~~Table~~UNITED ofSTATES ~~Contents~~

~~UNITED~~SECURITIES ~~STATES~~AND EXCHANGE COMMISSION

~~SECURITIES~~WASHINGTON, ~~AND~~D.C. ~~EXCHANGE~~20549 ~~COMMISSION~~

~~WASHINGTON,~~FORM ~~D.C.~~6-K ~~20549~~

~~FORM~~Report 6of foreign private issuer pursuant to Rule 13a-K16 or 15d-16

~~Report~~ of ~~foreign~~ ~~private~~the ~~issuer~~Securities Exchange Act of 1934.

~~pursuant~~For tothe ~~Rule~~Month ~~13a-16~~of ~~or 15d-16~~April, 2020

ofCommission ~~the~~File ~~Securities~~Number: ~~Exchange~~001-12126 ~~Act of 1934.~~

~~For~~CHINA ~~the~~ENTERPRISES ~~Month~~LIMITED ~~of November, 2019~~

~~Commission~~(Exact ~~File~~name ~~Number:~~of ~~001-12126~~registrant as specified in its charter)

~~CHINA~~21/F, ~~ENTERPRISES~~Catic Plaza, ~~LIMITED~~8 Causeway Road, Causeway Bay, Hong Kong

(~~Exact~~Address ~~name~~ of ~~registrant~~principal asexecutive ~~specified in its charter~~office)

~~21st~~Indicate ~~Floor, Catic~~by ~~Plaza,~~check 8mark ~~Causeway~~whether ~~Road,~~the ~~Causeway~~registrant ~~Bay,~~files ~~Hong~~or ~~Kong~~will file annual reports under cover of Form 20-F or Form 40-F.

~~(Address~~☒ ofForm ~~principal~~20-F ~~executive~~☐ ~~office)~~Form 40-F

Indicate by check mark ~~whether~~if the registrant ~~files~~is orsubmitting ~~will~~the ~~file~~Form ~~annual~~6-K ~~reports~~in ~~under~~paper ~~cover~~as permitted ofby ~~Form~~Regulation 20S-FT orRule ~~Form 40-F.~~ 101(b)(1):

~~☒ Form~~Indicate by ~~20-F ☐~~ check mark if the registrant is submitting the Form 406-FK in paper as permitted by Regulation S-T Rule 101(b)(7):

Indicate by check mark ifwhether the registrant isby ~~submitting~~furnishing the ~~Form~~information ~~6-K~~contained in ~~paper~~this asForm ~~permitted~~is byalso ~~Regulation~~thereby ~~S-T~~furnishing the information to the Commission pursuant to Rule ~~101~~12g3-2(b)~~(1): ☐~~ under the Securities Exchange Act of 1934.

~~Indicate~~☐ byYes ~~check~~☒ ~~mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐~~ No

~~Indicate~~If by“Yes” ~~check~~is ~~mark~~marked, ~~whether~~indicate ~~the~~below ~~registrant by furnishing~~ the ~~information~~file ~~contained~~number inassigned ~~this~~to ~~Form is also thereby furnishing~~ the ~~information~~registrant toin ~~the Commission~~connection ~~pursuant~~with to Rule 12g3-2(b): ~~under the Securities Exchange Act of 1934~~82- .

~~☐ Yes ☒ No~~CHINA ENTERPRISES LIMITED

IfExhibits ~~“Yes”~~Exhibit is99.1 ~~marked,~~Press ~~indicate~~Release ~~below~~issued ~~the~~by ~~file number assigned to~~ the ~~registrant~~Company inon ~~connection~~April ~~with~~15, ~~Rule 12g3-2(b): 82-~~ 2020.

~~Table~~SIGNATURE ~~of Contents~~

~~CHINA~~Pursuant ~~ENTERPRISES~~to ~~LIMITED~~the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TABLE OF CONTENTS


Date: April 15, 2020

CHINA ENTERPRISES LIMITED
By		/s/ Yap, Allan
Name:		Yap, Allan
Title:		Chairman

~~SIGNATURE~~Exhibit ~~ANNUAL~~99.1 ~~GENERAL MEETING 2019 CIRCULAR PROXY CARD~~

~~Table~~CHINA ofENTERPRISES ~~Contents~~LIMITED

~~SIGNATURE~~PRESS RELEASE

~~Pursuant~~HONG KONG, CHINA, April 15, 2020. China Enterprises Limited (the “Company”) announces that the Company will be unable to file its 2019 Annual Report on Form 20-F (the “20-F”) ~~requirements~~by ofApril 30, 2020 due to circumstances related to COVID-19. As the ~~Securities~~Company’s ~~Exchange~~major ~~Act~~non-marketable investment, its employees and facilities are located in China which has been affected by the outbreak of ~~1934~~COVID-19 since December 2019. From January to March 2020, the ~~registrant~~Chinese ~~has~~government ~~duly~~imposed ~~caused~~nationwide travel restrictions and quarantine control, and they largely suspended their operations during this ~~report~~period. toAs a result, the Company’s finance department will be ~~signed~~unable onto ~~its~~complete ~~behalf~~the bypreparation of the Company’s consolidated financial statements and the ~~undersigned,~~20-F ~~thereunto~~without ~~duly~~undue ~~authorized~~hardship and expense to the Company until after April 30, 2020.

~~Date:~~The Company ~~November~~is 14relying on the SEC order under Section 36 of the Securities Exchange Act of 1934, ~~2019~~as amended (the “Exchange Act”), dated March 25, 2020 (Release No. 34-88465) to extend the due date for the filing of the 20-F until June 15, 2020 (45 days after the original due date). The Company will work diligently to comply with such requirement and, at this time, management believes that it will need the entire available extension period.

