China Aoyuan Group Limited — Proxy Solicitation & Information Statement 2008

Apr 29, 2008

IMPORTANT

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

If you have sold or transferred all your shares in China Aoyuan Property Group Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’) 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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(incorporated in the Cayman Islands with limited liability) (Stock Code: 3883)

PROPOSALS FOR GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASE SHARES AND

INFORMATION ON THE RETIRING DIRECTORS TO BE RE-ELECTED AT THE 2008 ANNUAL GENERAL MEETING AND

NOTICE OF THE 2008 ANNUAL GENERAL MEETING

A letter from the board of directors of the Company is set out on page 1 to 10 of this circular. A notice convening the annual general meeting (the ‘‘2008 Annual General Meeting’’) of the Company to be held at 2/F, Gloucester Room, Mandarin Oriental, Hong Kong, 5 Connaught Road, Central, Hong Kong on 10 June 2008 (Tuesday) at 3:00 p.m. is set out on page 15 to 18 of this circular.

A form of proxy for the 2008 Annual General Meeting is also enclosed. Whether or not you desire to attend the 2008 Annual General Meeting, you are requested to complete the form of proxy and return the same to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time appointed for the 2008 Annual General Meeting or any adjournment thereof. Completion and delivery of the form of proxy will not preclude you from subsequently attending and voting at the 2008 Annual General Meeting or any adjournment thereof if you so wish.

30 April 2008

LETTER FROM THE BOARD OF DIRECTORS

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(incorporated in the Cayman Islands with limited liability)

(Stock Code: 3883)

Executive Directors:

Mr. Guo Zi Wen (Chairman) Mr. Guo Zi Ning Mr. Hu Da Wei Mr. Zheng Jian Jun

Registered Office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Non-Executive Directors:

Mr. Paul Steven Wolansky Mr. Leung Ping Chung, Hermann

Independent Non-Executive Directors:

Mr. Ma Kwai Yuen Mr. Tsui King Fai Mr. Song Xian Zhong

Principal Place of Business in Hong Kong: Room 5105, The Center 99 Queen’s Road Central Hong Kong

30 April 2008

To the Shareholders

Dear Sir/Madam,

PROPOSALS FOR GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASE SHARES AND

INFORMATION ON THE RETIRING DIRECTORS TO BE RE-ELECTED AT THE 2008 ANNUAL GENERAL MEETING AND

NOTICE OF THE 2008 ANNUAL GENERAL MEETING

1. INTRODUCTION

The Company’s existing general mandates to issue shares and to repurchase shares were approved by the Company’s then shareholders on 13 September 2007 by written resolutions. Unless otherwise renewed, the existing general mandates to issue shares and to repurchase shares will lapse at the conclusion of the 2008 Annual General Meeting.

In order to ensure flexibility when it is desirable to allot additional shares or to repurchase shares, the directors of the Company (the ‘‘Directors’’) will seek the approval of shareholders to grant new general mandates to issue shares and to repurchase shares at the 2008 Annual General Meeting.

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LETTER FROM THE BOARD OF DIRECTORS

The purpose of this circular is to, inter alia, provide you with information on i) the proposed renewal of the general mandates to issue shares and to repurchase shares; and ii) the retiring directors to be re-elected, for consideration on the related resolutions to be put forward at the 2008 Annual General Meeting.

2. GENERAL MANDATE TO ISSUE SHARES (THE ‘‘ISSUE MANDATE’’)

Two ordinary resolutions, as set out in the notice of the 2008 Annual General Meeting, will be proposed for the following purposes:

Ordinary resolution no. 5 — to grant to the Directors a general mandate to issue new shares up to a maximum of 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the resolution; and

Ordinary resolution no. 7 — to increase the aggregate nominal amount of share capital of the Company which the Directors may issue under the general mandate if given in the ordinary resolution no. 5 by the aggregate nominal of share capital of the Company repurchased under the general mandate if given in the ordinary resolution no. 6.

The Company had in issue an aggregate of 2,252,500,000 shares of HK$0.01 each as at 23 April 2008, (the ‘‘Latest Practicable Date’’), being the latest practicable date before the printing of this circular for ascertaining certain information to be included herein. Subject to the passing of the aforesaid ordinary resolution no. 5 and in accordance with the terms therein, the Company would be allowed to issue additional shares up to the aggregate nominal amount of a maximum of 450,500,000 shares on the basis that no further shares will be issued or repurchased prior to the 2008 Annual General Meeting.

3. GENERAL MANDATE TO REPURCHASE SHARES (THE ‘‘REPURCHASE MANDATE’’)

The ordinary resolution no. 6 as set out in the notice of the 2008 Annual General Meeting, will be proposed to grant to the Directors a general mandate to exercise the powers of the Company to repurchase the Company’s fully paid up shares representing up to a maximum of 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the resolution.

The Rules Governing the Listing of Securities on the Stock Exchange (the ‘‘Listing Rules’’) contain provisions to regulate the repurchase by companies with primary listings on the Stock Exchange of their own securities on the Stock Exchange.

