Exhibit (a)-(1)

ACTIONS SEMICONDUCTOR CO., LTD

November 7, 2016

Shareholders of Actions Semiconductor Co., Ltd

Re: Notice of Extraordinary General Meeting of Shareholders

Dear Shareholder:

You are cordially invited to attend an extraordinary general meeting of shareholders of Actions Semiconductor Co., Ltd (the “Company”) to be held on December 9, 2016 at 2:00 p.m. (Hong Kong Time). The meeting will be held at 8F, No. 437, Ruiguang Road, Neihu District, Taipei, Taiwan. The attached notice of the extraordinary general meeting and proxy statement provide information regarding the matters to be acted on at the extraordinary general meeting, including at any adjournment or postponement thereof.

On September 12, 2016, the Company entered into an agreement and plan of merger (the “merger agreement”) with Supernova Investment Ltd., an exempted company with limited liability incorporated under the laws of the Republic of Mauritius (“Parent”), which is owned 100% by Chen Hsuan-Wen (a.k.a. Niccolo Chen), the former CEO of the Company, and Starman Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of Parent (“Merger Sub”). Under the terms of the merger agreement, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving company and being owned by the Buyer Group (as defined below) (the “merger”).

As of the date of the proxy statement, the buyer group (the “Buyer Group”), which consists of Parent and 14 other existing shareholders of the Company, collectively beneficially owns 175,398,248 ordinary shares of the Company (the “Shares”), including ordinary shares underlying the Company’s American Depositary Shares (“ADS”), representing approximately 66.0% of the Company’s issued and outstanding share capital on an actual basis. Because the Buyer Group beneficially owns approximately 66.0% of the total issued and outstanding Shares of the Company and because authorization and approval of the merger agreement, plan of merger, and the transactions contemplated by the merger agreement requires an affirmative vote of holders of Shares representing at least two-thirds of the voting rights of the Shares, both quorum and an affirmative vote in favor of the transaction are practically assured with the Buyer Group’s vote.

The purpose of the extraordinary general meeting is for you and the other shareholders of the Company to consider and vote upon a proposal to authorize and approve the merger agreement, the plan of merger required to be filed with the Registrar of Companies of the Cayman Islands (the “plan of merger”) and, upon the merger becoming effective, the amendment and restatement of the memorandum and articles of association of the Company (as the surviving company) in the form attached to the plan of merger, and other transactions as set forth in the merger agreement. Copies of the merger agreement and the plan of merger are attached as Annex A to the accompanying proxy statement.

If the merger is consummated, the Company will continue its operations as a privately held company. As a result of the merger, the Company’s ADSs, each representing six Shares, will no longer be listed on the NASDAQ Global Select Market (“NASDAQ”), and the ADS Program will be terminated.

Neither the SEC nor any state securities regulatory agency has approved or disapproved the merger, passed upon the merits or fairness of the merger or passed upon the adequacy or accuracy of the disclosure in this letter or in the accompanying notice of the extraordinary general meeting or proxy statement. Any representation to the contrary is a criminal offense.

Under the terms of the merger agreement, at the effective time of the merger, holders of our Shares issued and outstanding immediately prior to the effective time of the merger, including Shares represented by ADSs, will have the right to receive $0.366 per Share or $2.20 per ADS surrendered for cancellation, in each case, in cash without interest and net of any applicable withholding taxes. The holders of ADSs will pay any applicable fees, charges and expenses of JPMorgan Chase Bank, N.A. (the “ADS Depositary”) and government charges (other than withholding taxes, if any) due to or incurred by the ADS Depositary in

connection with distribution of the Per ADS Merger Consideration (as defined in the proxy statement) to holders of ADSs and the cancellation of ADSs (including any ADS cancellation or termination fees payable in accordance with the ADS deposit agreement in connection with the merger). Shares, including Shares represented by ADSs, owned by shareholders who have validly exercised and not effectively withdrawn or lost their dissenter rights under the Companies Law (as amended) of the Cayman Islands (the “Cayman Islands Companies Law”) (“Dissenting Shares”) will be cancelled and cease to exist as of the effective time of the merger, and no consideration or distribution shall be delivered with respect thereto. Each holder of such Dissenting Shares will be entitled to receive only the payment of the fair value of such Dissenting Shares held by them in accordance with the provisions of the Cayman Islands Companies Law.

Available cash of the Company and its subsidiaries is intended to be used to finance the consummation of the merger and the other transactions contemplated by the merger agreement.

A special committee of the board of directors of the Company (the “Board”) composed solely of independent and disinterested directors of the Company who are unaffiliated with Merger Sub, the Buyer Group and the management members of the Company (the “Special Committee”) has reviewed and considered the terms and conditions of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger. On September 12, 2016, the Special Committee, after consultation with its financial advisor and legal counsel and due consideration, unanimously (a) determined that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair to, and in the best interests of, the Company and its unaffiliated security holders (“Unaffiliated Security Holders”); (b) declared that it is advisable to enter into the merger agreement and the plan of merger; (c) recommended that the Board approve the execution, delivery and performance by the Company of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger; and (d) recommended that the Board direct that the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, be submitted to a vote at an extraordinary general meeting of the shareholders of the Company with the recommendation of the Board that the shareholders of the Company authorize and approve by way of a shareholders resolution the merger agreement, the plan of merger and the transactions contemplated under the merger agreement, including the merger.

On September 12, 2016, the Board, after carefully considering all relevant factors, including the unanimous determination and recommendation of the Special Committee, had (a) determined that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair to, and in the best interests of, the Company and the Unaffiliated Security Holders; (b) approved the execution, delivery and performance by the Company of the merger agreement, the plan of merger and the consummation of the transactions contemplated thereby, including the merger; and (c) resolved to direct that the authorization and approval of the merger agreement, the plan of merger, and the transactions contemplated thereby, including the merger, be submitted to a vote at an extraordinary general meeting of the shareholders of the Company.

The Board unanimously recommends that you vote FOR the proposal to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, FOR the proposal to authorize each of the members of the Special Committee and any other director or officer of the Company to do all things necessary to give effect to the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received to pass the shareholders resolution during the extraordinary general meeting.

In considering the recommendation of the Special Committee and the Board, you should be aware that some of the Company’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of the shareholders generally. The Special Committee and the Board were aware of these potential conflicts of interest and considered them, among other matters, in reaching their decisions and recommendations with respect to the merger agreement and related matters.

The accompanying proxy statement provides detailed information about the merger and the extraordinary general meeting, and includes information regarding certain interests of the Company’s directors and executive

officers that may be different from, or in addition to, the interests of the Company’s shareholders generally. We encourage you to read the entire document and all of the attachments and other documents referred to or incorporated by reference herein carefully. You may also obtain more information about the Company from documents the Company has filed with the Securities and Exchange Commission (the “SEC”), which are available for free at the SEC’s website www.sec.gov.

Regardless of the number of Shares you own, your vote is very important. The merger cannot be completed unless the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, are authorized and approved by a special resolution (as defined in the Cayman Islands Companies Law) of the Company’s shareholders, which requires an affirmative vote of holders of Shares (including Shares represented by ADSs) representing at least two-thirds of the voting rights of the Shares present and voting in person or by proxy as a single class at the extraordinary general meeting. The Shares (including Shares represented by ADSs) owned by the Buyer Group will be voted in favor of the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, at the extraordinary general meeting of the Company. Whether or not you plan to attend the extraordinary general meeting in person, please complete the enclosed proxy card, in accordance with the instructions set forth thereon, as soon as possible. The deadline to lodge your proxy card is December 7, 2016 at 5:00 p.m. (Hong Kong Time). Voting at the extraordinary general meeting will take place by poll voting if so demanded by the chairman of the meeting, or by any shareholder present in person or by proxy entitled to vote who disputes the announcement by the chairman of the result of the vote.

If you own ADSs as at the close of business in New York City on November 8, 2016 (the “ADS Record Date”), you may instruct the ADS Depositary as the record holder of the Shares underlying the ADSs, how to vote the Shares underlying your ADSs. However, you cannot vote at the extraordinary general meeting directly. As the holder of record for all the Shares represented by the ADSs, only the ADS Depositary (or its nominee) may directly vote those Shares at the extraordinary general meeting. You should return your properly completed ADS voting instruction card to the ADS Depositary prior to 12:00 p.m. on December 7, 2016 (New York City Time), which is the last date by which voting instructions may be received by the ADS Depositary in order to directly vote the Shares underlying your ADSs at the extraordinary general meeting. The ADS Depositary will endeavor, in so far as practicable, to vote or cause to be voted the number of Shares represented by your ADSs in accordance with your voting instructions. If the ADS Depositary timely receives voting instructions from you which fail to specify the manner in which the ADS Depositary is to vote the Shares represented by your ADSs, the ADS Depositary will deem you to have instructed the ADS Depositary to vote all Shares underlying such uninstructed ADSs FOR the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, FOR the proposal to authorize each of the members of the Special Committee and any other director or officer of the Company to do all things necessary to give effect to the merger agreement, the plan of merger and the transactions contemplated therein, including the merger, and FOR any adjournment of the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received to pass the shareholders resolution during the extraordinary general meeting. Furthermore, if you do not timely deliver specific voting instructions to the ADS Depositary, you may, under the terms of the ADS deposit agreement, be deemed to have instructed the ADS Depositary to give a discretionary proxy to a person designated by the Company, who shall be the chairman of the extraordinary general meeting (the “Designee”). Unless the Company notifies the ADS Depositary that there exists substantial opposition on the matters to be voted on at the extraordinary general meeting or that such matters would have a material adverse impact on you or on the holders of Shares, the Designee will receive a discretionary proxy from the ADS Depositary and will vote all Shares underlying such uninstructed ADSs FOR the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, FOR the proposal to authorize each of the members of the Special Committee and any other director or officer of the Company to do all things necessary to give effect to the merger agreement, the plan of merger and the transactions contemplated therein, including the merger, and FOR any adjournment of the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received to pass the shareholders resolution during the extraordinary general meeting. If you hold your Shares or ADSs through a financial

intermediary such as a broker, bank or other nominee, you must rely on the procedures and timing of the financial intermediary through which you hold your Shares or ADSs if you wish to vote at the extraordinary general meeting.

Holders of ADSs will not be able to attend or to vote directly at the extraordinary general meeting unless they convert their ADSs into Shares and become registered in the Company’s register of members as the holders of Shares prior to the close of business in the Cayman Islands on November 8, 2016 (the “Share Record Date”). ADS holders who wish to convert their ADSs need to make arrangements to deliver the ADSs to the ADS Depositary for cancellation before the close of business in New York City on November 8, 2016 together with (a) delivery instructions for the corresponding Shares (name and address of person who will be the registered holder of such Shares), (b) payment of the ADS cancellation fees ($5.00 for each 100 ADSs (or portion thereof) to be cancelled pursuant to the terms of the ADS deposit agreement) and any applicable taxes, and (c) a certification that the ADS holder either (i) held the ADSs as of the ADS Record Date and has not given, and will not give, voting instructions to the ADS Depositary as to the ADSs being converted, or has given voting instructions to the ADS Depositary as to the ADSs being converted but undertakes not to vote the corresponding Shares at the extraordinary general meeting or (ii) did not hold the ADSs as of the ADS Record Date and undertakes not to vote the corresponding Shares at the extraordinary general meeting. If you hold your ADSs in a brokerage, bank or other nominee account, please contact your broker, bank or other nominee to find out what actions you need to take to instruct the broker, bank or other nominee to convert the ADSs on your behalf. Upon conversion of the ADSs, the ADS Depositary will arrange for JP Morgan Chase Bank, N.A., Hong Kong branch, the custodian holding the Shares, to transfer registration of the Shares to the former ADS holder (or a person designated by the former ADS holder). If the merger is not completed, the Company will continue to be a public company in the United States and ADSs will continue to be listed on NASDAQ. Shares are not listed and cannot be traded on any stock exchange other than NASDAQ, and in such case only in the form of ADSs. As a result, if you have converted your ADSs to attend the extraordinary general meeting and the merger is not completed and you wish to be able to sell your Shares on a stock exchange, you will need to deposit your Shares into the Company’s ADS Program for the issuance of the corresponding number of ADSs, subject to the terms and conditions of applicable law and the ADS deposit agreement, including, among other things, payment of relevant fees of the ADS Depositary for the issuance of ADSs ($5.00 for each 100 ADSs (or portion thereof) issued) and applicable share transfer taxes (if any) and related charges pursuant to the ADS deposit agreement.

Shareholders who dissent from the merger in accordance with Section 238 of the Cayman Islands Companies Law (the “dissenting shareholders”) will have the right to receive payment of the fair value of their Shares if the merger is completed, but only if they deliver to the Company, before the vote to authorize and approve the merger is taken at the extraordinary general meeting, a written objection to the merger and subsequently comply with all procedures and requirements of Section 238 of the Cayman Islands Companies Law. A copy of Section 238 of the Cayman Islands Companies Law is attached as Annex C to the accompanying proxy statement. The fair value of Shares determined under the Cayman Islands Companies Law could be more than, the same as, or less than the merger consideration dissenting shareholders would otherwise receive.

SHARE RECORD DATE. (TO AVOID DOUBT, ANY ADS HOLDERS WHO CONVERT THEIR ADSs INTO SHARES AFTER THE SHARE RECORD DATE WILL NOT BE ENTITLED TO ATTEND OR TO VOTE AT THE EXTRAORDINARY GENERAL MEETING, BUT WILL BE ENTITLED TO EXERCISE DISSENTER RIGHTS IF THEY BECOME REGISTERED HOLDERS OF SHARES BEFORE THE VOTE IS TAKEN AT THE EXTRAORDINARY GENERAL MEETING, IN ACCORDANCE WITH THE IMMEDIATELY PRECEDING SENTENCE.) AFTER CONVERTING THEIR ADSs AND BECOMING REGISTERED HOLDERS OF SHARES, SUCH FORMER ADS HOLDERS MUST ALSO COMPLY WITH THE PROCEDURES AND REQUIREMENTS FOR EXERCISING DISSENTER RIGHTS WITH RESPECT TO THE SHARES UNDER SECTION 238 OF THE CAYMAN ISLANDS COMPANIES LAW. IF THE MERGER IS NOT COMPLETED, THE COMPANY WILL CONTINUE TO BE A PUBLIC COMPANY IN THE UNITED STATES AND ADSs WILL CONTINUE TO BE LISTED ON NASDAQ. SHARES ARE NOT LISTED AND CANNOT BE TRADED ON ANY STOCK EXCHANGE OTHER THAN NASDAQ, AND IN SUCH CASE ONLY IN THE FORM OF ADSs. AS A RESULT, IF A FORMER ADS HOLDER HAS CONVERTED HIS, HER OR ITS ADSs TO EXERCISE DISSENTER RIGHTS AND THE MERGER IS NOT COMPLETED AND SUCH FORMER ADS HOLDER WISHES TO BE ABLE TO SELL HIS, HER OR ITS SHARES ON A STOCK EXCHANGE, SUCH FORMER ADS HOLDER WILL NEED TO DEPOSIT HIS, HER OR ITS SHARES INTO THE COMPANY’S ADS PROGRAM FOR THE ISSUANCE OF THE CORRESPONDING NUMBER OF ADSs, SUBJECT TO THE TERMS AND CONDITIONS OF APPLICABLE LAW AND THE ADS DEPOSIT AGREEMENT, INCLUDING, AMONG OTHER THINGS, PAYMENT OF RELEVANT FEES OF THE ADS DEPOSITARY FOR THE ISSUANCE OF ADSs ($5.00 FOR EACH 100 ADSs (OR PORTION THEREOF) ISSUED) AND APPLICABLE SHARE TRANSFER TAXES (IF ANY) AND RELATED CHARGES PURSUANT TO THE ADS DEPOSIT AGREEMENT.

If you have any questions or need assistance in voting your Shares or ADSs, you may contact Laurel Hill Advisory Group, the firm assisting us with this proxy solicitation. Banks and Brokers call collect at +1 516 933-3100; all others please call the Laurel Hill Advisory Group toll-free at 888-742-1305.

On behalf of Actions Semiconductor Co., Ltd, we would like to thank all of our shareholders and ADS holders for their ongoing support as we prepare to take part in this important event in our history.


Sincerely,		Sincerely,
/s/ Yu-Hsin, LIN Yu-Hsin (Casper) Lin On behalf of the Special Committee		/s/ Hsiang-Wei, LEE Hsiang-Wei (David) Lee Chairman of the Board

The accompanying proxy statement is dated November 7, 2016, and is first being mailed to the Company’s shareholders and ADS holders on or about November 15, 2016.

ACTIONS SEMICONDUCTOR CO., LTD

NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON

Dear Shareholder:

Notice is hereby given that an extraordinary general meeting of the shareholders of Actions Semiconductor Co., Ltd (referred to herein alternately as the “Company,” “us,” “our” or “we”) will be held on December 9, 2016 beginning at 2:00 p.m. (Hong Kong Time), at 8F, No. 437, Ruiguang Road, Neihu District, Taipei, Taiwan.

Only registered holders of ordinary shares of the Company, par value of $0.000001 each (the “Shares”), at the close of business in the Cayman Islands on November 8, 2016 (the “Share Record Date”), or their proxy holders are entitled to directly vote at this extraordinary general meeting or any adjournment or postponements thereof. The ADS holders could indirectly vote at the meeting pursuant to the procedures described herein. At the meeting, you will be asked to consider and vote upon the following resolutions:

As special resolutions:

THAT the agreement and plan of merger dated September 12, 2016 (the “merger agreement”) by and among the Company, Supernova Investment Ltd. (“Parent”), a private company limited by shares incorporated under the laws of the Republic of Mauritius, and Starman Limited (“Merger Sub”), an exempted company incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of Parent, and the plan of merger required to be filed with the Registrar of Companies of the Cayman Islands for the purpose of the merger, in the form attached as Annex C to the merger agreement (the “plan of merger”) (copies of such merger agreement and plan of merger being in the form attached to the proxy statement accompanying this notice, which will also be produced and made available for inspection at the meeting), pursuant to which Merger Sub will be merged with and into the Company (the “merger”), with the Company continuing as the surviving company, and the transactions contemplated by the merger agreement, including the merger, and upon the merger becoming effective, the amendment and restatement of the existing memorandum and articles of association of the Company (as the surviving company) by their deletion in their entirety and the substitution in their place of a new memorandum and articles of association in the form attached to the plan of merger, be approved and authorized;

THAT each of the members of the Special Committee (as defined below) and any other director or officer of the Company do all things necessary to give effect to the merger agreement, the plan of merger, and the transactions contemplated by the merger agreement, including the merger; and

If necessary, as an ordinary resolution:

THAT the extraordinary general meeting be adjourned in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.

A list of the shareholders of the Company will be available at its principal executive office at No. 1, Ke Ji Si Road, Technology Innovation Coast of Hi-Tech Zone, Zhuhai, Guangdong, 519085, the People’s Republic of China, during ordinary business hours for the two business days immediately prior to the extraordinary general meeting.

After careful consideration and upon the unanimous recommendation of a special committee of the board of directors of the Company (the “Board”) composed solely of directors who are unaffiliated with the Merger Sub, a consortium of existing shareholders of the Company which will beneficially owns the Company following the consummation of the merger (the “Buyer Group”) and any member of the management of the Company (the “Special Committee”) and after each director duly disclosed his interests in the transactions contemplated by the merger agreement, including the merger, as required by the memorandum and articles of association of the Company as amended to date and Cayman Islands law, the Board unanimously (a) determined that (i) the merger as contemplated in the merger agreement and (ii) the plan of merger are fair to and in the best interests of the Company and its shareholders and it is advisable for the Company to enter into the merger agreement, the plan of merger and the transactions contemplated by the merger agreement,

including the merger; (b) authorized and approved the merger agreement, the plan of merger, and the transactions contemplated by the merger agreement, including the merger; and (c) recommended the approval and authorization of the merger agreement, the plan of merger, and the transactions contemplated by the merger agreement, including the merger, to the shareholders of the Company and directed that the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, be submitted to a vote of the shareholders of the Company for authorization and approval.

The Board recommends that you vote FOR the proposal to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, FOR the proposal to authorize each of the members of the Special Committee and any other director or officer of the Company to do all things necessary to give effect to the merger agreement, the plan of merger and the transactions contemplated therein, including the merger, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting.

In order for the merger to be completed, the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, must be authorized and approved by the affirmative vote of holders of Shares representing at least two-thirds of the voting rights of the Shares present and voting in person or by proxy as a single class at the extraordinary general meeting.

As of the date of this proxy statement, the Buyer Group collectively beneficially owns 175,398,248 Shares, including Shares underlying the Company’s ADSs, representing approximately 66.0% of the Company’s issued and outstanding share capital on an actual basis. The Shares owned by the Buyer Group will be voted in favor of the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, at the extraordinary general meeting of the Company. Because the Buyer Group beneficially owns approximately 66.0% of the total issued and outstanding Shares of the Company and because authorization and approval of the merger agreement, plan of merger, and the transactions contemplated by the merger agreement requires an affirmative vote of holders of Shares representing at least two-thirds of the voting rights of the Shares, both quorum and an affirmative vote in favor of the transaction are practically assured with the Buyer Group’s vote.

Nonetheless, regardless of the number of the Shares you own, your vote is very important. Even if you plan to attend the extraordinary general meeting in person, we request that you submit your proxy in accordance with the instructions set forth on the proxy card as promptly as possible. The deadline to lodge your proxy card is December 7, 2016 at 5:00 p.m. (Hong Kong Time). Voting at the extraordinary general meeting will take place by poll voting if so demanded by the chairman of the meeting or by any shareholder present in person or by proxy entitled to vote who disputes the announcement by the chairman of the result of the vote.

Completing the proxy card in accordance with the instructions set forth on the proxy card will not deprive you of your right to attend the extraordinary general meeting and vote your Shares in person. Please note, however, that if your Shares are registered in the name of a broker, bank or other nominee and you wish to vote at the extraordinary general meeting in person, you must obtain from the record holder a proxy issued in your name.

If you abstain from voting, fail to cast your vote in person, fail to complete and return your proxy card in accordance with the instructions set forth on the proxy card, or fail to give voting instructions to your broker, bank or other nominee, your vote will not be counted.

If you receive more than one proxy card because you own Shares that are registered in different names, please vote all of your Shares shown on each of your proxy cards in accordance with the instructions set forth on each such proxy card.

When proxies are properly dated, executed and returned by holders of Shares, the Shares they represent will be voted at the extraordinary general meeting in accordance with the instructions of the shareholders. If

no specific instructions are given by such holders, the Shares will be voted “FOR” the proposals as described above and in the proxy holder’s discretion as to other matters that may properly come before the extraordinary general meeting.

If you own ADSs as of the close of business in New York City on November 8, 2016 (the “ADS Record Date”) (and do not convert such ADSs and become a registered holder of the Shares underlying such ADSs as explained below), you cannot vote at the extraordinary general meeting directly, but you may instruct JPMorgan Chase Bank, N.A., in its capacity as the ADS depositary (the “ADS Depositary”) and the registered holder of the Shares underlying your ADSs, how to vote the Shares underlying your ADSs by completing and signing the ADS voting instruction card attached to the accompanying proxy statement and returning it in accordance with the instructions printed on it as soon as possible. The ADS Depositary must receive your instructions no later than 12:00 p.m. (New York City Time) on December 7, 2016 in order to ensure the Shares underlying your ADSs are properly voted at the extraordinary general meeting. If you hold your ADSs in a brokerage, bank or other nominee account, you must rely on the procedures of the broker, bank or other nominee through which you hold your ADSs if you wish to vote.

Alternatively, if you own ADSs as of the close of business in New York City on the ADS Record Date, you may vote at the extraordinary general meeting directly if you convert your ADSs and become a registered holder of the Shares underlying your ADSs prior to the close of business in the Cayman Islands on the Share Record Date. If you wish to convert your ADSs for the purpose of voting Shares directly, you need to make arrangements to deliver your ADSs to the ADS Depositary for cancellation before the close of business in New York City on November 8, 2016 together with (a) delivery instructions for the corresponding Shares (name and address of person who will be the registered holder of such Shares), (b) payment of the ADS cancellation fees ($5.00 for each 100 ADSs (or portion thereof) to be cancelled pursuant to the terms of the ADS deposit agreement, dated as of August 22, 2005, and as amended in April 2007, December 2011, and November 2013, among the Company, the ADS Depositary and the holders and beneficial owners of ADSs issued thereunder (the “ADS deposit agreement”) and any applicable taxes, and (c) a certification that you either (i) held the ADSs as of the ADS Record Date and have not given, and will not give, voting instructions to the ADS Depositary as to the ADSs being cancelled or have given voting instructions to the ADS Depositary as to the ADSs being cancelled but undertake not to vote the corresponding Shares at the extraordinary general meeting or (ii) did not hold the ADSs as of the ADS Record Date and undertakes not to vote the corresponding Shares at the extraordinary general meeting. If you hold your ADSs in a brokerage, bank or other nominee account, please contact your broker, bank or other nominee to find out what actions you need to take to instruct the broker, bank or other nominee to convert the ADSs on your behalf.

