Capital VC Limited — Proxy Solicitation & Information Statement 2006

May 4, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Sino Katalytics Investment Corporation (“Company”), you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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SINO KATALYTICS INVESTMENT CORPORATION

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2324)

REFRESHMENT OF GENERAL MANDATE TO ALLOT AND ISSUE SHARES AND NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

Barits Securities (Hong Kong) Limited

A notice convening an extraordinary general meeting (“EGM”) of the Company to be held at Suites 403-404, 4/F, Prince’s Building, 10 Chater Road, Central, Hong Kong on Friday, 19 May 2006 at 3 p.m. is set out on pages 16 to 18 of this circular. Whether or not you intend to attend and vote at the EGM in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Tengis Limited, at 26/F, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting should you so wish.

3 May 2006

CONTENTS

		Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
**LETTER **	FROM THE BOARD
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2.	Usage of the Current General Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
3.	Proposed Grant of New General Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
4.	Reason for the New General Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
5.	Fund Raising since Last Grant of General Mandate . . . . . . . . . . . . . . . . . . . . . . . .	5
6.	EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
7.	Procedure For Demanding a Poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
8.	Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
9.	Qualification of the Expert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
10.	Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
11.	Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
**LETTER **	FROM THE INEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . .	9
**LETTER **	FROM BARITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
**NOTICE **	OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Accompanying document — Form of Proxy

— i —

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

• “2005 Annual Report”

the Audited Consolidated Financial Statements and the Reports of the Directors and Auditors of the Company for the year ended 30 June 2005

“AGM” the last annual general meeting of the Company held on 30 December 2005 “Articles” the Company’s articles of association “associate” has the meaning ascribed to it in the Listing Rules “Barits” Barits Securities (Hong Kong) Limited, a corporation licensed under the SFO to carry out types 1 and 6 regulated activities (dealing in securities and advising on corporate finance), which is not a connected person (as defined in the Listing Rules) of the Company and which is the independent financial adviser to the Independent Board Committee and the Independent Shareholders

“Board”	the board of Directors of the Company
“Company”	Sino Katalytics Investment Corporation, a company
	incorporated in the Cayman Islands with limited liability,
	whose shares are listed on the Stock Exchange
“Current General Mandate”	the general and unconditional mandate granted to	the
	Directors to allot, issue and deal with up to 17,368,181	new
	Shares, being 20% of the then issued share capital of	the
	Company as at 30 December 2005, by a resolution of	the
	Shareholders passed at the AGM
“Director(s)”	directors of the Company
“EGM”	an extraordinary general meeting of the Company to be	held
	on 19 May 2006
“New General Mandate”	the general and unconditional mandate proposed to be granted
	to the Directors to allot and issue new Shares as set out in
	resolutions contained in the notice of the EGM
“Group”	the Company and its subsidiaries
“Hong Kong”	Hong Kong Special Administrative Region of the PRC

— 1 —

DEFINITIONS

“Independent Board Committee”	an independent committee of the Board comprising Mr. Lam
	Kwan, Mr. Chan Ming Sun, Jonathan and Mr. Shiu Siu Tao, all
	being independent non-executive directors, to advise the
	Independent Shareholders in respect of the New General
	Mandate
“Independent Shareholders”	shareholders of the Company other than the Directors and
	their associates
“Latest Practicable Date”	2 May 2006, being the latest practicable date prior to the
	printing of this circular for the purpose of ascertaining certain
	information contained in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Placing Agreement”	the placing agreement dated 9 March 2006 made between the
	Company and Guotai Junan Securities (Hong Kong) Limited
	in respect of the Share Placement
“Placing Announcement”	the announcement of the Company dated 13 March 2006 in
	relation to the Share Placement
“PRC”	The People’s Republic of China
“SFO”	Securities and Futures Ordinance, Chapter 571 of the Laws of
	Hong Kong
“Share(s)”	ordinary share(s) of nominal value of HK$0.01 each in the
	share capital of the Company
“Share Placement”	the placement of 17,300,000 Shares as announced by the
	Company on 13 March 2006 pursuant to the Placing
	Agreement
“Shareholder(s)”	holders of Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent.