In accordance with the Listing Rules, the appendix to this circular serves as the explanatory statement, to provide you with the requisite information reasonably necessary to enable you to make an informed decision on whether to vote for or against the ordinary resolution for granting of the Repurchase Mandate.

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LETTER FROM THE BOARD OF DIRECTORS

4. INFORMATION ON THE RETIRING DIRECTORS TO BE RE-ELECTED AT THE 2008 ANNUAL GENERAL MEETING

For your further information, we set out below the relevant details of the retiring directors proposed to be re-elected at the 2008 Annual General Meeting:

Mr. Guo Zi Wen (‘‘Mr. Guo’’), aged 43, is the founder of the Company and its subsidiaries (‘‘Group’’). He is also an executive director and the chairman of the Board. Mr. Guo is also the chief executive officer of the Company. He is primarily responsible for the formulation of development strategies of the Company, as well as supervising the project planning, financing, design and marketing. Mr. Guo graduated with a master’s degree in business management from Jinan University (暨南大學) in June 2006. He is currently a committee member of the Chinese People’s Political Consultative Conference in Guangdong Province (廣東省政協常委), the vicechairman of the Federation of Industry and Commerce in Guangdong Province (廣東省工商聯副會 長) and the chairman of the Guangdong Provincial Private Enterprise Investment Association (廣東 省民營企業投資協會會長). Except for being a director in the Company, Mr. Guo has not held directorship in other listed company during the past three years. He is the director of the subsidiaries of the Group.

Mr. Guo has entered into a service contract with the Company for a term of three years commencing from 3 April 2007 and his appointment would continue thereafter unless and until terminated by either party in accordance with his service contract. As a director, Mr. Guo is subject to retirement by rotation and re-election at annual general meetings in accordance with the Articles of Association of the Company. Mr. Guo’s existing remuneration is HK$2,900,000 per annum. Mr. Guo’s remuneration, which is commensurate with his duties and responsibilities held, is approved by the Board with reference to the prevailing market situation for similar appointment.

Mr. Guo is the younger brother of Mr. Guo Zi Ning, an executive director of the Company, and the substantial shareholder of the Company. As at the Latest Practicable Date, Mr. Guo is interested in 1,154,325,000 shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance. Save as disclosed, he does not have other relationships with any directors, senior management or other substantial or controlling shareholder of the Company for the purpose of the Listing Rules and does not have any interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance.

Mr. Guo Zi Ning, aged 46, is an executive vice-president and executive director of the board of directors. He is primarily responsible for financial management, cost control, investment management and human resources management. In July 1989, he graduated from Journal of Guangzhou Economic Management College and graduated from China Geology University with a degree in law and later obtained a Master of Business Administration degree from Asia International Open University (Macau) Postgraduate College in December 2006. He joined the Group in 1998. He ceased to be a director of Aoyuan Limited during the period of being the vicepresident of Beijing Normal University Nanguo Aoyuan Primary School. Mr. Guo Zi Ning was reappointed as a director of Aoyuan Limited in 2006. Except for being a director in the Company, Mr. Guo has not held directorship in other listed company during the past three years. He is the director of the subsidiaries of the Group.

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LETTER FROM THE BOARD OF DIRECTORS

Mr. Guo Zi Ning has entered into a service contract with the Company for a term of three years commencing from 3 April 2007 and his appointment would continue thereafter unless and until terminated by either party in accordance with his service contract. As a director, Mr. Guo Zi Ning is subject to retirement by rotation and re-election at annual general meetings in accordance with the Articles of Association of the Company. Mr. Guo Zi Ning’s existing remuneration is HK$2,700,000 per annum. Mr. Guo Zi Ning’s remuneration, which is commensurate with his duties and responsibilities held, is approved by the Board with reference to the prevailing market situation for similar appointment.

He is the elder brother of Mr. Guo Zi Wen, the chairman of the Company. As at the Latest Practicable Date, he does not have other relationships with any directors, senior management or other substantial or controlling shareholder of the Company for the purpose of the Listing Rules and does not have any interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance.

Mr. Hu Da Wei (‘‘Mr. Hu’’), aged 45, is the vice-president and chief technical officer of the Group. He is primarily responsible for property development of our group companies and is in charge of the Project Planning Center, Brand Marketing Center, Design Integration Center and Commercial Operation Center of the Group. He graduated from Hunan University of Science and Technology in 1988 majoring in architecture. From 1988 to 1998, he served as a designer in Guangdong Guangzhou Panyu Architecture Design Institute (廣東省廣州市番禺建築設計院). He joined the Group in December 1998, and has served as the vice general manager of Guangzhou Olympic Garden, general manager of Panyu Olympic Garden, director and president of the Aoyuan Group, vice chairman and president of Guangzhou Olympic Property Investment Company Limited, and executive director of Foshan Aoyuan (one of the Group’s brand franchising projects). He has over 10 years of experience in real estate development and management. He has been appointed as executive director of the Company with effect from 8 April 2008. Except for being a director in the Company, Mr. Hu has not held directorship in other listed company during the past three years. He is the director of certain subsidiaries of the Group.