Shareholders who dissent from the merger in accordance with Section 238 of the Companies Law (as amended) of the Cayman Islands (the “Cayman Islands Companies Law”) (the “dissenting shareholders”) will have the right to receive payment of the fair value of their Shares if the merger is completed, but only if they deliver to the Company, before the vote to authorize and approve the merger is taken at the extraordinary general meeting, a written objection to the merger and subsequently comply with all procedures and requirements of Section 238 of the Cayman Islands Companies Law. A copy of Section 238 of the Cayman Islands Companies Law is attached as Annex C to the accompanying proxy statement. The fair value of Shares determined under the Cayman Islands Companies Law could be more than, the same as, or less than the merger consideration dissenting shareholders would otherwise receive.

12:00 P.M. (NEW YORK CITY TIME) ON DECEMBER 7, 2016, AND BECOME REGISTERED HOLDERS OF SHARES BY THE CLOSE OF BUSINESS IN THE CAYMAN ISLANDS ON THE SHARE RECORD DATE. (TO AVOID DOUBT, ANY ADS HOLDERS WHO CONVERT THEIR ADSs INTO SHARES AFTER THE SHARE RECORD DATE WILL NOT BE ENTITLED TO ATTEND OR TO VOTE AT THE EXTRAORDINARY GENERAL MEETING, BUT WILL BE ENTITLED TO EXERCISE DISSENTER RIGHTS IF THEY BECOME REGISTERED HOLDERS OF SHARES BEFORE THE VOTE IS TAKEN AT THE EXTRAORDINARY GENERAL MEETING, IN ACCORDANCE WITH THE IMMEDIATELY PRECEDING SENTENCE.) AFTER CONVERTING THEIR ADSs AND BECOMING REGISTERED HOLDERS OF SHARES, SUCH FORMER ADS HOLDERS MUST ALSO COMPLY WITH THE PROCEDURES AND REQUIREMENTS FOR EXERCISING DISSENTER RIGHTS WITH RESPECT TO THE SHARES UNDER SECTION 238 OF THE CAYMAN ISLANDS COMPANIES LAW. IF THE MERGER IS NOT COMPLETED, THE COMPANY WILL CONTINUE TO BE A PUBLIC COMPANY IN THE UNITED STATES AND ADSs WILL CONTINUE TO BE LISTED ON NASDAQ. SHARES ARE NOT LISTED AND CANNOT BE TRADED ON ANY STOCK EXCHANGE OTHER THAN NASDAQ, AND IN SUCH CASE ONLY IN THE FORM OF ADSs. AS A RESULT, IF A FORMER ADS HOLDER HAS CONVERTED HIS, HER OR ITS ADSs TO EXERCISE DISSENTER RIGHTS AND THE MERGER IS NOT COMPLETED AND SUCH FORMER ADS HOLDER WISHES TO BE ABLE TO SELL HIS, HER OR ITS SHARES ON A STOCK EXCHANGE, SUCH FORMER ADS HOLDER WILL NEED TO DEPOSIT HIS, HER OR ITS SHARES INTO THE COMPANY’S ADS PROGRAM FOR THE ISSUANCE OF THE CORRESPONDING NUMBER OF ADSs, SUBJECT TO THE TERMS AND CONDITIONS OF APPLICABLE LAW AND THE ADS DEPOSIT AGREEMENT, INCLUDING, AMONG OTHER THINGS, PAYMENT OF RELEVANT FEES OF THE ADS DEPOSITARY FOR THE ISSUANCE OF ADSs ($5.00 FOR EACH 100 ADSs (OR PORTION THEREOF) ISSUED) AND APPLICABLE SHARE TRANSFER TAXES (IF ANY) AND RELATED CHARGES PURSUANT TO THE ADS DEPOSIT AGREEMENT.

Please do not send your share certificates or the certificates evidencing your ADSs (“ADRs”) at this time. If the merger is completed, you will be sent instructions regarding the surrender of your share certificates or ADRs.

The merger agreement, the plan of merger, and the merger are described in the accompanying proxy statement. Copies of the merger agreement and the plan of merger are included as Annex A to the accompanying proxy statement. We urge you to read the entire proxy statement carefully.

Notes:

In the case of joint holders, the vote of the senior holder who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the joint holders. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company.

The proxy card shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorized to sign the same.

A proxy need not be a member (registered shareholder) of the Company.

The chairman of the extraordinary general meeting may in any event at his or her discretion direct that a proxy card shall be deemed to have been duly deposited. A proxy card that is not deposited in the manner permitted (that is, in accordance with the instructions set forth on the proxy card, or which is otherwise directed by the chairman to be deemed to have been duly deposited) shall be invalid.

A vote given in accordance with the terms of a proxy card shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the proxy card or of the authority under which it was executed, provided that no notice in writing of such death, insanity or revocation shall have been received by the Company at its principal executive offices before the commencement of the meeting or adjourned meeting at which the proxy is used.

BY ORDER OF THE BOARD OF DIRECTORS,

/s/ Hsiang-Wei, LEE

Chairman of the Board
November 7, 2016


	Page
SUMMARY TERM SHEET		1
QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING AND THE MERGER		17
SPECIAL FACTORS		27
MARKET PRICE OF THE COMPANY’S ADSs, DIVIDENDS AND OTHER MATTERS		63
THE EXTRAORDINARY GENERAL MEETING		64
THE MERGER AGREEMENT AND PLAN OF MERGER		71
PROVISIONS FOR UNAFFILIATED SECURITY HOLDERS		85
DISSENTER RIGHTS		86
FINANCIAL INFORMATION		88
TRANSACTIONS IN THE SHARES AND ADSs		96
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE COMPANY		98
FUTURE SHAREHOLDER PROPOSALS		99
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		100
WHERE YOU CAN FIND MORE INFORMATION		102
ANNEX A: Merger Agreement and Plan of Merger		A-1
ANNEX B: Opinion of Houlihan Lokey as Financial Advisor		B-1
ANNEX C: Cayman Islands Companies Law Cap. 22 (Law 3 of 1961, as consolidated and revised) — Section 238		C-1
ANNEX D: Directors and Executive Officers of Each Filing Person		D-1
ANNEX E: Voting and Support Agreement		E-1
FORM OF PROXY CARD
ADS VOTING INSTRUCTION CARD

SUMMARY TERM SHEET

This “Summary Term Sheet,” together with the “Questions and Answers about the Extraordinary General Meeting and the Merger,” highlights selected information contained in this proxy statement regarding the merger and may not contain all of the information that may be important to your consideration of the merger. You should carefully read this entire proxy statement and the other documents to which this proxy statement refers for a more complete understanding of the matters being considered at the extraordinary general meeting. In addition, this proxy statement incorporates by reference important business and financial information about the Company. You are encouraged to read all of the documents incorporated by reference into this proxy statement and you may obtain such information without charge by following the instructions in “Where You Can Find More Information” beginning on page 102. In this proxy statement, the terms “we,” “us,” “our,” “Actions”, the “Company” refer to Actions Semiconductor Co., Ltd and its subsidiaries. All references to “dollars” and “$” in this proxy statement are to US dollars.

The Parties Involved in the Merger

The Company

Actions Semiconductor Co., Ltd is a fabless semiconductor company that designs, develops, and markets integrated platform solutions, including SoCs, firmware, software development tools and reference designs, for manufacturers of portable media players and smart handheld devices such as tablets. The Company provides integrated platform solutions to tablet and portable media player manufacturers, brand owners and value-added distributors that enable them to accelerate the time-to-market for their products.

The Company’s principal executive offices are located at No. 1, Ke Ji Si Road, Technology Innovation Coast of Hi-Tech Zone, Zhuhai, Guangdong 519085, the People’s Republic of China, and our telephone number is (86-756) 339-2353. The Company’s registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

For a description of our history, development, business and organizational structure, see the Company’s Annual Report on Form 20-F for the year ended December 31, 2015, filed on April 28, 2016, which is incorporated herein by reference. Please see “Where You Can Find More Information” beginning on page 102 for a description of how to obtain a copy of the Company’s Annual Report.

Parent

Supernova Investment Ltd. (“Parent”) is a private company limited by shares incorporated under the laws of the Republic of Mauritius and the direct and sole shareholder of Merger Sub. Parent is currently 100% owned by Chen, Hsuan-Wen (a.k.a. Niccolo Chen). Parent currently holds 13,072,634 Shares of the Company. The registered office of Parent is located at Level 3, Alexander House, 35 Cybercity, Ebene, Mauritius. The telephone number of Parent is (886) 227 585 565 ext 511.

Merger Sub

Starman Limited (“Merger Sub”), an exempted company incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of Parent, was formed by Parent solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. Merger Sub does not currently hold any Shares of the Company. The registered office of Merger Sub is located at the offices of Offshore Incorporations (Cayman) Limited, P.O. Box 31119 Grand Pavilion Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205. The telephone number of Merger Sub is (886) 227 585 565 ext 511.

The Buyer Group

Surrey Glory Investments Inc.

Surrey Glory Investments Inc. (“Surrey Glory”), a company organized under the laws of the British Virgin Islands, is wholly owned by Mr. Chang Yung-Sen. Surrey Glory holds 2,379,444 ADSs, representing approximately 5.37% of the total outstanding Shares. Surrey Glory is a company formed solely for the purpose of holding these ADSs.

Tongtong Investment Holding Co., Ltd.

Tongtong Investment Holding Co., Ltd. (“Tongtong”), a private company limited by shares organized under the laws of the Republic of Mauritius, is wholly owned by Mr. Lee, Yun-Chin. Tongtong holds 13,061,000 Shares, representing approximately 4.91% of the total outstanding Shares. Tongtong is a company formed solely for the purpose of holding these Shares.

Perfectech Int’l Ltd.

Perfectech Int’l Ltd. (“Perfectech”), a private company limited by shares organized under the laws of the Republic of Mauritius, is wholly owned by Mr. Lewis Chi-Tak Lo. Perfectech holds 13,069,237 Shares, representing approximately 4.92% of the total outstanding Shares. Perfectech is a company formed solely for the purpose of holding these Shares.

Allpremier Investment Limited

Allpremier Investment Limited (“Allpremier”), a BVI business company organized under the laws of the British Virgin Islands, is wholly owned by Ms. Ma Yingna. Allpremier holds 12,986,442 Shares, representing approximately 4.89% of the total outstanding Shares. Allpremier is a company formed solely for the purpose of holding these Shares.

Octovest International Holding Co., Ltd.

Octovest International Holding Co., Ltd. (“Octovest”), a private company limited by shares organized under the laws of the Republic of Mauritius, is wholly owned by Mr. Pan, I-Ming (a.k.a. Robin Pan). Octovest holds 13,100,000 Shares, representing approximately 4.93% of the total outstanding Shares. Octovest is a company formed solely for the purpose of holding these Shares.

Ventus Corporation

Ventus Corporation (“Ventus”), an international business company organized under the laws of Belize, is wholly owned by Mr. Tang Hsin. Ventus holds 12,450,000 Shares, representing approximately 4.68% of the total outstanding Shares. Ventus is a company formed solely for the purpose of holding these Shares.

Middlesex Holdings Corporation Inc

Middlesex Holdings Corporation Inc (“Middlesex”), an international business company organized under the laws of the British Virgin Islands, is wholly owned by Mr. Lin, Yung-Chieh. Middlesex holds 1,186,553 Shares and 1,885,241 ADSs, together representing approximately 4.70% of the total outstanding Shares. Middlesex is a company formed solely for the purpose of these Shares and ADSs.

Rich Dragon Consultants Limited

Rich Dragon Consultants Limited (“Rich Dragon”), an international business company organized under the laws of the British Virgin Islands, is wholly owned by Mr. Chang Jr-Neng. Rich Dragon holds 12,540,000 Shares, representing approximately 4.72% of the total outstanding Shares. Rich Dragon is a company formed solely for the purpose of these Shares.

Nutronics Technology Corporation

Nutronics Technology Corporation (“Nutronics”), an international business company organized under the laws of the British Virgin Islands, is wholly owned by Mr. Lee Fu Chi. Nutronics holds 12,550,656 Shares, representing approximately 4.72% of the total outstanding Shares. Nutronics is a company formed solely for the purpose of these Shares.

Uniglobe Securities Limited

Uniglobe Securities Limited (“Uniglobe”), a BVI business company organized under the laws of the British Virgin Islands, is wholly owned by Mr. Chun Mei Chen De Chang. Uniglobe holds 13,128,371 Shares, representing approximately 4.94% of the total outstanding Shares. Uniglobe is a company formed solely for the purpose of these Shares.

New Essential Holdings Limited

New Essential Holdings Limited (“New Essential”), a BVI business company organized under the laws of the British Virgin Islands, is wholly owned by Mr. Chang Sui Gin. New Essential holds 3,600,000 Shares, representing approximately 1.35% of the total outstanding Shares. New Essential is a company formed solely for the purpose of these Shares.

Embona Holdings (Malaysia) Limited

Embona Holdings (Malaysia) Limited (“Embona Malaysia”), a company organized under the laws of Malaysia, is wholly owned by Embona Holdings Limited (“Embona”), a BVI business company organized under the laws of the British Virgin Islands. Embona is in turn wholly owned by Peakford International Co., Ltd (“Peakford”), a company organized under the laws of the British Virgin Islands. Mr. Yeh, Chia-Wen, Ms. Yeh Hsu, Li-Li, Mr. Yeh, Ming-Han, Mr. Yeh, Bo-Chun, and Ms. Yeh, Wei-Yen each hold a 20% interest in Peakford. Embona Malaysia holds 4,800,000 Shares, representing approximately 1.81% of the total outstanding Shares. Embona Malaysia is a company formed solely for the purpose of these Shares.

Suffolk Dragon Ventures Ltd

Suffolk Dragon Ventures Ltd (“Suffolk”), an international business company organized under the laws of the British Virgin Islands, is wholly owned by Good Turn Limited (“Good Turn”), a BVI business company organized under the laws of the British Virgin Islands. Mr. Yeh, Po-Len, Ms. Chen, Shu-Lin, Ms. Yeh, Yi-Chen (a.k.a. Angela Y.C. Yeh), Ms. Yeh, Yen-Hsi, and Ms. Yeh, Wei-Hsi each hold a 20% interest in Good Turn. Suffolk holds 12,732,622 Shares, representing approximately 4.80% of the total outstanding Shares. Suffolk is a company formed solely for the purpose of these Shares.

Top Best Development Limited

Top Best Development Limited (“Top Best”), an international business company organized under the laws of the British Virgin Islands, is wholly owned by Peakford. Mr. Yeh, Chia-Wen, Ms. Yeh Hsu, Li-Li, Mr. Yeh, Ming-Han, Mr. Yeh, Bo-Chun, and Ms. Yeh, Wei-Yen each hold a 20% interest in Peakford. Top Best holds 11,532,623 Shares, representing approximately 4.34% of the total outstanding Shares. Top Best is a company formed solely for the purpose of these Shares.

The Merger (Page 71)

You are being asked to vote to authorize and approve the agreement and plan of merger dated as of September 12, 2016, (the “merger agreement”) among the Company, Parent, and Merger Sub, the plan of merger required to be filed with the Registrar of Companies of the Cayman Islands (the “Cayman Islands Registrar”), substantially in the form attached as Annex C to the merger agreement (the “plan of merger”) and the transactions contemplated by the merger agreement, including the merger (the “merger”). Once the merger agreement and plan of merger are authorized and approved by the requisite vote of the shareholders of the Company and the other conditions to the consummation of the transactions contemplated by the merger agreement are satisfied or waived in accordance with the terms of the merger agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving company. The Company, as the surviving company, expects to continue to do business under the name “Actions Semiconductor Co., Ltd” following the merger. If the merger is completed, the Company will cease to be a publicly traded company; therefore, the Company’s American depositary shares (the “ADSs”), each representing six Shares, will no longer be listed on the NASDAQ Global Select Market (“NASDAQ”) and the American depositary shares program for the ADSs (the “ADS Program”) will terminate. Copies of the merger agreement and the plan of merger are attached as Annex A to this proxy statement. You should read the merger agreement and the plan of merger in their entirety because they, and not this proxy statement, are the legal documents that govern the merger.

Merger Consideration (Page 71)

Under the terms of the merger agreement, at the effective time of the merger, each of our outstanding ordinary shares of a par value of $0.000001 per share (each, a “Share” and collectively, the “Shares”), including Shares represented by ADSs, issued and outstanding immediately prior to the effective time of the merger, will be cancelled in exchange for the right to receive $0.366 in cash without interest (the “Per Share

Merger Consideration”), and each outstanding ADS (other than any ADS that represents Excluded Shares, as defined below) will represent the right to receive $2.20 in cash per ADS without interest (the “Per ADS Merger Consideration”), in each case, net of any applicable withholding taxes, other than the following Shares: (a) Shares beneficially owned by the Buyer Group or any person controlled by any of them prior to the effective time of the merger (the “Rollover Shares”); (b) Shares owned by the Company or its subsidiaries, if any, (c) Shares owned by holders of Shares who have validly exercised and not effectively withdrawn or lost their dissenter rights under the Companies Law (as amended) of the Cayman Islands (the “Cayman Islands Companies Law”) (the “Dissenting Shares”), and (d) Shares reserved (but not yet issued and allocated) by the Company, immediately prior to the effective time of the merger (including Shares held by JPMorgan Chase Bank, N.A. in its capacity as ADS depositary (the “ADS Depositary”)), for issuance and allocation upon the exercise of any option to purchase Shares (a “Company Option”) or restricted share unit (a “Company RSU”) issued under the Company’s 2007 Equity Performance and Incentive Plan (Shares described under (b) through (d) above are collectively referred to herein as the “Excluded Shares”). The holders of the ADSs will pay any applicable fees, charges and expenses of the ADS Depositary and government charges (other than withholding taxes, if any) due to or incurred by the ADS Depositary in connection with distribution of the Per ADS Merger Consideration to holders of ADSs and the cancellation of ADSs (including any ADS cancellation or termination fees payable in accordance with the ADS deposit agreement in connection with the merger).

The Excluded Shares (other than Dissenting Shares), including Excluded Shares represented by ADSs, will be cancelled and cease to exist at the effective time of the merger, and no consideration or distribution shall be delivered with respect thereto. Dissenting Shares will be cancelled and each holder thereof will be entitled to receive only the payment of the fair value of such Dissenting Shares held by them in accordance with the provisions of the Cayman Islands Companies Law. Please see “Dissenter Rights” beginning on page 86 for additional information. The Rollover Shares shall remain outstanding, shall continue to exist, and shall become validly issued, fully paid, and non-assessable ordinary shares, par value of $0.000001 each, in the surviving company.

Treatment of Company Options (Page 72)

At the effective time of the merger, each outstanding Company Option granted under the Company’s 2007 Equity Performance and Incentive Plan (as amended) (the “Company Incentive Plan”), with a per Share exercise price less than the Per Share Merger Consideration (each, a “Cashed-Out Option”) will be cancelled and entitle the former holder thereof to receive a cash amount equal to the excess of (i) the Per Share Merger Consideration over (ii) the exercise price of such Cashed-Out Option, multiplied by the number of Shares underlying such Cashed-Out Option. Each outstanding Company Option with a per Share exercise price greater than or equal to the Per Share Merger Consideration will be cancelled at the effective time of the merger for no consideration.

At or prior to the effective time of the merger, the Company, the Board or the compensation committee of the Board, as applicable, will adopt any resolutions and take any actions which are reasonably necessary to effectuate the foregoing arrangement.

Treatment of Company RSUs (Page 72)

At the effective time of the merger, each outstanding vested Company RSU granted under the Company Incentive Plan (each, a “Cashed-Out RSU”) will be cancelled and entitle the former holder thereof to receive a restricted cash award in an amount equal to the Per Share Merger Consideration multiplied by the number of Shares underlying such Cashed-Out RSU.

In addition, at the effective time of the merger, each outstanding unvested Company RSU will be assumed by the Company (as the surviving company), on the same terms and conditions, in respect of the number of common stock of the Company (as the surviving company) equal to the number of Shares underlying such Company RSUs.

Support Agreement (Page 72)

On September 16, 2016, Parent, Merger Sub, and the other Rollover Shareholders entered into a voting and support agreement (as may be amended from time to time, the “Support Agreement”), pursuant to which each Rollover Shareholders has agreed for the benefit of the other Rollover Shareholder and Merger Sub, among other things, that:

•

they will vote the Rollover Shares in favor of the authorization and approval of the merger agreement, the plan of merger and the consummation of the transactions contemplated by the merger agreement, including the merger; and

•

the Rollover Shares will, at the effective time of the merger, remain outstanding and continue to exist, and become validly issued, fully paid and nonassessable ordinary shares, par value of $0.000001 each, in the Company (as the surviving company), without payment of any consideration.

Record Date and Voting (Page 65)

Before voting your Shares, we encourage you to read this proxy statement in its entirety, including all of the annexes, attachments, exhibits and materials incorporated by reference, and carefully consider how the merger will affect you.

To ensure that your Shares can be voted at the extraordinary general meeting, please complete, sign and return to the Company the accompanying proxy card, which is attached to this proxy statement, in accordance with the instructions set forth on the proxy card, as soon as possible so that it is received by the Company no later than 5:00 p.m. (Hong Kong Time) on December 7, 2016, the deadline to lodge your proxy card. Voting at the extraordinary general meeting will take place by poll voting, as the chairman of the Board has undertaken to demand poll voting at the meeting. Completing the proxy card in accordance with the instructions set forth on the proxy card will not deprive you of your right to attend the extraordinary general meeting and vote your Shares in person. Please note, however, that if your Shares are registered in the name of a broker, bank or other nominee and you wish to vote at the extraordinary general meeting in person, you must obtain from the record holder a proxy issued in your name.

If you own ADSs as of the close of business in New York City on November 8, 2016 (the “ADS Record Date”) (and do not convert such ADSs and become a registered holder of the Shares underlying such ADSs as explained below), you cannot vote at the extraordinary general meeting directly, but you may instruct the ADS Depositary (as holder of the Shares underlying your ADSs) how to vote the Shares underlying your ADSs by completing and signing the ADS voting instruction card attached to this proxy statement and returning it in accordance with the instructions printed on it as soon as possible. The ADS Depositary must receive your instructions no later than 12:00 p.m. (New York City Time) on December 7, 2016 in order to ensure the Shares underlying your ADSs are properly voted at the extraordinary general meeting. If you hold your ADSs in a brokerage, bank or other nominee account, you must rely on the procedures of the broker, bank or other nominee through which you hold your ADSs if you wish to vote.

The ADS Depositary will endeavor to vote (or will endeavor to cause the vote of) the Shares it holds on deposit at the extraordinary general meeting in accordance with the voting instructions timely received from holders of ADSs. If the ADS Depositary timely receives voting instructions from an ADS holder that fail to specify the manner in which the ADS Depositary is to vote any Shares represented by the holder’s ADSs, then the ADS Depositary will, under the terms of the ADS deposit agreement, deem such ADS holder to have instructed the ADS Depositary to vote in favor of the items set forth in such voting instructions. If the ADS Depositary does not receive voting instructions from an ADS holder with respect to any Shares, such holder may, under the terms of the ADS deposit agreement, be deemed to have instructed the ADS Depositary to give a discretionary proxy to a person designated by the Company, which shall be the chairman of the extraordinary general meeting (the “Designee”).

Unless the Company notifies the ADS Depositary that there exists substantial opposition against the outcome for which the Designee would otherwise vote at the extraordinary general meeting or that would have a material adverse impact on the holders of ADSs or on the holders of Shares, the Designee will receive a discretionary proxy from the ADS Depositary and will vote all Shares underlying such uninstructed ADSs FOR the authorization and approval of the merger agreement, the plan of merger and the transactions

contemplated by the merger agreement, including the merger, FOR the proposal to authorize each of the members of the Special Committee and any other director or officer of the Company to do all things necessary to give effect to the merger agreement, the plan of merger and the transactions contemplated therein, including the merger, and FOR any adjournment of the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received to pass the shareholders resolution during the extraordinary general meeting.

