CLP Holdings Limited — Proxy Solicitation & Information Statement 2003

Feb 25, 2003

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the fifth Annual General Meeting of Shareholders of CLP Holdings Limited 中電控股有限公司 (the Company) will be held at The Peninsula, Salisbury Road, Kowloon, Hong Kong, on Monday, 5 May 2003, at 11:00 a.m. for the following purposes:

(1) To receive and consider the audited Accounts and the Reports of the Directors and Auditors for the year ended 31 December 2002.

(2) To declare a final dividend and a special final dividend.

(3) To elect Directors.

(4) To re-appoint Auditors and authorise Directors to fix their remuneration.

As special business to consider and, if thought fit, pass with or without modification the following Resolutions:

As a Special Resolution

(5) “That the Articles of Association of the Company be and are hereby amended in the following respects:

(a) by adding the following definitions in Article 2 immediately after the definition of “Board”:

“Electronic Communication” A communication sent by electronic

transmission in any form through any medium.

“Entitled Person” An “entitled person” as defined under section

2(1) of the Companies Ordinance.

(b) by adding the following definition in Article 2 immediately after the definition of “Register”:

“Relevant Financial Documents” The “relevant financial documents” as defined

under section 2(1) of the Companies

Ordinance.

(c) by adding the following definition in Article 2 immediately after the definition of “Stock Exchange”:

“Summary Financial Report” The “summary financial report” as

defined under section 2(1) of the Companies

Ordinance.

(d) by deleting the definitions “in writing” and “written” in Article 2 and substituting therefor the following:

“in writing” and “written” shall include printing, lithograph, xerography, photography or other modes of representing or reproducing words in a permanent visible form or, to the extent permitted by and in accordance with the Statutes and other applicable laws, rules and regulations, any visible substitute for writing (including an Electronic Communication), or modes of representing or reproducing words partly in one visible form and partly in another visible form.

(e) by adding the following paragraph to the end of Article 2:

References to a document being executed include references to its being executed under hand or under seal or, to the extent permitted by and in accordance with the Statutes and other applicable laws, rules and regulations, by electronic signature or by any other method. References to a document or notice, to the extent permitted by and in accordance with the Statues and other applicable laws, rules and regulations, include references to any information in visible form whether having physical substance or not.

(f) by deleting Article 145 and substituting therefor the following:

145 (A) Subject to Article 145(B), a copy of the Relevant Financial Documents and/or a copy of the Summary Financial Report (where the recipient has, in accordance with and if required by the Statutes and other applicable laws, rules and regulations, consented or is deemed to have consented to receiving the Summary Financial Report in place of the Relevant Financial Documents) shall, not less than twenty-one clear days before the relevant General Meeting, be delivered or sent by post to the registered address of every Entitled Person and to the Auditors and the required number of copies of each of the Relevant Financial Documents and the Summary Financial Report, if published, shall at the same time be forwarded to the Stock Exchange.

(B) Subject to the Company complying with the Statutes and any other applicable laws, rules and regulations from time to time in force with regard to any requirements for the obtaining of consent (or deemed consent) from any Entitled Person (a “Consenting Person”) and/or for giving a Notice of Publication (as defined in Article 148) to any such Consenting Person, the Company may treat the publication of the Relevant Financial Documents and/or the Summary Financial Report (as the case may be) on the Company’s computer network, to which such person may have access, throughout the period beginning not less than twenty-one clear days before the relevant General Meeting, as discharging the Company’s obligation to send to him a copy of such documents under Article 145(A).