Mr. Hu has entered into a service contract with the Company for a term commencing from 8 April 2008 to 2 April 2010 and his appointment would continue thereafter unless and until terminated by either party in accordance with his service contract. As a director, Mr. Hu is subject to retirement by rotation and re-election at annual general meetings in accordance with the Articles of Association of the Company. Mr. Hu’s existing remuneration is HK$2,500,000 per annum. Mr. Hu’s remuneration, which is commensurate with his duties and responsibilities held, is approved by the Board with reference to the prevailing market situation for similar appointment.

He does not have any relationships with any directors, senior management or other substantial or controlling shareholder of the Company for the purpose of the Listing Rules and as at the Latest Practicable Date, he does not have any interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance.

Mr. Zheng Jian Jun (‘‘Mr. Zheng’’), aged 37, is a vice-president and an executive Director of the board of directors. He is primarily responsible for internal audit management, information technology management and supervising legal affairs. He graduated from Tongui University with a bachelor’s degree in industrial management in 1993. He graduated from Zhong Shan University

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LETTER FROM THE BOARD OF DIRECTORS

with a master’s degree in business administration in June 2001. He became a PRC registered accountant in 1997 and a PRC registered tax adviser in 2000. He joined the Group in April 2003. Except for being a director in the Company, Mr. Zheng has not held directorship in other listed company during the past three years. He is the director of the subsidiaries of the Group.

Mr. Zheng has entered into a service contract with the Company for a term of three years commencing from 3 April 2007 and his appointment would continue thereafter unless and until terminated by either party in accordance with his service contract. As a director, Mr. Zheng is subject to retirement by rotation and re-election at annual general meetings in accordance with the Articles of Association of the Company. Mr. Zheng’s existing remuneration is HK$2,500,000 per annum. Mr. Zheng’s remuneration, which is commensurate with his duties and responsibilities held, is approved by the Board with reference to the prevailing market situation for similar appointment.

He does not have any relationships with any directors, senior management or other substantial or controlling shareholder of the Company for the purpose of the Listing Rules and as at the Latest Practicable Date, he is interested in 1,069,000 share options of the Company. Save as disclosed, he does not have any interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance.

Mr. Paul Steven Wolansky (‘‘Mr. Wolansky’’), aged 52, has been appointed as nonexecutive Director and the vice-chairman of the board of directors on 3 April 2007 under an appointment letter for a specific term which may be extended for such period as the Company and Mr. Wolansky may agree in writing. He has over 15 years of fund management and direct investment experience. He received a Bachelor of Arts degree from Amherst College, a Juris Doctor degree from Harvard Law School, and is admitted as a member of the bar of the State of New York. Mr. Wolansky is the chairman and the chief executive officer of New China Management Corp., the investment manager of The Cathay Investment Fund, Ltd., and New China Capital Management LLC, the investment manager of Cathay Capital Holdings, L.P. and Cathay Capital Holdings II, L.P. The Cathay funds have been investing in private equity in China since 1992, and Cathay Sino Property Ltd., a substantial shareholder of the Company, is wholly owned by Cathay Capital Holdings, L.P. Mr. Wolansky is one of the limited partners of Cathay Capital Holdings, L.P. Mr. Wolansky was previously a director of Lomas Financial Corporation (‘‘Lomas’’), which filed a voluntary petition for reorganization under Chapter 11 of the United States Federal Bankruptcy Code on 10 October 1995. Lomas was in financial difficulties prior to such petition and Mr. Wolansky was appointed by Cold Spring Partners and Cold Spring Associates, LP, which were companies in the business of buying distressed debts, to represent the interests of the creditors with a view to concluding a reorganization plan for Lomas. Lomas filed a plan of reorganization on 3 July 1996 and the plan of reorganization was confirmed by the relevant United States court on 1 October 1996, when Lomas was cleared of its bankruptcy status. The legal proceedings in relation to Lomas’ voluntary petition for reorganization have since completed.

Mr. Wolansky is able to fulfill his fiduciary duties as a non-executive Director of the board of directors in accordance with Rule 3.08 of the Listing Rules, and has the character, experience, and integrity and is able to demonstrate a standard of competence commensurate with his position as a non-executive Director of our Board, pursuant to Rule 3.09 of the Listing Rules. Mr. Leung Ping Chung, Hermann is the alternate director to Mr. Wolansky.

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LETTER FROM THE BOARD OF DIRECTORS

Mr. Wolansky was a non-executive director of China Resources Land Limited (華潤置地有限 公司), a Hong Kong listed company, from 1996 to 2006 and a non-executive director of Warderly International Holdings Limited (匯多利國際控股有限公司), a Hong Kong listed company, until May 2007. Mr. Wolansky is also currently a non-executive director of Centron Telecom International Holding Limited (星辰通信國際控股有限公司), a company whose shares are listed on the Main Board of the Stock Exchange. He joined the Group in June 2006 as a representative of Cathay Sino Property Ltd. as a result of Cathay Sino Property Ltd.’s subscription of the shares of Add Hero Holdings Limited. In light of Mr. Wolansky’s relevant experience in equity investment and corporate financing, the Company appointed him as a non-executive Director with the aim of bringing in more financing opportunities to the Company.