Holders of ADSs will not be able to attend the extraordinary general meeting unless they convert their ADSs into Shares and become registered in the Company’s register of members as the holders of Shares prior to the close of business in the Cayman Islands on November 8, 2016 (the “Share Record Date”). ADS holders who wish to convert their ADSs need to make arrangements to deliver the ADSs to the ADS Depositary for cancellation before the close of business in New York City on November 8, 2016 together with (a) delivery instructions for the corresponding Shares (name and address of person who will be the registered holder of such Shares), (b) payment of the ADS cancellation fees ($5.00 for each 100 ADSs (or portion thereof) to be cancelled pursuant to the terms of the ADS deposit agreement) and any applicable taxes, and (c) a certification that the ADS holder either (i) held the ADSs as of the ADS Record Date and has not given, and will not give, voting instructions to the ADS Depositary as to the ADSs being converted, or has given voting instructions to the ADS Depositary as to the ADSs being converted but undertakes not to vote the corresponding Shares at the extraordinary general meeting or (ii) did not hold the ADSs as of the ADS Record Date and undertakes not to vote the corresponding Shares at the extraordinary general meeting. If you hold your ADSs in a brokerage, bank or other nominee account, please contact your broker, bank or other nominee to find out what actions you need to take to instruct the broker, bank or other nominee to convert the ADSs on your behalf. Upon conversion of the ADSs, the ADS Depositary will arrange for JP Morgan Chase, N.A., Hong Kong branch, the custodian holding the Shares, to transfer registration of the Shares to the former ADS holder (or a person designated by the former ADS holder). If the merger is not completed, the Company will continue to be a public company in the United States and ADSs will continue to be listed on NASDAQ. Shares are not listed and cannot be traded on any stock exchange other than NASDAQ, and in such case only in the form of ADSs. As a result, if you have converted your ADSs to attend the extraordinary general meeting and the merger is not completed and you wish to be able to sell your Shares on a stock exchange, you will need to deposit your Shares into the Company’s ADS Program for the issuance of the corresponding number of ADSs, subject to the terms and conditions of applicable law and the ADS deposit agreement, including, among other things, payment of relevant fees of the ADS Depositary for the issuance of ADSs ($5.00 for each 100 ADSs (or portion thereof) issued) and applicable share transfer taxes (if any) and related charges pursuant to the ADS deposit agreement.

Shareholder Vote Required to Authorize and Approve the Merger Agreement and Plan of Merger (Page 65)

In order for the merger to be completed, the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, must be authorized and approved by a special resolution (as defined in the Cayman Islands Companies Law) of the Company’s shareholders, which requires an affirmative vote of holders of Shares representing at least two-thirds of the voting rights of the Shares present and voting in person or by proxy as a single class at the extraordinary general meeting (the “Requisite Company Vote”).

As of the date of the proxy statement, the Buyer Group beneficially owns approximately 66.0% of our issued and outstanding Shares entitled to vote. Pursuant to the Support Agreement, the Rollover Shareholders, Parent, and Merger Sub have agreed inter alia, that they will vote the Rollover Shares in favor of authorization and approval of the merger agreement, the plan of merger, and the consummation of the transactions contemplated therein, including the merger. Because the Buyer Group beneficially owns approximately 66.0% of the total issued and outstanding Shares of the Company and because authorization and approval of the merger agreement, plan of merger, and the transactions contemplated by the merger agreement requires an affirmative vote of holders of Shares representing at least two-thirds of the voting rights of the Shares, both quorum and an affirmative vote in favor of the transaction are practically assured with the Buyer Group’s vote.

Based on the number of Shares we expect to be issued and outstanding and entitled to vote on the Share Record Date, approximately 1,794,243 Shares held by shareholders other than the Buyer Group must be voted

in favor of the proposal to authorize and approve the merger agreement, the plan of merger, and the transactions contemplated by the merger agreement, including the merger, in order for the proposal to be authorized and approved, assuming all shareholders will be present and voting in person or by proxy at the extraordinary general meeting.

Dissenter Rights of Shareholders (Page 69)

Shareholders who dissent from the merger in accordance with Section 238 of the Cayman Islands Companies Law (the “dissenting shareholders”) will have the right to receive payment of the fair value of their Shares if the merger is completed, but only if they deliver to the Company, before the vote to authorize and approve the merger is taken at the extraordinary general meeting, a written objection to the merger and subsequently comply with all procedures and requirements of Section 238 of the Cayman Islands Companies Law. A copy of Section 238 of the Cayman Islands Companies Law is attached as Annex C to this proxy statement. The fair value of Shares determined under the Cayman Islands Companies Law could be more than, the same as, or less than the merger consideration dissenting shareholders would otherwise receive.

ADS HOLDERS WILL NOT HAVE THE RIGHT TO EXERCISE DISSENTER RIGHTS AND RECEIVE PAYMENT OF THE FAIR VALUE OF THE SHARES UNDERLYING THEIR ADSs. THE ADS DEPOSITARY WILL NOT EXERCISE OR ATTEMPT TO EXERCISE ANY DISSENTER RIGHTS WITH RESPECT TO ANY OF THE SHARES THAT IT HOLDS, EVEN IF AN ADS HOLDER REQUESTS THE ADS DEPOSITARY TO DO SO. ADS HOLDERS WISHING TO EXERCISE DISSENTER RIGHTS MUST SURRENDER THEIR ADSs TO THE ADS DEPOSITARY FOR CONVERSION INTO SHARES, PAY THE ADS DEPOSITARY’S FEES REQUIRED FOR THE CANCELLATION OF THEIR ADSs, PROVIDE INSTRUCTIONS FOR THE REGISTRATION OF THE CORRESPONDING SHARES IN THE COMPANY’S REGISTER OF MEMBERS, AND CERTIFY THAT THEY HELD THE ADSs AS OF THE ADS RECORD DATE AND HAVE NOT GIVEN, AND WILL NOT GIVE, VOTING INSTRUCTIONS AS TO THEIR ADSs BEFORE 12:00 P.M. (NEW YORK CITY TIME) ON DECEMBER 7, 2016, AND BECOME REGISTERED HOLDERS OF SHARES BEFORE THE VOTE TO AUTHORIZE AND APPROVE THE MERGER IS TAKEN AT THE EXTRAORDINARY GENERAL MEETING. (TO AVOID DOUBT, ANY ADS HOLDERS WHO CONVERT THEIR ADSs INTO SHARES AFTER THE SHARE RECORD DATE WILL NOT BE ENTITLED TO ATTEND OR TO VOTE AT THE EXTRAORDINARY GENERAL MEETING, BUT WILL BE ENTITLED TO EXERCISE DISSENTER RIGHTS IF THEY BECOME REGISTERED HOLDERS OF SHARES BEFORE THE VOTE IS TAKEN AT THE EXTRAORDINARY GENERAL MEETING, IN ACCORDANCE WITH THE IMMEDIATELY PRECEDING SENTENCE.) AFTER CONVERTING THEIR ADSs AND BECOMING REGISTERED HOLDERS OF SHARES, SUCH FORMER ADS HOLDERS MUST ALSO COMPLY WITH THE PROCEDURES AND REQUIREMENTS FOR EXERCISING DISSENTER RIGHTS WITH RESPECT TO THE SHARES UNDER SECTION 238 OF THE CAYMAN ISLANDS COMPANIES LAW. IF THE MERGER IS NOT COMPLETED, THE COMPANY WILL CONTINUE TO BE A PUBLIC COMPANY IN THE UNITED STATES AND ADSs WILL CONTINUE TO BE LISTED ON NASDAQ. SHARES ARE NOT LISTED AND CANNOT BE TRADED ON ANY STOCK EXCHANGE OTHER THAN NASDAQ, AND IN SUCH CASE ONLY IN THE FORM OF ADSs. AS A RESULT, IF A FORMER ADS HOLDER HAS CONVERTED HIS, HER OR ITS ADSs TO EXERCISE DISSENTER RIGHTS AND THE MERGER IS NOT COMPLETED AND SUCH FORMER ADS HOLDER WISHES TO BE ABLE TO SELL HIS, HER OR ITS SHARES ON A STOCK EXCHANGE, SUCH FORMER ADS HOLDER WILL NEED TO DEPOSIT HIS, HER OR ITS SHARES INTO THE COMPANY’S ADS PROGRAM FOR THE ISSUANCE OF THE CORRESPONDING NUMBER OF ADSs, SUBJECT TO THE TERMS AND CONDITIONS OF APPLICABLE LAW AND THE ADS DEPOSIT AGREEMENT, INCLUDING, AMONG OTHER THINGS, PAYMENT OF RELEVANT FEES OF THE ADS DEPOSITARY FOR THE ISSUANCE OF ADSs ($5.00 FOR EACH 100 ADSs (OR PORTION THEREOF) ISSUED) AND APPLICABLE SHARE TRANSFER TAXES (IF ANY) AND RELATED CHARGES PURSUANT TO THE ADS DEPOSIT AGREEMENT.

We encourage you to read the section of this proxy statement entitled “Dissenter Rights” as well as Annex C to this proxy statement carefully and to consult your Cayman Islands legal counsel if you desire to exercise your dissenter rights.

Purposes and Effects of the Merger (Page 50)

The purpose of the merger is to enable Buyer Group to acquire 100% control of the Company in a transaction in which the Company’s shareholders (other than the holders of Rollover Shares and Excluded Shares) will be cashed out in exchange for $0.366 per Share or $2.20 per ADS without interest and net of any applicable withholding taxes, so that the Buyer Group will bear the rewards and risks of the sole ownership of the Company after the merger, including any future earnings and growth of the Company as a result of improvements to the Company’s operations or acquisitions of other businesses. Please see “Special Factors — Purpose of and Reasons for the Merger” beginning on page 50 for additional information.

ADSs representing the Shares are currently listed on NASDAQ (under the symbol “ACTS”). It is expected that, immediately following the completion of the merger, the Company will cease to be a publicly traded company and will instead become a privately held company owned by the Buyer Group. Following the completion of the merger, the ADSs will cease to be listed on NASDAQ, and price quotations with respect to sales of the ADSs in the public market will no longer be available. In addition, registration of the ADSs and the underlying Shares under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”) may be terminated upon the Company’s application to the United States Securities and Exchange Commission (“SEC”) if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders of the Shares. 90 days after the filing of Form 15 in connection with the completion of the merger or such longer period as may be determined by the SEC, registration of the ADSs and the underlying Shares under the Exchange Act will be terminated and the Company will no longer be required to file periodic reports with the SEC or otherwise be subject to the United States federal securities laws, including the Sarbanes-Oxley Act of 2002, applicable to public companies. Furthermore, following the completion of the merger, the ADSs Program will be terminated. Please see “Special Factors — Effect of the Merger on the Company” beginning on page 50 for additional information.

Plans for the Company after the Merger (Page 53)

After the effective time of the merger, Parent anticipates that the Company’s operations will be conducted substantially as they are currently being conducted, except that the Company will cease to be an independent public company and will instead be owned by the Buyer Group.

Recommendations of the Special Committee and the Board of Directors (Page 31)

on the terms and subject to the conditions set forth in the merger agreement, is fair to, and in the best interests of, the Company and its Unaffiliated Security Holders; (b) approved the execution, delivery and performance by the Company of the merger agreement, the plan of merger and the consummation of the transactions contemplated thereby, including the merger; and (c) resolved to direct that the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated thereby, including the merger, be submitted to a vote at an extraordinary general meeting of the shareholders of the Company.

The Board unanimously recommends that you vote FOR the proposal to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, and upon the merger becoming effective, the amendment and restatement of the existing memorandum and articles of association of the Company (as the surviving company) by their deletion in their entirety and the substitution in their place of a new memorandum and articles of association in the form attached to the plan of merger, FOR the proposal to authorize each of the members of the Special Committee and any other director or officer of the Company to do all things necessary to give effect to the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received to pass the special resolutions during the extraordinary general meeting.

For a detailed discussion of the material factors considered by the Special Committee and the Board in determining to recommend the approval of the merger agreement and the approval of the transactions, including the merger, and in determining that the merger is fair to and in the best interests of the Company and its Unaffiliated Security Holders, see “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 31 and “Special Factors — Effects of the Merger on the Company — Primary Benefits and Detriments of the Merger” beginning on page 51. The foregoing summary is qualified in its entirety by reference to these sections.

Position of the Buyer Group as to the Fairness of the Merger (Page 36)

Each member of the Buyer Group believes that the merger is both substantively and procedurally fair to the Company’s Unaffiliated Security Holders. Their belief is based upon the factors discussed under the caption “Special Factors — Position of the Buyer Group as to Fairness of the Merger” beginning on page 36.

Each member of the Buyer Group is making the statements included in this paragraph solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The Buyer Group’s views as to the fairness of the merger are not intended to be and should not be construed as a recommendation to any shareholder of the Company as to how that shareholder should vote on the proposal to authorize and approve the merger agreement, the plan of merger and the transactions, including the merger.

Financing of the Merger (Page 54)

Parent estimates that the total amount of funds necessary to complete the merger and the related transactions at the closing of the merger, including for the payment of the merger consideration to our shareholders (other than the Buyer Group) pursuant to the merger agreement, is anticipated to be approximately $33,405,139, assuming no exercise of dissenter rights by the shareholders of the Company. Available cash of the Company and its subsidiaries is expected to be used to finance the consummation of the merger and the other transactions contemplated by the merger agreement. The funds necessary to complete the merger and the related transactions at the closing of the merger, including for the payment of the merger consideration to our shareholders, will be paid from accounts outside China, and such payment will not be subject to any restriction, registration, approval or procedural requirements under applicable PRC laws, rules and regulations.

Share Ownership of the Company Directors and Officers and Voting Commitments (Page 55)

As of the date of this proxy statement, the Company’s directors and executive officers, as a group held an aggregate of 0.02% of the issued and outstanding Shares, or 558,000 Shares, including Shares represented by ADS. They also held 402,000 Shares underlying Company RSUs granted under the Company Incentive Plan. The Company’s directors and executive officers, having reviewed the recommendation of the Board, have preliminarily determined to follow the Board’s recommendation and vote FOR the proposals.

As of the Share Record Date, we expect that the Buyer Group will beneficially own approximately 66.0% of our issued and outstanding Shares entitled to vote. Please see “Security Ownership of Certain Beneficial Owners and Management of the Company” beginning on page 98 for additional information.

Pursuant to the Support Agreement, the Rollover Shareholders with each other and with Merger Sub have agreed inter alia, that they will vote the Rollover Shares in favor of authorization and approval of the merger agreement, the plan of merger, and the consummation of the transactions contemplated therein, including the merger.

Opinion of the Special Committee’s Financial Advisor (Page 42)

On September 12, 2016, Houlihan Lokey (China) Limited (“Houlihan Lokey”) rendered an oral opinion to the Special Committee (which was confirmed in writing by delivery of Houlihan Lokey’s written opinion dated the same day), as to the fairness, from a financial point of view, of the $0.366 Per Share Merger Consideration and the $2.20 Per ADS Merger Consideration, as applicable, to be received in the merger by holders of Shares and ADSs, as applicable (in each case, other than holders of the Rollover Shares and the Excluded Shares, including Rollover Shares and Excluded Shares represented by ADSs), as of September 12, 2016, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by Houlihan Lokey in preparing its opinion.

The opinion of Houlihan Lokey was directed to the Special Committee and only addressed the fairness from a financial point of view of the Per Share Merger Consideration and Per ADS Merger Consideration, as applicable, to be received in the merger by holders of the Shares and the ADSs, respectively, (in each case, other than holders of the Rollover Shares and the Excluded Shares, including Rollover Shares and Excluded Shares represented by ADSs), and does not address any other aspect or implication of the merger. The summary of the opinion of Houlihan Lokey in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex B to this proxy statement and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by Houlihan Lokey in preparing its opinion. However, neither the opinion of Houlihan Lokey nor the summary of the opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute advice or a recommendation to the Special Committee or any holder of the Shares or the ADSs as to how to act or vote with respect to the merger or related matters. Please see “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 42 for additional information.

Interests of the Company’s Executive Officers and Directors in the Merger (Page 55)

In considering the recommendations of the Special Committee and the Board, the Company’s shareholders should be aware that certain of the Company’s directors and executive officers have interests in the transaction that are different from, and/or in addition to, the interests of the Company’s shareholders generally. These interests include, among others:

•

continued indemnification rights and directors and officers liability insurance to be provided by the surviving company to former directors and officers of the Company pursuant to the merger agreement; and

•

the expected continuation of service of the directors and executive officers of the Company with the surviving company in positions that are substantially similar to their current positions, allowing them to benefit from remuneration arrangements with the surviving company.

The Special Committee and the Board were aware of these potential conflicts of interest and considered them, among other matters, in reaching their decisions and recommendations with respect to the merger agreement and related matters. Please see “Special Factors — Interests of Certain Persons in the Merger” beginning on page 55 for additional information.

Conditions to the Merger (Page 80)

The completion of the transactions contemplated by the merger agreement, including the merger, is subject to the satisfaction of the following conditions:

•

the merger agreement, the plan of merger and transactions contemplated by the merger agreement, including the merger, being authorized and approved by the Requisite Company Vote;

•

no court or other governmental entity of competent jurisdiction having enacted, issued, promulgated, enforced or entered any law or award, writ, injunction, determination, rule, regulation, judgment, decree or executive order (whether temporary, preliminary or permanent) that is then in effect or is pending, proposed, or threatened, which restrains, enjoins or otherwise prohibits the consummation of the merger;

•

except for the approval of registration of the plan of merger to be issued by the Cayman Islands Registrar, all required governmental authorizations necessary to effect the merger, if any, shall have been obtained and be in full force and effect; and

•

consent from all secured creditors of the Company, if any, for the consummation of the merger shall have been obtained in accordance with the Cayman Islands Companies Law and be in full force and effect.

The obligations of Parent and Merger Sub to consummate the merger are also subject to the satisfaction, or waiver by Parent, of the following conditions:

•

the representations and warranties of the Company in the merger agreement (disregarding any limitation or qualification by “materiality” or “Material Adverse Effect”) being true and correct as of the date of the merger agreement and as of the closing date (or as of a specific date, to the extent such representation or warranty is expressly made as of a specific date), except where the failure of such representations and warranties to be so true and correct has not had any Material Adverse Effect (as defined in the merger agreement);

•

the Company having performed or complied in all material respects with all agreements and covenants required to be performed or complied with by it under the merger agreement prior to or at the time of closing;

•

since the date of the merger agreement, there has been no effect and there continues to be no effect that has had, individually or in the aggregate, a Material Adverse Effect;

•

the holders of no more than 5% of the Shares have validly served a notice of dissent under Section 238(2) of the Cayman Islands Companies Law;

•

the aggregate amount of available cash available to fund the merger consideration at least equals the Required Available Cash Amount (as defined in the merger agreement), and the Company has delivered to Parent written evidence thereof in form and substance reasonably satisfactory to Parent and certified to be true and correct as of the time of closing; and

•

Parent having received a certificate signed by an executive officer of the Company, dated the closing date, certifying as to the fulfillment of the relevant conditions above.

The obligations of the Company to consummate the merger are also subject to the satisfaction, or waiver by the Company, of the following conditions:

•

the representations and warranties of Parent and Merger Sub in the merger agreement (disregarding any limitation or qualification by “materiality”) being true and correct as of the date of the merger agreement and as of the closing date (or as of a specific date, to the extent such representation or warranty is expressly made as of a specific date), as if made on and at such date and time, except where the failure of such representations and warranties to be so true and correct has not had or would not, individually or in the aggregate, prevented or reasonably be expected to prevent the consummation of any of the transactions, including the merger;

•

each of Parent and Merger Sub having performed or complied in all material respects with all agreements and covenants required to be performed or complied with by it under the merger agreement prior to or at the time of closing; and

•

the Company having received a certificate signed by an officer or director of each of Parent and Merger Sub, dated the closing date, certifying as to the fulfillment of the above conditions.

Acquisition Proposals (Page 78)

During the period beginning on the date of the merger agreement and at any time prior to the receipt of the Requisite Company Vote, the Company and its representatives may (i) initiate, solicit, and encourage proposals from third parties relating to any direct or indirect acquisition or purchase of all, but not part, of the Company; (ii) contact the person who has made any proposal or offer of a Competing Transaction (as defined in the merger agreement) to clarify and understand the terms and conditions thereof; (iii) provide information in response to the request of the person who has made such proposal or offer, if and only if, prior to providing such information, the Company has received from the person so requesting such information an executed Acceptable Confidentiality Agreement (as defined in the merger agreement), provided that the Company shall concurrently make available to Parent any information concerning the Company and the Subsidiaries that is provided to any such person and that was not previously made available to Parent or its representatives; and (iv) enter into and maintain discussions or negotiations with respect to a proposal for a Competing Transaction or otherwise cooperate with or assist or participate in, or facilitate any such inquiries, proposals, discussions or negotiation; provided that the Special Committee has (A) determined, in its good faith judgment, after consultation with its financial advisor and outside legal counsel, that such proposal or offer constitutes or would reasonably be expected to result in a “Superior Proposal” (as defined in the merger agreement and further explained under the caption “The Merger Agreement and Plan of Merger — Acquisition Proposal” beginning on page 78), (B) determined, in its good faith judgment, after consultation with its financial advisor and outside legal counsel, that, in light of such “Superior Proposal”, failure to take such action would be inconsistent with the fiduciary duties of the Board under applicable law, and (C) provided written notice to Parent at least three (3) business days prior to taking any such action.

Until the earlier of the effective time or the termination of the merger agreement, the Company shall (i) promptly notify Parent orally and in writing if the Company (A) determines to initiate actions soliciting or otherwise concerning a proposal, offer, inquiry, contact, or request, or (B) becomes aware of any proposal or offer, or any inquiry or contact with any person, regarding a Competing Transaction or that could reasonably be expected to lead to a Competing Transaction; (ii) notify Parent orally and in writing as promptly as practicable (and in any event within 24 hours after the Company has knowledge thereof), specifying the material terms and conditions of the proposal, the identity of the party making such proposal, and whether the Company has any intention to provide confidential information to such person; (iii) keep Parent reasonably informed, on a reasonably current basis (and in any event within 12 hours of the occurrence of any material changes, developments, discussions or negotiations) of the status and terms of any such proposal, offer, inquiry, contact, or request; (iv) provide Parent with 48 hours’ prior notice (or such prior notice as provided to the members of the Board or members of the Special Committee) of any meeting of the Board or Special Committee at which the Board or Special Committee, as applicable, is reasonably expected to consider any Competing Transaction; and (v) refrain from entering into any confidentiality agreement with any third party subsequent to the merger agreement which prohibits the Company from providing such information to Parent.

Change of Recommendation (Page 79)

The Company may affect a change in the Company Recommendation if:

(i)

the Company has received a bona fide written proposal or offer with respect to a Competing Transaction and the Board determines, in its good faith judgment upon the unanimous recommendation of the Special Committee (after consultation with its financial advisor and outside legal counsel), that such proposal or offer constitutes a “Superior Proposal” and failure to make a Change in the Company Recommendation (as defined in the merger agreement) with respect to such “Superior Proposal” would be inconsistent with its fiduciary duties under applicable law;

(ii)

the Company has complied with the relevant requirements as specified in the merger agreement with respect to such proposal or offer;

(iii)

after (A) providing at least ten (10) business days’ (the “Superior Proposal Notice Period”) written notice to Parent (a “Notice of Superior Proposal”) advising Parent that the Board has received a “Superior Proposal”, specifying the material terms and conditions of such “Superior Proposal” (and providing any proposed agreements related thereto), identifying the person making such “Superior Proposal” and indicating that the Board intends to effect a change in the Company Recommendation and the manner in which it intends (or may intend) to do so, it being understood that the Notice of “Superior Proposal” or any amendment or update thereto or the determination to so deliver such notice shall not constitute a change in the Company Recommendation, (B) negotiating with and causing its financial and legal advisors to negotiate with Parent, Merger Sub and their respective representatives in good faith (to the extent Parent desires to negotiate) to make such adjustments in the terms and conditions of the merger agreement, so that such proposal or offer would cease to constitute a “Superior Proposal”, and (C) permitting Parent and its representatives to make a presentation to the Board and the Special Committee regarding the merger agreement and any adjustments with respect hereto (to the extent Parent desires to make such presentation); provided that any material modifications to such proposal or offer that the Board has determined to be a “Superior Proposal” shall be deemed a new “Superior Proposal” and the Company shall be required to again comply with the relevant requirements, and provided, further, that with respect to the new written notice to Parent, the Superior Proposal Notice Period shall be deemed to be an eight (8) business day period rather than the ten (10) business day period first described above; and

(iv)

following the end of such ten (10) business day period or eight (8) business day period (as applicable), the Board shall have determined, in its good faith judgment upon the unanimous recommendation of the Special Committee (after consultation with its financial advisor and outside legal counsel), that taking into account any changes to merger agreement proposed by Parent and Merger Sub in response to the Notice of Superior Proposal or otherwise, that the proposal or offer with respect to the Competing Transaction giving rise to the Notice of Superior Proposal continues to constitute a “Superior Proposal”.