— 2 —

LETTER FROM THE BOARD

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SINO KATALYTICS INVESTMENT CORPORATION

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2324)

Executive Directors:

Mr. Chui Tak Keung, Duncan Mr. Yau Chung Hong Mr. Chow Ka Wo, Alex

Non-executive Director:

Mr. Ma Kwok Keung, Kenneth

Registered office:

Century Yard, Cricket Square Hutchins Drive P.O. Box 2681 GT George Town Grand Cayman British West Indies

Independent non-executive Directors:

Mr. Lam Kwan Mr. Chan Ming Sun, Jonathan Mr. Shiu Siu Tao

Head office and principal place of business in Hong Kong: Suites 403-404 Prince’s Building 10 Chater Road Central, Hong Kong 3 May 2006

To the Shareholders

Dear Sir or Madam,

REFRESHMENT OF GENERAL MANDATE TO ALLOT AND ISSUE SHARES AND NOTICE OF EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

As disclosed in the Placing Announcement, the Company entered into the Placing Agreement on 9 March 2006. Pursuant to the Placing Agreement, the Company has placed a total of 17,300,000 Shares under the Current General Mandate. As at the Latest Practicable Date, the Share Placement has been completed.

Following completion of the Share Placement, the Current General Mandate has been substantially utilized. The Company proposes to refresh the Current General Mandate by the grant of the New General Mandate to the Directors.

— 3 —

LETTER FROM THE BOARD

The purpose of this circular is to set out (i) details of the New General Mandate; (ii) the recommendation from the Independent Board Committee; (iii) the recommendation from Barits to the Independent Board Committee and the Independent Shareholders; and (iv) a notice convening the EGM at which necessary resolution will be proposed to the Independent Shareholders to consider and, if thought fit, approve the refreshment of the Current General Mandate by the grant of the New General Mandate.

2. USAGE OF THE CURRENT GENERAL MANDATE

At the AGM, the Shareholders approved, among other things, an ordinary resolution to grant to the Directors the Current General Mandate to issue not more than 17,368,181 Shares, being 20% of the then aggregate nominal amount of the issued share capital of the Company of 86,840,909 Shares as at the date of passing of the resolution. During the period from the grant of the Current General Mandate to the Latest Practicable Date, the Current General Mandate has been utilized to the extent of 17,300,000 Shares as a result of completion of the Share Placement, being approximately 19.92% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the resolution at the AGM. Details of the Share Placement are contained in the Placing Announcement.

3. PROPOSED GRANT OF NEW GENERAL MANDATE

The Company will convene the EGM at which an ordinary resolutions will be proposed to the Independent Shareholders that the Directors be granted the New General Mandate to allot and issue Shares not exceeding 20% of the issued share capital of the Company as at the date of passing the relevant ordinary resolution.

As at the Latest Practicable Date, the Company has an aggregate of 114,640,909 Shares in issue. Subject to the passing of the ordinary resolution for the approval of the New General Mandate and on the basis that no further Shares are issued and/or repurchased by the Company between the Latest Practicable Date and the date of the EGM, the Company would be allowed under the New General Mandate to allot and issue up to 22,928,181 Shares, being 20% of the 114,640,909 Shares in issue as at the Latest Practicable Date.

4. REASONS FOR THE NEW GENERAL MANDATE

A new grant of the New General Mandate will empower the Directors to issue new Shares under the refreshed limit speedily as and when necessary, and without seeking further approval from the Shareholders as opportunities arise. The New General Mandate will also give the Company the ability to capture any capital raising or related investment opportunity as and when it arises. Such ability is crucial in a competitive and rapidly changing investment environment.

