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Check
the appropriate box:
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o
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Preliminary
Information Statement
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o
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Confidential,
for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
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x
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Definitive
Information Statement
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CHINA
FIRE & SECURITY GROUP, INC.
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(Name
of Registrant as Specified In Its Charter)
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Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required.
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o
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Fee
computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
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1)
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Title
of each class of securities to which transaction
applies:
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2)
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Aggregate
number of securities to which transaction applies:
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3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is
calculated and state how it was determined):
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4)
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Proposed
maximum aggregate value of transaction:
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5)
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Total
fee paid:
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o
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Fee
paid previously with preliminary materials.
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o
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee
was paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its filing.
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1)
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Amount
Previously Paid:
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2)
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Form,
Schedule or Registration Statement No.:
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3)
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Filing
Party:
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4)
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Date
Filed:
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Old
Articles of Incorporation
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New
Articles of Incorporation
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Change
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Preferred
Stock
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“The
preferred stock consists of two classes.”
“Three
million shares of Series I Convertible Preferred Stock ($0.001
par value)
each share of which shall be exchangeable for three shares of Common
Stock, without any further consideration required and upon such
other
terms and conditions as may be designated by the Board of Directors.”
“Two
Million shares of no par value Preferred Stock without designation
until
the Board of Directors shall determine to issue part or all of
such shares
and upon such terms and conditions as they designate.”
In
October, 2006, the Board of Directors designated two million shares
of
preferred as Series A Convertible Preferred Stock. 701,538 shares
were
issued in connection with the acquisition of China Fire Protection
Group,
Inc. All shares of Series A Convertible Preferred Stock that were
issued
have been converted to Common Stock on the basis of 32.5 shares
of Common
Stock for each share of preferred. No preferred shares are outstanding
and
there is no current intention to issue any such shares.
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“There
are five million shares of Preferred stock.”
“The
Board of Directors is authorized at any time, and from time to
time, to
provide for the issuance of shares of Serial Preferred Stock in
one or
more series, and to determine the designations, preferences, limitations
and relative or other rights of the Serial Preferred Stock or any
series
thereof.”
The
powers of the Board of Directors include designation of dividend
or
interest rates, conversion prices, voting rights, redemption prices,
maturity dates, and similar matters.
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Under
the New Articles of Incorporation, the number of preferred shares
remains
the same and the preferred shares are renamed Serial Preferred
Stock. The
Series I Convertible Preferred Stock, which has a provision that
each
share is exchangeable into three shares of common stock, is eliminated.
The Series A Convertible Preferred Stock authorized by designation
of the
Board of Directors in 2006 is
eliminated.
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Old
Articles of Incorporation
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New
Articles of Incorporation
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Change
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Size
of the Board of Directors
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“The
initial Board of Directors shall consist of at least one member.
The
number of Directors may be increased or decreased from time to
time by the
majority vote, or written consent of the members of the Board of
Directors, or by the vote or written consent of the holders of
a majority
of the issued and outstanding shares then entitled to vote, but
in no case
shall the number of directors be less than one.”
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“The
number of directors of the Corporation shall be as set forth in
the
bylaws.”
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Under
the Bylaws, the number of directors is set from time to time by
the Board
of Directors. However, the shareholders may amend the
Bylaws.
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Removal
of Directors
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“A
majority of the Board of Directors voting in person at a meeting
duly
called and held, or by their written consent taken in lieu of such
a
meeting, may remove a member of the Board for cause, and may elect
a
replacement to serve until the next meeting of Shareholders.”
FBCA
provides that “the shareholders may remove one or more directors with or
without cause unless the articles of incorporation provide that
directors
may be removed only for cause” and also provides that action by
shareholders requires that “the votes cast within the voting group
favoring the action exceed the votes cast opposing the
action.”
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“A
director may be removed by shareholders, but only for cause and
only by
the affirmative vote of the holders of at least 75% of the voting
power of
the then outstanding shares of Voting Stock, voting together as
a single
class. Except as may otherwise be provided by law, cause for removal
shall
be construed to exist only if the director whose removal is proposed
has
been convicted of a felony by a court of competent jurisdiction
and such
conviction is no longer subject to direct appeal or has been adjudged
by a
court of competent jurisdiction to be liable for negligence or
misconduct
in the performance of his or her duty to the Corporation in a matter
of
substantial importance to the Corporation, and such adjudication
is no
longer subject to direct appeal.”
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The
New Articles
(a)
eliminate removal of a director by directors;
(b)
provide that removal by shareholders requires (i) cause and (ii)
approval
of 75% of the outstanding shares rather than a majority of votes
cast; and
(c)
define the term “cause.”
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Old
Articles of Incorporation
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New
Articles of Incorporation
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Change
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Indemnification
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“This
Corporation may indemnify any Officer or Director, or any former
Officer
or Director, to the full extent permitted by law.”