Irrespective of whether there is a change in the Company Recommendation, the Company shall not submit to the vote of its shareholders any Competing Transaction or Alternative Acquisition Agreement (as defined in the merger agreement) prior to the termination of the merger agreement.

Termination of the Merger Agreement (Page 82)

The merger agreement may be terminated at any time prior to the effective time, whether before or after shareholder approval has been obtained:

•

by mutual written consent of the Company and Parent;

•

by either Parent or the Company, if:

•

the merger is not consummated on or before 11:59 p.m. (Hong Kong Time) on March 31, 2017;

•

any injunction permanently restraining, enjoining or otherwise prohibiting the consummation of the merger becomes final and non-appealable; or

•

the shareholders’ meeting has been held and completed and the requisite shareholders’ approval has not been obtained at the extraordinary general meeting duly convened therefor or at any adjournment or postponement thereof;

provided that this termination right shall not be available to any party whose failure to fulfill any of its obligations under the merger agreement has been a material cause of, or resulted in, the failure of the applicable conditions being satisfied.

•

by the Company, if:

•

Parent or Merger Sub has breached any of its representations, warranties, covenants or agreements under the merger agreement, such that the corresponding condition to closing would not be satisfied and such breach or inaccuracy cannot be cured by the termination date, or if curable, is not cured within thirty (30) business days following receipt by Parent or Merger

Sub of written notice from the Company; provided that this termination right is not available to the Company if it is then in material breach of any representations, warranties, covenants or other agreements under the merger agreement that would result in the corresponding conditions to closing would not be satisfied;

•

(a) all of the closing conditions that are the obligation of Parent and Merger Sub are otherwise satisfied (other than those conditions that by their nature are to be satisfied at the closing); (b) Parent and Merger Sub fail to complete the closing within ten (10) business days following the date the closing should have occurred according to the merger agreement; and (c) the Company stands ready, willing and able to consummate the transactions contemplated hereby during such period; or

•

prior to the receipt of the Requisite Company Vote, the Board, based on recommendation of the Special Committee, has authorized an Alternative Acquisition Agreement (as defined in the meger agreement) with respect to a “Superior Proposal”, and the Company immediately after the termination of the merger agreement enters into such Alternative Acquisition Agreement; provided that the Company has complied in all respects with the relevant requirements with respect to such “Superior Proposal” and/or Alternative Acquisition Agreement.

•

by Parent, if:

•

the Company has breached any of its representations, warranties, covenants or agreements under the merger agreement, such that the corresponding condition to closing would not be satisfied prior to the termination date; provided that this termination right is not available to Parent if it or Merger Sub is then in material breach of any representations, warranties, covenants or other agreements under the merger agreement that would result in the corresponding conditions to closing would not be satisfied; or

•

(a) the Board or any committee thereof shall have effected a change in the Company Recommendation, or (b) the Company has entered into or publicly announced its intention to enter into, an Alternative Acquisition Agreement (as defined in the merger agreement); or

•

(a) Parent has received an Alternative Financing Notice (as defined in the merger agreement) from the Company, and Parent shall have failed to obtain the necessary Alternative Financing within seven (7) days from receipt of such notice despite using its commercially reasonable efforts, (b) Parent shall have received an Alternative Financing Notice that is untimely, or (c) Parent, upon the advice of outside counsel, reasonably and in good faith determines that all or any portion of the available cash of the Company to fund the merger consideration cannot be released within seven (7) days from the proposed closing date to pay the shareholders of the Company.

No termination fee will be payable by any party if the merger agreement is terminated.

Fees and Expenses (Page 57)

Whether or not the merger is consummated, all costs and expenses incurred in connection with the merger agreement and the merger and the other transactions contemplated by the merger agreement will be paid by the party incurring such expense.

The holders of ADSs will pay any applicable fees, charges and expenses of the ADS Depositary and government charges (other than withholding taxes, if any) due to or incurred by the ADS Depositary in connection with distribution of the Per ADS Merger Consideration to holders of ADSs and the cancellation of ADSs (including any ADS cancellation or termination fees payable in accordance with the ADS deposit agreement in connection with the merger).

Material U.S. Federal Income Tax Consequences (Page 57)

The receipt of cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local and other tax laws. Please see “Special Factors — Material U.S. Federal Income Tax Consequences” beginning on page 57. The tax

consequences of the merger to you will depend upon your personal circumstances. You should consult your tax advisors for a full understanding of the U.S. federal, state, local, foreign and other tax consequences of the merger to you.

Material PRC Income Tax Consequences (Page 61)

Based on the current law and practice in the People Republic of China (“PRC”), the Company does not believe that it should be considered a resident enterprise under the PRC Enterprise Income Tax Law, effective January 1, 2008 (the “EIT Law”) or that the gain recognized on the receipt of cash for our Shares or ADSs should otherwise be subject to PRC tax to holders of such Shares and ADSs that are not PRC residents. However, there is uncertainty regarding whether the PRC tax authorities would deem the Company to be a resident enterprise. If the PRC tax authorities were to determine that the Company should be considered a resident enterprise or that the receipt of cash for the Shares or ADSs should otherwise be subject to PRC tax, then gain recognized on the receipt of cash for the Shares or ADSs pursuant to the merger or through the exercise of dissenter rights, as the case may be, by the Company’s shareholders or ADS holders who are not PRC residents could be treated as PRC-source income that would be subject to PRC income tax at a rate of 20% in the case of individuals or 10% in the case of enterprises (subject to applicable tax treaty relief, if any). Whether or not the Company is considered a resident enterprise, gain recognized on the receipt of cash for Shares or ADSs is subject to PRC tax if the holders of such Shares or ADSs are PRC resident individuals. You should consult your own tax advisor for a full understanding of the tax consequences of the merger or the exercise of dissenter rights to you, including any PRC tax consequences. Please see “Special Factors — Material PRC Income Tax Consequences” beginning on page 61 for additional information.

Material Cayman Islands Tax Consequences (Page 62)

The Cayman Islands currently have no form of income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax. No taxes, fees or charges will be payable (either by direct assessment or withholding) to the government or other taxing authority in the Cayman Islands under the laws of the Cayman Islands in respect of the merger or the receipt of cash for the Shares or ADSs under the terms of the merger agreement. This is subject to the qualification that (a) Cayman Islands stamp duty may be payable if any original transaction documents are brought into or executed or produced before a court in the Cayman Islands (for example, for enforcement), (b) registration fees will be payable to the Cayman Islands Registrar to register the plan of merger and (c) fees will be payable to the Cayman Islands Government Gazette Office to publish the notice of the merger in the Cayman Islands Government Gazette. Please see “Special Factors — Material Cayman Islands Tax Consequences” beginning on page 62 for additional information.

Litigation Related to the Merger

We are not aware of any lawsuit that challenges the merger, the merger agreement or any of the transactions contemplated by the merger agreement.

Regulatory Matters (Page 57)

The Company does not believe that any material federal or state regulatory approvals, filings or notices are required in connection with the merger other than the approvals, filings or notices required under the federal securities laws and the filing of the plan of merger (and supporting documentation as specified in the Cayman Islands Companies Law) with the Cayman Islands Registrar and in the event the merger becomes effective, a copy of the certificate of merger being given to the shareholders and creditors of the Company and Merger Sub as at the time of the filing of the plan of merger.

Accounting Treatment of the Merger (Page 57)

Upon completion of the merger, the Company would cease to be a publicly traded company, and the Company expects to account for the merger at historical cost.

Market Price of the Shares (Page 63)

The closing price of the ADSs on NASDAQ on May 19, 2016, the last trading date immediately prior to the Company’s announcement on May 20, 2016 that it had received “a going private” proposal from the Buyer Group, was $1.47 per ADS. The merger consideration of $0.366 per Share, or $2.20 per ADS, to be paid in the merger represents a premium of approximately 49.7% to that closing price.

QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY
GENERAL MEETING AND THE MERGER

The following questions and answers address briefly some questions you may have regarding the extraordinary general meeting and the merger. These questions and answers may not address all questions that may be important to you as a shareholder of the Company. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

Why am I receiving this proxy statement?

On September 12, 2016, we entered into the merger agreement with Parent and Merger Sub. You are receiving this proxy statement in connection with the solicitation of proxies by the Board in favor of the proposal to authorize and approve the merger agreement, the plan of merger, and the transactions completed therein, including the merger, at an extraordinary general meeting or at any adjournment of such extraordinary general meeting.

What is the merger?

The merger is a going private transaction pursuant to which Merger Sub will merge with and into the Company. Once the merger agreement is authorized and approved by the shareholders of the Company and the other closing conditions under the merger agreement have been satisfied or waived, Merger Sub will merge with and into the Company, with the Company continuing as the surviving company after the merger. If the merger is completed, the Company will be a privately held company beneficially owned by the Buyer Group, and as a result of the merger, the ADSs will no longer be listed on NASDAQ, the Company will cease to be a publicly traded company and the ADS Program will be terminated.

What will I receive in the merger?

If you own Shares and the merger is completed, at the effective time of the merger, you will be entitled to receive the Per Share Merger Consideration, in cash, without interest and net of any applicable withholding taxes, for each Share you own immediately prior to the effective time of the merger (unless you validly exercise and have not effectively withdrawn or lost your dissenter rights under Section 238 of the Cayman Islands Companies Law with respect to the merger, in which event you will be entitled to receive the fair value of each Share as determined pursuant to Section 238 of the Cayman Islands Companies Law).

If you own ADSs and the merger is completed, you will be entitled to receive the Per ADS Merger Consideration (less a cancellation fee of up to $5.00 per 100 ADSs (or any fraction thereof) pursuant to the terms of the ADS deposit agreement), in cash, without interest and net of any applicable withholding taxes, for each ADS you own immediately prior to the effective time of the merger unless you (a) surrender your ADS to the ADS Depositary, pay the ADS Depositary’s fees required for the cancellation of ADSs, provide instructions for the registration of the corresponding Shares, and certify that you have not given, and will not give, voting instructions as to the ADSs (or, alternatively, you will not vote the Shares) before 12:00 p.m. on December 7, 2016 (New York City Time) and become a registered holder of Shares by the close of business in the Cayman Islands on the Share Record Date and (b) validly exercise and have not effectively withdrawn or lost your dissenter rights under Section 238 of the Cayman Islands Companies Law with respect to the merger, in which event you will be entitled to the fair value of each corresponding Share pursuant to the Cayman Islands Companies Law.

Please see “Special Factors — Material U.S. Federal Income Tax Consequences,” “Special Factors — Material PRC Income Tax Consequences” and “Special Factors — Material Cayman Islands Tax Consequences” beginning on page 57, page 61 and page 62 respectively for a more detailed description of the tax consequences of the merger. You should consult your own tax advisor for a full understanding of how the merger will affect your U.S. federal, state, local, non-U.S. and other taxes.

How will the Company’s share options be treated in the merger?

over (ii) the exercise price of such Cashed-Out Option, multiplied by the number of Shares underlying such Cashed-Out Option. Each outstanding Company Option with a per Share exercise price greater than or equal to the Per Share Merger Consideration will be cancelled at the effective time of the merger for no consideration.

How will the Company’s RSUs be treated in the merger?

After the merger is completed, how will I receive the merger consideration for my Shares?

If you are a registered holder of Shares, promptly after the effective time of the merger (in any event within three business days after the effective time of the merger), a paying agent appointed by the Company will mail you a form of letter of transmittal specifying how the delivery of the merger consideration to you will be effected and instructions for effecting the surrender of share certificates in exchange for the applicable merger consideration. You will receive cash for your Shares from the paying agent after you comply with these instructions. Upon surrender of your share certificates or a declaration of loss or non-receipt, you will receive an amount equal to the number of your Shares multiplied by $0.366 in cash, without interest and net of any applicable withholding taxes, in exchange for the cancellation of your Shares.

If your Shares are held in “street name” by your broker, bank or other nominee, you will receive instructions from your broker, bank or other nominee on how to surrender your Shares and receive the merger consideration for those Shares.

After the merger is completed, how will I receive the merger consideration for my ADSs?

If your ADSs are represented by certificates, also referred to as American depositary receipts (“ADRs”), unless you have surrendered your ADRs to the ADS Depositary for cancellation prior to the effective time of the merger, upon your surrender of the ADRs (or an affidavit and indemnity of loss in lieu of the ADRs) together with a duly completed letter of transmittal (which will be supplied to you by the ADS Depositary after the effective time of the merger), the ADS Depositary will send you a check for the Per ADS Merger Consideration of $2.20, without interest and net of any applicable withholding taxes, for each ADS represented by the ADRs, in exchange for the cancellation of your ADRs after the completion of the merger. The holders of ADSs will pay any applicable fees, charges and expenses of the ADS Depositary and government charges (other than withholding taxes, if any) due to or incurred by the ADS Depositary in connection with distribution of the Per ADS Merger Consideration to holders of ADSs and the cancellation of ADSs (including any ADS cancellation or termination fees payable in accordance with the ADS deposit agreement in connection with the merger). If you hold your ADSs in uncertificated form, that is, without an ADR, unless you have surrendered your ADSs to the ADS Depositary for cancellation prior to the effective time of the merger, the ADS Depositary will automatically send you a check for the Per ADS Merger Consideration of $2.20, without interest and net of any applicable withholding taxes, in exchange for the cancellation of each of your ADSs after the completion of the merger. The Per ADS Merger Consideration may be subject to backup withholding taxes if the ADS Depositary has not received from you a properly completed and signed U.S. Internal Revenue Service Form W-8 or W-9.

In the event of a transfer of ownership of ADSs that is not registered in the register of ADS holders maintained by the ADS Depositary, the check for any cash to be exchanged upon cancellation of the ADSs will be issued to such transferee only if the ADRs, if applicable, are presented to the ADS Depositary, accompanied by all documents reasonably required to evidence and effect such transfer and to evidence that any applicable ADS transfer taxes have been paid or are not applicable. The Per ADS Merger Consideration may be subject to backup withholding taxes if the ADS Depositary has not received from the transferee a properly completed and signed U.S. Internal Revenue Service Form W-8 or W-9.

If your ADSs are held in “street name” by your broker, bank or other nominee, you will not be required to take any action to receive the net merger consideration for your ADSs as the ADS Depositary will arrange for the surrender of the ADSs and the remittance of the Per ADS Merger Consideration with The Depository Trust Company (the clearance and settlement system for the ADSs) for distribution to your broker, bank or nominee on your behalf. If you have any questions concerning the receipt of the Per ADS Merger Consideration, please contact your broker, bank or nominee.

When and where will the extraordinary general meeting be held?

The extraordinary general meeting will take place at 8F, No. 437, Ruiguang Road, Neihu District, Taipei, Taiwan, on December 9, 2016, at 2:00 p.m. (Hong Kong Time).

What matters will be voted on at the extraordinary general meeting?

You will be asked to consider and vote on the following proposals:

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as a special resolution, to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, and upon the merger becoming effective, the amendment and restatement of the existing memorandum and articles of association of the Company (as the surviving company) by their deletion in their entirety and the substitution in their place of a new memorandum and articles of association in the form attached to the plan of merger;

•

as a special resolution, to authorize each of the members of the Special Committee and any other director or officer of the Company to do all things necessary to give effect to the merger agreement, the plan of merger, and the transactions contemplated therein, including the merger; and

•

if necessary, as an ordinary resolution, to approve any motion to adjourn or postpone the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received to pass the special resolutions during the extraordinary general meeting.

What vote of our shareholders is required to authorize and approve the merger agreement and the plan of merger?

In order for the merger to be completed, the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, must be authorized and approved by a special resolution (as defined in the Cayman Islands Companies Law) of the Company’s shareholders, which requires an affirmative vote of holders of Shares representing at least two-thirds of the voting rights of the Shares present and voting in person or by proxy as a single class at the extraordinary general meeting.

the merger agreement requires an affirmative vote of holders of Shares representing at least two-thirds of the voting rights of the Shares, both quorum and an affirmative vote in favor of the transaction are practically assured with the Buyer Group’s vote.

At the close of business in the Cayman Islands on the Share Record Date, 265,788,736 Shares are expected to be issued and outstanding and entitled to vote at the extraordinary general meeting. Based on the number of Shares we expect to be issued and outstanding on the Share Record Date, approximately 1,794,243 Shares held by shareholders other than the Buyer Group must be voted in favor of the proposal to authorize and approve the merger agreement, the plan of merger and the transactions, including the merger, in order for the proposal to be authorized and approved, assuming all shareholders will be present and voting in person or by proxy at the extraordinary general meeting.

How does the Company’s board of directors recommend that I vote on the proposals?

After careful consideration and upon the unanimous recommendation of the Special Committee and after each director duly disclosed his interests in the transactions, including the merger, under the memorandum and articles of associations of the Company as amended to date and Cayman Islands law, the Board unanimously recommends that you vote:

•

FOR the proposal to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, and upon the merger becoming effective, the amendment and restatement of the existing memorandum and articles of association of the Company by their deletion in their entirety and the substitution in their place of a new memorandum and articles of association at the effective time of the merger, a copy of which is attached to the plan of merger;

•

FOR the proposal to authorize each of the members of the Special Committee and any other director or officer of the Company to do all things necessary to give effect to the merger agreement, the plan of merger, and the transactions contemplated by the merger agreement, including the merger; and

•

FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received to pass the shareholders resolution during the extraordinary general meeting.

You should read “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 31 for a discussion of the factors that the Special Committee and the Board considered in deciding to recommend the approval of the merger agreement. In addition, in considering the recommendation of the Special Committee and the Board with respect to the merger agreement, you should be aware that some of the Company’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of the Company’s shareholders generally. See “Special Factors — Interests of Certain Persons in the Merger” beginning on page 55.

Who is entitled to vote at the extraordinary general meeting?

The Share Record Date is November 8, 2016. Only shareholders entered in the register of members of the Company at the close of business in the Cayman Islands on the Share Record Date or their proxy holders are entitled to directly vote at the extraordinary general meeting or any adjournment thereof.

The ADS Record Date is November 8, 2016. Only ADS holders of the Company at the close of business in New York City on the ADS Record Date are entitled to instruct the ADS Depositary to vote at the extraordinary general meeting. Alternatively, you may vote at the extraordinary general meeting if you convert your ADSs into Shares by the close of business in New York City on November 8, 2016 and become a holder of Shares by the close of business in the Cayman Islands on the Share Record Date.

What constitutes a quorum for the extraordinary general meeting?

The presence, in person or by proxy, of shareholders holding not less than an aggregate of one-third of the issued and outstanding Shares that are entitled to vote on the Share Record Date will constitute a quorum for the extraordinary general meeting.

What effects will the merger have on the Company?

As a result of the merger, the Company will cease to be a publicly traded company and will be owned by the Buyer Group. You will no longer have any interest in our future earnings or growth. Following consummation of the merger, the registration of our Shares and ADSs and our reporting obligations with respect to our Shares and ADSs under the Exchange Act, will be terminated upon application to the SEC. In addition, upon completion of the merger, our ADSs will no longer be listed or traded on any stock exchange, including NASDAQ and the ADS Program will be terminated.

When do you expect the merger to be completed?

We are working toward completing the merger as quickly as possible and currently expect the merger to close by the end of 2016. In order to complete the merger, we must obtain shareholder approval of the merger at the extraordinary general meeting and the other closing conditions under the merger agreement must be satisfied or waived in accordance with the merger agreement.

What happens if the merger is not completed?

If the Company’s shareholders do not authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, or if the merger is not completed for any other reason, the Company’s shareholders will not receive any payment for their Shares or ADSs pursuant to the merger agreement. In addition, the Company will remain an independent publicly traded company. The ADSs will continue to be listed and traded on NASDAQ, provided that the Company continues to meet NASDAQ’s listing requirements. In addition, the Company will remain subject to SEC reporting obligations. Therefore, the Company’s shareholders will continue to be subject to similar risks and opportunities as they currently are with respect to their ownership of Shares and ADSs.

How do I vote if my Shares are registered in my name?

If Shares are registered in your name as of the Share Record Date, you should simply indicate on your proxy card how you want to vote, and sign and mail your proxy card in the enclosed return envelope as soon as possible so that it is received by the Company no later than December 7, 2016 at 5:00 p.m. (Hong Kong Time), the deadline to lodge your proxy card, so that your Shares will be represented and may be voted at the extraordinary general meeting.

Alternatively, you can attend the extraordinary general meeting and vote in person. If you decide to sign and send in your proxy card, and do not indicate how you want to vote, the Shares represented by your proxy will be voted FOR the proposal to authorize and approve the merger agreement, the plan of merger and transactions contemplated by the merger agreement, including the merger, FOR the proposal to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger and upon the merger becoming effective, the amendment and restatement of the existing memorandum and articles of association of the Company (as the surviving company) by their deletion in their entirety and the substitution in their place of a new memorandum and articles of association in the form attached to the plan of merger, FOR the proposal to authorize each of the members of the Special Committee and any other director or officer of the Company to do all things necessary to give effect to the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting, unless you appoint a person other than the chairman of the meeting as proxy, in which case the Shares represented by your proxy card will be voted (or not

submitted for voting) as your proxy determines. If your Shares are held by your broker, bank or other nominee, please see below for additional information.

How do I vote if I own ADSs?

If you own ADSs as of the close of business in New York City on the ADS Record Date (and do not cancel such ADSs and become a registered holder of the Shares underlying such ADSs as explained below), you cannot vote at the meeting directly, but you may instruct the ADS Depositary (as the holder of the Shares underlying your ADSs) how to vote the Shares underlying your ADSs by completing and signing the ADS voting instruction card and returning it in accordance with the instructions printed on it as soon as possible but, in any event, so as to be received by the ADS Depositary no later than 12:00 p.m. on December 7, 2016 (New York City Time). The ADS Depositary will endeavor, in so far as practicable, to vote or cause to be voted the number of Shares represented by your ADSs in accordance with your voting instructions. If the ADS Depositary timely receives valid voting instructions from an ADS holder which fail to specify the manner in which the ADS Depositary is to vote the Shares represented by ADSs held by such ADS holder, such ADS holder will be deemed to have instructed the ADS Depositary to vote in favor of the items set forth in the voting instructions. Furthermore, if holders of ADSs do not timely deliver specific voting instructions to the ADS Depositary, they may, under the terms of deposit agreement, be deemed to have instructed the ADS Depositary to give a discretionary proxy to a member of the Special Committee.

Alternatively, you may directly vote at the extraordinary general meeting if you cancel your ADSs prior to the close of business in New York City on and become a holder of Shares by the close of business in the Cayman Islands on the Share Record Date. If you hold your ADSs through a financial intermediary such as a broker, you must rely on the procedures and timing of the financial intermediary through which you hold your ADSs if you wish to vote. If your ADSs are held by your broker, bank or other nominee, see below.

If you wish to convert your ADSs for the purpose of voting the corresponding Shares, you need to make arrangements to deliver your ADSs to the ADS Depositary for cancellation before the close of business in New York City on November 8, 2016 together with (a) delivery instructions for the corresponding Shares (name and address of person who will be the registered holder of such Shares), (b) payment of the ADS cancellation fees ($5.00 for each 100 ADSs (or portion thereof) to be cancelled pursuant to the terms of the ADS deposit agreement) and any applicable taxes, and (c) a certification that you either (i) held the ADSs as of the ADS Record Date and have not given, and will not give, voting instructions to the ADS Depositary as to the ADSs being cancelled, or have given voting instructions to the ADS Depositary as to the ADSs being cancelled but undertake not to vote the corresponding Shares at the extraordinary general meeting or (ii) did not hold the ADSs as of the ADS Record Date and undertakes not to vote the corresponding Shares at the extraordinary general meeting. If you hold your ADSs in a brokerage, bank or other nominee account, please contact your broker, bank or other nominee to find out what actions you need to take to instruct the broker, bank or other nominee to convert the ADSs on your behalf. Upon conversion of the ADSs, the ADS Depositary will arrange for JP Morgan Chase, N.A., Hong Kong branch, the custodian holding the Shares, to transfer registration of the Shares to the former ADS holder (or a person designated by the former ADS holder). If the merger is not completed, the Company will continue to be a public company in the United States and ADSs will continue to be listed on NASDAQ. Shares are not listed and cannot be traded on any stock exchange other than NASDAQ, and in such case only in the form of ADSs. As a result, if you have converted your ADSs to attend the extraordinary general meeting and the merger is not completed and you wish to be able to sell your Shares on a stock exchange, you will need to deposit your Shares into the Company’s ADS Program for the issuance of the corresponding number of ADSs, subject to the terms and conditions of applicable law and the ADS deposit agreement, including, among other things, payment of relevant fees of the ADS Depositary for the issuance of ADSs ($5.00 for each 100 ADSs (or portion thereof) issued) and applicable share transfer taxes (if any) and related charges pursuant to the ADS deposit agreement.

If my Shares or ADSs are held in a brokerage account, will my broker vote my Shares or ADSs on my behalf?