The Directors also consider equity financing to be an important mean of fund raising resource to the Company since it does not create any interest paying obligations on the Company. In appropriate circumstances, the Company will also consider other financing methods such as debt financing to fund its operation. While the Directors consider that there is no immediate funding need for the Company’s

— 4 —

LETTER FROM THE BOARD

current operations and that there is currently no concrete proposal presented by potential investors for placement of Shares, the Directors are now proposing to seek the approval of Independent Shareholders at the EGM of the New General Mandate such that the Directors will be able to respond to the market promptly when opportunity of funding raising through equity arises.

For these reasons, the Directors believe that it is in the best interests of the Company and its Shareholders as a whole if the Current General Mandate is to be refreshed by the grant of the New General Mandate at the EGM.

As at the Latest Practicable Date, there has been no other refreshment of general mandate since the last grant of general mandate at the AGM.

5. FUND RAISING SINCE LAST GRANT OF GENERAL MANDATE

The fund raising completed subsequent to the grant on the Company’s last AGM included the Share Placement with net proceeds involved of approximately HK$12.5 million. Save for the Share Placement, there has been no other fund raising activity undertaken by the Company since the last grant of general mandate at the AGM.

As set out in the Placing Announcement, the proceeds from the Placing Agreement will be used for potential investment in the future or general working capital, if required. In particular, the Company will use the proceeds for further investment in accordance with the investment strategy set out in the 2005 Annual Report, which is to maintain its positive long term view of the PRC market and continue to search for unique direct investment opportunities with the potential for steady returns even in times of volatile market conditions.

The Share Placement has been completed. A total of 17,300,000 new Shares have been allotted and issued at a price of HK$0.75 per Share. The net proceeds of approximately of HK$12.5 million are intended to be used for potential investment in the future or, if required, general working capital.

6. EGM

At the EGM, ordinary resolutions will be proposed to seek the approval of the Independent Shareholders to grant to the Directors the New General Mandate to allot, issue and deal in Shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company at the date of resolution.

Pursuant to Rule 13.36(4)(a) of the Listing Rules, the New General Mandate requires the approval of the Independent Shareholders at the EGM at which any of the controlling Shareholders and their associates or, where there is no controlling Shareholders, Directors (excluding independent non-executive Directors) and the chief executive of the Company and their respective associates shall abstain from voting. As at the Latest Practicable Date, there is no controlling Shareholder and accordingly, only the executive directors of the Company shall abstain from voting of the EGM. Pursuant to Rule 13.39(4)(b) of the Listing Rules, any vote of the Independent Shareholders at the EGM will be taken by poll.

— 5 —

LETTER FROM THE BOARD

The New General Mandate will, if granted, remain effective until the earliest of (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required to be held by law or the Articles; and (iii) the revocation or variation by an ordinary resolution of the Shareholders in general meeting.

The notice of the EGM is set out on pages 16 to 18 of this circular. A form of proxy for use at the EGM is enclosed. Whether or not you intend to attend and vote at the EGM in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Tengis Limited, at 26/F, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting should you so wish.

7. PROCEDURE FOR DEMANDING A POLL

Under article 66 of the Articles, a resolution put to the vote of a general meeting shall be decided upon by a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (1) by the chairman of such meeting; or

• (2) by at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy for the time being entitled to vote at the meeting; or

• (3) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or

• (4) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy and holding Shares in the Company conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Shares conferring that right.

A demand by a person as proxy for a Shareholder or in the case of a Shareholder being a corporation by its duly authorized representative shall be deemed to be the same as a demand by a Shareholder.

Under article 72 of the Articles, a Shareholder entitled to more than one vote on a poll need not use all his votes or cast all the votes he uses in the same way.