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No
provision.
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Indemnification
is addressed in the Bylaws adopted on August 13, 2007, which provide
that
indemnification is mandatory if the person acted in good faith
and in a
manner he or she reasonably believed to be in, or not opposed to,
the best
interests of the corporation and, with respect to any criminal
action or
proceeding, had no reasonable cause to believe his or her conduct
was
unlawful.
The
Old Articles were subject to the provision of the FBCA that
indemnification is mandatory for one who has been successful on
the merits
or otherwise in defense of a proceeding. The Bylaws now explicitly
provide
for such indemnification.
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Amendment
of Bylaws
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“The
by-laws of this Corporation may be adopted, altered, amended or
repealed
by the affirmative vote of a majority of either the Board of Directors
or
of the Shareholders.”
Under
the FBCA, action by shareholders, unless the articles otherwise
provide,
is taken if “the votes cast within the voting group favoring the action
exceed the votes cast opposing the action.”
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“The
power to adopt, alter, amend or repeal bylaws shall be vested in
the Board
of Directors. Bylaws adopted by the Board of Directors may be repealed
or
changed, and new bylaws may be adopted by shareholders only if
such
repeal, change or adoption is approved by the affirmative vote
of the
holders of at least 75% of the then outstanding Voting
Stock.”
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The
supermajority voting requirement for shareholder action (75% of
the
outstanding) replaces a FBCA requirement that shareholder action
is by a
majority of votes cast.
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Old
Articles of Incorporation
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New
Articles of Incorporation
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Change
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Amendment
to the Articles of Incorporation
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No
provision in existing articles. Amendments are governed by the
FBCA which
provides that “unless the articles of incorporation or the board of
directors requires a greater vote, the amendment to be adopted
must be
approved by: :
“(a)
A majority of the votes entitled to be cast on the amendment by
any voting
group with respect to which the amendment would create dissenters'
rights;
and “
“(b)
A majority of the votes cast on other matters.”
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With
respect to the provisions relating to the name and purpose of the
Company
and the number of authorized shares and the terms of the preferred
stock,
as to which amendments can be approved by a majority of the votes
cast;
all other amendments require the affirmative vote of the holders
of at
least 75% of the then outstanding shares of Voting Stock, “provided,
however, that such 75% vote shall not be required for any alteration,
amendment or repeal unanimously recommended by the Board of Directors
if
all such directors are Continuing Directors.”
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The
provisions for supermajority requirement and the relief from the
supermajority requirement if the amendment is approved by all of
the
Continuing Directors are new. They replace a requirement of approval
of a
majority of the outstanding in the event that the amendment would
create
dissenters’ rights and a requirement for approval by a majority of votes
cast on other matters.
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Continuing
Directors
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No
provision.
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A
Continuing Director is “any member of the Board of Directors of the
Corporation who is not an Affiliate or Associate or representative
of the
Interested Shareholder and was a member of the Board prior to the
time
that the Interested Shareholder became an Interested Shareholder,
and any
successor of a Continuing Director who is not an Affiliate or Associate
or
representative of the Interested Shareholder and is recommended
or elected
to succeed a Continuing Director by a majority of Continuing Directors
then on the Board.”
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The
Continuing Director provision is new. The concept that a director
who is a
director at the time a person becomes an Interested Shareholder
is a
Continuing Director or his successors become Continuing Directors
is drawn
from the disinterested director provisions in FBCA
607.0901.
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Old
Articles of Incorporation
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New
Articles of Incorporation
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Change
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Supermajority
Vote for CertainTtransactions with Interested
Shareholder
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No
provision.
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The
approval of 75% of the outstanding shares is required for the transactions
set forth below (all of which are referred to as “business combinations”)
unless the transactions
“(a)
are approved by a majority of Continuing Directors and
“(b)
if consideration is to be received by shareholders, [the transactions]
provide for consideration per share at least equal to the highest
of (i)
the highest per share price (paid by the Interested Shareholder
for any
shares of Common Stock acquired by it (x) within the two-year period
immediately prior to the date of the first public announcement
of the
proposal of the business combination (the “Announcement Date”) or (y) in
the transaction in which it became an Interested Shareholder, whichever
is
higher; or (ii) the fair market value per share of Common Stock
on the
Announcement Date or on the date on which the Interested Shareholder
became an Interested Shareholder.”
The
covered transactions are any of the following:
(i)
any merger or consolidation of the Company or any subsidiary (a) any
Interested Shareholder (defined to include the beneficial owner
of more
than 10% of the shares of the Company) or its affiliate or
(ii)
any sale, lease, exchange, mortgage, pledge, transfer or other
disposition
(in one transaction or a series of transactions) to or with any
Interested
Shareholder or its affiliate of assets of the Corporation or any
subsidiary having an aggregate fair market value (as hereinafter
defined)
of $5,000,000 or more; or
(iii)
the issuance or transfer by the Corporation or any subsidiary (in
one
transaction or a series of transactions) of any securities to any
Interested Shareholder or its affiliate in exchange for consideration
having an aggregate fair market value of $5,000,000 or more; or
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The
provisions are new.