Your broker, bank or other nominee will only vote your Shares on your behalf, or give voting instructions to the ADS Depositary with respect to the Shares representing your ADSs, if you instruct it how to vote. Therefore, it is important that you promptly follow the directions provided by your broker, bank or nominee regarding how to instruct it to vote your Shares or the Shares representing your ADSs. If you do not instruct your broker, bank or other nominee how to vote your Shares, or the Share representing your ADSs, that it holds on your behalf, those Shares may not be voted or, in the case of those Share representing your ADSs, a discretionary proxy may be provided to a member of the Special Committee to vote such uninstructed Shares in its sole discretion in accordance with the terms and conditions more fully described in the ADS deposit agreement.

What will happen if I abstain from voting or fail to vote on the proposal to authorize and approve the merger agreement and the plan of merger?

If you abstain from voting, fail to cast your vote in person or by proxy or fail to give voting instructions to the ADS Depositary, your broker, dealer, commercial bank, trust company or other nominee, your vote will not be counted; provided that if you are a holder of Shares and submit a signed proxy card without indicating how you wish to vote, the Shares represented by your proxy card will be voted FOR the proposal to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger and upon the merger becoming effective, the amendment and restatement of the existing memorandum and articles of association of the Company (as the surviving company) by their deletion in their entirety and the substitution in their place of a new memorandum and articles of association in the form attached to the plan of merger, FOR the proposal to authorize each of the members of the Special Committee and any other director or officer of the Company to do all things necessary to give effect to the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, and FOR the proposal to adjourn the extraordinary general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the extraordinary general meeting to pass the special resolutions to be proposed at the extraordinary general meeting, unless you appoint a person other than the chairman of the meeting as proxy, in which case the Shares represented by your proxy will be voted (or not submitted for voting) as your proxy determines.

May I change my vote?

Yes. If you are a holder of Shares, you may change your vote in one of the following three ways:

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First, you may revoke a proxy by written notice of revocation given to the chairman of the extraordinary general meeting before the extraordinary general meeting commences. Any written notice revoking a proxy should be sent to Actions Semiconductor Co., Ltd, No. 1, Ke Ji Si Road, Technology Innovation Coast of Hi-Tech Zone, Zhuhai, Guangdong, 519085, the People’s Republic of China;

•

Second, you may complete, date and submit a new proxy card bearing a later date than the proxy card sought to be revoked to the Company so that it is received by the Company no later than 5:00 p.m. (Hong Kong Time) on December 7, 2016, which is the deadline to lodge your proxy card; or

•

Third, you may attend the extraordinary general meeting and vote in person. Attendance, by itself, will not revoke a proxy. It will only be revoked if the shareholder actually votes at the extraordinary general meeting.

If you hold Shares through a broker, bank or other nominee and have instructed the broker, bank or other nominee to vote your Shares, you must follow directions received from the broker, bank or other nominee to change your instructions.

Holders of our ADSs may revoke their voting instructions by notification to the ADS Depositary in writing at any time prior to 12:00 p.m. on December 7, 2016 (New York City Time). A holder of ADSs can do this in one of two ways:

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First, a holder of ADSs can revoke its voting instructions by written notice of revocation timely delivered to the ADS Depositary; and

•

Second, a holder of ADSs can complete, date and submit a new ADS voting instruction card to the ADS Depositary bearing a later date than the ADS voting instruction card sought to be revoked.

If you hold your ADSs through a broker, bank or nominee and you have instructed your broker, bank or nominee to give ADS voting instructions to the ADS Depositary, you must follow the directions of your broker, bank or nominee to change those instructions.

What should I do if I receive more than one set of voting materials?

You may receive more than one set of voting materials, including multiple copies of this proxy statement or multiple proxy or voting instruction cards. For example, if you hold your Shares or ADSs in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold Shares or ADSs. If you are a holder of record and your Shares or ADSs are registered in more than one name, you will receive more than one proxy card. Please submit each proxy card that you receive.

If I am a holder of certificated Shares or ADRs, should I send in my share certificates or my ADRs now?

No. After the merger is completed, you will be sent a form of letter of transmittal with detailed written instructions for exchanging your share certificates for the merger consideration. Please do not send in your certificates now. Similarly, you should not send in the ADRs that represent your ADSs at this time. Promptly after the merger is completed, the ADS Depositary will call for the surrender of all ADRs for delivery of the merger consideration. ADR holders will be receiving a similar form of letter of transmittal and written instructions from the ADS Depositary relating to the foregoing.

All holders of uncertificated Shares and uncertificated ADSs (i.e., holders whose Shares or ADSs are held in book entry) will automatically receive their merger consideration shortly after the merger is completed without any further action required on the part of such holders. lf your Shares or your ADSs are held in “street name” by your broker, bank or other nominee you will receive instructions from your broker, bank or other nominee as to how to effect the surrender of your share certificates or ADRs in exchange for the merger consideration.

What happens if I sell my Shares or ADSs before the extraordinary general meeting?

The Share Record Date for voting at the extraordinary general meeting is earlier than the date of the extraordinary general meeting and the date that the merger is expected to be completed. If you transfer your Shares after the Share Record Date for voting but before the extraordinary general meeting, you will retain your right to vote at the extraordinary general meeting unless you have given, and not revoked, a proxy to the person to whom you transfer your Shares, but will transfer the right to receive the merger consideration to such person, so long as such person is registered as the owner of such Shares when the merger is completed. In such case, your vote is still very important and you are strongly encouraged to vote.

The ADS Record Date is the close of business in New York City on November 8, 2016. If you transfer your ADSs after the ADS Record Date but before the extraordinary general meeting, you will retain your right to instruct the ADS Depositary to vote at the extraordinary general meeting, but will transfer the right to receive the merger consideration to the person to whom you transfer your ADSs, so long as such person owns such ADSs when the merger is completed.

Am I entitled to dissenter rights?

Shareholders who dissent from the merger in accordance with Section 238 of the Cayman Islands Companies Law will have the right to receive payment of the fair value of their Shares if the merger is completed, but only if they deliver to the Company, before the vote to authorize and approve the merger is taken at the extraordinary general meeting, a written objection to the merger and subsequently comply with all procedures and requirements of Section 238 of the Cayman Islands Companies Law. A copy of Section 238 of the Cayman Islands Companies Law is attached as Annex C to this proxy statement. The fair value of Shares determined under the Cayman Islands Companies Law could be more than, the same as, or less than the merger consideration dissenting shareholders would otherwise receive.

ADS holders will not have the right to exercise dissenter rights and receive payment of the fair value of the Shares underlying their ADSs. The ADS Depositary will not exercise or attempt to exercise any dissenter rights with respect to any of the Shares that it holds, even if an ADS holder requests the ADS Depositary to do so. ADS holders wishing to exercise dissenter rights must surrender their ADSs to the ADS Depositary for conversion into Shares, pay the ADS Depositary’s fees required for the cancellation of their ADSs, provide instructions for the registration of the corresponding Shares in the Company’s register of members, and certify that they held the ADSs as of the ADS Record Date and have not given, and will not give, voting instructions as to their ADS before 12:00 p.m. (New York City Time) on December 7, 2016, and become registered holders of Shares before the vote to authorize and approve the merger is taken at the extraordinary general meeting. (To avoid doubt, any ADS holders who convert their ADSs into Shares after the Share Record Date will not be entitled to attend or to vote at the extraordinary general meeting, but will be entitled to exercise dissenter rights if they become registered holders of Shares before the vote is taken at the extraordinary general meeting, in accordance with the immediately preceding sentence.) After converting their ADSs and becoming registered holders of Shares, such former ADS holders must also comply with the procedures and requirements for exercising dissenter rights with respect to the Shares under Section 238 of the Cayman Islands Companies Law. If the merger is not completed, the Company will continue to be a public company in the United States and ADSs will continue to be listed on NASDAQ. Shares are not listed and cannot be traded on any stock exchange other than NASDAQ, and in such case only in the form of ADSs. As a result, if a former ADS holder has converted his, her, or its ADSs to exercise dissenter rights and the merger is not completed and such former ADS holder wishes to be able to sell his, her, or its Shares on a stock exchange, such former ADS holder will need to deposit his, her or its Shares into the Company’s ADS Program for the issuance of the corresponding number of ADSs, subject to the terms and conditions of applicable law and the ADS deposit agreement, including, among other things, payment of relevant fees of the ADS Depositary for the issuance of ADSs ($5.00 for each 100 ADSs (or portion thereof) issued) and applicable share transfer taxes (if any) and related charges pursuant to the ADS deposit agreement.

We encourage you to read the section of this proxy statement entitled “Dissenter rights” beginning on page 86 as well as “Annex C — Cayman Islands Companies Law Cap. 22 (Law 3 of 1961, as consolidated and revised) — Section 238” to this proxy statement carefully and to consult your own Cayman Islands legal counsel if you desire to exercise your dissenter rights.

Will any proxy solicitors be used in connection with the extraordinary general meeting?

Yes. To assist in the solicitation of proxies, the Company has engaged Laurel Hill Advisory Group as its proxy solicitor.

Do any of the Company’s directors or executive officers have interests in the merger that may differ from those of other shareholders?

Yes. Some of the Company’s directors or executive officers have interests in the merger that may differ from those of other shareholders. Please see “Special Factors — Interests of Certain Persons in the Merger” beginning on page 55 for a more detailed discussion of how some of the Company’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of our shareholders generally.

How will our directors and executive officers vote on the proposal to approve the merger agreement?

As of the date of this proxy statement, the Company’s directors and executive officers, as a group held an aggregate of 0.02% of the issued and outstanding Shares, or 558,000 Shares, including Shares represented by ADS. They also held 402,000 Shares underlying Company RSUs granted under the Company Incentive Plan. The Company’s directors and executive officers, having reviewed the recommendation of the Board, have preliminary determined to follow the Board’s recommendation and vote FOR the proposals.

Pursuant to the Support Agreement, the Rollover Shareholders and Parent have agreed to vote, or cause to be voted, all of the Shares they beneficially own, representing an aggregate of approximately 66.0% of the total issued and outstanding Shares entitled to vote as of September 16, 2016, plus any Shares that they may acquire after September 16, 2016, in favor of the proposal to approve the merger agreement, the plan of merger, and the consummation of the transactions contemplated thereby, including the merger. Because the Buyer Group beneficially owns approximately 66.0% of the total issued and outstanding Shares of the Company and because authorization and approval of the merger agreement, plan of merger, and the transactions contemplated by the merger agreement requires an affirmative vote of holders of Shares representing at least two-thirds of the voting rights of the Shares, both quorum and an affirmative vote in favor of the transaction are practically assured with the Buyer Group’s vote.

What do I need to do now?

We urge you to read this proxy statement carefully, including its annexes, exhibits, attachments and the other documents referred to or incorporated by reference herein and to consider how the merger affects you as a shareholder. After you have done so, please vote as soon as possible.

Who can help answer my questions?

If you have any questions or need assistance in voting your Shares or ADSs, you may contact Laurel Hill Advisory Group, the firm assisting us with this proxy solicitation, by phone or by mail.

By Phone:

Banks and Brokers call collect at +1 516 933-3100; all others please call the Laurel Hill Advisory Group toll-free at 888-742-1305.

By Mail:

Laurel Hill Advisory Group
2 Robbins Lane
Suite 201
Jericho, NY 11753
U.S.A.

SPECIAL FACTORS

Background of the Merger

Events leading to the execution of the merger agreement described in this Background of the Merger occurred in China and Hong Kong. As a result, Hong Kong Time is used for all dates and times given.

The Board and senior management periodically review the Company’s long-term strategic plans with the goal of enhancing shareholder value. As part of this ongoing process, the Board and senior management, from time to time, have considered strategic alternatives that may be available to the Company, including potential commercial and strategic business partnerships, acquisitions, dispositions, and new business lines.

In the third quarter of 2014, the Company completed a tender offer to purchase up to 60,000,000 of our issued and outstanding Shares (including Shares represented by ADSs), at a purchase price not greater than $7/15 per Share (or $2.80 per ADS) nor less than $5/12 per Share (or $2.50 per ADS). We eventually accepted for purchase 60,001,063 Shares (including Shares represented by ADSs) at a price of $5/12 per Share (or $2.50 per ADS), for an aggregate cost of approximately $25.0 million, excluding fees and expenses relating to the tender offer. Subsequently in the fourth quarter of 2015, we completed another tender offer to purchase up to 84,000,000 Shares at a purchase price of not greater than $23/60 per Share (or $2.30 per ADS) nor less than $20/60 per Share (or $2.00 per ADS). We eventually accepted for purchase 83,999,299 Shares (including Shares represented by ADSs) at a price of $23/60 per Share (or $2.30 per ADS), for an aggregate cost of approximately $32.2 million, excluding fees and expenses relating to the tender offer. The depositary for both tender offers has made all payments for the Shares validly tendered and accepted for purchase.

From time to time, parties have approached the Board and the Company’s senior management about possible transactions involving the Company. In particular, Mr. Chen, Hsuan-Wen (a.k.a. Niccolo Chen) (“Mr. Chen”), the former Chief Executive Officer of the Company who ceased his employment with the Company in 2013, continued to note the Company’s business, prospects and financial conditions and development efforts. Mr. Chen has kept close contact with members of the Buyer Group over the years to discuss the development and prospects of the Company. The members of the Buyer Group consist of a small circle of investors in the Company who have all known each other since the formation of the Company.

On December 1, 2015, the Company filed a Form 6-K announcing its financial results for the third quarter ended September 30, 2015. Upon reviewing the financial results, Mr. Chen, who was also the beneficial owner of our Shares representing approximately 4.9% of the issued and outstanding share capital of the Company, felt that the Company’s financial performance and prospects were underwhelming, and that the Company’s development plans had not borne fruit. Mr. Chen approached, among others, the controlling persons of Surrey Glory, Tongtong, Perfectech, Allpremier, Octovest and Ventus (the “Initial Group”) to explore different potential approaches going forward in light of the Company’s disappointing results. In their discussions, Mr. Chen and the Initial Group contemplated several options to maximize the value of their Shares, including selling their Shares on the open market, as well as bundling a significant tranche of Shares with several members of the Initial Group and selling the tranche to a competitor of the Company.

Upon further discussions however, Mr. Chen and the Initial Group believed that the full value of the Company was not fully reflected in the results of the Company, and felt that a sale of a significant tranche of the Shares to a competitor of the Company would be fraught with difficulties, and thus, would not be a realistic option. They felt that the Company’s financial performance and prospects may be turned around with further investment and a substantial restructuring of the Company’s business, including spinning off unprofitable business lines and expanding profitable business lines into new segments of the market.

As a former Chief Executive Officer of the Company, Mr. Chen believed that he possessed the relevant expertise and knowledge about the Company and the market to substantially restructure the Company and guide it back to profitability. Mr. Chen and the Initial Group understood that any restructuring could create substantial losses over a number of years, and believed that it would be difficult for the Company to meet market and analyst expectations as a publicly listed company. As a result, on March 24, 2016 Mr. Chen consulted K&L Gates (“K&L Gates”) on a preliminary basis for legal advice on the possibility of formalizing his discussions with the Initial Group in an agreement and prepare relevant disclosure.

On May 18, 2016, Mr. Chen (through the Parent) entered into a consortium agreement (the “Consortium Agreement”) with the Initial Group, pursuant to which they agreed to form the Buyer Group to (i) jointly make a proposal to the Company for a “going private” transaction, (ii) deal exclusively with one another in pursuing such transaction for a period of twelve months, and (iii) cooperate with respect to such transaction. The Consortium Agreement further provided that the Parent will be the representative of the Buyer Group and be primarily responsible for structuring, negotiating and finalizing the transaction. The Consortium Agreement, however, did not grant Parent or Mr. Chen an irrevocable proxy to vote other members Shares or nominate Parent or Mr. Chen as a director nominee for the other members. In addition, Parent has the discretion to invite other shareholders of the Company to join the Buyer Group. On May 19, 2016, the Board received a preliminary, non-binding proposal letter from the Buyer Group that proposed a going private transaction involving the acquisition of all of the outstanding equity interest of the Company not already owned by the Buyer Group at a price of $2.00 per ADS or $0.333 per Share, each ADS representing six Shares. As of and according to the proposal letter, the Buyer Group beneficially owned, in the aggregate, approximately 34.61% of the Company’s issued and outstanding share capital. In the proposal letter, the Buyer Group stated, among other things, that (a) they would work with each other on an exclusive basis, (b) they were interested only in acquiring the outstanding Shares that the Buyer Group do not already own, and (c) the Buyer Group did not intend to sell their stake in the Company to a third party.

The Board determined that it was in the best interests of the Company and its shareholders to form a special committee (the “Special Committee”), consisting of the Board’s three independent directors, Yu-Hsin (Casper) Lin (to serve as chairman of the Special Committee), Mr. Chin-Hsin (Fred) Chen, and Jun-Tse (Walter) Huang, to evaluate the Buyer Group’s proposal and other strategic alternatives for the Company. All members of the Board approved establishment of the Special Committee on May 20, 2016, by means of a written resolution. The Board delegated full power and authority to the Special Committee in connection with its evaluation of the proposal from the Buyer Group, including, among other things, the power and authority to: (a) determine whether the proposal from the Buyer Group or any alternative transaction was advisable and fair to, and in the best interests of, the Company and its Unaffiliated Security Holders; (b) investigate, review and evaluate the terms and conditions and determine the advisability of the terms of the proposal from the Buyer Group or any alternative transaction; (c) determine whether, and under what conditions, to seek or commence solicitations of interest or proposals from other interested parties for transactions with the Company other than the proposal from the Buyer Group; (d) respond to any communications, inquiries or proposals regarding the proposal from the Buyer Group or any alternative transaction; (e) establish, approve, modify, monitor and direct the process and procedures related to, and establish, adopt and issue guidelines and instructions for the Company’s senior management with respect to the review and evaluation of the proposal from the Buyer Group or any alternative transaction, and any discussions or negotiations concerning any such transactions; (f) reject or approve the proposal from the Buyer Group or any alternative transaction, or recommend such rejection or approval to the Board; (g) review and approve in advance any and all documents and other instruments used in connection with the proposal by the Buyer Group or any alternative transaction, including any and all materials to be filed with the SEC; and (h) engage legal, financial and other advisors and obtain any necessary or desirable opinions from such advisors. The Board agreed that it would not recommend the proposed transaction or any alternative transaction for approval by the Company’s shareholders or otherwise approve the proposed transaction or any alternative transaction without a prior favorable recommendation by the Special Committee.

The Company issued a press release regarding its receipt of the proposal letter, the proposed transaction and the formation of the Special Committee. On May 20, 2016, the Special Committee retained Jones Day as its U.S. legal counsel, and on May 23, 2016, Maples and Calder as its Cayman Islands legal counsel. Neither Jones Day nor Maples and Calder had performed any work for the Buyer Group or affiliates of members of the Buyer Group in the last five years prior to their respective engagement by the Special Committee. On May 23, 2016, Jones Day provided the Special Committee and the Board with an overview of the substantive requirements, processes and duties of directors under applicable law in connection with the proposed transaction, including various approaches taken by boards of directors when considering similar transactions. Jones Day also discussed the purposes and roles of the Special Committee and best practices for the Special Committee as well as the Company’s management. On May 23, 2016, the Company also issued a press

release announcing the retention of Jones Day and Maples and Calder as independent legal advisors to the Special Committee to assist in the proposed transaction.

Between May 24, 2016, and June 22, 2016, the Special Committee received proposals from, and conducted interviews with, multiple investment banking firms to act as the Special Committee’s independent financial advisor. On June 24, 2016, after considering the experience, qualifications, and reputation of each potential financial advisor candidate, the Special Committee decided to engage Houlihan Lokey (China) Limited (“Houlihan Lokey”) as its independent financial advisors based on Houlihan Lokey’s substantial experience in similar mergers and acquisitions transactions and its qualification and reputation. The Special Commitee inquired and confirmed that Houlihan Lokey had not performed any work for the Buyer Group or affiliates of members of the Buyer Group prior to its engagement by the Special Committee and did not have any conflict of interest with respect to the proposed transaction.

On June 24, 2016, the Special Committee held the first meeting with Mr. Chen (as representative of the Buyer Group). Mr. Nigel Liu, the Chief Financial Officer of the Company, Jones Day and K&L Gates were also in attendance. At the meeting, Mr. Chen provided more details with respect to the Buyer Group’s proposal, including proposed deal structure, financing strategies and future plans for the Company. Considering future funding needs that may still be required in order to ensure the long-term welfare of the Company, Mr. Chen proposed that the Buyer Group may initially fund all or part of the proposed transaction with the cash on hand of the Company, and secure future financing for the Company as and when required after completion of the merger. The Special Committee agreed to further discuss this pending a projection of its operating cash requirements and the potential impact on its cash flow if the proposed transaction were to proceed on such a financing basis. The Special Committee also raised questions to Mr. Chen on treatment of the Company’s employee stock options. Jones Day was instructed to prepare a draft non-disclosure agreement to be executed by Parent in anticipation of the Buyer Group’s request to conduct due diligence on the Company. Lastly, K&L Gates indicated that it will circulate an initial draft of the merger agreement to Jones Day the following week.

The non-disclosure agreement was signed by Parent (as representative of the Buyer Group) on June 30, 2016. From July 1, 2016, the Buyer Group and K&L Gates conducted due diligence on the Company. On July 6, 2016, Jones Day received the draft merger agreement from K&L Gates.

On July 12, 2016, the Special Committee held a second meeting with Mr. Chen. Mr. Nigel Liu, Jones Day and K&L Gates were also in attendance. At the meeting, Mr. Chen raised certain questions that arose from the due diligence efforts, including the Company’s continued business focuses, future prospects of its business lines, its supplier relationships and its cash flow needs for the near future. In addition, the Special Committee discussed with Mr. Chen the latest update on the status of the proposed transaction. In particular, the Special Committee raised the issue of having received a request from shareholders for the Company to “go shop” once Houlihan Lokey completes its review. The Special Committee emphasized its duty to maximize shareholder value and to give serious consideration to such request. Mr. Chen acknowledged this and expressed that the Buyer Group will respect the Special Committee’s decision. The Special Committee also repeated its concern regarding the possible impact of the Buyer Group’s proposal to fund the going private transaction with the Company’s own cash reserve. Mr. Chen responded that the Buyer Group will consider the Company’s cash flow issue and provide capital injections for its future operations following the delisting. The meeting concluded with the Special Committee indicating that it would make its determination after reviewing the draft merger agreement and the results of Houlihan Lokey’s preliminary financial review.

Meanwhile, Mr. Chen had been carrying out discussions with, among others, the controlling persons of Middlesex, Rich Dragon, Nutronics and Uniglobe (the “Second Group”), as well as New Essential, Embona Malaysia, Suffolk and Top Best (the “Third Group”) with regards to joining the Buyer Group. As a result of these discussions, the Second Group and the Third Group agreed to join the Buyer Group to acquire all of the outstanding equity interest of the Company not already owned by the Buyer Group, and entered into adherence agreements to the Consortium Agreement on July 8, 2016, and August 15, 2016, respectively.

On August 1, 2016, the Board and the Special Committee held a meeting with Houlihan Lokey. Mr. Nigel Liu, the Chief Financial Officer of the Company and Jones Day were also in attendance. At the meeting, Houlihan Lokey presented its initial financial analysis of the Company and discussed, among other

things, the various valuation methodologies applied and the Company’s financial results. The pros and cons of conducting a market check before entering into the definitive agreements were also discussed. In addition, the Special Committee discussed the then-proposed merger consideration with the Board and eventually decided that the Buyer Group should be able to increase its offer price and would counter-propose to the Buyer Group an increased merger consideration of $2.30 per ADS. Later in the day, the Special Committee held the third meeting with Mr. Chen, where Mr. Nigel Liu, Jones Day and K&L Gates were also in attendance, at which such counter proposal was conveyed to them. The Special Committee also inquired if a standby letter of credit to fund the proposed transaction will be obtained by the Buyer Group to cover any potential shortfall in the Company’s cash reserve. Mr. Chen responded that the Buyer Group will further discuss the need for such a standby letter of credit.

On August 3, 2016, at the direction of the Special Committee, Jones Day circulated comments on the draft merger agreement to K&L Gates. Since August 5, 2016, Jones Day and K&L Gates held several conference calls to discuss the terms of the merger agreement and exchanged revised drafts of the transaction documents.