Mr. Wolansky’s remuneration is fixed at HK$60,000 per annum, which is commensurate with his duties and responsibilities as non-executive director.

The interests of Mr. Wolansky in the issued share capital of the Company (within the meaning of Part XV of the Securities and Futures Ordinance) are set out below:

					% of the
			No. of Share		issued share
		No. of Share	options held	Total	capital
Mr.	Wolanksy	293,175,000	300,000	293,475,000	13.03%
		(Note)

Note: Shares are held by Cathay Sino Property Ltd. which is wholly-owned by Cathay Capital Holdings L.P.. Mr. Wolansky is deemed to be interested in the shares within the meaning of Part XV of the Securities and Futures Ordinance.

Save as disclosed above, Mr. Wolansky does not hold any directorship in listed public companies in the past three years and he is not related to the directors, senior management, substantial or controlling shareholders of the Company, nor does he hold any other positions with the Company or any of its subsidiaries.

Mr. Leung Ping Chung, Hermann (‘‘Mr. Leung’’), aged 52, has been appointed as nonexecutive Director of the Company on 3 April 2007 under an appointment letter for a specific term which may be extended for such period as the Company and Mr. Leung may agree in writing. He is an existing non-executive Director of the Company nominated by Cathay Sino Property Ltd. He is also the alternate director to Mr. Wolansky. He graduated from the Chinese University of Hong Kong (香港中文大學) with a bachelor’s degree in social sciences in 1979. He graduated from the Chinese University of Hong Kong with a master’s degree in 1982. He is an executive director of New China Capital Management (HK) Ltd. He is a non-executive director of Wuxi Little Swan Company Limited (無錫小天鵝股份有限公司), a PRC listed company, which shares are listed on the Shenzhen Stock Exchange. He was an alternate non-executive director of Warderly International Holdings Limited (匯多利國際控股有限公司), a Hong Kong listed company, until May 2007. Mr. Leung is also currently a non-executive director of Centron Telecom International Holdings Limited (星辰通信國際控股有限公司) and Vinda International Holdings Limited (維達

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LETTER FROM THE BOARD OF DIRECTORS

國際控股有限公司), companies whose shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited. Save as disclosed above, Mr. Leung did not hold any other directorships in listed public companies during the past three years.

Mr. Leung’s remuneration is fixed at HK$60,000 per annum, which is commensurate with his duties and responsibilities as non-executive director.

The interests of Mr. Leung in the issued share capital of the Company (within the meaning of Part XV of the Securities and Futures Ordinance), as at the date of this announcement are set out below:

					% of the
			No. of Share		issued share
		No. of Share	options held	Total	capital
Mr.	Leung	293,175,000	4,581,000	297,756,000	13.22%
		(Note)

Note: Shares are held by Cathay Sino Property Ltd. which is wholly-owned by Cathay Capital Holdings L.P.. Mr. Leung is deemed to be interested in the shares within the meaning of Part XV of the Securities and Futures Ordinance.

Mr. Leung is the director of one subsidiary of the Company. Save as disclosed above, he is not related to the directors, senior management, substantial or controlling shareholders of the Company, nor does he hold any other positions with the Company or any of its subsidiaries.

Mr. Ma Kwai Yuen (‘‘Mr. Ma’’), aged 55, has been appointed as independent non-executive Director of the Company on 13 September 2007 under an appointment letter for a specific term which may be extended for such period as the Company and Mr. Ma may agree in writing. He is currently an executive director of a consulting company in Hong Kong. He has previously held positions as the corporate planning manager of Sino Land Company Limited (信和置業有限公司) and a consultant of Jardine Management Consulting Services Pty., Ltd. Currently, Mr. Ma is an independent non-executive director of PacMOS Technologies Holdings Limited and Vision Tech International Holdings Limited, Hong Kong listed companies. He is a fellow member of the Chartered Institute of Cost and Management Accountants, an associate member of the Hong Kong Institute of Certified Public Accountants and a fellow member of the Certified Practising Accountants Australia. Mr. Ma has over 30 years of professional experience in accounting, financial management and business consultancy.

Mr. Ma’s remuneration is fixed at HK$230,000 per annum, which is commensurate with his duties and responsibilities as independent non-executive director and chairman of the audit committee.

Save as disclosed above, Mr. Ma has not held directorship in other listed company during the past three years. He does not have any relationships with any directors, senior management or other substantial or controlling shareholder of the Company for the purpose of the Listing Rules and as at the Latest Practicable Date, he is interested in 300,000 share options of the Company.

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LETTER FROM THE BOARD OF DIRECTORS

Save as disclosed, he does not have any interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance nor does he hold any other positions with the Company or any of its subsidiaries.