~~CHINA~~The ~~ENTERPRISES~~consequences ~~LIMITED~~of ~~By:~~the ~~/s/~~COVID-19 ~~Yap~~outbreak to economic conditions in China and globally, ~~Allan~~and ~~Name:~~the ~~Yap~~financial position and operating results of the Company in particular, ~~Allan~~have ~~Title:~~been ~~Chairman~~material in the first quarter of 2020, are changing rapidly, and cannot be predicted. The Company continues to monitor the situation closely.

~~Table~~***End*** ~~of Contents~~

~~CHINA~~For ~~ENTERPRISES~~more information, ~~LIMITED~~please contact:

(Exact Name of Registrant as Specified in its Charter)


Hong Kong		New York
China Enterprises Limited		Pristine Advisers
Tel: (852) 3151 0300		Tel: (631) 756-2486
Fax: (852) 2542 0298		Fax: (646) 478-9415

Bermuda

(Jurisdiction of Incorporation or Organization)

21st Floor, Catic Plaza, 8 Causeway Road, Causeway Bay, Hong Kong

(Address of Principal Executive Office)

ANNUAL GENERAL MEETING

2019

Enclosed herewith a notice convening an annual general meeting of China Enterprises Limited (“the Company”) to be held at 10:00 a.m. on December 20, 2019 (Hong Kong time) at Royal Room I-II, Level 1, Royal Plaza Hotel, 193 Prince Edward Road West, Kowloon, Hong Kong is set out on page 4 of this circular.

Whether or not you intend to attend the annual general meeting, you are requested to complete the enclosed proxy card in accordance with the instructions printed thereon to the Company. The proxy card must be received on or prior to December 18, 2019 (Hong Kong time) for action to be taken. Completion and return of the proxy card will not preclude you from attending and voting in person at the meeting should you so wish.

CONTENTS

		PAGE(S)
PART I:	CORPORATE INFORMATION		1-2
PART II:	NOTICE OF 2019 ANNUAL GENERAL MEETING		3-4
PART III:	PROXY STATEMENT		5-8
PART IV:	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		9-10
PART V:	CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018		11-33

— i —

PART I

CORPORATE INFORMATION

— 1 —

CORPORATE INFORMATION

ANNUAL GENERAL MEETING
Date and time:		December 20, 2019
		at 10:00 a.m.
		(Hong Kong time)
Venue:		Royal Room I-II, Level 1
		Royal Plaza Hotel
		193 Prince Edward
		Road West, Kowloon
		Hong Kong

TRADING VENUE

OTC Securities Marketplace

Trading Symbol: CSHEF

PRINCIPAL PLACE OF BUSINESS

21st Floor, Catic Plaza

8 Causeway Road

Causeway Bay, Hong Kong

Telephone: (852) 3151-0300

Fax: (852) 2542-0298

REGISTERED OFFICE

Clarendon House

2 Church Street

Hamilton HM 11

Bermuda

OFFICIAL WEBSITE

http://www.chinaenterpriseslimited.com

COUNSEL

Conyers Dill & Pearman

29th Floor, One Exchange Square

8 Connaught Place

Central

Hong Kong

Telephone: (852) 2524-7106

Fax: (852) 2845-9268

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Centurion ZD CPA & Co.

Unit 1304, 13/F

Two Harbourfront

22 Tak Fung Street

Hunghom, Kowloon

Hong Kong

Telephone: (852) 2126-2388

Fax: (852) 2122-9078

REGISTRAR, TRANSFER AGENT

Bermuda:

MUFG Fund Services (Bermuda) Limited

4th Floor, North Cedar House

41 Cedar Avenue

Hamilton HM 12

Bermuda

United States:

Computershare

By Regular Mail:

PO Box 505000 Louisville,

KY 40233-5000

United States

By Overnight Delivery:

462 South 4th Street Suite 1600

Louisville, KY 40202

United States

Toll Free: 800-522-6645

Toll: +1 (201) 680-6578

PUBLIC RELATIONS

Pristine Advisers

8 Walnut Ave East

Farmingdale, NY11735

Telephone: (631) 756-2486

Fax: (646) 478-9415

FORM 20-F

Form 20-F for China Enterprises Limited is available on the U.S. Securities and Exchange Commission’s website at www.sec.gov.

— 2 —

PART II

NOTICE OF 2019

ANNUAL GENERAL MEETING

— 3 —

NOTICE OF 2019 ANNUAL GENERAL MEETING

CHINA ENTERPRISES LIMITED

(incorporated in Bermuda with limited liability)

Principal Place of Business:

21st Floor, Catic Plaza, 8 Causeway Road, Causeway Bay, Hong Kong

Registered Office:

Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda

To the Shareholders of

China Enterprises Limited:

The annual general meeting of China Enterprises Limited (“the Company”) is called and will be held at 10:00 a.m. on December 20, 2019 at Royal Room I-II, Level 1, Royal Plaza Hotel, 193 Prince Edward Road West, Kowloon, Hong Kong (“Annual General Meeting”), for the following purposes:

(1) To re-elect each of the following five directors for a term expiring at the next annual general meeting and to authorize the Board of Directors to determine the Directors’ remuneration:

Dr. Yap, Allan

Mr. Lien Kait Long

Ms. Dorothy Law

Mr. Richard Whittall

Mr. Sin Chi Fai;

(2) To consider and adopt the report of the independent registered public accounting firm and audited financial statements for the year ended December 31, 2018; and

(3) To re-appoint Centurion ZD CPA & Co. as the independent registered public accounting firm for a term expiring at the next annual general meeting and to authorize the Board of Directors to determine its remuneration.

Only shareholders of record at the close of business on October 24, 2019 are entitled to attend and to vote at the Annual General Meeting.

It is requested that you sign, date and mail the enclosed proxy card whether or not you plan to attend the Annual General Meeting. You may revoke your voted proxy at any time prior to the meeting or vote in person if you attend the meeting.

We thank you for your assistance and appreciate your cooperation.