(g) by deleting Article 148 and substituting therefor the following:

148(1) Subject to Article 148(2) any notice, document or other publication by the Company (including any “corporate communication” as defined in the Listing Rules) may be given or issued by the following means:

1. by serving it personally on the relevant person;
2. by sending it through the post in a prepaid envelope or wrapper addressed to a member at his registered address as appears in the Register (or in the case of other person, to such address as he may provide under Article 150);
3. by delivering or leaving it at such address as aforesaid;
4. by placing an advertisement in English in at least one English language newspaper or publication and in Chinese in at least one Chinese language newspaper or publication, being in each case a newspaper or publication specified in the list thereof issued and published in the Gazette for the purposes of Section 71A of the Companies Ordinance (Chapter 32) (including any statutory modification or re-enactment thereof) by the Chief Secretary for Administration for such period as the Board may think fit;
5. by sending or transmitting it as an Electronic Communication to the relevant person at such electronic address as he may provide under Article 150, subject to the Company complying with the Statutes and any other applicable laws, rules and regulations from time to time in force with regard to any requirements for the obtaining of consent (or deemed consent) from such person;
6. by publishing it on the Company’s computer network to which the relevant person may have access, subject to the Company complying with the Statutes and any other applicable laws, rules and regulations from time to time in force with regard to any requirements for the obtaining of consent (or deemed consent) from such person and/or for giving notification to any such person stating that the notice, document or publication is available on the Company’s computer network (a “Notice of Publication”); or
7. by sending or otherwise making it available to such person through such other means to the extent permitted by and in accordance with the Statutes and other applicable laws, rules and regulations.

(2) Any Notice of Publication may be given or issued by any of the means mentioned in Article 148(1), other than the means specified in paragraph (F) thereof.

(h) by deleting Article 150 and substituting therefor the following:

150 Every member of and holder of debentures of the Company or a person who is entitled to receive notice from the Company under the provisions of the Statutes or these Articles shall register with the Company an address either in Hong Kong or elsewhere and/or an electronic address to which notices can be served upon him and if any such person shall fail to do so, notice may be served on such person by sending the same in any of the manners mentioned to his last known registered address or electronic address, or if there is none, a notice displayed in the Office shall be deemed to be well served on him at the time when it is first so displayed.

(i) by deleting Articles 151 and 152 and substituting therefor the following:

151 Any notice, document or other publication (including any “corporate communication” as defined in the Listing Rules) given or issued by or on behalf of the Company:

1. if served by post, shall be deemed to have been served or delivered on the day following that on which the envelope or wrapper containing the same is put into a post office situated within Hong Kong and in proving such service or delivery it shall be sufficient to prove that the envelope or wrapper containing the notice, document or publication was properly addressed, prepaid and put into such post office and a certificate in writing signed by the Secretary or other officer of the Company that the envelope or wrapper containing the notice, document or publication was so addressed, prepaid and put into the post office shall be conclusive evidence thereof;
2. if sent or transmitted as an Electronic Communication, shall be deemed to have been served at the time when the notice, document or publication is transmitted electronically provided that no notification that the Electronic Communication has not reached its recipient has been received by the sender, except that any failure in transmission beyond the sender’s control shall not invalidate the effectiveness of the notice, document or publication being served;
3. if published on the Company’s computer network, shall be deemed to have been served on the day on which the notice, document or publication first so appears on the Company’s computer network to which the relevant person may have access or the day on which the Notice of Publication is deemed to have been served or delivered to such person under these Articles, whichever is later;
4. if served or delivered in person, shall be deemed to have been served or delivered at the time of personal service or delivery and in proving such service or delivery, a certificate in writing signed by the Secretary or other officer of the Company that the notice, document or publication was so served or delivered shall be conclusive evidence of the service or delivery; or
5. if published as an advertisement in a newspaper or other publication permitted under Article 148(1)(D), shall be deemed to have been served on the day on which the advertisement first so appears.

(j) by deleting the words “by post to, or left at, the registered address of any member” in the first line of Article 153 and substituting therefor the words “to any member in such manner as provided in Article 148” and by renumbering Article 153 to Article 152;

(k) by adding immediately after the word “address” in the third line of Article 154 the words “(including electronic address)” and by renumbering Article 154 to Article 153; and

(l) by adding immediately after the existing Article 154 (which is to be renumbered to Article 153) the following new Article 154:

154 Subject to any applicable laws, rules and regulations and the terms of these Articles, any notice, document or publication, including but not limited to the documents referred to in Article 145 and any “corporate communication” as defined in the Listing Rules, may be given in the English language only, in the Chinese language only or in both the English language and the Chinese language.”