Mr. Tsui King Fai (‘‘Mr. Tsui’’), aged 58, has been appointed as independent non-executive Director of the Company on 13 September 2007 under an appointment letter for a specific term which may be extended for such period as the Company and Mr. Tsui may agree in writing. He is a director of WAG Worldsec Corporate Finance Limited, a registered financial services company in Hong Kong. He has over 30 years of experience in accounting, finance and investment management, particularly in investments in China. Mr. Tsui worked for two of the ‘‘Big Four’’ audit firms in Hong Kong and the United States of America. He has previously served as the independent non-executive director of the Hong Kong Building and Loan Agency Limited. Mr. Tsui is currently acting as independent non-executive director of Lippo Limited, Lippo China Resources Limited, Hong Kong Chinese Limited and Vinda International Holdings Limited, all of which are listed on the Stock Exchange. He graduated from the University of Houston with a Master of Science in Accountancy degree and a Bachelor of Business Administration degree with first class honors. Mr. Tsui is a Fellow of the Hong Kong Institute of Certified Public Accountants, a member of the Institute of Chartered Accountants in Australia and a member of the American Institute of Certified Public Accountants.

Mr. Tsui’s remuneration is fixed at HK$180,000 per annum, which is commensurate with his duties and responsibilities as independent non-executive director.

Save as disclosed above, Mr. Tsui has not held directorship in other listed company during the past three years. He does not have any relationships with any directors, senior management or other substantial or controlling shareholder of the Company for the purpose of the Listing Rules and as at the Latest Practicable Date, he is interested in 300,000 share options of the Company. Save as disclosed, he does not have any interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance nor does he hold any other positions with the Company or any of its subsidiaries.

Mr. Song Xian Zhong (‘‘Professor Song’’), aged 45, has been appointed as independent nonexecutive Director of the Company on 13 September 2007 under an appointment letter for a specific term which may be extended for such period as the Company and Professor Song may agree in writing. He is currently the head of the development planning division at Jinan University (暨南大學). Professor Song is also the director of the China Accountants Society, a member of the Finance Department Accounting Standards Expert Committee, and the vice-chairman of the Guangzhou Audit Society. He is an independent director of Guangdong Electric Power Development Co., Ltd. (廣東省電力發展股份有限公司) and an independent director of and a member of the audit committee of Guangzhou Development Industry (Holdings) Co., Ltd. (廣州發 展實業控股集團股份有限公司), both listed on the Shenzhen Stock Exchange and Shanghai Stock Exchange, respectively. He is also an independent director of Guangzhou Donghua Enterprise Co., Ltd. (廣州東華實業股份有限公司), a company listed on the Shanghai Stock Exchange. Professor Song has over 20 years of teaching and research experience in the fields of accounting and finance, and has published many books and articles on topics such as enterprise finance management, reorganization finance and socially responsible accounting for business enterprises.

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LETTER FROM THE BOARD OF DIRECTORS

Professor Song’s remuneration is fixed at HK$180,000 per annum, which is commensurate with his duties and responsibilities as independent non-executive director.

Save as disclosed above, Professor Song has not held directorship in other listed company during the past three years. He does not have any relationships with any directors, senior management or other substantial or controlling shareholder of the Company for the purpose of the Listing Rules and as at the Latest Practicable Date, he is interested in 300,000 share options of the Company. Save as disclosed, he does not have any interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance nor does he hold any other positions with the Company or any of its subsidiaries.

The Board is not aware of any other matters or information that need to be brought to the attention of shareholders of the Company or to be disclosed pursuant to Rule 13.51(2) in relation to the proposed re-election of the aforesaid retiring directors.

5. ACTION TO BE TAKEN

The notice convening the 2008 Annual General Meeting to be held at 2/F, Gloucester Room, Mandarin Oriental, Hong Kong, 5 Connaught Road, Central, Hong Kong on 10 June 2008 (Tuesday) at 3:00 p.m. is set out on page 15 to 18 of this circular.

A form of proxy for the 2008 Annual General Meeting is also enclosed. Whether or not you desire to attend the 2008 Annual General Meeting, you are requested to complete the form of proxy and return the same to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time appointed for the 2008 Annual General Meeting or any adjournment thereof. Completion and delivery of the form of proxy will not preclude you from subsequently attending and voting at the 2008 Annual General Meeting or any adjournment thereof if you so wish.

6. PROCEDURES FOR DEMANDING A POLL

For your further information as required by the Listing Rules, set forth below are the procedures for demanding a poll at general meeting of the Company. Pursuant to Article no. 66 of the Company’s articles of association (‘‘Articles of Association’’), a resolution put to the vote of a general meeting shall be decided on a show of hands unless voting by way of a poll is required by the rules of the Designated Stock Exchange (as defined in the Articles of Association) or (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:

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

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

• (c) by a member or members present in person or in the case of a member 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 members having the right to vote at the meeting; or

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LETTER FROM THE BOARD OF DIRECTORS

• (d) by a member or members present in person or in the case of a member 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; or

• (e) if required by the rules of the Designated Stock Exchange, by any director or directors who, individually or collectively, hold proxies in respect of shares representing five per cent (5%) or more of the total voting rights at such meeting.

A poll which is duly demanded shall be then held in such manner prescribed by the Articles of Association of the Company.