By order of the Board of Directors

Yap, Allan

Chairman

November 14, 2019

— 4 —

PART III

PROXY STATEMENT

— 5 —

PROXY STATEMENT

CHINA ENTERPRISES LIMITED

(incorporated in Bermuda with limited liability)

The accompanying proxy is solicited by the Board of Directors and is revocable at any time before it is exercised. The cost of solicitation will be borne by the Company. The report of the independent registered public accounting firm and the audited consolidated financial statement for the year ended December 31, 2018 is enclosed with this Proxy Statement.

PROPOSAL NO. 1

RE-ELECTION OF DIRECTORS

The shareholders of the Company will be asked to re-elect five persons to the Board of Directors to serve until the next annual general meeting of shareholders and until their successors have been duly elected and qualified and to authorize the Board of Directors to determine the Directors’ remuneration. All nominees are currently Directors of the Company. The persons named in the accompanying proxy will vote all properly executed proxies for the election of the persons named in the following table unless authority to vote for one or more of the nominees is withheld.

Name	Age	Position	EmployedSince
Yap, Allan	64	Chairman of the Board of the Company		2001
Lien Kait Long	71	Director		1999
Dorothy Law	49	Director		2000
Richard Whittall	60	Independent Director		2000
Sin Chi Fai	60	Independent Director		2010

Compensation of Directors and Officers

For the year ended December 31, 2018, the aggregate amount of remuneration paid by the Company to all directors and executive officers, for services in all capacities, was approximately US$122,667 (2017: US$119,208). No bonus has been paid for the year ended December 31, 2018.

Required Vote

The affirmative vote of the holders of a majority of the votes cast, either in person or by proxy, at the Annual General Meeting is required for the election of the nominees to the Board of Directors of the Company, and to authorize the Board of Directors to determine the Directors’ remuneration.

The Company’s Board of Directors recommends that the shareholders vote FOR this proposal including the election of five nominees listed above and authorizing the Board of Directors to determine the Directors’ remuneration.

— 6 —

PROXY STATEMENT

PROPOSAL NO. 2

ADOPTION OF THE REPORT OF THE INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM AND 2018 FINANCIAL STATEMENTS

The Board of Directors approved the report of the independent registered public accounting firm and the audited financial statements of the Company for the year ended December 31, 2018 and the same will be presented at the Annual General Meeting for the shareholders’ consideration and adoption. The shareholders will be asked to approve adoption of the report of the independent registered public accounting firm and the Company’s audited financial statements for the year ended December 31, 2018 at the Annual General Meeting.

Required Vote

The affirmative vote of a majority of the votes cast, either in person or by proxy, at the Annual General Meeting is required to adopt the report of the independent registered public accounting firm and the Company’s audited financial statements for the year ended December 31, 2018.

The Company’s Board of Directors recommends that the shareholders vote FOR this proposal.

PROPOSAL NO. 3

RE-APPOINTMENT OF CENTURION ZD CPA & Co. AS INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

In accordance with applicable law, the Company’s shareholders have the right to appoint independent registered public accounting firm of the Company and to authorize the Board of Directors to fix the independent registered public accounting firm’s remuneration. The Board of Directors recommended that Centurion ZD CPA & Co. be re-appointed as independent registered public accounting firm of the Company for a term expiring at the next annual general meeting and the Board of Directors be authorized to fix the independent registered public accounting firm’s remuneration. Accordingly, the shareholders will be asked to approve such re-appointment at the Annual General Meeting and to authorize the Board of Directors to fix the independent registered public accounting firm’s remuneration.

Required Vote

The affirmative vote of a majority of the votes cast, either in person or by proxy, at the Annual General Meeting is required to approve the re-appointment of Centurion ZD CPA & Co. as the Company’s independent registered public accounting firm and to authorize the Board of Directors to fix its remuneration.

The Company’s Board of Directors recommends that the shareholders vote FOR this proposal.

— 7 —

PROXY STATEMENT

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY, AND THEREFORE, SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL GENERAL MEETING IN PERSON ARE URGED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD IN THE REPLY ENVELOPE PROVIDED. DUE TO THE SIGNIFICANT TIME DIFFERENCE BETWEEN NORTH AMERICA AND HONG KONG, PROXIES MUST BE RECEIVED ON OR PRIOR TO December 18, 2019 (HONG KONG TIME) FOR ACTION TO BE TAKEN.

By order of the Board of Directors Yap, Allan Chairman

November 14, 2019

— 8 —

PART IV

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

— 9 —

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CHINA ENTERPRISES LIMITED

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of China Enterprises Limited (“Company”) and subsidiaries as of December 31, 2018 and 2017, and the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Centurion ZD CPA & Co.

Centurion ZD CPA & Co. (as successor to Centurion ZD CPA Limited)

We have served as the Company’s auditor since 2016.

Hong Kong, China

April 30, 2019

— 10 —

PART V

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED

DECEMBER 31, 2018

— 11 —

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands, except number of shares and per share data)

	Year ended December 31,
	2016			2017			2018			2018
	Rmb			Rmb			Rmb			US$
Operating activities
General and administrative expenses		(2,732	)		(2,163	)		(2,322	)		(338	)
Non-operating income (expenses):
Dividend income		—			97			—			—
Interest income		2,617			5,422			5,360			780
Interest expense		(682	)		(778	)		(830	)		(121	)
Gain on dissolution of subsidiaries (note 5)		—			6,460			1,301			189
Net realized loss on marketable securities		(1,258	)		(229	)		(1,787	)		(260	)
Unrealized gain (loss) on marketable securities still held at the balance sheet date		2,424			(2,264	)		(8,368	)		(1,217	)
Exchange gain (loss)		244			—			(2	)		—
Profit (loss) before income tax		613			6,545			(6,648	)		(967	)
Income tax expense (note 6)		—			—			—			—
Net income (loss)		613			6,545			(6,648	)		(967	)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment		47,437			(50,891	)		34,203			4,975
Change in unrealized (losses) gain		(2,968	)		2,066			—			—
Net change		44,469			(48,825	)		34,203			4,975
Total comprehensive income (loss)		45,082			(42,280	)		27,555			4,008
Earnings (Loss) per common share
Basic and diluted		0.07			0.73			(0.74	)		(0.11	)
Weighted average number of shares used in the calculation of earnings per common share
Basic and diluted		9,017,310			9,017,310			9,017,310			9,017,310

See accompanying notes to consolidated financial statements.