— 6 —

LETTER FROM THE BOARD

8. RECOMMENDATIONS

Barits has been appointed to advise the Independent Board Committee and the Independent Shareholders with regard to the granting of the New General Mandate and considers that the granting of the New General Mandate is fair and reasonable so far as the interests of the Independent Shareholders are concerned. Your attention is drawn to the text of the letter of advice from Barits containing its recommendation and the principal factors it has taken into account in arriving at its recommendation are set out on pages 10 to 15 of this circular.

The Independent Board Committee, having taken into account the advice of Barits, considers the terms of the New General Mandate are fair and reasonable so far as the Independent Shareholders are concerned and the refreshment of the Current General Mandate by the grant of the New General Mandate is in the interest of the Company and its Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolution with regard to the granting of the New General Mandate. The full text of the letter from the Independent Board Committee is set out on page 9 of this circular.

9. QUALIFICATION OF THE EXPERT

The following is the qualification of the expert who has been named in this circular or has given an opinion or advice which is contained in this circular:

Name Qualification

Barits Securities (Hong Kong) Limited A corporation licensed under the SFO to carry out types 1 and 6 regulated activities (dealing in securities and advising on corporate finance)

Barits has given and has not withdrawn its written consent to the issue of the circular with the inclusion herein of its letter or references to its name in the form and context in which they respectively appear. Barits had no shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

10. ADDITIONAL INFORMATION

Your attention is drawn to (i) the letter from the Independent Board Committee to the Independent Shareholders set out on page 9 of this circular containing its recommendation to the Independent Shareholders with regard to the grant of the New General Mandate and (ii) the letter from Barits set out on pages 10 to 15 of this circular containing its advice to the Independent Board Committee and Independent Shareholders in relation to the grant of the New General Mandate.

— 7 —

LETTER FROM THE BOARD

11. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiry, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

By Order of the Board Chui Tak Keung, Duncan Executive Director

— 8 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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SINO KATALYTICS INVESTMENT CORPORATION

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2324)

3 May 2006

To the Independent Shareholders

Dear Sir/Madam,

We have been appointed as the Independent Board Committee to advise the Independent Shareholders in connection with the grant of the New General Mandate, details of which are set out in the letter from the Board contained in the circular to the Shareholders dated 3 May 2006 (the “Circular”), of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

Having considered the refreshment of the Current General Mandate by the grant of the New General Mandate and the advice of Barits in relation thereto as set out on pages 10 to 15 of the Circular, we are of the view that the refreshment of the Current General Mandate by the grant of the New General Mandate is in the interests of the Company and its Shareholders as a whole and the terms of the New General Mandate are fair and reasonable so far as the Independent Shareholders are concerned.

Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the refreshment of the Current General Mandate by the grant of the New General Mandate.

Yours faithfully,

Mr. Lam Kwan	Mr. Chan Ming Sun, Jonathan	Mr. Shiu Siu Tao
Independent Non-executive	Independent Non-executive	Independent Non-executive
Director	Director	Director

— 9 —

LETTER FROM BARITS

The following is the text of the letter of advice from Barits to the Independent Board Committee and the Independent Shareholders dated 3 May 2006 for incorporation in this circular.

BARITS SECURITIES (HONG KONG) LIMITED

Room 3406, 34/F

Edinburgh Tower, The Landmark 15 Queen’s Road Central Hong Kong

3 May 2006

To the Independent Board Committee and the Independent Shareholders of Sino Katalytics Investment Corporation

Dear Sir/Madam,

REFRESHMENT OF GENERAL MANDATE TO ALLOT AND ISSUE SHARES

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee and the Independent Shareholders in respect of the proposed refreshment of the Current General Mandate by granting the New General Mandate to the Directors, details of which are set out in this circular of which this letter forms part. Capitalised terms used in this letter shall have the same meanings ascribed to them in this circular unless the context otherwise requires.