7. RECOMMENDATION

The Directors believe that the granting of the Issue Mandate and the Repurchase Mandate are in the best interests of the Company and its shareholders as a whole. Moreover, the necessary information regarding the re-election of the retiring directors at the 2008 Annual General Meeting is already set out herein for consideration. Accordingly, the Directors recommend that all shareholders should vote in favour of the related resolutions to be proposed at the 2008 Annual General Meeting.

Yours faithfully, By Order of the Board Guo Zi Wen Chairman

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EXPLANATORY STATEMENT

APPENDIX

This appendix serves as an explanatory statement, as required by the Listing Rules, to provide requisite information to shareholders of the Company for their consideration as to whether to vote for or against the ordinary resolution to be proposed at the 2008 Annual General Meeting for granting the Repurchase Mandate.

This explanatory statement contains all the information required pursuant to rule 10.06 of the Listing Rules which is set out as follows:

SHARE CAPITAL

As at the Latest Practicable Date, the Company had in issue an aggregate of 2,252,500,000 shares of HK$0.01 each which are fully paid.

Subject to the passing of the ordinary resolution no.6 as set out in the notice of 2008 Annual General Meeting and in accordance with the terms therein, the Company would be allowed under the Repurchase Mandate to repurchase fully paid shares up to the aggregate nominal amount of a maximum of 225,250,000 shares on the basis that no further shares will be issued or repurchased prior to the 2008 Annual General Meeting.

REASONS FOR SHARE REPURCHASE

Although the Directors have no present intention of repurchasing any securities of the Company, they believe that the flexibility afforded by the Repurchase Mandate would be beneficial to the Company and its shareholders. Trading conditions on the Stock Exchange have sometimes been volatile. At any time in the future when securities trading at a discount to their underlying value, the ability of the Company to repurchase securities will be beneficial to those shareholders who retain their investment in the Company since their interests in the assets of the Company would increase in proportion to the number of securities repurchased by the Company and thereby resulting in an increase in net asset value per share and/or earnings per share of the Company. Such repurchases will only be made when the Directors believe that the repurchases will benefit the Company and its shareholders as a whole.

FUNDING OF REPURCHASES

In repurchasing securities, the Company may only apply funds legally available for such purpose in accordance with the memorandum and articles of association of the Company and the applicable laws and regulations of the Cayman Islands. Securities may only be repurchased out of the profits of the Company or out of the proceeds of a fresh issue of shares made for the purpose of repurchase. The premium, if any, payable on repurchases must have been provided for out of the profits of the Company or out of the Company’s share premium account before or at the time the securities are repurchased. The Company may not purchase securities on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

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EXPLANATORY STATEMENT

APPENDIX

SHARE PRICES

During each of the seven months preceding the Latest Practicable Date (the Company was listed on the Stock Exchange on 9 October 2007), the highest and lowest prices at which shares of the Company have been traded were as follows:

	Shares
	Highest	Lowest
	HK$	HK$
2007
October	7.50	5.85
November	6.96	4.46
December	5.55	4.12
2008
January	4.38	2.66
February	3.56	2.90
March	3.18	1.97
April (up to Latest Practicable Date)	3.10	2.30

REPURCHASES MADE BY THE COMPANY

Neither the Company nor any of its subsidiaries has purchased any of the Company’s shares (whether on the Stock Exchange or otherwise) in the six months immediately preceding the Latest Practicable Date.

POSSIBLE MATERIAL ADVERSE IMPACT

There might be material adverse impact on the working capital or gearing position of the Company (as compared with the financial position disclosed in the audited financial statements for the year ended 31 December 2007) in the event that the Repurchase Mandate was to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the Company’s working capital requirements or the gearing levels. The number of shares to be repurchased on any occasion and the price and other terms upon which the same are repurchased will be decided by the Directors at the relevant time having regard to the circumstances then pertaining.

DIRECTORS’ UNDERTAKING

The Directors have undertaken to the Stock Exchange to exercise the powers of the Company to make repurchases under the Repurchase Mandate in accordance with the Listing Rules and laws of the Cayman Islands and in accordance with the regulations set out in the memorandum and articles of association of the Company.

– 12 –

EXPLANATORY STATEMENT

APPENDIX

EFFECT OF HONG KONG CODE ON TAKEOVERS AND MERGERS

If as a result of share repurchase by the Company, a substantial shareholder’s proportionate interest in voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of the Hong Kong Code on Takeovers and Mergers (the ‘‘Code’’). Accordingly, a shareholder, or group of shareholders acting in concert, could, depending on the level of increase in the interest of shareholdings, obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 and 32 of the Code.