As Ordinary Resolutions

(6) “That:

(a) subject to paragraph (c), a general mandate be and is hereby unconditionally granted to the Directors of the Company to exercise during the Relevant Period all the powers of the Company to allot, issue and dispose of additional shares in the Company and to make or grant offers, agreements, options or warrants which would or might require the exercise of such powers;

(b) the mandate in paragraph (a) shall authorise the Directors of the Company during the Relevant Period to make or grant offers, agreements and options which would or might require the exercise of such powers after the end of the Relevant Period;

(c) the aggregate nominal value of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors of the Company pursuant to the mandate in paragraph (a), otherwise than pursuant to (i) a Rights Issue, or (ii) any option scheme or similar arrangement for the time being adopted for the grant or issue to the officers and/or employees of the Company and/or any of its subsidiaries of shares or rights to acquire shares of the Company or (iii) any scrip dividend or similar arrangement pursuant to the Articles of Association of the Company from time to time, shall not exceed ten per cent of the aggregate nominal amount of the share capital of the Company in issue at the date of this Resolution and the said mandate shall be limited accordingly;

(d) for the purpose of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earlier 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 law to be held; and

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

“Rights Issue” means an offer of shares open for a period fixed by the Directors of the Company to holders of shares of the Company or any class thereof on the register on a fixed record date in proportion to their then holdings of such shares or class thereof (subject to such exclusion or other arrangements as the Directors of the Company 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 recognised regulatory body or any stock exchange in, any territory outside Hong Kong).”

(7) “That:

(a) a general mandate be and is hereby unconditionally given to the Directors of the Company to exercise during the Relevant Period all the powers of the Company to purchase or otherwise acquire shares of HK$5.00 each in the capital of the Company in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, provided that the aggregate nominal amount of shares so purchased or otherwise acquired shall not exceed ten per cent of the aggregate nominal amount of the share capital of the Company in issue at the date of this Resolution.

(b) for the purpose of this Resolution:

“Relevant Period” means the period from the passing of this Resolution until whichever is the earlier 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 law to be held; and

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

(8) “That, conditional upon the passing of Resolutions (6) and (7) set out in the Notice convening this Meeting, the aggregate nominal amount of the shares which are purchased or otherwise acquired by the Company pursuant to Resolution (7) shall be added to the aggregate nominal amount of the shares which may be issued pursuant to Resolution (6).”

By Order of the Board

Peter W. Greenwood

Director & Company Secretary

Hong Kong, 24 February 2003

Explanatory Notes to the Notice

1. A Shareholder entitled to attend and vote at the Meeting convened by the above Notice is entitled to appoint not more than two proxies to attend and vote in his stead. The proxy need not be a Shareholder of the Company.

2. Proxy forms for use at the Annual General Meeting are sent to Shareholders together with the Annual Report 2002. In order to be valid, proxy forms must be completed, signed and deposited at the Company's Registrars, Computershare Hong Kong Investor Services Limited (formerly known as Central Registration Hong Kong Limited), 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong not less than 48 hours before the time for holding the Annual General Meeting.

3. In relation to the resolution for final dividend and special final dividend, the Board has recommended a final dividend and a special final dividend of HK$0.51 per share and HK$0.23 per share respectively. The final dividend and special final dividend totalling HK$0.74 per share are subject to Shareholders' approval at the Annual General Meeting. The special final dividend represents the distribution of the CLP Group’s share of profit arising from the sale of remaining units of Phases 4 and 5 of Laguna Verde and the gain from sale of a property formerly used as staff quarters in Ho Man Tin Hill.

4. The Register of Shareholders will be closed from 24 April to 5 May 2003, both days inclusive, during which period the registration of transfers of shares will be suspended. To rank for the final dividend and special final dividend, all transfers should be lodged with the Company's Registrars, Computershare Hong Kong Investor Services Limited, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, for registration not later than 4:00 p.m. on Wednesday, 23 April 2003.

5. The biographical details of the Directors to be elected at the Annual General Meeting to be held on 5 May 2003 are provided in the “Board of Directors” section in CLP Holdings Annual Report 2002.