Pursuant to the Listing Rules, the proposed refreshment of the Current General Mandate by granting the New General Mandate to the Directors is subject to the approval of the Independent Shareholders at the EGM by way of poll. Accordingly, the Independent Board Committee has been established to advise whether the proposed refreshment of the Current General Mandate by granting the New General Mandate to the Directors is fair and reasonable and in the interest of the Company and the Shareholders as a whole. The Independent Board Committee comprises all of the three independent non-executive Directors, namely, Mr. Lam Kwan, Mr. Chan Ming Sun, Jonathan and Mr. Shiu Siu Tao. In this regard, we have been appointed as the independent financial adviser to the Independent Board Committee and the Independent Shareholders.

Pursuant to Rule 13.36(4)(a) of the Listing Rules, the New General Mandate requires the approval of the Independent Shareholders at the EGM at which any of the controlling Shareholders and their associates or, where there is no controlling Shareholders, Directors (excluding independent non-executive Directors) and the chief executive of the Company and their respective associates shall abstain from voting. As at the Latest Practicable Date, there is no controlling Shareholders and accordingly, the executive Directors shall abstain from voting of the EGM.

— 10 —

LETTER FROM BARITS

In formulating our opinion, we have relied on the accuracy of the information and representations contained in this circular and information and facts provided to us by the Company, the Directors and the management of the Company. We have also assumed that all statements of belief and intention made by the Directors in this circular were reasonably made after due enquiry. We have assumed that all statements and representations made or referred to in this circular were true at the time they were made and continue to be true at the date of the EGM. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Company, the Directors and management of the Company and have no reason to doubt that any relevant material facts have been withheld or omitted. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in this letter and to provide a reasonable basis for our opinion. We have not, however, conducted an independent investigation into the business affairs, financial position or future prospects of the Company nor have we carried out any independent verification of the information supplied.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion regarding the proposed refreshment of the Current General Mandate by granting the New General Mandate to the Directors, we have considered the following principal factors and reasons:

1. Background and use of the Current General Mandate

The Company is principally engaged in investment in a diversified portfolio of listed and unlisted companies in Hong Kong and the PRC.

At the annual general meeting of the Company held on 30 December 2005, the Shareholders approved, among other things, an ordinary resolution to grant to the Directors the Current General Mandate to issue not more than 17,368,181 Shares, being 20% of the aggregate nominal amount of the issued share capital of the Company of 86,840,909 Shares as at the date of passing the resolution. During the period from the grant of the Current General Mandate to the Latest Practicable Date, the Current General Mandate had been utilized as to 17,300,000 Shares, being approximately 19.92% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the resolution, to be allotted and issued pursuant thereto.

According to the announcement of the Company dated 13 March 2006, the Company entered into the Placing Agreement with a placing agent on 9 March 2006 for the placing (the “Placing”) of a maximum of 17,300,000 new Shares under the Current General Mandate on a best effort basis. Pursuant to the Placing Agreement, 17,300,000 new Shares have been allotted and issued at a price of HK$0.75 per Share to not less than six placees who are independent of and not connected with the Company. The 17,300,000 Shares represented approximately 15.09% of the issued share capital of the Company of 114,640,909 Shares as enlarged by the Shares issued under the Placing.

The total proceeds and net proceeds from the Placing amounted to approximately HK$12,975,000 and approximately HK$12,500,000 respectively. As confirmed by the Directors, the net proceeds from the Placing are intended to be used for potential investment in the future or, if required, general working capital. In particular, the Company intended to use such proceeds for future investment in

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LETTER FROM BARITS

accordance with the Company’s investment strategy which, as set out in the interim report of the Company for the six months ended 31 December 2005 (“2006 Interim Report), is to focus on alternative investment opportunities in the PRC with the objective to generate more consistent and less volatile returns and to offer positive returns even in times of falling market trends.