The
effect is to require a supermajority vote of 75% of the outstanding
shares
for certain transactions unless the transactions are approved by
the
continuing directors and with respect to certain transactions price
and
procedure requirements are complied with.
The
provisions provide for different voting requirements than those
under the
FBCA. Under the FBCA,
(a)
(i) mergers, consolidations, the sale of substantially all of the
assets
and reclassifications require the affirmative vote of a majority
of the
outstanding; and (ii) liquidation and dissolution require the affirmative
vote of a majority of the votes cast;
(b)
other sales of assets, mergers with subsidiaries, and issuances
of stock
generally do not require shareholder approval;
(c)
depending on the terms, other transactions that have the effect
of
increasing the proportionate share of the outstanding shares of
any class
of securities of the Company or any subsidiary owned by any Interested
Shareholder may or may not require shareholder approval.
Management,
the members of the board of directors,
and principal shareholders beneficially own approximately 74.6%
of the
outstanding shares.
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(iv)
any reclassification of securities or recapitalization of the
Corporation,
or any merger or consolidation of the Corporation with any of
its
subsidiaries or any other transaction (whether or not with or
into or
otherwise involving an Interested Shareholder) which has the
effect of
increasing the proportionate share of the outstanding shares
of any class
of securities of the Corporation or any subsidiary which is directly
or
indirectly owned by any Interested Shareholder or its affiliate
shall
require the affirmative vote of the holders of at least 75% of
the voting
power of the then outstanding shares of Voting Stock, voting
together as a
single class. Such affirmative vote shall be required notwithstanding
the
fact that no vote may be required, or that a lesser percentage
may be
specified, by law or in any agreement with any national securities
exchange or otherwise.
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For
information as to the repeal of this provision, see above.
FBCA
607.0901 is similar to this provision, but the Company is not and
has not
been subject to such provision.
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o
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each
person who is known by us to be the beneficial owner of more than
five
percent (5%) of our issued and outstanding shares of Common Stock;
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o
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each
of our directors, executive officers and nominees to become directors;
and
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o
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all
directors and executive officers as a group.
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Title
of Class
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Name
and Address of Beneficial Owner*
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Amount
and Nature of Beneficial Owner
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Percent
of Class
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Common
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Li
Brothers Holding Inc.
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12,768,000
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(1)
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45.7%
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Common
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Vyle
Investment Inc.
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2,622,000
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(2)
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9.4%
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Common
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China
Honor Investment Limited
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2,667,600
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(3)
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9.5%
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Common
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Worldtime
Investment Advisors Limited
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2,576,400
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9.2%
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Common
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Gangjin
Li
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12,993,000
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(4)
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46.5%
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Common
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Brian
Lin
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899,100
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(5)
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3.2%
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Common
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Tieying
Guo
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15,000
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(6)
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0.1%
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Common
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Qihong
Wu
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0
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0.0%
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Common
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Gene
Michael Bennett
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0
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0.0%
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Common
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Guoyou
Zhang
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0
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0.0%
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Common
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Yushen
Liu
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0
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0.0%
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Common
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Directors
and executive officers as a group (7) persons
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13,907,100
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49.8%
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*
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The
address for the officers and directors is South Banbidian Industrial
Park,
Liqiao Township, Shunyi District, Beijing 101304, People’s Republic of
China, (86-10) 8416 3816.
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(1)
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Li
Brothers Holding Inc is a BVI company of which Mr. Gangjin Li is the
sole shareholder.
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(2)
|
Vyle
Investment Inc. is a BVI company of which Mr. Brian Lin owns 30%
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(3)
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China
Honor Investment Inc. is a BVI company of which Mr. Ang Li is the
sole shareholder. Mr. Ang Li is the son of Mr. Gangjin Li, who
disclaims beneficial ownership of such shares.
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(4)
|
Represents
the number of shares of Common Stock plus options to purchase 225,000
shares of Common Stock that is exercisable within 60 days from
July 1,
2007.
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(5)
|
Represents
the number of shares of Common Stock plus options to purchase 112,500
shares of Common Stock that is exercisable within 60 days from
July 1,
2007.
|
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(5)
|
Represents
the number of shares of options to purchase 1,500 shares of Common
Stock
that is exercisable within 60 days from July 1, 2007.
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By
Order of the Board of Directors:
China
Fire & Security Group, Inc.
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/s/
Brian Lin
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Brian
Lin, Chief Executive Officer
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