— 12 —

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except number of shares and their par values)

	As of December 31,
	2017			2018			2018
	Rmb			Rmb			US$
ASSETS
Current assets:
Cash and cash equivalents		473,954			502,541			73,091
Prepaid expenses and other current assets		139			216			31
Due from related party (note 11)		154			163			24
Marketable securities (notes 3 and 8)		9,564			4,956			721
Total current assets		483,811			507,876			73,867
Non-marketable investment (note 4)		166,760			175,680			25,552
Marketable securities (notes 3 and 8)		16,798			9,324			1,356
Total assets		667,369			692,880			100,775
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Payables to securities brokers (note 12)		7,084			4,718			686
Other payable		1,592			2,353			342
Accrued liabilities		1,348			1,574			229
Other taxes payable		2,753			2,753			400
Income taxes payable		17,135			16,470			2,395
Total current liabilities		29,912			27,868			4,052
Total liabilities		29,912			27,868			4,052
Commitments and contingencies (note 9)
Shareholders’ equity:
Common stock — par value US$0.01 per share 50,000,000 shares authorized; 9,017,310 shares issued and outstanding (note 7)		770			770			112
Additional paid-in capital		1,000,958			1,000,958			145,584
Accumulated other comprehensive income		1,661			33,913			4,932
Accumulated deficit		(365,932	)		(370,629	)		(53,905	)
Total shareholders’ equity		637,457			665,012			96,723
Total liabilities and shareholders’ equity		667,369			692,880			100,775

See accompanying notes to consolidated financial statements.

— 13 —

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Amounts in thousands, except number of shares)

							Accumulated
							other
					Additional		comprehensive
	Common		Common		paid-in		income/			Accumulated
	Stock		Stock		Capital		(losses)			deficit			Total
	Number		Rmb		Rmb		Rmb			Rmb			Rmb
Balance at January 1, 2016		9,017,310		770		1,000,958		6,017			(373,090	)		634,655
Net income		—		—		—		—			613			613
Foreign currency translation adjustment		—		—		—		47,437			—			47,437
Unrealized loss on available-for-sale securities		—		—		—		(2,968	)		—			(2,968	)
Balance at December 31, 2016		9,017,310		770		1,000,958		50,486			(372,477	)		679,737
Net income		—		—		—		—			6,545			6,545
Foreign currency translation adjustment		—		—		—		(50,891	)		—			(50,891	)
Unrealized gain on available-for-sale securities		—		—		—		2,066			—			2,066
Balance at December 31, 2017		9,017,310		770		1,000,958		1,661			(365,932	)		637,457
Net loss		—		—		—		—			(6,648	)		(6,648	)
Foreign currency translation adjustment		—		—		—		34,203			—			34,203
Reclassification from adoption of ASU 2016-01		—		—		—		(1,951	)		1,951			—
Balance at December 31, 2018		9,017,310		770		1,000,958		33,913			(370,629	)		665,012
Balance at December 31, 2018 (in US$)				112		145,584		4,932			(53,905	)		96,723

See accompanying notes to consolidated financial statements.

— 14 —

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

				Year ended December 31,
	2016			2017			2018			2018
	Rmb			Rmb			Rmb			US$
Cash flows from operating activities:
Net income (loss)		613			6,545			(6,648	)		(967	)
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Net gain on dissolution of subsidiaries (note 5)		—			(6,460	)		(1,301	)		(189	)
Net realized loss on marketable securities		1,258			229			1,787			260
Unrealized (gain) loss on marketable securities still held at the balance sheet date		(2,424	)		2,264			8,368			1,217
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		—			—			(68	)		(10	)
Accrued liabilities		118			131			149			21
Net cash (used in) provided by operating activities		(435	)		2,709			2,287			332
Cash flows provided by from investing activities:
Repayment from an unrelated party		145			417			—			—
Advances from an unrelated party		—			—			650			95
Decrease in due from related parties		183			—			—			—
Purchases of marketable securities		(6,933	)		—			—			—
Proceeds from marketable securities		16,079			7,273			2,820			410
Increase (decrease) in payables to securities brokers		683			781			(2,640	)		(384	)
Net cash provided by investing activities		10,157			8,471			830			121

— 15 —

CONSOLIDATED STATEMENTS OF CASH FLOWS — CONTINUED

(Amounts in thousands)

	Year ended December 31,
	2016		2017			2018		2018
	Rmb		Rmb			Rmb		US$
Effect of exchange rate change		34,423		(37,080	)		25,470		3,704
Net increase (decrease) in cash and cash equivalents		44,145		(25,900	)		28,587		4,157
Cash and cash equivalents, beginning of year		455,709		499,854			473,954		68,934
Cash and cash equivalents, end of year		499,854		473,954			502,541		73,091
Supplemental schedule of cash flow information:
Income taxes paid		—		—			—		—
Interest paid		682		778			830		121

See accompanying notes to consolidated financial statements.

— 16 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

China Enterprises Limited (the “Company”) was incorporated in Bermuda on January 28, 1993. Its common stock trades on the OTC (Over-the-Counter) Securities Marketplace in the United States of America (the “US”).