On August 29, 2016, the Special Committee held a fourth meeting with Mr. Chen. Mr. Nigel Liu, Jones Day and K&L Gates were also in attendance. At the meeting, the Special Committee inquired of Mr. Chen of the possibility of the Buyer Group obtaining a standby letter of credit to fund the proposed transaction. Mr. Chen communicated that the cost of having to obtain such a standby letter of credit may impact the Buyer Group’s offer price. During the meeting, Jones Day provided an overview and explanation of the key issues presented by the draft merger agreement. Among other things, the Special Committee and Mr. Chen discussed (i) retaining a “go-shop” right after entering into the definitive agreements and (ii) deletion of the termination fee payable by the Company and the reverse termination fee payable by the Buyer Group under certain circumstances. The Special Committee communicated that it should have a “go-shop” right in order to ensure fair treatment to the Company’s Unaffiliated Security Holders. With respect to the deletion of termination fees, the Special Committee noted that, considering the financing of the merger and the Buyer Group’s decision not to obtain a standby letter of credit, it would be unfair for the Company to pay a termination fee to the Buyer Group if the merger is not consummated. Mr. Chen (on behalf of the Buyer Group) agreed to the Special Committee’s position on both issues. The Special Committee and Mr. Chen then instructed Jones Day and K&L Gates to further negotiate and revise the draft merger agreement pursuant to the agreed positions. At the same meeting, Mr. Chen also conveyed a counter proposal of a merger consideration of $2.20 per ADS.

On August 30, 2016, at the instruction of the Special Committee, Jones Day sent K&L Gates further comments to the draft merger agreement. Between September 1 and September 11, 2016, the parties continued to negotiate and revise the relevant legal documents.

On September 12, 2016, Houlihan Lokey presented to the Special Committee its financial analysis with respect to the consideration to be paid to the Company’s shareholders in the proposed transaction. The Special Committee members then asked questions regarding the financial analysis. Following the presentation and discussion, based on the financial analysis it had performed, Houlihan Lokey rendered an oral opinion to the Special Committee (which was confirmed in writing by delivery of Houlihan Lokey’s written opinion dated the same day), to the effect that as of September 12, 2016, based upon and subject to procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by Houlihan Lokey in preparing its opinion, the Per Share Merger Consideration and the Per ADS Merger Consideration, as applicable, to be received in the merger by holders of Shares and ADSs, as applicable (in each case, other than holders of the Rollover Shares and the Excluded Shares, including Rollover Shares and Excluded Shares represented by ADSs) was fair, from a a financial point of view, to such holders of the Shares and the ADSs. See “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 42 for more details. Jones Day then reported to the Special Committee that it had reached agreement with K&L Gates on key outstanding issues and finalized the legal documentation for the proposed transaction. Jones Day then reviewed the material terms in the merger agreement with the Special Committee. Following a comprehensive and detailed discussion of the proposed terms of the merger agreement, the financial analysis provided by Houlihan Lokey and its oral opinion, and taking into account the other factors described below under the heading titled “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and The Board of Directors” beginning on page 31, the Special Committee then

unanimously determined that the merger agreement, plan of merger and the other transactions contemplated by the merger agreement, including the merger, were fair to and in the best interests of the Company and its shareholders and ADS holders (other than the Buyer Group) and declared it advisable for the Company to enter into the merger agreement and the plan of merger and recommended that the Board adopt a resolution approving and declaring the advisability of the merger agreement and the plan of merger, the merger and the other transactions contemplated by the merger agreement and recommending that the shareholders of the Company authorize and approve the merger agreement, the plan of merger and the other transactions contemplated by the merger agreement, including the merger.

Following the meeting of the Special Committee, also on September 12, 2016, the Board held a meeting, attended by Houlihan Lokey and Jones Day. Jones Day provided a summary of the key terms of the merger agreement, including the merger consideration, conditions to closing and termination events. The Special Committee presented its recommendation to the Board. After considering the proposed terms of the merger agreement and the other transaction agreements and the various presentations of Houlihan Lokey and Jones Day, including Houlihan Lokey’s fairness opinion provided to the Special Committee, and taking into account the other factors described below under the caption “Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 31, the Board unanimously determined that it was fair to and in the best interests of the Company and shareholders and ADS holders (other than the Buyer Group), and declared it advisable, to enter into the merger agreement and the transactions contemplated by the merger agreement, including the merger, and approved the execution, delivery and performance of the merger agreement and the transactions contemplated by the merger agreement, including the merger, and directed that the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, be submitted to a vote at an extraordinary general meeting of the shareholders with the recommendation of the Board that the shareholders of the Company authorize and approve by way of special resolution the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger. See “Reasons for the Merger and Recommendation of the Special Committee and the Board” beginning on page 31 for a full description of the resolutions of the Board at this meeting.

Later during the day on September 12, 2016, the Company, Parent and Merger Sub executed the merger agreement and the Company issued a press release announcing the execution of the merger agreement. The Company furnished the press release to the SEC as an exhibit to a Current Report on Form 6-K filed on September 13, 2016.

Reasons for the Merger and Recommendation of the Special Committee and The Board of Directors

The Board, acting upon the unanimous recommendation of the Special Committee, which acted with the advice and assistance of its independent financial and legal advisors, evaluated the merger, including the terms and conditions of the merger agreement.

At a meeting on September 12, 2016, the Special Committee unanimously recommended that the Board adopt resolutions that:

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determine that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair (both substantively and procedurally) to and in the best interests of, the Company and its Unaffiliated Security Holders, and declare it advisable to enter into the merger agreement;

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authorize and approve the execution, delivery and performance by the Company of the merger agreement and the transactions contemplated thereby, including the merger; and

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direct that the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, be submitted to a vote at an extraordinary general meeting of the shareholders of the Company with the recommendation that the shareholders of the Company authorize and approve the merger agreement, the plan of merger and the transactions contemplated under the merger agreement, including the merger.

At a meeting also on September 12, 2016, the Board, acting upon the unanimous recommendation of the Special Committee and after each director duly disclosed his interests in the transactions, including the merger, as required by the memorandum and articles of associations of the Company as amended to date and Cayman Islands law, unanimously (a) determined (i) that the merger as contemplated in the merger agreement and the plan of merger is fair to and in the best interests of the Company and its Unaffiliated Security Holders and (ii) that it is advisable for the Company to enter into the merger agreement, the plan of merger and the transactions contemplated thereby, including the merger; (b) authorized and approved the merger agreement, the plan of merger and the transactions contemplated thereby, including the merger; and (c) recommended the approval and authorization of the merger agreement, the plan of merger and the transactions contemplated thereby, including the merger, to the shareholders of the Company and directed that the merger agreement, the plan of merger and the transactions contemplated thereby, including the merger, be submitted to the shareholders of the Company for authorization and approval.

In the course of reaching their respective determinations, the Special Committee and the Board considered the following substantive factors as well as potential benefits and drawbacks of the merger, each of which the Special Committee and the Board believed supported their respective decisions, and that the merger is substantively fair to the Unaffiliated Security Holders. These factors which are not listed in any relative order of importance, are discussed below:

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the financial analysis reviewed by Houlihan Lokey with the Special Committee, and the oral opinion of Houlihan Lokey to the Special Committee on September 12, 2016 (which was confirmed in writing by delivery of Houlihan Lokey’s written opinion dated the same day), with respect to the fairness, from a financial point of view, of the Per Share Merger Consideration and the Per ADS Merger Consideration, as applicable, to be received in the merger by holders of Shares and ADSs, as applicable (in each case, other than holders of the Rollover Shares and the Excluded Shares, including the Rollover Shares and the Excluded Shares represented by ADSs), as of September 12, 2016, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by Houlihan Lokey in preparing its opinion. Please see “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 42 for additional information;

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the current and historical market prices of our ADSs, including the fact that the merger consideration offered to our shareholders represents a 49.7% premium to the closing price of our ADSs on May 19, 2016, the last trading day immediately prior to the Company’s announcement on May 20, 2016 that it had received “a going private” proposal. The $0.366 Per Share Merger Consideration or $2.20 Per ADS Merger Consideration to be paid to our shareholders (other than the Buyer Group) in the merger also represents a (a) 9.5% premium over the closing price of $2.01 per ADS on September 9, 2016, the trading day immediately before the merger agreement was signed; and (b) 50.4%, 51.7%, and 36.5% premium over the volume-weighted average closing price of the ADSs during the 30, 90, 180 days, respectively, prior to the Company’s announcement on May 20, 2016 that it had received a “going private” proposal;

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the lowest closing price of our ADSs was $1.30 during the 52-week period prior to September 12, 2016, the date the Company announced the execution of the merger agreement;

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the negotiations with respect to the Per Share Merger Consideration and Per ADS Merger Consideration and the Special Committee’s determination that, following extensive negotiations with the Buyer Group, $0.366 per Share and $2.20 per ADS was the highest price that the Buyer Group would agree to pay, with the Special Committee basing its belief on a number of factors, including the tenor of negotiations and the experience of the Special Committee and its advisors;

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the Special Committee’s belief that it was unlikely that any transaction with a third party could by completed at this time given the Buyer Group’s beneficial ownership of approximately 66.0% of the Company’s issued and outstanding share capital and its members’ express intention not to sell their Shares (or Shares represented by ADSs) to any third party, and the lack of interested bidders since the announcement of the “going private” proposal on May 20, 2016 to the date of entry into the merger agreement;

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the all-cash merger consideration, which will allow our shareholders (other than the Buyer Group) to immediately realize liquidity for their investment and provide them with a specific amount of cash consideration for their Shares or ADSs;

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possible alternatives to the merger (including the possibility of continuing to operate the Company as an independent publicly-traded company and the perceived risks of that alterative), the range of potential benefits to its shareholders of the possible alternatives and the timing and the likelihood of accomplishing the goals of such alternatives, and the assessment by the Special Committee that none of these alternatives was reasonably likely to present superior opportunities for the Company or to create greater value for our shareholders than the merger, taking into account the likelihood of execution as well as business, competitive, industry and market risks;

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the possibility that it could take a considerable period of time before the trading price of our ADSs would reach and sustain at least the Per ADS Merger Consideration of $2.20, as adjusted for present value, and the possibility that such value might never be obtained;

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the limited trading volume of our ADSs on NASDAQ;

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the increased costs of regulatory compliance for public companies, which in 2015 cost the Company approximately $1.1 million, especially considering the trend that many comparable companies in our industry ceased to be publicly listed and traded;

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estimated forecast of the Company’s future financial performance prepared by the Company’s management based on their knowledge of the Company’s business, financial conditions, results of operations, prospects and competitive position;

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the belief of the Special Committee that the terms of the merger agreement, including the parties’ representations, warranties and covenants and the conditions to their respective obligations, are reasonable;

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the likelihood and anticipated timing of completing the merger in light of the scope of the conditions to completion, including the absence of required regulatory approvals; and

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our ability, under certain circumstances, to specifically enforce the terms of the merger agreement.

In addition, the Special Committee and the Board believed that sufficient procedural safeguards were and are present to ensure that the merger is procedurally fair to the Unaffiliated Security Holders and to permit the Special Committee and the Board to represent effectively the interests of such shareholders. These procedural safeguards, which are not listed in any relative order of importance, are discussed below:

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the consideration and negotiation of the merger agreement was conducted entirely under the control and supervision of the Special Committee, which consists of three independent directors, each of whom is an outside, non-employee director, and that no limitations were placed on the authority of the Special Committee, which was advised throughout the process by independent legal and financial advisors;

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in considering the merger with the Buyer Group, the Special Committee acted solely to represent the interests of the shareholders of our Company (including those shareholders who are unaffiliated with the Buyer Group), and the Special Committee had independent control of the negotiations with the Buyer Group and its independent legal advisor on behalf of such shareholders;

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all of the directors serving on the Special Committee during the entire process were and are independent directors and free from any affiliation with the Buyer Group; none of such directors is or ever was an employee of the Company or any of its subsidiaries or affiliates and none of such directors has any financial interest in the merger that is different from that of our shareholders other than (i) the director’s receipt of board compensation in the ordinary course; and (ii) the director’s indemnification and liability insurance rights under the merger agreement;

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following its formation, the Special Committee’s independent control of the sale process with the advice and assistance of Houlihan Lokey, as its independent financial advisor, and Jones Day and Maples and Calder, as its independent legal advisors, each reporting solely to the Special Committee;

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the Special Committee was empowered to consider, attend to and take any and all actions in connection with the written proposal from the Buyer Group and the transactions contemplated thereby from the date the committee was established, and no evaluation, negotiation, or response regarding the transaction or any documentation in connection therewith from that date forward was considered by the Board for authorization and approval unless the Special Committee had recommended such action to the Board;

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the Special Committee had the authority to reject the terms of any strategic transaction, including the merger;

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the Special Committee met regularly to consider and review the terms of the merger;

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the recognition by the Special Committee and the Board that it had no obligation to recommend the authorization and approval of the proposal from the Buyer Group or any other proposed transaction; and

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the availability of dissenter rights to shareholders who comply with all of the required procedures under the Cayman Islands Companies Law for exercising dissenter rights, which allow such shareholders to receive payment of the fair value of their Shares as determined by the Grand Court of the Cayman Islands.

In addition, the Special Committee and the Board recognize that, under the terms of the merger agreement, the Board has the ability to consider any proposal regarding a competing transaction reasonably likely to lead to a “Superior Proposal” until the date our shareholders vote upon and authorize and approve the merger agreement without concerns for any termination fee payable. Despite the fact that the Buyer Group can practically assure the outcome of the vote and has expressed an unwillingness to sell to a competing bidder, the ability for the Board to consider alternative proposals remains important. First, the Company may receive an unsolicited proposal that exceeds the current consideration price. In such an event, even though the Buyer Group has indicated its unwillingness to sell to a competing bidder, its adherence to this stance may change if the Buyer Group was presented with a significantly higher proposal. Second, notwithstanding that the Board has determined the transaction to be fair to the Unaffiliated Security Holders, by maintaining the ability to consider alternative proposals in the merger agreement, which may contain higher consideration prices, the Board was further assured that it had negotiated a term that maximizes value for such shareholders.

The Special Committee and Board also considered a variety of potentially negative factors discussed below concerning the merger agreement and the merger, which are not listed in any relative order of importance:

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the fact that authorization and approval of the merger agreement are not subject to the authorization and approval of holders of a majority of the Company’s outstanding Shares unaffiliated with the Buyer Group and, given the Buyer Group beneficially owns approximately 66.0% of the Company’s issued and outstanding share capital on an actual basis, assuming each member of the Buyer Group complies with its obligation under the consortium agreement, the Buyer Group has sufficient votes to constitute a quorum for the extraordinary general meeting and the adoption of the proposals is practically assured;

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the likelihood of the completion of the merger being impacted by our ability to consider any proposal regarding a competing transaction reasonably likely to lead to a “Superior Proposal” and the fact that neither party will be subject to a termination fee if the merger agreement is terminated prior to the date our shareholders vote upon the approval of the merger agreement;

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the Company’s shareholders will have no ongoing equity participation in the Company following the merger, and they will cease to participate in our future earnings or growth, if any, or to benefit from increases, if any, in the value of the Shares, and will not participate in any potential future sale of the Company to a third party or any potential recapitalization of the Company which could include a dividend to shareholders;

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the possibility that the Buyer Group could sell part or all of the Company following the merger to one or more purchasers at a valuation higher than that being paid in the merger;

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the conduct of the Company’s business prior to the completion of the merger, which may delay or prevent the Company from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of the Company pending the completion of the merger;

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the risks and costs to the Company if the merger is not completed, including the diversion of management and employee attention, potential employee attrition and the potential disruptive effect on business and customer relationships;

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the terms of the Buyer Group’s participation in the merger and the fact that the Buyer Group may have interests in the transaction that are different from, or in addition to, those of our shareholders, as well as the other interests of the Company’s directors and officers in the merger; see “Special Factors — Interests of Certain Persons in the Merger” beginning on page 55 for additional information;

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the possibility that the merger might not be completed and the negative impact of a public announcement of the merger on our sales and operating results and our ability to attract and retain key management, marketing and technical personnel; and

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the taxability of an all-cash transaction to our shareholders that are U.S. holders as defined below in “Special Factors — Material U.S. Federal Income Tax Consequences” beginning on page 57 for U.S. federal income tax purposes, and the likely taxability of such a transaction to our shareholders in other jurisdictions.

The forgoing discussion of information and factors considered by the Special Committee and the Board is not intended to be exhaustive, but includes the material factors considered by the Special Committee and the Board. In view of the wide variety of factors considered by the Special Committee and the Board, neither the Special Committee nor the Board found it practicable to quantify or otherwise assign relative weights to the foregoing factors in reaching its conclusions. In addition, individual members of the Special Committee and the Board may have given different weights to different factors and may have viewed some factors more positively or negatively than others. The Special Committee recommended that the Board authorize and approve, and the Board authorized and approved, the merger agreement based upon the totality of the information presented to and considered by it.

In reaching its conclusion regarding the fairness of the merger to the Company’s Unaffiliated Security Holders and its decision to recommend the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, the Special Committee considered financial analysis presented by Houlihan Lokey to the Special Committee on September 12, 2016 as summarized below under the caption “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 42. The Special Committee expressly adopted these analyses and opinions, among other factors considered, in reaching its determination as to the fairness of the transactions contemplated by the merger agreement, including the merger.

Each of the Special Committee and the Board considered the historical market prices of our ADSs as described under the caption “Market Price of the Company’s ADSs, Dividends and Other Matters — Market Price of the ADSs” beginning on page 63. Each of the Special Committee and the Board also considered the purchase prices paid in previous purchases as described under the caption “Transactions in the Shares and ADSs”, each of which the Special Committee and the Board considered to be fair prices based on our financial situation at the time and under the unique circumstances of the previous purchases. Such purchase prices were also considered and compared with the Per ADS Merger Consideration of $2.20 by the Special Committee and the Board in the context of our financial results this year and current financial outlook. Neither the Special Committee nor the Board considered the Company’s net book value, which is defined as total assets minus total liabilities, attributable to the shareholders of the Company, as a determining factor. The Special Committee and the Board believe that net book value is not a determining indicator of the value of the Company as a going concern. Net book value does not take into account the future prospects of the Company, market conditions, trends in the technology industry or the business risks inherent in competing with larger companies in that industry. The Company is not aware of any firm offers made by any unaffiliated person, other than the filing persons, during the past two years for (i) the merger or consolidation of the Company with or into another company, or vice-versa; (ii) the sale or other transfer of all or any substantial part of the assets of the Company; or (iii) a purchase of the Company’s securities that would enable the holder to exercise control of the Company.

In reaching its determination that the merger agreement, the plan of merger, and the transactions contemplated thereby, including the merger, are fair to and in the best interests of the Company and our Unaffiliated Security Holders and its decision to authorize and approve the merger agreement and recommend the authorization and approval of the merger agreement, the plan of merger, and the transactions contemplated thereby, including the merger, by our shareholders, the Board, on behalf of the Company, considered the analysis and recommendation of the Special Committee and the factors examined by the Special Committee as described above under this section and adopted such recommendations and analysis.

For the foregoing reasons, each of the Company and the Board believes that the merger agreement, the plan of merger, and the transactions contemplated thereby are both substantively and procedurally fair to and in the best interests of the Company and the Unaffiliated Security Holders.

Except as discussed in “Special Factors — Background of the Merger,” “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and the Board of Directors,” and “Special Factors — Opinion of the Special Committee’s Financial Advisor,” no director who is not an employee of the Company has retained an unaffiliated representative to act solely on behalf of the Company’s shareholders for purposes of negotiating the terms of the transaction and/or preparing a report concerning the fairness of the transaction.

Position of the Buyer Group as to the Fairness of the Merger

Under SEC rules governing “going private” transactions, each member of the Buyer Group may be deemed to be an affiliate of the Company, and therefore, required to express his, her or its belief as to the fairness of the merger to the Unaffiliated Security Holders. Each member of the Buyer Group is making the statements included in this section solely for the purposes of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The Buyer Group’s view as to the fairness of the merger are not intended and should be construed as a recommendation to any shareholder of the Company as to how that shareholder or ADS holder should vote on the proposal to adopt the merger agreement and the transactions contemplated by the merger agreement, including the merger. The Buyer Group has interests in the merger that are different from, and/or in addition to, those of the other shareholders of the Company by virtue of their continuing interests (or potential continuing interests) in the surviving company after the completion of the merger. Please see “Special Factors — Interests of Certain Persons in the Merger” beginning on page 55 for additional information.

The Buyer Group believes the interests of the Company’s shareholders unaffiliated with the Buyer Group were represented by the Special Committee, which negotiated the terms and conditions of the merger agreement with the assistance of its independent legal and financial advisors. None of the Buyer Group members believe that it or any of its affiliates has or had any fiduciary or other duty to the Company or its

shareholders, including with respect to the merger and its terms. None of the Buyer Group members or their affiliates participated in the deliberations of the Special Committee regarding, nor received any advice from the Special Committee’s independent legal or financial advisors as to the fairness of the merger to the Unaffiliated Security Holders. Furthermore, none of the Buyer Group members or their affiliates undertook a formal evaluation of the fairness of the merger. No financial advisor provided any of the Buyer Group members or their affiliates with any analysis or opinion with respect to the fairness of the merger consideration to the Unaffiliated Security Holders.

Based on their knowledge and analysis of available information regarding the Company, as well as discussions with members of the Company’s senior management regarding the Company and its business and the factors considered by, and the analysis and resulting conclusions of, the Special Committee and the Board discussed in “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and The Board of Directors” beginning on page 31, the Buyer Group believes that the merger is fair to the Company’s Unaffiliated Security Holders. In particular, the Buyer Group believes that the proposed merger is both substantively and procedurally fair to the Company’s Unaffiliated Security Holders based on their consideration of the following factors, which are not listed in any relative order of importance, among others:

•

the Special Committee and, acting upon the unanimous recommendation of the Special Committee, the Board determined that the merger agreement and the transactions contemplated thereby, including the merger, are in the best interests of the Company’s shareholders (including those shareholders who are unaffiliated with the Buyer Group);

•

the Special Committee, consisting entirely of directors who are not officers or employees of the Company and who are not affiliated with any of the Buyer Group members, was established and given authority to, among other things, review, evaluate and negotiate the terms of the merger and to recommend to the Board what action should be taken by the Company, including not to engage in the merger;

•

the members of the Special Committee do not have any interests in the merger different from, or in addition to, those of the Company’s shareholders, other than (i) the directors’ receipt of board compensation in the ordinary course; and (ii) the directors’ indemnification and liability insurance rights under the merger agreement;

•

the Special Committee retained and was advised by its independent legal and financial advisors, who are experienced in advising committees such as the Special Committee in similar transactions;

•

the Buyer Group did not influence the deliberative process of, or the conclusions reached by, the Special Committee or the Board or the negotiating positions of the Special Committee;

•

the Special Committee and the Board had no obligation to recommend the authorization and approval of the merger agreement and the transactions contemplated thereby, including the merger;

•

the current and historical market prices of our ADSs, including the fact that the merger consideration offered to shareholders (other than the Buyer Group) represents a 49.7% premium to the closing price of our ADSs on May 19, 2016, the last trading day immediately prior to the Company’s announcement on May 20, 2016, that it had received “a going private” proposal. The $0.366 Per Share Merger Consideration or $2.20 Per ADS Merger Consideration to be paid to our shareholders (other than the Buyer Group) in the merger also represents a (a) 9.5% premium over the closing price of $2.01 per ADS on September 9, 2016, the trading day immediately before the merger agreement was signed; and (b) 50.4%, 51.7%, and 36.5% premium over the volume-weighted average closing price of the ADSs during the 30, 90, and 180 days, respectively, prior to the Company’s announcement on May 20, 2016 that it had received a “going private” proposal;

•

the merger consideration is a specific amount payable in cash, which provides liquidity to our shareholders and allows such shareholders not to be exposed to risks and uncertainties relating to the prospects of the Company;

•

the merger consideration, other terms and conditions of the merger agreement and the transactions contemplated thereby were the result of extensive negotiations over an extended period of time between the Special Committee, its advisors and the Buyer Group;

•

notwithstanding that the fairness opinion by Houlihan Lokey was delivered to the Special Committee only and none of the Buyer Group members or any of their affiliates was entitled to rely or relied on such opinion, the fact that the Special Committee received an oral opinion of Houlihan Lokey to the Special Committee on September 12, 2016 (which was confirmed in writing by delivery of Houlihan Lokey’s written opinion dated the same day), with respect to the fairness, from a financial point of view, of the Per Share Merger Consideration and the Per ADS Merger Consideration, as applicable (in each case, other than holders of the Rollover Shares and the Excluded Shares, including the Rollover Shares and Excluded Shares represented by ADSs), as of September 12, 2016, based upon and subject to the procedures followed, assumptions made, qualifications, and limitations on the review undertaken, and other matters considered by Houlihan Lokey in preparing its opinion;

•

in certain circumstances under the terms of the merger agreement, the Company is able to change, withhold, withdraw, qualify or modify their recommendation of the merger and, subject to compliance with the terms and conditions of the merger agreement, terminate the merger agreement prior to the completion of the merger in order to accept an alternative transaction proposed by a third party that is a “Superior Proposal” (as defined in the merger agreement and further explained under the caption “The Merger Agreement and Plan of Merger — Acquisition Proposals” beginning on page 78); however, the Buyer Group acknowledges that the fact that its members beneficially own Shares (including Shares underlying ADSs) representing approximately 66.0% of the Company’s issued and outstanding share capital on an actual basis, and their expressed unwillingness to sell their stake in the Company to a third party, may have discouraged, and may in the future discourage, third parties from submitting alternative transaction proposals with terms and conditions, including price, that may be superior to the merger; and

•

The Buyer Group did not consider net book value, which is an accounting concept, as a factor because it believed that net book value is not a determining indicator of the value of the Company as a going concern but rather is indicative of historical costs and therefore not a relevant measure in the determination as to the fairness of the merger. The Buyer Group did not establish, and did not consider, a pre-merger going concern value for the Company’s Shares and ADSs to determine the fairness of the merger consideration to the Company’s shareholders because following the merger, the Company will have a significantly different capital structure. However, to the extent the pre-merger going concern value was reflected in the pre-announcement price of the Company’s ADSs, the merger consideration represented a premium to the going concern value of the Company.

