partner of Messrs. Yuen & Partners, one of the legal
advisors to the Company and its subsidiaries, and Lai Chau Ming, Matthew, is a
Senior Manager at Vickers Ballas, an affiliate of the Sponsor and Manager, and
one of the underwriters, in MSIL's IPO. Messrs. Yuen & Partners receives its
standard professional fees in the provision of legal services to the Company and
its subsidiaries, and Vickers Ballas' affiliate and MSIL dealt with each other
in an arms-length manner.
Except as described in this and the immediately preceding paragraph, no
executive officer of the Company, (i) served as a member of the compensation
committee (or other board committee performing similar functions or, in the
absence of any such committee, the board of directors) of another entity, one of
whose executive officers served on the Company's Compensation Committee, (ii)
served as a director of another entity, one of whose executive officers served
on the Company's Compensation Committee, or (iii) served as a member of the
compensation committee (or other board committee performing similar functions
or, in the absence of any such committee, the board of directors) of another
entity, one of whose executive officers served as a director of the Company.
Both Cheng Tai Po and Yan Sau Man, Amy, serve as a director in several companies
of which Cheng Chung Hing, Ricky is also a director; however, neither of them is
a Member of the Compensation Committee of the Company's Board of Directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past three years, the Company has loaned funds and received
advances from Cheng Chung Hing, Ricky and Cheng Tai Po, the founders and
principal shareholders of the Company. Advances to Cheng Chung Hing, Ricky
totaled $-0- as of March 31, 1998. However, during fiscal 1998, the Company
advanced to Cheng Tai Po, Vice Chairman of the Company, a maximum amount of
$65,700. The maximum amount advanced to Cheng Chung Hing, Ricky during the past
three years was $356,268. Advances to Cheng Tai Po totaled $-0- as of March 31,
1998. The maximum amount advanced to Cheng Tai Po during the past three years
was $524,913. All such advances were made on an interest free basis and without
definitive repayment terms.
During the same period, Cheng Chung Hing, Ricky and Cheng Tai Po advanced
funds to the Company on an interest free basis and repayable on demand. Advances
from Cheng Chung Hing, Ricky totaled $-0- and
12
<PAGE> 15
advances from Cheng Tai Po totaled $-0- as of March 31, 1998. The maximum amount
owed to Cheng Chung Hing, Ricky and to Cheng Tai Po during the past three years
was $724,993 and $-0- respectively.
Finally, during the past three years, Cheng Chung Hing, Ricky has utilized
a leasehold property of the Company as his personal residence at no cost to Mr.
Cheng. See "Executive Compensation".
Lai Chau Ming, Matthew, a Director of the Company and a Member of the
Compensation Committee of the Company's Board, is a Senior Manager of Vickers
Ballas, an affiliate of the Sponsor and Manager, and one of the underwriters, in
MSIL's IPO.
Yuen Ka Lok, Ernest, a director of both the Company and MSIL, and the
Chairman of the Compensation Committee of the Board of Directors of the Company,
is a partner of Messrs. Yuen & Partners, one of the legal advisors to the Group.
Messrs. Yuen & Partners receives its standard professional fees in the provision
of legal services to the Group.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF
DELOITTE TOUCHE TOHMATSU AS INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Deloitte Touche Tohmatsu as
independent accountants for the fiscal year ended March 31, 1998 and has further
directed that the selection of such independent accountants be submitted for
ratification by the shareholders at the Annual meeting. Deloitte Touche Tohmatsu
will have one or more representatives at the Annual Meeting. Such
representatives will have an opportunity to make a statement, if he or she so
desires, and will be available to respond to appropriate questions from
shareholders.
SHAREHOLDERS PROPOSALS FOR 1999 ANNUAL MEETING
Any shareholder proposal intended for inclusion in proxy materials for the
1999 annual meeting of the shareholders must be received in proper form by the
Company at its principal office no later than March 22, 1999.
OTHER MATTERS
The Board of Directors is not aware of any business other than the
aforementioned matters that will be presented for consideration at the Annual
Meeting. If other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote thereon in
accordance with their best judgment.
ANNUAL REPORTS
A copy of the Company's 1998 Annual Report to shareholders, which is the
Company's annual report on Form 10-K for the fiscal year ended March 31, 1998
accompanies this Proxy Statement. The Annual Report is not to be treated as part
of the proxy solicitation material or as having been incorporated by reference
therein.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON ARE URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY IN THE REPLY ENVELOPE PROVIDED.
By Order of the Board of Directors
/s/ Sophia Ho
Sophia Ho
Secretary
Hong Kong
July 13, 1998
13
<PAGE> 16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MAN SANG HOLDINGS, INC.
21/F RAILWAY PLAZA
39 CHATHAM ROAD SOUTH
TSIMSHATSUI, KOWLOON, HONG KONG
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 12, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The
undersigned hereby appoints Cheng Chung Hing, Ricky and Cheng Tai Po,
and each of them, as Proxies, with full power of substitution in each
of them, in the name, place and stead of the undersigned, to vote at
an Annual Meeting of Shareholders (the "Meeting") of Man Sang
Holdings, Inc., a Nevada corporation (the "Company"), on August 12,
1998, at 10:00 a.m., or at any postponements or adjournments thereof,
in the manner designated below, all of the shares of the Company's
common stock that the undersigned would be entitled to vote as if
personally present.
1. GRANTING _______ WITHHOLDING _______ authority to vote for the
election as directors of the Company the following nominees:
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME.)
Cheng Chung Hing, Ricky; Cheng Tai Po; Yan San Man, Amy; Hung Kwok
Wing, Sonny;
Ng Hak Yee, Patrick; Lai Chau Ming, Matthew and Yuen Ka Lok, Ernest.
2. Proposal to ratify the appointment of Deloitte Touche Tohmatsu as the
Company's independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting or any adjournments
thereof.
(continued, and to be signed, on other side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(continued from other side)
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN
ABOVE. IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSAL 2 AND FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS. IF ANY
OTHER MATTER SHOULD COME BEFORE THE MEETING, THIS PROXY WILL BE VOTED
IN ACCORDANCE WITH THE BEST JUDGMENT OF PROXIES.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS AN ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, OR CORPORATE OFFICER,
PLEASE INDICATE THE CAPACITY IN WHICH SIGNING.
Dated: , 1998
------------------
-------------------------------
SIGNATURE
-------------------------------
SIGNATURE IF HELD JOINTLY
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