The accompanying financial statements include the financial statements of the Company and its wholly owned subsidiaries which primarily consist of Million Good Limited (“Million Good”, incorporated in the British Virgin Islands, “BVI”, principally engaged in investment holding), Wealth Faith Limited (“Wealth Faith”, incorporated in the BVI, principally engaged in investment holding), Cosmos Regent Limited (“Cosmos Regent”, incorporated in the BVI, principally engaged in investment holding), Cyber Generation Limited (“Cyber Generation”, incorporated in the BVI, principally engaged in investment holding). The Company and all of its subsidiaries are collectively referred to as the “Group”.

Based in Hong Kong, the Company has historically been engaged in tire manufacturing, trading and related businesses, and actively participated in the management of China-based companies in a variety of industries for strategic operating purposes.

As of January 1, 2010, the Company had a 26% equity interest in Hangzhou Zhongce Rubber Co., Limited (“HZ”, located in Hangzhou, Zhejiang Province, the PRC). HZ and its consolidated subsidiaries (the “PRC entities”) are engaged in the manufacture of rubber tires in the PRC.

On November 28, 2011, the Company sold all of its ownership interests in HZ to CZ Tire Holdings Limited, an independent third party company incorporated in the British Virgin Islands.

Following the disposal of all of its interest in the tire business in 2011, the Company had no revenue producing businesses and began actively seeking new investment opportunities, including entering into an agreement through its wholly owned subsidiary to purchase a 40% equity interest in Million Cube Limited (“Million Cube”) in 2012. Million Cube has acquired a 45% equity interest and corresponding shareholder loans of Paragon Winner Company Limited (“Paragon”). Paragon was formed to invest in a joint venture that is developing a golf course, hotel and resort complex at Sanya City in the PRC. On March 27, 2015, the Company closed on the acquisition of Million Cube.

The Company has continued to seek new strategic investment opportunities in the PRC, including Hong Kong. Apart from the golf resort business, the Company is also looking at other potential investments and has a long term goal to build a platform of value-added and productive businesses under the strategic direction of the Company whereby it can exercise significant influence over the financial and operating decisions of its investees for financial returns.

— 17 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

(b) Basis of Consolidation

The Company consolidates all entities in which it is the primary beneficiary of variable interests in variable interest entities and entities in which it has a controlling financial interest. The Company did not have a variable interest in any variable interest entity during the periods presented.

The consolidated financial statements include the assets, liabilities, revenue and expenses of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated on consolidation.

The Company considers cash on hand, demand deposits with banks, and highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents.

(d) Marketable Securities

The Company’s marketable equity securities are publicly traded stocks measured at fair value and classified within Level 1 in the fair value hierarchy because it uses quoted prices for identical assets in active markets. The classification of marketable securities is based on the Company’s intent, which is re-evaluated periodically, with respect to those securities. The Company classifies those marketable equity securities in current assets when these securities are bought and held principally for the purpose of selling them in the near term and represent investments of cash available for current operations. These investments are reported at fair value, with unrealized gains and losses included in earnings.

Prior to January 1, 2018, the Company accounted for marketable equity securities that were not designated as trading securities as available-for- sale securities. They were held at fair value with unrealized gains and losses, net of tax, reported in accumulated other comprehensive gain or losses. Any unrealized losses that were deemed other-than-temporary were included in current period earnings and removed from accumulated other comprehensive gain or losses.

— 18 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued

(d) Marketable Securities — continued

On January 1, 2018, the Company adopted ASU 2016-01. The carrying value of the Company’s marketable equity securities is adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment (referred to as the measurement alternative). All gains and losses on marketable equity securities, realized and unrealized, are recognized in non-operating income (expenses).

The Company adopted ASU 2016-01 prospectively on its marketable securities. Upon adoption, the Company reclassified RMB1,951 net unrealized gains related to marketable equity securities from accumulated other comprehensive income to opening accumulated deficit.

No impairment loss had been recorded for the years ended December 31, 2018 and 2017.

(e) Non-marketable Investment

The Company’s non-marketable equity securities are investments in privately held companies without readily determinable fair values. The Company does not have significant influence over these investees.

Prior to January 1, 2018, the Company accounted for its non-marketable equity securities at cost and only adjusts for other-than-temporary declines in fair value and distributions of earnings. An impairment loss was recognized in the consolidated statements of operations equal to the excess of the investment’s cost over its fair value at the balance sheet date of the reporting period for which the assessment was made. The fair value would then become the new cost basis of investment.

On January 1, 2018, the Company adopted ASU 2016-01 which changed the way it accounts for non-marketable securities. The carrying value of the Company’s non-marketable equity securities is adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment (referred to as the measurement alternative). All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in non-operating income (expenses).

The Company adopted ASU 2016-01 prospectively on its non-marketable investment, which did not have a material impact on the Company’s financial condition or results of operations.

No impairment loss had been recorded for the years ended December 31, 2018 and 2017.

— 19 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued

(f) Income Taxes

Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements and unutilized tax loss carry forwards by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided in accordance with the laws of the relevant taxing authorities.

The Company adopted ASC Topic 740, Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides accounting guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

(g) Foreign Currencies

The functional currency of the Company and its Hong Kong domiciled subsidiaries is Hong Kong dollars. The Company has elected Renminbi as its reporting currency.

Foreign currency transactions are translated into the functional currencies of the Company and its subsidiaries at the applicable exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into functional currencies using the applicable exchange rates prevailing at the respective balance sheet dates. Exchange differences are included in the consolidated statements of operations.

Assets and liabilities of the Company and its subsidiaries domiciled in Hong Kong have been translated into Renminbi at the rates of exchange prevailing at the balance sheet dates and all income and expense items are translated into Renminbi at the average rates of exchange over the year. Exchange differences resulting from the translation have been recorded as a component of comprehensive losses.

The translation of Renminbi amounts into US$ amounts are included solely for the convenience of readers and have been made at US$1.00 = RMB6.8755, the noon buying rate from the Federal Reserve Bank of New York on December 31, 2018. No representation is made that the Renminbi amounts could have been, or could be, converted into United States dollar at that rate or at any other rate.