The Buyer Group did not receive any offers or proposals from unaffiliated third parties with respect to (a) a merger or consolidation of the Company with or into another company; (b) a sale of all or a substantial part of the Company’s assets; or (c) the purchase of the Company voting securities that would enable the holder to exercise control over the Company. And it did not consider any hypothetical value that may be offered by unaffiliated third parties in its fairness determination.

Because the Buyer Group has indicated their unwillingness to dispose of their Shares to a competing bidder or cast their votes to support an alternative transaction, the Board may not have maximum flexibility to “shop” the Company or conduct a sale auction for purposes of soliciting a “Superior Proposal” to maximize the short term value for all shareholders of the Company. The Buyer Group believes this factor is nonetheless counterbalanced by the other procedural safeguards described above; as a whole, the merger is fair to the Unaffiliated Security Holders.

The foregoing discussion of the information and factors considered and given weight by the Buyer Group in connection with its evaluation of the fairness of the merger to the Unaffiliated Security Holders. It is not intended to be exhaustive, but is believed to include all material factors considered. The Buyer Group found it impracticable to assign, and did not assign, relative weights to the foregoing factors considered in reaching its conclusions as to the fairness of the merger to the Company’s shareholders (including the Unaffiliated Security Holders). Rather, the Buyer Group made the fairness determinations after considering all of the foregoing as a whole.

The Buyer Group believes these factors provide a reasonable basis for its belief that the merger is both substantively and procedurally fair to the Unaffiliated Security Holders. This belief, however, is not intended to be and should not be construed as a recommendation by the Buyer Group to any shareholder or ADS holder of the Company to approve the merger agreement. The Buyer Group does not make any recommendation as to how such shareholders or ADS holders should vote relating to the proposal to approve the merger agreement and the merger at the extraordinary general meeting.

None of the Buyer Group members performed, or engaged a financial advisor to perform, any valuation or other analysis for the purposes of assessing the fairness of the proposed merger to the Company’s Unaffiliated Security Holders.

Certain Financial Projections

The Company does not as a matter of course make public projections as to future sales, earnings, or other results. However, the management of the Company has prepared certain financial projections for the fiscal year ending December 31, 2016 through the fiscal year ending December 31, 2020 for the Special Committee and Houlihan Lokey in connection with the financial analysis of the merger. The accompanying prospective financial projections were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of the Company’s management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of the Company. However, this information is not fact and should not be relied upon being necessarily indicative of future results, and readers of this proxy statement are cautioned not to place undue reliance on the prospective financial information.

Neither the Company’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial projection, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial projection.

The financial projections are not a guarantee of performance. They involve significant risks, uncertainties and assumptions. In compiling the projections, our management took into account historical performance, combined with estimates regarding net revenue, gross profit, operating expenses, operating income and net income. Although the projections are presented with numerical specificity, they were based on numerous assumptions and estimates as to future events made by our management that our management believed were reasonable at the time the projections were prepared. However, this information is not fact and should not be relied upon as being necessarily indicative of actual future results. In addition, factors such as industry performance, the market for our existing and new products, the competitive environment, expectations regarding future acquisitions or any other transactions and general business, economic, regulatory, market and financial conditions, all of which are difficult to predict and beyond the control of our management, may cause actual future results to differ materially from the results forecasted in these financial projections.

In addition, the projections do not take into account any circumstances or events occurring after the date that they were prepared. For instance, the projections do not give effect to completion of the merger or any changes to our operations or strategy that may be implemented after the time the projections were prepared. As a result, there can be no assurance that the projections will be realized, and actual results may be significantly different from those contained in the projections.

Neither the Company, its independent registered public accounting firm, Deloitte Touche Tohmatsu, nor any other independent accountants have examined, compiled, or performed any procedures with respect to the financial projections or any amounts derived therefrom or built thereupon, nor have they given any opinion or any other form of assurance on such information or its achievability. The financial projections included in this proxy statement are included solely to give shareholders access to certain information that was made available to the Special Committee and Houlihan Lokey, and are not included in this proxy statement in order to induce any holder of Shares or ADSs to vote in favor of approval of the merger agreement or to elect not to seek appraisal for his or her Shares.

The following tables summarize the financial projections prepared by the Company’s management and considered by the Special Committee and its financial advisor in connection with their analysis of the proposed transaction.

The first table is based on information available up to May 31, 2016.


	Projected Fiscal Year Ending December 31,
	2016E			2017E			2018E			2019E			2020E
	(in millions of $, except percentages)
Sales		63.4			71.1			80.9			95.1			112.0
Growth %		29.1	%		12.1	%		13.7	%		17.6	%		17.7	%
Cost of Goods Sold		(46.1	)		(52.7	)		(61.1	)		(71.7	)		(83.8	)
Inventory Write-Downs Adjustments⁽¹⁾		0.0			0.0			0.0			0.0			0.0
Gross Profit		17.4			18.4			19.8			23.4			28.2
Margin %		27.4	%		25.9	%		24.5	%		24.6	%		25.2	%
Other Operating Income⁽²⁾		1.7			0.8			0.8			0.6			0.6
Selling Expenses		(2.2	)		(2.1	)		(2.1	)		(2.0	)		(2.1	)
General and Administrative Expenses		(7.3	)		(6.3	)		(6.4	)		(6.3	)		(6.4	)
Research and Development Expenses		(22.8	)		(17.8	)		(18.4	)		(19.0	)		(19.7	)
EBIT		(13.3	)		(7.0	)		(6.4	)		(3.4	)		0.6
Margin %		-20.9	%		-9.9	%		-7.9	%		-3.5	%		0.5	%
Depreciation & Amortization⁽³⁾		5.0			4.7			4.7			4.6			3.8
EBITDA		(8.3	)		(2.3	)		(1.7	)		1.2			4.4
Margin %		-13.0	%		-3.2	%		-2.2	%		1.3	%		3.9	%
Capital Expenditures		2.5			1.0			1.0			1.0			1.0
Net Working Capital		17.5			16.5			16.6			22.1			24.2
Change in Net Working Capital		(3.5	)		1.0			(0.1	)		(5.4	)		(2.1	)

Notes:

(1)

Represents adjustment for various inventory write-downs the Company has taken over the past four years

(2)

Other Operating Income primarily consists of government subsidies. The Company receives annual subsidy payments from the Zhuhai municipal government for its headquarters and research and development activities. The subsidies are expected to continue in the foreseeable future

(3)

Includes amortization of acquired intangible assets

The second table is based on information available up to July 31, 2016.


	Projected Fiscal Year Ending December 31,
	2016E			2017E			2018E			2019E			2020E
	(in millions of $, except percentages)
Sales		51.9			71.1			80.9			95.1			112.0
Growth %		5.6	%		37.0	%		13.7	%		17.6	%		17.7	%
Cost of Goods Sold		(40.2	)		(52.7	)		(61.1	)		(71.7	)		(83.8	)
Adjustment: Inventory Write-Downs⁽¹⁾		3.1			0.0			0.0			0.0			0.0
Gross Profit		14.8			18.4			19.8			23.4			28.2
Margin %		28.4	%		25.9	%		24.5	%		24.6	%		25.2	%
Other Operating Income⁽²⁾		1.6			0.8			0.8			0.6			0.6
Selling Expenses		(1.8	)		(2.1	)		(2.1	)		(2.0	)		(2.1	)
General and Administrative Expenses		(7.9	)		(6.3	)		(6.4	)		(6.3	)		(6.4	)
Research and Development Expenses		(24.2	)		(17.8	)		(18.4	)		(19.0	)		(19.7	)
Adjusted EBIT		(17.5	)		(7.0	)		(6.4	)		(3.4	)		0.6
Margin %		-33.7	%		-9.9	%		-7.9	%		-3.5	%		0.5	%
Depreciation & Amortization⁽³⁾		4.8			4.7			4.7			4.6			3.8
Adjusted EBITDA		(12.7	)		(2.3	)		(1.7	)		1.2			4.4
Margin %		-24.5	%		-3.2	%		-2.2	%		1.3	%		3.9	%
Capital Expenditures		1.9			1.0			1.0			1.0			1.0
Net Working Capital		17.5			16.5			16.6			22.1			24.2
Change in Net Working Capital		(3.5	)		1.0			(0.1	)		(5.4	)		(2.1	)

Notes:

(1)

Represents adjustment for various inventory write-downs the Company has taken over the past four years and is expecting to take in 2016E

(2)

(3)

Includes amortization of acquired intangible assets

NONE OF THE COMPANY OR ITS AFFILIATES, ADVISORS, OFFICERS, DIRECTORS OR REPRESENTATIVES HAS MADE OR MAKES ANY REPRESENTATION TO ANY SHAREHOLDER OR OTHER PERSON REGARDING THE ULTIMATE PERFORMANCE OF THE COMPANY COMPARED TO THE INFORMATION CONTAINED IN THE PROJECTIONS OR THAT PROJECTED RESULTS WILL BE ACHIEVED.

BY INCLUDING IN THIS PROXY STATEMENT A SUMMARY OF ITS INTERNAL FINANCIAL PROJECTIONS, THE COMPANY UNDERTAKES NO OBLIGATIONS TO UPDATE, OR PUBLICLY DISCLOSE ANY UPDATE TO, THESE FINANCIAL PROJECTIONS TO REFLECT CIRCUMSTANCES OR EVENTS, INCLUDING UNANTICIPATED EVENTS, THAT MAY HAVE OCCURRED OR THAT MAY OCCUR AFTER THE PREPARATION OF THESE PROJECTIONS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE FINANCIAL PROJECTIONS ARE SHOWN TO BE IN ERROR OR CHANGE, EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE FEDERAL SECURITIES LAW.

The financial projections are forward-looking statements. For information on factors that may cause our future financial results to materially vary, see “Cautionary Note Regarding Forward-Looking Statements” beginning on page 100 and “Item 3. Key Information — D. Risk Factors” included in our Annual Report on Form 20-F for the fiscal year ended December 31, 2015, incorporated by reference into this proxy statement.

Opinion of the Special Committee’s Financial Advisor

On September 12, 2016, Houlihan Lokey rendered an oral opinion to the Special Committee (which was confirmed in writing by delivery of Houlihan Lokey’s written opinion dated the same day), to the effect that as of September 12, 2016, based upon and subject to procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by Houlihan Lokey in preparing its opinion, the Per Share Merger Consideration and the Per ADS Merger Consideration, as applicable, to be received in the merger by holders of Shares and ADSs, as applicable (in each case, other than holders of the Rollover Shares and the Excluded Shares, including Rollover Shares and Excluded Shares represented by ADSs), was fair, from a financial point of view, to such holders of the Shares and the ADSs.

The opinion of Houlihan Lokey was directed to the Special Committee and only addressed the fairness from a financial point of view of the Per Share Merger Consideration and the Per ADS Merger Consideration, as applicable, to be received in the merger by holders of the Shares and the ADSs (in each case, other than holders of the Rollover Shares and the Excluded Shares, including Rollover Shares and Excluded Shares represented by ADSs), and does not address any other aspect or implication of the merger. The summary of the opinion of Houlihan Lokey in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex B to this proxy statement and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by Houlihan Lokey in preparing its opinion. However, neither the opinion of Houlihan Lokey nor the summary of the opinion and the related analyses set forth in this proxy statement are intended to be, and no not constitute advice or a recommendation to the Special Committee or any holder of the Shares of the ADSs, as to how to act or vote with respect to the merger or related matters. In arriving at its opinion, Houlihan Lokey, among other things:

reviewed the execution version, dated September 12, 2016, of the merger agreement;

reviewed certain publicly available business and financial information relating to the Company that Houlihan Lokey deemed to be relevant;

reviewed certain information relating to the historical, current and future operations, financial condition and prospects of the Company made available to Houlihan Lokey by the Company, including financial projections prepared by the management of the Company relating to the Company for the calendar years ending 2016 through 2020;

spoke with certain members of the management of the Company and certain of its representatives and advisors regarding the business, operations, financial condition and prospects of the Company, the merger, and related matters;

compared the financial and operating performance of the Company with that of other public companies that Houlihan Lokey deemed to be relevant;

considered the publicly available financial terms of certain transactions that Houlihan Lokey deemed to be relevant;

reviewed the current and historical market prices and trading volume for certain of the Company’s publicly traded securities, and the current and historical market prices and trading volume of the publicly traded securities of certain other companies that Houlihan Lokey deemed to be relevant;

reviewed liquidation analysis prepared by the management of the Company based on the Company’s consolidated balance sheets as of July 31, 2016 (the “Liquidation Analysis”); and

conducted such other financial studies, analyses and inquiries and considered such other information and factors as Houlihan Lokey deemed appropriate.

Houlihan Lokey relied upon and assumed, without independent verification, the accuracy and completeness of all data, material and other information furnished, or otherwise made available to Houlihan Lokey, discussed with or reviewed by Houlihan Lokey, or publicly available. In addition, management of the Company has advised Houlihan Lokey, and Houlihan Lokey assumed, that the financial projections reviewed by Houlihan Lokey were reasonably prepared in good faith on bases reflecting the best currently available

estimates and judgments of such management as to the future financial results and condition of the Company, and Houlihan Lokey expressed no opinion with respect to such projections or the assumptions on which they are based. Houlihan Lokey relied upon and assumed, without independent verification, that there had been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Houlihan Lokey that would be material to Houlihan Lokey’s analyses or its opinion, and that there was no information or any facts that would make any of the information reviewed by Houlihan Lokey incomplete or misleading. Further, management of the Company advised Houlihan Lokey that (i) the financial projections provided to Houlihan Lokey were the only projections prepared by management of the Company (or any affiliated entity) in connection with the merger, (ii) they had not received, reviewed, approved, commented on, or otherwise contributed to any other projections or similar information prepared by any other party in connection with the merger, nor had they updated or otherwise revised the financial projections since the last date they were provided to Houlihan Lokey, and (iii) to the best of their knowledge and belief, no other projections or similar information had been provided to any party involved in the merger, and the Special Committee had received all projections and/or similar information that had been received by any other party involved in the merger.

Houlihan Lokey relied upon and assumed, with the consent of the Special Committee, that the Liquidation Analysis, including the underlying assumptions as to the recovery rate of the Company’s assets and liabilities, its contractual obligations and estimated wind down charges, were reasonably prepared based on the best currently available estimates and judgments as to the matters covered thereby. It was represented to Houlihan Lokey, and Houlihan Lokey relied upon and assumed, with the consent of the Special Committee, that there were no other businesses, operations, assets or properties of the Company, off balance sheet or otherwise, or liabilities or obligations of the Company (whether fixed, contingent or otherwise) that had been or were expected to be settled, assumed, guaranteed or discharged by any third party, that could reasonably be expected to be for the benefit of the Company, other than those disclosed to Houlihan Lokey or set forth in the Liquidation Analysis and the financial projections.

Houlihan Lokey understood that holders of the Rollover Shares had indicated that they were only willing to consider entering into an agreement with Parent and amongst themselves in relation to the merger and had no interest in entering into any agreement, arrangement or understanding with other parties as an alternative thereto.

As the Special Committee was aware, the credit, financial, and stock markets had been experiencing unusual volatility and Houlihan Lokey expressed no opinion or view as to any potential effects of such volatility on the merger and its opinion did not purport to address potential developments in any such markets.

Houlihan Lokey relied upon and assumed, without independent verification, that that (a) the representations and warranties of all parties to the merger agreement and all other related documents and instruments that are referred to therein are true and correct, (b) each party to the merger agreement and such other related documents and instruments will fully and timely perform all of the covenants and agreements required to be performed by such party, (c) all conditions to the consummation of the merger will be satisfied without waiver thereof, and (d) the merger will be consummated in a timely manner in accordance with the terms described in the merger agreement and such other related documents and instruments, without any amendments or modifications thereto. Houlihan Lokey relied upon and assumed, without independent verification, that (i) the merger will be consummated in a manner that complies in all respects with all applicable laws international, federal, and state statutes, rules, and regulations, and (ii) all governmental, regulatory, and other consents and approvals necessary for the consummation of the Transaction will be obtained and that no delay, limitations, restrictions or conditions will be imposed or amendments, modifications or waivers made that would have an effect on the merger or the Company that would be material to Houlihan Lokey’s analyses or its opinion. In addition, Houlihan Lokey relied upon and assumed, without independent verification, that the final form of the merger agreement will not differ in any respect from the draft of the merger agreement identified above.

Furthermore, in connection with its opinion, Houlihan Lokey was not requested to make, and has not made, any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (fixed, contingent, derivative, off-balance-sheet or otherwise) of the Company or any other party, nor was Houlihan Lokey provided with any such appraisal or evaluation other than the Liquidation Analysis. Houlihan Lokey did not estimate, and expressed no opinion regarding, the liquidation value of any entity or business. Houlihan Lokey undertook no independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which the Company is or may be a party or is or may be subject, or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which the Company is or may be a party or is or may be subject.

Houlihan Lokey was not requested to, and did not, (a) initiate or participate in any discussions or negotiations with, or solicit any indications of interest from, third parties with respect to the merger, the securities, assets, businesses or operations of the Company or any other party, or any alternatives to the merger, (b) negotiate the terms of the merger, or (c) advise the Special Committee, the Board or any other party with respect to alternatives to the merger. Houlihan Lokey’s opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Houlihan Lokey as of, the date of the opinion. Houlihan Lokey did not undertake, and is under no obligation, to update, revise, reaffirm or withdraw its opinion, or otherwise comment on or consider events occurring or coming to its attention after the date of the opinion.

Houlihan Lokey’s opinion was furnished for the use of the Special Committee (solely in its capacity as such) in connection with its evaluation of the merger and may not be used for any other purpose without Houlihan Lokey’s prior written consent. Houlihan Lokey’s opinion should not be construed to create any fiduciary duty on Houlihan Lokey’s part to any party. In that regard, it is Houlihan Lokey’s view that the express terms of the Company’s engagement letter with Houlihan Lokey does not create a contractual or fiduciary relationship with the Company’s shareholders. Although Houlihan Lokey does not have the present intention to assert the substance of the disclaimer regarding the absence of fiduciary duty as a defense, it is not and will not be in a position to ascertain whether it will assert this defense in any future shareholder claim that might be brought against it under applicable law alleging the existence of such a fiduciary duty, until such future claim arises. Therefore, Houlihan Lokey may, and reserves its right to, assert the substance of this disclaimer as a defense to shareholder claims. However, the law of the Cayman Islands (the Company’s jurisdiction of incorporation), to the extent that it would govern such a claim, has not addressed the availability of such a defense in connection with any shareholder claim, and that the issue of availability of that defense necessarily would have to be resolved by a court of competent jurisdiction if that defense were to be asserted. Regardless, the availability or non-availability of such a defense will have no effect on the rights and responsibilities of the board of directors under the law of the Cayman Islands, or the rights and responsibilities of the board or the financial advisor under the federal securities laws.

Houlihan Lokey’s opinion is not intended to be, and does not constitute, a recommendation to the Special Committee, the Board, any security holder or any other party as to how to act or vote with respect to any matter relating to the merger or otherwise.

Houlihan Lokey was not requested to opine as to, and its opinion did not express an opinion as to or otherwise address, among other things: (i) the underlying business decision of the Special Committee, the Board, the Company, its security holders, or any other party to proceed with or effect the merger, (ii) the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the merger or otherwise (other than the Per Share Merger Consideration and the Per ADS Merger Consideration to the extent expressly specified herein), (iii) the fairness of any portion or aspect of the merger to the holders of any class of securities, creditors or other constituencies of the Company, or to any other party, except if and only to the extent expressly set forth in the last sentence of its opinion, (iv) the relative merits of the merger as compared to any alternative business strategies or transactions that might be available for the Company or any other party or the effect of any other transaction in which the Company or any other party might engage, (v) the fairness of any portion or aspect of the merger to any one class or group of the Company’s or any other party’s security holders or other constituents vis-à-vis any other class or group of the Company’s or such other party’s security holders or other constituents (including, without limitation, the allocation of any consideration amongst or within such classes or groups of security holders or other

constituents), (vi) whether or not the Company, its security holders or any other party is receiving or paying reasonably equivalent value in the merger, (vii) the solvency, creditworthiness or fair value of the Company or any other participant in the merger, or any of their respective assets, under any applicable laws relating to bankruptcy, insolvency, fraudulent conveyance or similar matters, or (viii) the fairness, financial or otherwise, of the amount, nature or any other aspect of any compensation to or consideration payable to or received by any officers, directors or employees of any party to the merger, any class of such persons or any other party, relative to the Per Share Merger Consideration, the Per ADS Merger Consideration or otherwise. Furthermore, no opinion, counsel or interpretation is intended in matters that require legal, regulatory, accounting, insurance, tax or other similar professional advice. It is assumed that such opinions, counsel or interpretations have been or will be obtained from the appropriate professional sources. Furthermore, Houlihan Lokey relied, with the consent of the Special Committee, on the assessments by the Special Committee, the Board, the Company and their respective advisors, as to all legal, regulatory, accounting, insurance and tax matters with respect to the Company and the merger or otherwise.

In preparing its opinion to the Special Committee, Houlihan Lokey performed a variety of analyses, including those described below. The summary of Houlihan Lokey’s analyses is not a complete description of the analyses underlying Houlihan Lokey’s opinion. The preparation of a fairness opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytical methods employed and the adaptation and application of these methods to the unique facts and circumstances presented. As a consequence, neither a fairness opinion nor its underlying analyses is readily susceptible to summary description. Houlihan Lokey arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, methodology or factor. Accordingly, Houlihan Lokey believes that its analyses and the following summary must be considered as a whole and that selecting portions of its analyses, methodologies and factors or focusing on information presented in tabular format, without considering all analyses, methodologies and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying Houlihan Lokey’s analyses and opinion. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques.

In performing its analyses, Houlihan Lokey considered general business, economic, industry, and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of the opinion. Houlihan Lokey’s analyses involved judgments and assumptions with regard to industry performance, general business, economic, regulatory, market and financial conditions and other matters, many of which are beyond the control of the Company, such as the impact of competition on the business of the Company and on the industry generally, industry growth and the absence of any material change in the financial condition and prospects of the Company or the industry or in the markets generally. No company, transaction or business used in Houlihan Lokey’s analyses for comparative purposes is identical to the Company or the proposed merger and an evaluation of the results of those analyses is not entirely mathematical. Houlihan Lokey believes that mathematical derivations (such as determining average and median) of financial data are not by themselves meaningful and should be considered together with qualities, judgments and informed assumptions. The estimates contained in the Company’s analyses and the implied reference range values indicated by Houlihan Lokey’s analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond the control of our company. Much of the information used in, and accordingly the results of, Houlihan Lokey’s analyses are inherently subject to substantial uncertainty.

Houlihan Lokey’s opinion was provided to the Special Committee in connection with its evaluation of the proposed merger and was only one of many factors considered by the Special Committee in evaluating the proposed merger. Neither Houlihan Lokey’s opinion nor its analyses were determinative of the merger consideration or of the views of the Special Committee or management with respect to the merger or the merger consideration. The type and amount of consideration payable in the merger were determined through negotiation between the Special Committee and the Buyer Group, and the decision to enter into the merger was solely that of the Special Committee and the Board.

The following is a summary of the material analyses reviewed by Houlihan Lokey with the Special Committee in connection with Houlihan Lokey’s opinion rendered on September 12, 2016. The order of the analyses does not represent relative importance or weight given to those analyses by Houlihan Lokey. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of Houlihan Lokey’s analyses.