As at the Latest Practicable Date and to the best of knowledge and belief of the Company, the following persons were directly or indirectly interested in 5% or more of the nominal value of the issued ordinary shares that carry a right to vote in all circumstances at general meetings of the Company:

		Number of issued
		shares and	Approximate
		derivative interests	Percentage of
Name		held/ interested	Shareholding
(1)	Ace Rise Profits Limited	1,154,325,000	51.25%
(2)	Credit Suisse Trust Limited	1,154,325,000	51.25%
(3)	Guo Zi Wen	1,154,325,000	51.25%
(4)	Jiang Min Er	1,154,325,000	51.25%
(5)	Seletar Limited	1,154,325,000	51.25%
(6)	Serangoon Limited	1,154,325,000	51.25%
(7)	Sturgeon Limited	1,154,325,000	51.25%
(8)	Capital Asset Management, Inc	383,043,462	17.01%
(9)	Sussman Selwyn Donald	383,043,462	17.01%
(10)	Trust Asset Management LLP	383,043,462	17.01%
(11)	Leung Ping Chung, Hermann	297,756,000	13.22%
(12)	Paul Steven Wolansky	293,475,000	13.03%
(13)	Cathay Capital Holdings L.P.	293,175,000	13.02%
(14)	Cathay Master GP, Ltd.	293,175,000	13.02%
(15)	Cathay Sino Property Ltd.	293,175,000	13.02%

In the event that the Directors exercised in full the power to repurchase shares of the Company in accordance with the terms of the ordinary resolution no.6 to be proposed at the 2008 Annual General Meeting, the aforesaid interests of (1) Ace Rise Profits Limited; (2) Credit Suisse Trust Limited; (3) Guo Zi Wen; (4) Jiang Min Er; (5) Seletar Limited; (6) Serangoon Limited; (7) Sturgeon Limited; (8) Capital Asset Management, Inc; (9) Sussman Selwyn Donald; (10) Trust Asset Management LLP; (11) Leung Ping Chung, Hermann; (12) Paul Steven Wolansky; (13) Cathay Capital Holdings L.P.; (14) Cathay Master GP, Ltd.; (15) Cathay Sino Property Ltd.. in the issued share capital of the Company as at the Latest Practicable Date would be proportionally increased to approximately (1) 56.94%; (2) 56.94%; (3) 56.94%; (4) 56.94%; (5) 56.94%; (6) 56.94%; (7) 56.94%; (8) 18.89%; (9) 18.89%; (10) 18.89%; (11) 14.69%; (12) 14.48% ; (13) 14.46% (14) 14.46% (15) 14.46% respectively.

– 13 –

EXPLANATORY STATEMENT

APPENDIX

On the basis of the aforesaid increase of shareholding held by each substantial shareholder set out above, the Directors are not aware of any consequences of such repurchases of Shares that would result in any Shareholder, or group of Shareholders acting in concert, becoming obliged to make a mandatory offer under Rule 26 and 32 of the Takeovers Code if the Repurchase Mandate were exercised in full. Moreover, the Directors have no intention to exercise the Repurchase Mandate to such an extent that will result in the number of Shares in the hands of public falling below the prescribed minimum percentage of 25%.

DIRECTORS’ DEALINGS

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates presently intends to sell shares to the Company under the Repurchase Mandate in the event that such mandate as proposed in the ordinary resolution no.6 is approved by the shareholders of the Company.

CONNECTED PERSONS

The Company has not been notified by any connected persons of the Company that they have a present intention to sell any shares to the Company, or that they have undertaken not to sell any shares held by them to the Company in the event that such mandate as proposed in the ordinary resolution no. 6 is approved by the shareholders of the Company.

– 14 –

NOTICE OF ANNUAL GENERAL MEETING

==> picture [305 x 36] intentionally omitted <==

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 3883)

NOTICE IS HEREBY GIVEN that the Annual General Meeting of members of China Aoyuan Property Group Limited (the ‘‘Company’’) will be held at 2/F, Gloucester Room, Mandarin Oriental, Hong Kong, 5 Connaught Road, Central, Hong Kong on 10 June 2008 (Tuesday) at 3:00 p.m. for the following purposes:

1. To receive and consider the audited financial statements and the reports of the directors and of the auditors for the year ended 31 December 2007;

2. To declare a final dividend for the year ended 31 December 2007;

3. To re-elect directors and to authorize the board of directors to fix directors’ remuneration;

4. To appoint auditors and to authorize the board of directors to fix their remuneration.

5. To consider as special business and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

‘‘THAT

• (a) subject to paragraph (c) of this resolution, the exercise by the directors of the Company (‘‘Directors’’) during the Relevant Period (as defined below) of all the powers of the Company to allot, issue and otherwise deal with additional shares (‘‘Shares’’) in the capital of the Company or securities convertible into Shares, or options, warrants or similar rights to subscribe for any Shares, and to make, grant, sign or execute offers, agreements or options, deeds and other documents which would or might require the exercise of such powers, subject to and in accordance with all applicable laws, be and it is hereby generally and unconditionally approved;

• (b) the approval in paragraph (a) of this resolution shall authorize the Directors during the Relevant Period to make, grant, sign or execute offers, agreements or options, deeds and other documents which would or might require the exercise of such powers after the end of the Relevant Period;

• (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors pursuant to the approval in this resolution, otherwise than pursuant to:

• (i) a rights issue (as defined below); or

• (ii) the exercise of rights of subscription or conversion attaching to any warrants of the Company or any securities which are convertible into Shares; or