Given that 17,300,000 Shares, out of a maximum of 17,368,181 Shares as permitted under the Current General Mandate, have been issued under the Placing, the Current General Mandate has been substantially utilized. In this regard, the Directors advised that the grant of the New General Mandate would help to maintain the flexibility of the Company to solicit funding in the future for its business development should appropriate investment opportunities arise. Under such circumstances, the Directors proposed to seek for the approval of the Independent Shareholders at the EGM for the grant of the New General Mandate to the Directors to allot and issue not exceeding 20% of the issued share capital of the Company as at the date of passing the relevant resolution at the EGM.

2. Financial flexibility

According to the 2006 Interim Report, the Company had bank balances of approximately HK$4.24 million as at 31 December 2005. The New General Mandate serves as an alternative of equity funding should the Company encounter any urgent need for capital or when any business opportunities arise in the future. As mentioned above, the Company is an investment company which is principally engaged in the investment in a diversified portfolio of listed and unlisted companies in Hong Kong and the PRC. As disclosed in the 2006 Interim Report, the vision of the Company is to become the world’s premier investor or investment corporation focused on alternative investment opportunities in the PRC. With an objective to generate more consistent returns and to offer positive returns even in adverse market conditions, the Company intended to continue its effort to seek direct investment opportunities that capitalize on the evolving economy and developing economic and regulatory environment of the PRC. As further mentioned in the 2006 Interim Report, the Directors believed that ample investment opportunities would emerge given the robust economic growth in the PRC and the improvement in market sentiment of the worldwide financial markets. The Company intended to continue to expand its scale and financial strength such that it could increase its stake in successful companies in its existing portfolio and/ or their ancillary businesses, as well as to participate in promising new alternative investment opportunities. When investment or acquisition opportunities arise, it would be possible that decisions have to be promptly made and that funds have to be solicited within a limited period of time. The New General Mandate would allow the Company to allot and issue new Shares to raise capital through placing of Shares or as consideration for such investment and/ or acquisition, thereby enhancing the Company’s financing flexibility. We consider the additional financing flexibility as enhanced by the grant of the New General Mandate beneficial to the Company.

As at the Latest Practicable Date, the Company had an aggregate of 114,640,909 Shares. Subject to the passing of the ordinary resolution for the approval of the grant of the New General Mandate at the EGM and on the basis that no further Shares are to be issued and/or repurchased by the Company between the Latest Practicable Date and the date of the EGM, the New General Mandate will empower the Directors to allot, issue or otherwise deal with up to a maximum of 22,928,181 new Shares,

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LETTER FROM BARITS

representing 20% of the total number of issued Shares as at the Latest Practicable Date. It is expected that the capital which may be raised under the New General Mandate could offer more financing options to the Company when contemplating any potential acquisitions. The Directors confirmed that at present there is no concrete proposal for any investment or acquisition by the Company.

3. Other financing alternatives

Other than raising funds by way of issuing of equity capital, the Directors advised that they would also consider other financing methods such as bank financing, debt financing and funding through internal resources in order to meet its funding needs arising from future development of the Company. The Directors further advised that they would select an appropriate funding alternative which is in the best interest of the Company depending on a number of factors such as (i) the financial position and capital structure of the Company; (ii) the cost of funding to the Company; and (iii) the then market condition. Provided that there is no immediate funding need for the Company’s current operations and there is currently no concrete proposal presented by potential investors for another placement of Shares, the Directors considered that the New General Mandate would enable the Company to respond to the market promptly when opportunities of fund raising through equity arise. As such, we concur with the Directors that it is advisable for them to obtain the New General Mandate.

4. Potential dilution to shareholding of the Independent Shareholders

For illustration purpose, we set out below a table setting out the respective shareholding structures of the Company (i) as at the Latest Practicable Date; and (ii) upon full utilization of the New General Mandate:

	As at the Latest	As at the Latest	Upon full utilization of	Upon full utilization of
	**Practicable **	Date	**New General **	Mandate
	No. of Shares	%	No. of Shares	%
Four Gold MS H01 Limited (Note)	22,800,000	19.89	22,800,000	16.57
Mr. Li Yiu Keung	13,000,000	11.34	13,000,000	9.45
DKR Capital	10,000,000	8.72	10,000,000	7.27
Public Shareholders	68,840,909	60.05	68,840,909	50.04
Prospective placee(s)/investor(s)	—	—	22,928,181	16.67
Total	114,640,909	100.00	137,569,090	100.00

Note: Mr. Chui Tak Keung, Duncan, an executive Director, is deemed to be interested in 22,800,000 Shares by virtue of his shareholding in Four Gold MS H01 Limited.