Liquidation Analysis

Our Company has exhibited negative operating profits since 2009, primarily as a result of focusing production on portable media players, while consumers have migrated towards bluetooth and WiFi products, and WiFi-only tablets, while consumers have migrated towards cellular devices such as large-screen smartphones. The market for semiconductor components used in portable media players, tablets and OTT boxes has been highly competitive and rapidly evolving. The Company has been attempting to penetrate new market segments such as Open Source Platform and Virtual Reality, but those market segments are dominated by larger and better financed companies, and the prospect of successful penetration is very limited.

Given the current condition of our business and the limited prospects of our Company in the foreseeable future, the Board believes that the highest and best use of the Company’s assets aside from the merger would be to cease operations and liquidate, especially given that the Company has a number of valuable non-operating assets, including cash, real estate and equity investments, which appear to be the Company’s primary source of value. Accordingly, our management prepared the Liquidation Analysis, which Houlihan Lokey considered in preparing its financial analysis.



	Balance Sheet as of 7/31/2016*							Recoverability Estimate						Liquidation Value
	%			Sub		Total		Low			High			Sub (Low)		Total (Low)		Sub (High)		Total (High)
	(dollars in millions, except per ADS figures)
Assets
Current Assets:
Cash & Bank Balances							87.4										87.4				87.4
Cash and Cash Equivalents		45.3	%		39.6				100	%		100	%		39.6				39.6
Time Deposit		0.0	%		0.0				100	%		100	%		0.0				0.0
Restricted Deposits		40.3	%		35.3				100	%		100	%		35.3				35.3
Marketable Securities		14.3	%		12.5				100	%		100	%		12.5				12.5
Trading Securities		0.1	%		0.1				100	%		100	%		0.1				0.1
A/C Receivable – Trade							5.1										3.9				4.4
Within 30 Days		85.6	%		4.4				80	%		90	%		3.5				3.9
31 – 90 Days		14.4	%		0.7				50	%		70	%		0.4				0.5
91 – 180 Days		0.0	%		0.0				0	%		0	%		0.0				0.0
Over 180 days		0.0	%		0.0				0	%		0	%		0.0				0.0
Prepaid Expenses and other Current Assets							7.1		23	%		25	%				1.6				1.8
Inventory							13.1		33	%		42	%				4.3				5.4
Deferred Tax Assets							0.9		0	%		0	%				0.0				0.0
Amount Due From Related Parties							0.6		100	%		100	%				0.6				0.6
Dividend Receivable							0.0		100	%		100	%				0.0				0.0
Current Assets							114.2										97.8				99.7
Non-Current Assets:
Property, Plant and Equipment, Net							26.5		3	%		12	%				0.7				3.2
Acquired Intangible Assets, net							5.1		0	%		0	%				0.0				0.0
Investment in Equity Method Investees							26.3										41.5				48.6
Beijing Action		12.6	%		3.3				75	%		80	%		2.5				2.6
Nann Capital		87.4	%		23.0				170	%		200	%		39.0				45.9
Other Investments							15.5										14.9				16.7
Hi-Trend		6.6	%		1.0				400	%		500	%		4.1				5.1
AMC Holding		0.0	%		0.0				0	%		0	%		0.0				0.0
Grand Choice Investment Limited		4.5	%		0.7				75	%		80	%		0.5				0.6
Octt Investment Holdings		88.8	%		13.7				75	%		80	%		10.3				11.0
Marketable Securities							0.0										0.0				0.0
Restricted Deposits							26.5		100	%		100	%				26.5				26.5
Rental Deposits							0.0		87	%		87	%				0.0				0.0
Land Use Right							1.4		0	%		10	%				0.0				0.1
Deferred Tax Assets							0.2		0	%		0	%				0.0				0.0
Non-Current Assets							101.4										83.6				95.1
Total Assets							215.6										181.4				194.8
Liabilities & Stockholders’ Equity
Current Liabilities:
Accounts Payable							7.2		100	%		100	%				7.2				7.2
Amount Due to a Related Party							0.7		100	%		100	%				0.7				0.7



	Balance Sheet as of 7/31/2016*				Recoverability Estimate						Liquidation Value
	%	Sub	Total		Low			High			Sub (Low)	Total (Low)		Sub (High)	Total (High)
	(dollars in millions, except per ADS figures)
Accrued Expenses and Other Current Liabilities				4.4		100	%		80	%			4.4			3.5
Short-Term Bank Loans				61.0		100	%		100	%			61.0			61.0
Other Liabilities				1.4		100	%		100	%			1.4			1.4
Income Tax Payable				0.0		0	%		0	%			0.0			0.0
Deferred Tax Liabilities				0.3		0	%		0	%			0.0			0.0
Current Liabilities				75.0									74.7			73.8
Non-Current liabilities:
Payable for Acquisition of Intangible Assets				0.0		100	%		100	%			0.0			0.0
Other liabilities				0.0		100	%		100	%			0.0			0.0
Deferred Tax and Other Liabilities				0.6		0	%		0	%			0.0			0.0
Non-Current Liabilities				0.6									0.0			0.0
Total Liabilities				75.6									74.7			73.8
RESIDUAL VALUE													106.8			121.0
Wind Down Charges
Operating Costs During Wind-down													1.2			1.2
Severance Fee													8.1			8.1
Liquidation Committee’s Fee													0.1			0.1
Other Legal Charges (Litigation, Tax Clearance, Authority Approval, Deregistration)													6.0			6.0
Total Wind Down Charges													15.4			15.4
Dividend Tax													0.9			0.9
Residual After Total Contractual Obligations and Wind Down Charges
Total													90.5			104.7
Per ADS													1.99			2.30

(Our management had prepared, prior to the Liquidation Analysis, a liquidation analysis based on the Company’s consolidated balance sheets as of May 31, 2016 (the “Prior Liquidation Analysis”). The implied per ADS reference range derived from the Prior Liquidation Analysis was between $2.09 and $2.40. The methodology that our management employed in preparing the Prior Liquidation Analysis and the Liquidation Analysis are the same, and the differing results of the two analyses are due to the facts that (i) balance sheets as of May 31, 2016 were used in the Prior Liquidation Analysis, and balance sheets as of July 31, 2016 were used in the Liquidation Analysis, which reflected the further deterioration of the Company’s balance sheet, and (ii) estimated severance fee (as part of wind down charges) was reduced from $8.2 million to $8.1 million, as some of the severance costs were booked or realized between May 31, 2016 and July 31, 2016. Once the Liquidation Analysis became available, Houlihan Lokey disregarded the Prior Liquidation Analysis in preparing its financial analysis. See the preliminary presentation of the financial advisor to the board of the directors of Company, filed as Exhibit (c)-(2) to Schedule 13E-3, for the Prior Liquidation Analysis.)

After taking into account the Company’s assets and liabilities, as well as our management’s estimates for the recoverability against the Company’s assets and liabilities, Houlihan Lokey was able to derive a residual value of between $106.8 million and $121.0 million. After taking into account our management’s estimates for wind down charges, Houlihan Lokey calculated the net residual available to shareholders after wind down charges to be between $90.5 million and $104.7 million, indicating an implied per ADS reference range for our Company of between $1.99 and $2.30, as compared to the proposed per ADS merger consideration.

Selected Companies and Transactions Analyses

Houlihan Lokey also considered performing a selected companies analysis and a selected transactions analysis. However, due to the Company’s negative enterprise value and EBITDA as well as the limited comparability of the Company to other companies in the semiconductor industry, Houlihan Lokey concluded that conducting a selected companies analysis, determining multiples ranges and deriving an implied per share reference range for our company, as compared to the proposed per share merger consideration, would not result in a meaningful result for which an implied valuation range could be concluded. For similar reasons, Houlihan Lokey concluded that it would not be able to derive a meaningful result for which an implied valuation range could be concluded based on an analysis of comparable transactions.

Discounted Cash Flow Analysis

Houlihan Lokey also considered performing a discounted cash flow analysis of the Company. Because the management projections provided by our management to Houlihan Lokey project continued negative EBITDA through the fiscal year 2018 and limited turnaround options for the business, absent meaningful third party financing that was not available to us, Houlihan Lokey concluded that the financial projections would produce results that are of limited meaningfulness in a discounted cash flow analysis and therefore did not conduct a discounted cash flow analysis.

Other Matters

Houlihan Lokey was engaged by the Special Committee to provide an opinion to the Special Committee regarding the fairness from a financial point of view of the Per Share Merger Consideration and the Per ADS Merger Consideration, as applicable, to be received in the merger by holders of Shares and ADSs, as applicable (in each case, other than holders of the Rollover Shares and the Excluded Shares, including Rollover Shares and Excluded Shares represented by ADSs). We engaged Houlihan Lokey based on Houlihan Lokey’s experience and reputation. Houlihan Lokey is regularly engaged to provide advisory services in connection with mergers and acquisitions, financings, and financial restructurings. Pursuant to the engagement letter, the Company will pay Houlihan Lokey $550,000 for its services, $200,000 of which was paid upon the execution of Houlihan Lokey’s engagement letter, $300,000 of which was paid upon the delivery of Houlihan Lokey’s opinion, and $50,000 of which will become payable upon closing of the merger. The Company has also agreed to reimburse Houlihan Lokey for certain expenses and to indemnify Houlihan Lokey its affiliates and certain related parties against certain liabilities and expenses, including certain liabilities under federal securities laws arising out of or relating to Houlihan Lokey’s engagement.

In the ordinary course of business, certain of Houlihan Lokey’s employees and affiliates, as well as investment funds in which they may have financial interests or with which they may co-invest, may acquire, hold or sell, long or short positions, or trade, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, the Company or any other party that may be involved in the merger and their respective affiliates or any currency or commodity that may be involved in the merger.

Houlihan Lokey and certain of its affiliates may provide investment banking, financial advisory, and other financial services to the Company, other participants in the merger or certain of their respective affiliates in the future, for which Houlihan Lokey and such affiliates may receive compensation. In addition, Houlihan Lokey and certain of its affiliates and certain of their respective employees may have committed to invest in private equity or other investment funds managed or advised by the participants in the merger or certain of their respective affiliates, and in portfolio companies of such funds, and may have co-invested with the Company, other participants in the merger or certain of their respective affiliates, and may do so in the future. Furthermore, in connection with bankruptcies, restructurings, and similar matters, Houlihan Lokey and certain of its affiliates may have in the past acted, may currently be acting and may in the future act as financial advisor to debtors, creditors, equity holders, trustees and other interested parties (including, without limitation, formal and informal committees or groups of creditors) that may have included or represented and may include or represent, directly or indirectly, or may be or have been adverse to, the Company, other participants in the merger or certain of their respective affiliates, for which advice and services Houlihan Lokey and such affiliates have received and may receive compensation.

Houlihan Lokey has also acted as financial advisor to the Special Committee in connection with, and has participated in certain of the negotiations leading to, the merger and will receive a fee for such services, a portion of which is contingent upon the consummation of the merger.

Buyer Group’s Purpose of and Reasons for the Merger

Under the rules governing “going private” transactions, each member of the Buyer Group may be deemed to be engaged in a “going private” transaction and, therefore, required to express their reasons for the merger to the Company’s shareholders (including those shareholders who are unaffiliated with the Buyer Group), as defined in Rule 13e-3 of the Exchange Act. Each member of the Buyer Group is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

For the Buyer Group, the primary purpose of the merger is to benefit from any future earnings and growth of the Company after the merger of Merger Sub with and into the Company, making the Company privately held and owned by the Buyer Group. The Buyer Group believe that structuring the transaction in such a manner is preferable to other transaction structures because it will enable the Buyer Group to acquire 100% control of the Company, and it represents an opportunity for the Company’s shareholders and ADS holders (in each case, other than the Buyer Group) to receive the Per Share Merger Consideration and Per ADS Merger Consideration in cash, without interest and net of any applicable withholding taxes, for their Shares and ADSs.

The Buyer Group also believes that the merger will provide the Company with flexibility to pursue certain strategic alternatives that it would not be practicable to pursue as a public company, including the ability to (i) restructure the Company, potentially spinning off unprofitable business lines and expanding profitable ones into new segments, and (ii) pursue other business initiatives without focusing on the short-term market reaction of the Company’s public shareholders with respect to such initiatives or the collective risk tolerance of such public shareholders as it relates to such initiatives. Further, as a privately held entity, the Company will be relieved of many of the other expenses, burdens and constraints imposed on companies that are subject to the public reporting requirements under the federal securities laws of the United States, including the Exchange Act and Sarbanes-Oxley Act of 2002. The need for the management of the Company to be responsive to shareholders’ concerns and to engage in an ongoing dialogue with shareholders can at times distract management’s time and attention from the effective operation and improvement of the business. The Buyer Group decided to undertake the going private transaction at this time because it wants to take advantage of the benefits of the Company’s being a privately held company as described above. In the course of considering the going private transaction, the Buyer Group did not consider alternative transaction structures.

Effect of the Merger on the Company

Private Ownership

ADSs representing Shares of the Company are currently listed on NASDAQ under the symbol “ACTS.” It is expected that, immediately following the completion of the merger, the Company will cease to be a publicly traded company and will instead become a privately held company owned by the Buyer Group. Following the completion of the merger, the ADSs will cease to be listed on NASDAQ, and price quotations with respect to sales of the ADSs in the public market will no longer be available. In addition, registration of the ADSs and the underlying Shares under the Exchange Act may be terminated upon the Company’s application to the SEC if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders of the Shares. Ninety (90) days after the filing of Form 15 in connection with the completion of the merger or such longer period as may be determined by the SEC, registration of the ADSs and the underlying Shares under the Exchange Act will be terminated. At such time, the Company will no longer be required to file periodic reports with the SEC or otherwise be subject to the United States federal securities laws, including Sarbanes-Oxley, applicable to public companies, and our shareholders will no longer enjoy the rights or protections that the United States federal securities laws provide, including reporting obligations for directors, officers and principal securities holders of the Company.

At the effective time of the merger, each outstanding Share (including Shares represented by ADSs), other than the Excluded Shares and the Rollover Shares, will be cancelled in exchange for the right to receive

the Per Share Merger Consideration in cash without interest, and each issued and outstanding ADS (other than any ADS that represents Excluded Shares and Rollover Shares) will be cancelled in exchange for the right to receive the Per ADS Merger Consideration in cash per ADS without interest (less a cancellation fee of up to $5.00 per 100 ADSs (or any fraction thereof) pursuant to the terms of the ADS deposit agreement), in each case, net of any applicable withholding taxes. The Excluded Shares other than Dissenting Shares will be cancelled for no consideration. Each Rollover Share shall remain outstanding and continue to exist and shall become one validly issued, fully paid, and non-assessable ordinary share in the surviving company.

At the effective time of the merger, each Cashed-Out Option will be cancelled and entitle the former holder thereof to receive a cash amount equal to the excess of (i) the Per Share Merger Consideration over (ii) the exercise price of such Cashed-Out Option, multiplied by the number of Shares underlying such Cashed-Out Option. Each outstanding Company Option with a per Share exercise price greater than or equal to the Per Share Merger Consideration will be cancelled at the effective time of the merger for no consideration.

At the effective time of the merger, each Cashed-Out RSU will be cancelled and entitle the former holder thereof to receive a restricted cash award in an amount equal to the Per Share Merger Consideration multiplied by the number of Shares underlying such Cashed-Out RSU. In addition, at the effective time of the merger, each outstanding unvested Company RSU will be assumed by the Company (as the surviving company), on the same terms and conditions, in respect of the number of common stock of the Company (as the surviving company) equal to the number of Shares underlying such Company RSUs.

Directors and Management of the Surviving Company

As of the effective time of the merger, the surviving company shall adopt new memorandum and articles of association substantially in the form of the memorandum and articles of association of the Company as in effect immediately prior to the effective time of the merger, which shall be the memorandum and articles of association of the surviving company until thereafter amended as provided therein or by law. In such new memorandum and articles of association of the surviving company which will be in effect immediately after the effective time of the merger, (a) references therein to the name of the surviving company shall continue to be “Actions Semiconductor Co., Ltd”; (b) references therein to the authorized share capital of the surviving company will be amended to refer to the authorized share capital of the surviving company as approved in the plan of merger, if necessary; (c) there will be changes reflecting the unlisted status of the Shares; and (d) the provisions relating to the indemnification of directors of the surviving company will be no less favorable to the intended beneficiaries than are set forth in the memorandum and articles of association of the Company as in effect on the date thereof.

In addition, unless otherwise determined by Parent prior to the effective time, the directors of the Company at the effective time (identified below in Annex D — “Directors and Executive Officers of Each Filing Person”) will become the directors of the surviving company and the officers of the Company immediately prior to the effective time will become the officers of the surviving company, until, after the effective time of the merger, their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the memorandum and articles of association.

Primary Benefits and Detriments of the Merger

The primary benefits of the merger to the Company’s shareholders (including those shareholders who are unaffiliated with the Buyer Group but excluding the Rollover Shareholders) include, without limitation, the following:

•

the receipt by such shareholders of $0.366 per Share or $2.20 per ADS in cash, representing a 49.7% premium to the closing price of our ADSs on May 19, 2016, the last trading day immediately prior to the Company’s announcement on May 20, 2016, that it had received “a going private” proposal; and

•

the avoidance of the risk associated with any possible decrease in our future revenues and free cash flow, growth or value, and the risks related to our substantial leverage, following the merger.

The primary detriments of the merger to the Company’s shareholders (including those shareholders who are unaffiliated with the Buyer Group but excluding the Rollover Shareholders) include, without limitation, the following:

•

such shareholders will cease to have an interest in the Company and, therefore, will no longer benefit from possible increases in the future revenues and free cash flow, growth or value of the Company or payment of dividends on the Shares, if any; and

•

in general, the receipt of cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under other applicable tax laws. As a result, a U.S. Holder (as defined under “Special Factors — Material U.S. Federal Income Tax Consequences”) of the Shares or ADSs who receives cash in exchange for all of such U.S. Holder’s Shares or ADSs in the merger generally will be required to recognize gain as a result of the merger for U.S. federal income tax purposes if the amount of cash received exceeds such U.S. Holder’s aggregate adjusted tax basis in such Shares. Additional adverse consequences will also result if the Company is treated as a passive foreign investment company for U.S. federal income tax purposes.

The primary benefits of the merger to the Buyer Group include, without limitation, the following:

•

if the Company successfully executes its business strategies, the value of their equity investment could increase because of possible increases in future revenues and free cash flow;

•

the Company will no longer have continued pressure to meet quarterly forecasts set by analysts. In contrast, as a publicly traded company, the Company currently faces public shareholders and investment analyst pressure to make decisions that may produce better short term results, but which may not over the long term lead to a maximization of its equity value;

•

the Company will have more flexibility to change its capital spending strategy and deploy new content to attract customers without public market scrutiny or the pressure to meet quarterly forecasts set by analysts. In contrast, as a publicly traded company, the Company currently faces public shareholders and investment analyst pressure to make decisions that may produce better short term results, butwhich may not over the long term lead to a maximization of its equity value; and

•

there will be a reduction of the costs and administrative burden associated with operating the Company as a U.S. publicly traded company, including the costs associated with regulatory filings and compliance requirements.

The primary detriments of the merger to the Buyer Group include, without limitation, the following:

•

all of the risk of any possible decrease in our revenues, free cash flow or value following the merger will be borne by the Buyer Group;

•

risks associated with any legal and regulatory proceedings against the Company will be borne by the Buyer Group;

•

the business risks facing the Company will be borne by the Buyer Group;

•

an equity investment in the surviving company by the Buyer Group following the merger will involve substantial risk resulting from the limited liquidity of such an investment; and

•

following the merger, there will be no trading market for the surviving company’s equity securities.

Effect of the Merger on the Company’s Net Book Value and Net Earnings

The table below sets out the direct or indirect interest in the Company’s net book value and net earnings for the Buyer Group before and immediately after the merger, based on the historical net book value as of June 30, 2016 and the net earnings of the Company for the six months ended June 30, 2016.


	Ownership Prior to the Merger									Ownership After the Merger
	Net Book Value				Earnings					Net Book Value				Earnings
	$’000		%		$’000			%		$’000		%		$’000			%
The Buyer Group	$	92,886.8		66.0	$	(7,809.8	)		66.0	$	107,545.9		100.0	$	(11,851.1	)		100.0

Plans for the Company after the Merger

Other than as described in this proxy statement and transactions already under consideration by the Company, there are no present plans or proposals that relate to or would result in an extraordinary corporate transaction involving the Company’s corporate structure, business, or management, such as a merger, reorganization, liquidation, relocation of any material operations, or sale or transfer of a material amount of assets. However, the Buyer Group will continue to evaluate the Company’s entire business and operations from time to time, and may propose or develop plans and proposals which they consider to be in the best interests of the Company and its equity holders, including the disposition or acquisition of material assets, alliances, joint ventures, and other forms of cooperation with third parties or other extraordinary transactions, including the possibility of relisting the Company or a substantial part of its business on another internationally recognized stock exchange.

Subsequent to the completion of the merger and the termination of registration of the Company’s ADSs and underlying Shares under the Exchange Act, the Company will no longer be subject to the Exchange Act and NASDAQ compliance and reporting requirements and the related direct and indirect costs and expenses, and may experience positive effects on profitability as a result of the elimination of such costs and expenses.

Alternatives to the Merger

The Board did not independently determine to initiate a process for the sale of the Company. The Special Committee was formed on May 20, 2016, in response to the receipt of the going private proposal letter from the Initial Group on May 19, 2016. The Special Committee discussed with its advisors other potential alternatives available to the Company, and reviewed and discussed the proposed process to conduct a pre-signing market check through a third-party solicitation process. Since the Company’s receipt of the proposal letter from the Buyer Group on May 19, 2016, the Company has not received any actionable offer from any third party for (a) a merger or consolidation of the Company with another company, (b) the sale or transfer of all or substantially all of the Company’s assets, or (c) the purchase of all or a substantial portion of the Shares that would enable such person to exercise control or significant influence over the Company.

Despite the fact that the Buyer Group can practically assure the outcome of the vote and has expressed an unwillingness to sell to a competing bidder, the ability for the Board to consider alternative proposals remains important. First, the Company may receive an unsolicited proposal that exceeds the current consideration price. In such an event, even though the Buyer Group has indicated its unwillingness to sell to a competing bidder, its adherence to this stance may change if the Buyer Group was presented with a significantly higher proposal. Second, notwithstanding that the Board has determined the transaction to be fair to the Unaffiliated Security Holders, maintaining the ability to consider alternative proposals, which may present higher consideration prices, helps the Board ensure that it can negotiate a term that maximizes value for unaffiliated shareholders.

Considering the possible alternatives to the merger (including the possibility of continuing to operate the Company as an independent entity and the perceived risks of that alternative), the range of potential benefits to its shareholders of the possible alternatives and the timing and the likelihood of accomplishing the goals of such alternatives, the Special Committee determined that none of these alternatives were reasonably likely to

present superior opportunities for the Company or to create greater value for its shareholders than the proposed sale of the Company to the Buyer Group, taking into account risks of execution as well as business, financing, regulatory approval, competitive, industry and market risks.

The Special Committee also took into account that, the Company can terminate the merger agreement in order to enter into an alternative acquisition agreement with respect to a “Superior Proposal”, prior to obtaining required shareholder approval of the merger agreement with no termination fee payable by any party, subject to notification to Parent as promptly as practicable of any proposal or offer regarding a competing transaction or that could reasonably lead to a competing transaction and subject to keeping Parent informed on a reasonably current basis of the status and terms of any such proposal or offer. In this regard, the Special Committee recognized that it has flexibility under the merger agreement to respond to an alternative transaction proposed by a third party that is or is reasonably likely to result in a “Superior Proposal”, including the ability to provide information to and engage in discussions and negotiations with such party (and, if such proposal is a “Superior Proposal”, recommend such proposal to the Company’s shareholders).

Effects on the Company if the Merger is Not Completed

If the merger agreement, the plan of merger and the transactions contemplated thereby, including the merger, are not authorized and approved by the Company’s shareholders or if the merger is not completed for any other reason, shareholders will not receive any payment for their Shares or ADSs in connection with the merger. Instead, the Company will remain a publicly traded company, the ADSs will continue to be listed and traded on NASDAQ, provided that the Company continues to meet NASDAQ’s listing requirements, and the Company will remain subject to SEC reporting obligations. Therefore, the Company’s shareholders will continue to be subject to similar risks and opportunities as they currently are with respect to their ownership of our Shares or ADSs. Accordingly, if the merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your Shares or ADSs, including the risk that the market price of the ADSs may decline to the extent that the current market price reflects a market assumption that the merger will be completed.

If the merger is not completed, from time to time, the Board will evaluate and review, among other things, the business, operations, dividend policy and capitalization of the Company and make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance shareholder value. If the merger agreement is not authorized and approved by the Company’s shareholders or if the merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to the Company will be offered, or that the business, prospects or results of operations of the Company will not be adversely impacted.