6. In order to take advantage of flexibility now permitted under the amendments to the Companies Ordinance and the Listing Rules, the Directors propose to amend the Company’s Articles of Association as set out in Resolution (5) above to allow the Company to distribute Summary Financial Reports, if published, to shareholders who have given their consent to receive Summary Financial Reports in place of the full set of the Annual Report and Accounts, in printed form or through the Company’s computer network.

The Directors have no immediate plan to issue Summary Financial Reports and if the Board decides to do so, the consent of individual shareholders will be sought.

1. Following the amendment to the Listing Rules in February 2002 which allows listed companies to send or otherwise make available corporate communications to shareholders through electronic means, a special resolution was passed at the Annual General Meeting on 25 April 2002 amending the Company’s Articles of Association to allow the Company, subject to the consent of the relevant recipient, to send the Company’s Interim and Annual Reports and Accounts to shareholders through electronic means.

The Directors propose to amend further the Articles of Association as set out in Resolution (5) above to clarify that corporate communications (including but not limited to Interim and Annual Reports, circulars and notices of meetings) may, subject to the consent of the relevant recipient, be sent to shareholders through electronic means.

Subject to shareholders’ approval of Resolution (5), consent of individual shareholders to receive all corporate communications through electronic means will be sought as a cost saving and environmental initiative. Shareholders are free to revert, with written notice to the Company, to receiving printed copies of corporate communications at any time free of charge.

1. In relation to the general mandate referred to in Resolution (6) above, an ordinary resolution was passed at the Annual General Meeting held on 25 April 2002 giving a general mandate to the Directors to issue up to ten per cent of the share capital of the Company in issue. No shares have been issued pursuant to this mandate, which will lapse at the conclusion of the forthcoming Annual General Meeting, unless the mandate is renewed at that meeting. The Directors believe that it is in the best interests of the Company and its shareholders to have a general authority from Shareholders to enable the Directors to issue shares.

2. In relation to the general mandate referred to in Resolution (7) above, an ordinary resolution was passed at the Annual General Meeting on 25 April 2002 giving a general mandate to the Directors to repurchase shares of the Company on The Stock Exchange of Hong Kong Limited (“Stock Exchange”) up to 10 per cent of the issued share capital of the Company. Up to 24 February 2003, no shares were repurchased pursuant to this general mandate, which will lapse at the conclusion of the forthcoming Annual General Meeting, unless the mandate is renewed at that meeting. The Directors believe that it is in the best interests of the Company and its Shareholders to have a general authority from Shareholders to enable the Directors to repurchase shares on an opportunistic basis for the enhancement of long-term shareholder value. The Explanatory Statement required by the Rules Governing the Listing of Securities on the Stock Exchange in relation to Resolutions (7) and (8) above accompanies the Notice convening the Annual General Meeting.

The Explanatory statement on Share Repurchase Mandate together with the Notice of Annual General Meeting are published on the Company’s website at www.clpgroup.com and the website of the Stock Exchange of Hong Kong, and will be despatched to shareholders on 28 March 2003.

IMPORTANT

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this Explanatory Statement, 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 Explanatory Statement.

.

EXPLANATORY STATEMENT ON SHARE REPURCHASE MANDATE

This Explanatory Statement includes information required under Rule 10.06(1)(b) of the Rules Governing the Listing of Securities (“Listing Rules”) on The Stock Exchange of Hong Kong Limited (“Stock Exchange”) to be given to Shareholders in connection with the proposed share repurchase mandate to be granted to the Directors of CLP Holdings Limited 中電控股有限公司 (“the Company”).

Exercise of the Repurchase Mandate

Resolution (7) set out in the Notice of Annual General Meeting will, if passed, give a general unconditional mandate to the Directors authorising the repurchase by the Company of up to ten per cent of the fully paid shares of HK$5.00 each in the capital of the Company (“Shares”) in issue at the date of the Annual General Meeting at any time from the passing of the Resolution until the conclusion of the next Annual General Meeting of the Company, the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held, or at any time when the aforementioned mandate is revoked or varied by ordinary resolution of the Shareholders in general meeting, whichever occurs first (“Relevant Period”).