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LETTER FROM BARITS

Assuming that (i) the New General Mandate will be approved at the EGM; (ii) no Shares will be repurchased and no new Shares will be issued during the period from the Latest Practicable Date to the date of the EGM (both dates inclusive); and (iii) upon full utilization of the New General Mandate, 22,928,181 Shares can be issued at maximum, representing 20% and approximately 16.67% of the existing issued share capital as at the Latest Practicable Date and the then enlarged issued share capital (as increased by the full utilization of the New General Mandate) of the Company respectively. It is expected that the aggregate shareholding of the existing public Shareholders will decrease from approximately 60.05% to approximately 50.04% upon full utilization of the New General Mandate.

Taking into consideration that (i) the New General Mandate will increase the amount of capital to an extent that may be raised under the New General Mandate and therefore provides the Company with more options of financing for further development of its business as well as for other potential future acquisitions as and when such opportunities arise and; (ii) the fact that the shareholding of all the Shareholders will be diluted to the same extent upon any utilization of the New General Mandate, we consider that the extent of potential dilution to the shareholding of the existing Shareholders is tolerable.

Shareholders should note that the Current General Mandate will be revoked upon approval of the New General Mandate at the EGM and the New General Mandate will be and continue to be in force until the earliest of (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required to be held by law or the Articles; and (iii) the revocation or variation by an ordinary resolution of the Shareholders in general meeting.

5. Terms of the New General Mandate

Pursuant to the Listing Rules, the Company will be required to seek prior consent of the Shareholders for any allotment, issue or grant of Shares or securities convertible into Shares or other rights to subscribe for Shares or such convertible securities, unless such allotment, issue or grant falls under the circumstances provided under rule 13.36(2) of the Listing Rules, including certain rights issue and open offer (subject to other Listing Rules requirements on the offering size and structure). Pursuant to rule 13.36(4) of the Listing Rules, an ordinary resolution will be proposed at the EGM to obtain approval from the Independent Shareholders to refresh the Current General Mandate so that the Directors will be entitled to exercise the powers of the Company to allot, issue and deal in Shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the relevant resolution.

Pursuant to rule 13.36(5) of the Listing Rules, the Company may not issue any securities pursuant to the general mandate given under rule 13.36(2)(b) of the Listing Rules if the relevant price represents a discount of 20% or more to the benchmarked price of the securities as detailed in the Listing Rules unless otherwise allowed by the Stock Exchange. We consider that such restriction can serve as a measure to reasonably govern any future fund raising exercises carried out pursuant to the New General Mandate, thereby safeguarding the interest of the Company and the Shareholders.

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LETTER FROM BARITS

RECOMMENDATION

Having considered the above principal factors, in particular,

1. the vision of the Company to become the world’s premier investor or investment corporation focusing on alternative investment opportunities in the PRC;

2. the enhancement in the financial flexibility of the Company resulting from the refreshment of the Current General Mandate by granting the New General Mandate to the Directors;

3. the tolerable extent of possible dilution to the shareholdings of the Independent Shareholders in the Company resulting from the issue of new Shares pursuant to the New General Mandate; and

4. the restriction imposed on the discount of issue price under the Listing Rules which itself can serve as a protective measure to safeguard the interest of the Company and the Shareholders,

we are of the opinion that the proposed refreshment of the Current General Mandate by granting the New General Mandate to the Directors is in the interest of the Company and the Shareholders as a whole and is fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution approving the grant of the New General Mandate at the EGM.