— 20 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued

(h) Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income by the weighted-average number of common shares outstanding during the year. The Company did not have dilutive potential common share equivalents during fiscal 2016, 2017 and 2018.

(i) Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the years presented. Actual results may differ from those estimates. Significant estimates in these financial statements that are susceptible to change as more information becomes available are collectability of receivables, valuation allowances for deferred tax assets and impairment with respect to i) marketable securities and ii) non-marketable investment.

(j) Financial Instruments

The Company recognizes all derivative instruments on the balance sheet at fair value with changes in fair values reported in the consolidated statements of operations.

The Company’s financial instruments that are exposed to concentration of credit risk consist primarily of its cash and cash equivalents, and amounts due from related parties. The Company has reviewed the credit worthiness and financial position of its related parties for credit risks associated with amounts due from them. These entities have good credit standing and the Company does not expect to incur significant losses on advances provided to these entities.

(k) Comprehensive Income

Comprehensive income represents changes in equity resulting from transactions and other events and circumstances from non-owner sources. Comprehensive income consists of net income (loss) and the foreign exchange differences arising from translation to the reporting currency and unrealized gains and losses on available-for-sale securities.

— 21 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued

(l) Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016- 02, Leases (Topic 842). The new standard establishes a right-of- use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. The amendments are an improvement to U.S. GAAP because they provide guidance for each of the eight issues, thereby reducing the current and potential future diversity in practice. This ASU is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company has adopted the guidance retrospectively to each period presented. The adoption does not have any material effect on the presentation of its consolidated statements of cash flows.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This ASU improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. For public business entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial statements.

— 22 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued

(l) Recently Issued Accounting Pronouncements — continued

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of- period total amounts shown on the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, and interim period within those fiscal years. The Company has adopted the guidance retrospectively to each period presented. The adoption does not have any material effect on the presentation of its consolidated statements of cash flows.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company has adopted the guidance effective January 1, 2018. The Company will evaluate the impact of adopting this standard prospectively upon any transactions of acquisitions or disposals of assets or businesses.

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis for the annual or any interim goodwill impairment tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this ASU did not have a significant impact on the Company’s consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.

— 23 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

3. MARKETABLE SECURITIES

	2017			2018			2018
	Rmb			Rmb			US$
Marketable securities:
Equity securities listed in Hong Kong:
Adjusted cost		69,319			64,228			9,342
Unrealized losses		(44,975	)		(48,272	)		(7,022	)
Exchange differences		2,018			(1,676	)		(243	)
Total at fair value		26,362			14,280			2,077
Less: classified as non-current marketable securities (Note 2(d))		16,798			9,324			1,356
		9,564			4,956			721

As of the end of reporting period, the Company considers the declines in market value of its marketable securities in its investment portfolio not to be other than temporary in nature, therefore no impairment is recorded. Fair values were determined using closing prices of each individual security in the investment portfolio. When evaluating an investment for other-than- temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, and the Company’s intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s cost basis. No impairment loss was recognized for the years presented.

4. NON-MARKETABLE INVESTMENT

On March 27, 2015, the Company closed on the acquisition of 40% interests in Million Cube. Million Cube is essentially an investment vehicle and without substantive operating activities of its own. Million Cube has only one investment in 45% of the issued capital and corresponding shareholder loans of Paragon, which was acquired in 2012 from ITC Properties Group Limited, a company incorporated in Bermuda and listed on the HKSE (“ITC Properties”). Paragon was incorporated in the BVI and engages in the development and operation of Sanya Sun Valley Golf Resort in Yalong Bay, Sanya China, PRC. Through the investments, the Company has effective held approximately 18% of interests in Paragon after the completion of its purchasing of 40% interest in Million Cube.

Although Wealth Faith had appointed one director to Million Cube’s board of directors, as there are no other operating activities in Million Cube, the Company has no significant influence over its investment in Million Cube and the substantive investment, which is the Company’s secondary investment in Paragon. As such, the Company records the investment in Million Cube at cost and adjusts for other-than-temporary declines in fair value and distributions of earnings. As of December 31, 2018, the carrying amount of the non-marketable investment was RMB175,680 (HK$200,000).

— 24 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

4. NON-MARKETABLE INVESTMENT — continued

The management of the Company considered that no impairment was required on its long-term investment because there was a significant appreciation of the underlying asset, a piece of land in Yalong Bay, held by Paragon.

The Company appointed a third party professional valuer to re-assess the current market value of that piece of land in Yalong Bay. In the opinion of the Company’s management, no impairment on the investment in non-marketable investment was required by the Company as of December 31, 2017 and 2018.

5. DISSOLUTION OF SUBSIDIARIES

	2017			2018			2018
	Rmb			Rmb			US$
Net assets disposed of:
Other long term assets		6			—			—
Income taxes payable		(6,466	)		(1,301	)		(189	)
Gain on dissolution of subsidiaries		(6,460	)		(1,301	)		(189	)

During 2018, Orion Tire Corporation, a 60% owned subsidiary incorporated in United States, Ventures Kingdom Limited, a 100% owned subsidiary incorporated in BVI and Great Windfall Agents Limited, a 100% owned subsidiary incorporated in BVI were dissolved and a gain was recorded on dissolution.

During 2017, Orion (B.V.I.) Tire Corporation, a 60% owned subsidiary incorporated in BVI and Whole Good Limited, a 100% owned subsidiary incorporated in BVI, were dissolved and a gain was recorded on dissolution.