Exercise in full of the repurchase mandate (on the basis of 2,408,245,900 Shares in issue as at 24 February 2003, being the date of the Notice of Annual General Meeting) would result in up to 240,824,590 Shares being repurchased by the Company during the Relevant Period.

Reasons for Repurchases

The Directors believe that it is in the best interests of the Company and its Shareholders to have a general authority from Shareholders to enable the Directors to repurchase Shares. Such repurchase may, depending on market conditions and funding arrangements at the time, lead to an enhancement in the value of the Shares and/or earnings per Share and will only be made when the Directors believe that such repurchase will benefit the Company and its Shareholders.

Funding of Repurchases

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with the laws of Hong Kong and the Memorandum and Articles of Association of the Company. Such funds may include profits available for distribution and the proceeds of a fresh issue of Shares made for the purpose of the repurchases.

Given the comparatively low gearing level of the Company as disclosed in the audited consolidated financial statements as at 31 December 2002, there would not be a material adverse effect on the working capital position of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company if the repurchase mandate were exercised in full. However, any repurchase of Shares to the full extent of the repurchase mandate could significantly reduce the Company's distributable reserves. The timing and the number(s), the price and other terms upon which the Shares are repurchased would be decided by the Directors at the relevant time having regard to the circumstances then pertaining.

Status of Repurchased Shares

The Listing Rules provide that all the Shares purchased by the Company are automatically delisted and the Company must ensure that the corresponding certificates are cancelled and destroyed. Under the Companies Ordinance, the Shares so purchased will be treated as having been cancelled but the aggregate amount of the Company's authorised share capital would not be reduced.

Share Prices

The highest and lowest prices at which Shares have been traded on the Stock Exchange during each of the previous 12 months were as follows:

Highest Lowest

HK$ HK$

2002

February 31.50 30.00

March 32.10 30.60

April 32.20 29.80

May 32.70 30.60

June 32.90 30.60

July 31.40 30.00

August 32.20 30.40

September 33.00 31.00

October 32.80 30.90

November 32.20 31.10

December 31.90 31.20

2003

January 31.80 31.20

Disclosure of Interests

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates currently intends to sell any Shares to the Company or its subsidiaries under the repurchase mandate if such repurchase mandate is approved by Shareholders.

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the repurchase mandate pursuant to the proposed resolution in accordance with the Listing Rules and the laws of Hong Kong.

No connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company or have undertaken not to do so in the event that the repurchase mandate is approved by Shareholders.

Hong Kong Code on Takeovers and Mergers

If, as a result of share repurchases by the Company, a Shareholder's proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition of voting rights for the purposes of Rule 32 of the Hong Kong Code on Takeovers and Mergers (“Takeovers Code”). Accordingly, a Shareholder, or group of Shareholders acting in concert, may be treated, as a result of share repurchases by the Company, to obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeovers Code.

As recorded on 30 December 2002 in the Register of Shareholdings under Rule 26.6 of the Hong Kong Code on Takeovers and Mergers maintained by the Securities and Futures Commission, Bermuda Trust Company Limited, The Hon. Michael D. Kadoorie, Mr. R. J. McAulay, The Sir Horace Kadoorie International Foundation and The Incorporated Trustees of the Kadoorie Foundation (the Parties) had registered their aggregated interests in 839,028,074 ordinary shares in CLP Holdings as at 19 October 2001, representing 33.96% of the issued share capital of the Company on that date. The Parties’ aggregated interests in CLP Holdings as at the date of the Notice of Annual General Meeting have increased accordingly to 34.84% as a result of repurchases made by the Company pursuant to its longstanding opportunistic on-market Share Repurchase Programme. On the basis of the Company’s issued share capital as at 24 February 2003, if the Company repurchases about 11 million Shares, representing approximately 0.46% of the issued share capital of the Company, the Parties’ proportionate interests in the Shares will exceed 35%, as a result of which the Parties will be obliged to make a mandatory offer under the Takeovers Code unless a waiver is obtained.

Repurchases made by the Company

The Company has not repurchased any shares of the Company on the Stock Exchange in the six months prior to the date of the Notice of Annual General Meeting.