Yours faithfully, For and on behalf of

Barits Securities (Hong Kong) Limited Terence Hong Alfred Wong Managing Director Executive Director

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NOTICE OF EXTRAORDINARY GENERAL MEETING

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SINO KATALYTICS INVESTMENT CORPORATION

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2324)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of the shareholders of Sino Katalytics Investment Corporation (the “Company”) will be held at Suites 403-404, 4/F, Prince’s Building, 10 Chater Road, Central, Hong Kong on Friday, 19 May 2006 at 3 p.m. for the purpose of considering and, if thought fit, passing (with or without modifications) the following resolution as an Ordinary Resolution of the Company:

ORDINARY RESOLUTION

“ THAT

• (1) the general mandate granted to the directors of the Company (“ Directors ”) to exercise the power of the Company to allot, issue and deal with securities of the Company at the annual general meeting of the Company held on 30 December 2005 be and is hereby revoked (without prejudice to the valid exercise of such general mandate, if any, prior to the passing of this resolution);

• (2) subject to paragraph (4) below, pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue or otherwise deal with the unissued shares in the capital of the Company and to make or grant offers, agreements and options which might require the exercise of such power be and is hereby generally and unconditionally approved;

• (3) the approval in paragraph (2) above shall authorize the Directors during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such power after the end of the Relevant Period;

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (4) the aggregate nominal value of share capital allotted and issued or agreed conditionally or unconditionally to be allotted and issued (whether pursuant to an option or otherwise) by the directors of the Company pursuant to the approval in paragraphs (2) and (3) above, otherwise than pursuant to:

• (a) a Rights Issue (as hereinafter defined); or

• (b) the exercise of the subscription rights or conversion under the terms of any warrants or other securities issued by the Company as at the date of passing of this Resolution carrying a right to subscribe for or purchase shares in the capital of the Company or otherwise convertible into shares in the capital of the Company; or

• (c) the exercise of the subscription rights under any share option scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries or other eligible grantees of shares or rights to acquire shares of the Company; or

• (d) any scrip dividend or similar arrangement providing for the allotment of shares in the capital of the Company in lieu of the whole or part of a dividend on shares in accordance with the memorandum and articles of association of the Company, shall not exceed 20% of the aggregate nominal value of the share capital of the Company in issue as at the date of passing of this Resolution and the said approval shall be limited accordingly; and

• (5) for the purpose of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earliest of:

• (a) the conclusion of the next annual general meeting of the Company;

• (b) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable laws of the Cayman Islands to be held; or

• (c) the passing of an ordinary resolution by shareholders of the Company in general meeting revoking or varying the authority given to the Directors by this Resolution; and

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NOTICE OF EXTRAORDINARY GENERAL MEETING

“Rights Issue” means an offer of shares open for a period fixed by the Directors to holders of shares whose names appear on the register of members of the Company on a fixed record date in proportion to their then holdings of such shares (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognized regulatory body or any stock exchange in, any territory applicable to the Company).”

By Order of the Board Chui Tak Keung, Duncan Executive Director

Hong Kong, 3 May 2006

Notes:

• (i) A member of the Company entitled to attend and vote at the meeting convened by the above notice is entitled to appoint a proxy or proxies to attend and, subject to the provisions of the articles of association of the Company, vote in his stead. A proxy need not be a member of the Company.

• (ii) A form of proxy for use at the meeting is enclosed herewith.

• (iii) To be valid, the form of proxy together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or authority must be deposited with the Company’s Hong Kong Branch Registrars, Tengis Ltd., at 26/F, Tesbury Centre, 28 Queen’s Road East, Hong Kong no later than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

• (iv) Completion and return of the accompanying form of proxy will not preclude members of the Company from attending and voting in person at the meeting or any adjournment thereof should they so wish.

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