— 25 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

6. INCOME TAXES

The components of profit (loss) from operations before income tax are as follows:

			Year ended December 31,
	2016		2017		2018			2018
	Rmb		Rmb		Rmb			US$
The PRC		—		—		—			—
All other jurisdictions		613		6,545		(6,648	)		(967	)
		613		6,545		(6,648	)		(967	)
Income tax expense consists of:
			Year ended December 31,
	2016		2017		2018			2018
	Rmb		Rmb		Rmb			US$
Current		—		—		—			—
Deferred		—		—		—			—
		—		—		—			—

Bermuda

The Company is incorporated under the laws of Bermuda and, under current Bermuda law, is not subject to tax on income or on capital gains. The Company has received an undertaking from the Ministry of Finance of Bermuda pursuant to the provisions of the Exempted Undertakings Tax Protection Amendment Act, 2011, as amended, that in the event that Bermuda enacts any legislation imposing tax computed on profits or income, including any dividend or capital gains withholding tax, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of any such tax shall not be applicable to the Company or to any of its operations or the shares, debentures or other obligations of the Company until March 31, 2035. This undertaking is not to be construed so as to (i) prevent the application of any such tax or duty on such person as an ordinary resident in Bermuda; or (ii) prevent the application of any tax payable in accordance with the provision of the Land Tax Act, 1967 or otherwise payable in relation to any land leased to the Company in Bermuda.

— 26 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

6. INCOME TAXES — continued

British Virgin Islands (“BVI”)

The Company has certain of its subsidiaries incorporated under the laws of the BVI. Pursuant to the rules and regulations of the BVI, these subsidiaries are not subject to any income tax in the BVI.

Under the International Business Companies Act of the BVI as currently in effect, a holder of common stock who is not a resident of the BVI is exempt from BVI income tax on dividends paid with respect to the common stock and all holders of common stock are not liable for BVI income tax on gains realized during that year on sale or disposal of such shares; the BVI does not impose a withholding tax on dividends paid by a company incorporated under the International Business Companies Act.

There are no capital gains, gift or inheritance taxes levied by the BVI on companies incorporated under the International Business Companies Act. In addition, the common stock is not subject to transfer taxes, stamp duties or similar charges.

There is no income tax treaty or convention currently in effect between the United States and the BVI.

Hong Kong

The Company and certain of its subsidiaries are operating in Hong Kong and their income taxes have been calculated by applying a profits tax rate of 16.5% to the estimated taxable income earned in or derived from Hong Kong.

The tax positions for the years 2011 to 2018 may be subject to examination by the Hong Kong tax authorities.

PRC

The Company adopted the provisions of ASC Topic 740 effective January 1, 2007. The Group has made its assessment of the level of tax authority for each tax position (including the potential application of interest and penalties) based on the technical merits, and has measured the unrecognized tax benefits associated with the tax positions. Based on the evaluation by the Company, it is concluded that there are no significant uncertain tax positions requiring recognition in the financial statements.

The Company has no material unrecognized tax benefit which would favorably affect the effective income tax rate in future periods and does not believe that there will be any significant increases or decreases of unrecognized tax benefits within the next twelve months. The Company classifies interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2017 and 2018, there is no interest and penalties related to uncertain tax positions.

According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or its withholding agent. The statute of limitations extends to five years under special circumstances, which are not clearly defined. In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion.

— 27 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

6. INCOME TAXES — continued

The tax impact of temporary differences gives rise to the following deferred tax asset and liability:

	2017			2018			2018
	Rmb			Rmb			US$
Current deferred tax asset:
Tax losses		19,552			19,236			2,798
Valuation allowances		(19,552	)		(19,236	)		(2,798	)
		—			—			—

Movement in valuation allowance:

	2017		2018			2018
	Rmb		Rmb			US$
At the beginning of the year		19,285		19,552			2,844
Current year movement		267		(316	)		(46	)
At the end of the year		19,552		19,236			2,798

The Group has total tax operating loss carry forwards of RMB118,496 and RMB116,581 as of December 31, 2017 and 2018, respectively, which are available for offset against future profits that may be carried forward indefinitely. The valuation allowance refers to the estimated portion of the deferred tax assets that are not “more likely than not” to be realized.

The reconciliation of the effective income tax rate based on profit (loss) from operations before income taxes to the statutory income tax rates in Hong Kong is as follows:

	Year ended December 31,
	2016			2017			2018
Profits tax rate in Hong Kong		16.5	%		16.5	%		16.5	%
Permanent differences relating to non-taxable income and non-deductible expenses		(27.4	%)		(18	%)		(16	%)
Change in valuation allowance		10.9	%		1.5	%		(0.5	%)
Effective tax rate		—			—			—

— 28 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

7. CAPITAL STOCK

Share Capital

The Company did not issue any Common Stock for the years ended December 31, 2016, 2017 and 2018.

8. FAIR VALUE MEASUREMENTS

Effective from January 1, 2008, the Company adopted ASC Topic 820, Fair Value Measurement and Disclosures, for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). ASC Topic 820 defines fair value as the price that would be received to sell the asset or paid to transfer a liability (i.e. the “exit price”) in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

— 29 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

8. FAIR VALUE MEASUREMENTS — continued

Fair Value Hierarchy — continued

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 and 2018:

	Quoted prices		Significant
	In Active		Other		Significant		Balance		Balance
	Market for		Observable		Unobservable		as of		as of
	Identical Assets		Inputs		Inputs		December 31,		December 31,
	(Level 1)		(Level 2)		(Level 3)		2017		2017
	Rmb		Rmb		Rmb		Rmb		US$
Marketable securities
— Equity securities listed in Hong Kong
— Hotel operations		18,866		—		—		18,866		2,900
— Gaming, entertainment and tourist-related		2,948		—		—		2,948		453
— Property development and investment		4,548		—		—		4,548		699
Total marketable securities		26,362		—		—		26,362		4,052
Less: classified as non-current marketable securities (Note 2(d))		16,798		—		—		16,798		2,582
Total current marketable securities		9,564		—		—		9,564		1,470

— 30 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

8. FAIR VALUE MEASUREMENTS — continued

Fair Value Hierarchy — continued

	Quoted prices		Significant
	In Active		Other		Significant		Balance		Balance
	Market for		Observable		Unobservable		as of		as of
	Identical Assets		Inputs		Inputs		December 31,		December 31,
	(Level 1)		(Level 2)		(Level 3)		2018		2018
	Rmb		Rmb		Rmb		Rmb		US$
Marketable securities
— Equity securities listed in Hong Kong
— Hotel operations		10,472		—		—		10,472		1,523
— Gaming, entertainment and tourist-related		3,808		—		—		3,808		554
Total marketable securities		14,280		—		—		14,280		2,077
Less: classified as non-current marketable securities (Note 2(d))		9,324		—		—		9,324		1,356
Total current marketable securities		4,956		—		—		4,956		721

9. COMMITMENTS AND CONTINGENCIES

There were no outstanding capital commitments as of December 31, 2017 or 2018.