– 15 –

NOTICE OF ANNUAL GENERAL MEETING

• (iii) the exercise of any option under the 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 any other eligible person of Shares or rights to acquire Shares of the Company; or

• (iv) scrip dividends or under similar arrangement providing for the allotment of Shares in lieu of the whole or part of a dividend on Shares in accordance with the articles of association of the Company in force from time to time; and

• (v) a specific authority granted by the shareholders of the Company,

  • shall not exceed 20% of the aggregate nominal amount 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;

• (d) for the purpose of this resolution:

‘‘Relevant Period’’ means the period from (and including) the passing of this resolution until whichever is 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 by the articles of association of the Company or the applicable laws of the Cayman Islands to be held; or

• (iii) the date on which the authority set out in this resolution is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting; and

‘‘right issue’’ means the allotment, issue or grant of Shares pursuant to an offer of shares open for a period fixed by the Directors to the 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 as at that date (subject to such exclusions 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).’’

1. To consider as special business and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

‘‘THAT

• (a) subject to paragraph (b) of this resolution, the exercise by the Directors of the Company during the Relevant Period (as defined below) of all powers of the Company to purchase shares (‘‘Shares’’) in the capital of the Company or securities convertible into Shares on The Stock Exchange of Hong Kong Limited (‘‘Stock Exchange’’) or on any other exchange on which the securities of the Company may be listed and recognized

– 16 –

NOTICE OF ANNUAL GENERAL MEETING

by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose (‘‘Recognized Stock Exchange’’), subject to and in accordance with the applicable laws of the Cayman Islands and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange or those of any other Recognized Stock Exchange as amended from time to time, be and the same is hereby generally and unconditionally approved;

• (b) the aggregate nominal amount of Shares and securities convertible into Shares which may be purchased by the Company pursuant to the approval in paragraph (a) of this resolution during the Relevant Period shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of this resolution, and the approval pursuant to paragraph (a) of this resolution be limited accordingly;

• (c) for the purpose of this resolution, ‘‘Relevant Period’’ means the period from the date of passing of this resolution until whichever is 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 by the articles of association of the Company of the applicable laws of the Cayman Islands to be held; or

  • (iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting.’’

• To consider as special business and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

‘‘THAT subject to the passing of the resolutions numbered 5 and 6 as set out in the notice (the ‘‘Notice’’) convening this meeting, the general mandate granted to the Directors to exercise the powers of the Company to allot, issue and otherwise deal with shares (‘‘Shares’’) in the capital of the Company pursuant to the resolution numbered 5 as set out in the Notice be and the same is hereby extended (as regards the amount of share capital thereby limited) by the addition to the aggregate nominal amount of share capital of the Company which may be allotted or agreed conditionally or unconditionally to be allotted by the Directors pursuant to such general mandate of an amount representing the aggregate

– 17 –

NOTICE OF ANNUAL GENERAL MEETING

nominal amount of the share capital of the Company purchased by the Company under the authority granted pursuant to the resolution numbered 6 as set out in the Notice provided that such amount shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing of this resolution.’’

By Order of the Board Guo Zi Wen Chairman

Hong Kong, 30 April 2008

Principal Place of business in Hong Kong:

Room 5105, The Center 99 Queen’s Road Central Hong Kong

Notes:

• (1) A member of the Company entitled to attend and vote at the aforesaid meeting is entitled to appoint one or (if holding two or more shares) more proxies to attend and vote in his stead. A proxy need not be a member of the Company.

• (2) To be valid, the form of proxy together with any power of attorney or other authority under which it is signed or a notarially certified copy of that power of attorney or authority must be deposited with the Hong Kong branch share registrar of the Company, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 48 hours before the time fixed for holding the meeting or any adjournment thereof.

• (3) Completion and return of the form of proxy will not preclude members from attending and voting at the aforesaid meeting, and in such event, the form of proxy shall be deemed to be revoked.

• (4) The register of members will be closed from 5 June 2008 (Thursday) to 10 June 2008 (Tuesday) (both dates inclusive), during which period no transfer of shares will be effected. In order to qualify for the proposed final dividend and for attending and voting at the aforesaid meeting, all transfer forms of shares accompanied by the relevant share certificates must be lodged with the Hong Kong branch share registrar of the Company, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration no later than 4:30 p.m. on 4 June 2008 (Wednesday).

• (5) The Chinese translation of this notice (including the contents of the proposed resolutions set out herein) is for reference only. In case of inconsistency, the English version shall prevail.

As at the date of this notice, the board of directors comprises (1) the Executive Directors namely Mr. Guo Zi Wen, Mr. Guo Zi Ning, Mr. Zheng Jian Jun and Mr. Hu Da Wei; (2) the Non-executive Directors namely Mr. Paul Steven Wolansky and Mr. Leung Ping Chung, Hermann (Mr. Leung is also the alternate director to Mr. Wolansky); (3) the Independent Non-executive Directors namely Mr. Song Xian Zhong, Mr. Ma Kwai Yuen, Mr. Tsui King Fai.

– 18 –