10. DISTRIBUTION OF PROFIT

(a) Dividends

The Company did not propose or pay any dividends on the outstanding Common Stock for the years ended December 31, 2016, 2017 and 2018.

(b) Profit appropriation

As of December 31, 2017 and 2018, the Company had no distributable reserves.

— 31 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

11. RELATED PARTY BALANCES, TRANSACTIONS AND ARRANGEMENTS

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

Other than those disclosed elsewhere in the consolidated financial statements, the Company had the following related party balances:

Due from Related Party

	2017		2018		2018
	Rmb		Rmb		US$
Due from:
Master Glory Group Limited		154		163		24
		154		163		24

As of December 31, 2017 and 2018, the Company held a 6.2% equity interest in Rosedale Hotel Holdings Limited, of which 48,660,424 shares were recorded as marketable securities. The carrying value of this investment was RMB18,866 and RMB10,472 as of December 31, 2017 and 2018. Dr. Allan Yap is the chairman and chief executive director of Rosedale.

As of December 31, 2017 and 2018, the amount due from related party was unsecured, non-interest bearing and had no fixed repayment terms.

12. PAYABLES TO SECURITIES BROKERS

As of December 31, 2017 and 2018, the payables to securities brokers were bearing interest at 11.25% per annum, repayable on demand, and secured by marketable securities (note 13).

13. PLEDGE OF ASSETS

As of December 31, 2017 and 2018, marketable securities amounting to RMB24,383 and RMB13,181 (US$1,917) are collateralized to secure the security trading margin facilities of the Company.

— 32 —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Amounts in thousands, except number of shares, per share data and unless otherwise stated)

14. CONCENTRATION OF CREDIT RISK

As of December 31, 2017 and 2018, approximately 98.8% and 99.3%, respectively, of the Company’s cash is maintained with one bank in Taiwan. To protect the interest of depositors, Taiwan introduced deposit insurance which provides maximum compensation of NT$3,000 (approximately RMB652) per depositor if a bank becomes bankrupt. The Company has historically not experienced any losses due to the bank failure and monitors the soundness and the credit ratings of the bank on a periodic basis. Thus, the Company believes it is currently not exposed to any material risks on its bank deposits with the bank.

15. MARKET RATE RISK

On August 11, 2015, the People’s Bank of China (“PBOC”) has cut the RMB’s reference rate by 1.9%, sparking the sharpest fall in the currency since the dollar peg ended a decade ago. The move by the PBOC comes amid growing signs of a deepening slowdown in the mainland economy. The PBOC said that the reference rate move was a one-time adjustment, and it will strengthen the market’s role in the fixing of the rate and promote the convergence of the onshore and offshore rates. Through 2016 the RMB continued its significant depreciation. This depreciation halted in 2017, and the RMB appreciated against the U.S. dollar during this one-year period. In 2018, the RMB exchange rate against the U.S. dollar depreciated significantly, mainly due to changes in political and economic conditions, including trade friction between China and the U.S. The exchange rates of the RMB against U.S. Dollar as of December 31, 2018 and 2017 were 6.8755 and 6.5063, respectively. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system and there is no guarantee that the RMB will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future.

16. SUBSEQUENT EVENTS

The Company has evaluated all events or transactions that occurred through the date the consolidated financial statements were available to be issued (April 30, 2019), and has determined that there were no material recognizable nor subsequent events or transactions which would require recognition or disclosure in the consolidated financial statements other than those disclosed elsewhere in the consolidated financial statements.

— 33 —

China Enterprises Limited Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2019 Annual Meeting Proxy Card q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals — The Board recommends a vote FOR all nominees, and FOR Proposals 2 — 3. 1. Re-elect each of the following five directors for a term expiring at the next annual general meeting and to authorize the Board of Directors to determine the Directors’ remuneration: + For Against Abstain For Against Abstain For Against Abstain 01—Allan Yap 02—Lien Kait Long 03—Dorothy Law 04—Richard Whittall 05—Sin Chi Fai For Against Abstain For Against Abstain 2. Adopt the report of the independent registered public 3. Re-appoint Centurion ZD CPA & Co. as the independent accounting firm and audited financial statements for the year registered public accounting firm for a term expiring at the ended December 31, 2018. next annual general meeting and to authorize the Board of Directors to determine its remuneration. B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. 52BM + 034W9B

2019 Annual Meeting 2019 Annual Meeting of China Enterprises Limited Shareholders December 20, 2019, 10:00 am Hong Kong Time Royal Room I-II, Level 1, Royal Plaza Hotel 193 Prince Edward Road West, Kowloon, Hong Kong Upon arrival, please present this admission ticket and photo identification at the registration desk. qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy — China Enterprises Limited + Notice of 2019 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting — December 20, 2019 Chairman of the Meeting or (name) of (address), or any of them, each with the power of substitution, are hereby authorized to represent and vote all / shares of China Enterprises Limited registered in the name of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of China Enterprises Limited to be held on December 20, 2019 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR all nominees, and FOR items 2-3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below. +

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Filing Compare · CHINA ENTERPRISES LTD