CMON Limited — Proxy Solicitation & Information Statement 2003

Mar 19, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your securities in Shenyang Public Utility Holdings Company Limited, you should at once hand this circular and the accompanying form of proxy and reply slip to the purchaser or transferee or to the bank, stockbroker 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.

�� ! " # $ % & ' ( SHENYANG PUBLIC UTILITY HOLDINGS COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

CHANGE OF AUDITORS,

CONVERSION TO FOREIGN INVESTMENT JOINT STOCK LIMITED COMPANY AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

A notice convening an extraordinary general meeting of Shenyang Public Utility Holdings Company Limited to be held at 4th Floor, No. 14 Shisiwei Road, Heping District, Shenyang, the PRC on 26th April, 2003, at 9:00 a.m. was published on 11th March, 2003 in The Standard in English and the Hong Kong Economic Times in Chinese respectively and are now reproduced and set out on pages 4 to 6 of this circular. Whether or not you are able to attend the meeting, please complete and return the reply slip and form of proxy enclosed and posted with the Notice in accordance with the instructions printed thereon to the office of the Company’s H share registrar in Hong Kong, Hong Kong Registrars Limited, at Rooms 1901-5, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as practicable but in any event for the reply slip, on or before 6th April, 2003, and for the form of proxy, not less than 24 hours before the time appointed for the holding of the extraordinary general meeting. Completion of the form of proxy will not preclude you from attending and voting at the extraordinary general meeting or any adjourned meeting or meetings thereof should you so wish.

19th March, 2003

CONTENTS

	Page
Definitions.....................................................................................................................................................	ii
Letter from the Board
Introduction ........................................................................................................................................	1
Change of auditors .............................................................................................................................	2
Conversion to foreign investment joint stock limited company .....................................................	2
Recommendation................................................................................................................................	3
The Extraordinary General Meeting .................................................................................................	3
Notice of Extraordinary General Meeting..............................................................................................	4

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DEFINITIONS

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

• “Articles of Association” Articles of Association of the Company

• “Board”

the board of Directors

• “Company”

• �� !"#$%&' ( (Shenyang Public Utility Holdings Company Limited), a joint stock limited company incorporated in the PRC with limited liability, the H shares of which are listed on the Stock Exchange

• “Deloitte Hua Yung” �� !"#$%&'()*+ I= the domestic auditors proposed to be appointed by the Company at the Extraordinary General meeting

• “Deloitte Toushe Tohmatsu” Deloitte Toushe Tohmatsu, the international auditors proposed to be appointed by the Company at the Extraordinary General meeting

• “Directors” the directors of the Company

• “Extraordinary General Meeting”

• an extraordinary general meeting of the Company to be convened on 26th April, 2003, the notice of which dated 10th March, 2003 was published in The Standard in English and the Hong Kong Economic Times in Chinese on 11th March, 2003 and reproduced on pages 4 to 6 of this circular for information purposes

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “H Share(s)”

• overseas listed foreign invested shares in the issued share capital of the Company with a renminbi-denominated nominal value of RMB1.00 each, which are listed on the Stock Exchange and subscribed for and traded in Hong Kong dollars

• “Latest Practicable Date”

• 18th March 2003, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular

— ii —

DEFINITIONS

“Notice”	the notice dated 10th March, 2003 made by the Company in relation to the
	Extraordinary General Meeting published in The Standard in English and
	the Hong Kong Economic Times in Chinese on 11th March, 2003 and
	reproduced on pages 4 to 6 of this circular
“PRC”	the People’s Republic of China which for the purpose of this circular,
	excludes Hong Kong, Macau Special Administrative Region and Taiwan
“PricewaterhouseCoopers”	PricewaterhouseCoopers, the international auditors of the Company which
	resigned with effect from 24th February, 2003
“Proposed Conversion”	the proposal for the Company’s conversion to a foreign investment joint
	stock limited company
“Share(s)”	State Shares and H Shares
“Shareholder(s)”	the holder(s) of the Share(s)
“Shenyang”	Shenyang, Liaoning Province, the PRC
“State Share(s)”	ordinary shares with a nominal value of RMB1.00 each in the share
	capital of the Company, issued by the Company to�� !"#$%
	�(Shenyang Public Utility Group Company Limited) credited as fully
	paid
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Yue Hua”	�� !"#$%&'()+,-.+, the domestic auditors
	of the Company which resigned with effect from 26th February, 2003

— iii —

LETTER FROM THE BOARD

�� ! " # $ % & ' ( SHENYANG PUBLIC UTILITY HOLDINGS COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

Executive Directors:

Mr. Xu Er Hui Mr. Zhang Jian Bo Mr. Zhang Ying Jian Mr. Wang Se Mr. Geng Jian Wei Mr. Chen Shu Xin Mr. Chan Kam Ling

Non-executive Directors:

Mr. Lin Wen Bin Mr. Michel Detay Mr. Zhang Wan Zhong

Legal Address:

No.24-1 Mo Chou Hu Street Shenyang Economic and Technological Development Zone Shenyang the PRC

Place of business in the PRC: No. 14 Shisiwei Road Heping District Shenyang the PRC

Independent non-executive Directors:

Mr. Cheng Wei Mr. Choy Shu Kwan, Wilson

19th March, 2003

To the Shareholders

Dear Sir or Madam,

CHANGE OF AUDITORS AND

CONVERSION TO FOREIGN INVESTMENT JOINT STOCK LIMITED COMPANY

INTRODUCTION

As stated in the Notice, the Board proposed (i) the appointment of Deloitte Touche Tohmatsu and Deloitte Hua Yung as international auditors and domestic auditors of the Company respectively; (ii) the Proposed Conversion; and (iii) the amendments to the Articles of Association to reflect the Proposed Convesion.

— 1 —

LETTER FROM THE BOARD

The purpose of this circular is to provide you with information reasonably necessary to enable Shareholders to make an informed decision on whether to vote for or against the ordinary resolutions and special resolution as set out in the Notice and reproduced in the section headed “Notice of Extraordinary General Meeting” on pages 4 to 6 of this circular.

CHANGE OF AUDITORS

On 24th February, 2003, the Company received a letter of resignation from PricewaterhouseCoopers tendering its resignation as international auditors of the Company and its subsidiaries with effect from 24th February, 2003. Also, on 26th February, 2003, the Company received a letter of resignation from Yue Hua tendering its resignation as domestic auditors of the Company and its subsidiaries with effect from 26th February, 2003. The resignation of PricewaterhouseCoopers and Yue Hua were both attributable to the fact that the parties could not reach an agreement on the fees for the audit of the Company's accounts for the financial year ended 31 December 2002.

Each of PricewaterhouseCoopers and Yue Hua had confirmed in their respective resignation letter that there were no circumstances connected with their resignation that they considered ought to be brought to the attention of the shareholders or creditors of the Company. Also, the Board was not aware of any matter that should be brought to the attention of the shareholders or creditors of the Company.

A meeting of the Board was convened on 7th March, 2003 to consider the resignation of PricewaterhouseCoopers and Yue Hua and the appointment of new international auditors and domestic auditors of the Company. It was resolved in the meeting that Deloitte Touche Tohmatsu and Deloitte Hua Yung be appointed as international auditors and domestic auditors of the Company to fill the vacancy left by the resignation of PricewaterhouseCoopers and Yue Hua respectively and that the matter be referred to the Shareholders for approval in accordance with the Articles of Association.

In accordance with the Articles of Association, the Board shall as soon as practicable convene an extraordinary general meeting to approve the ordinary resolution as set out in the Notice and reproduced in the section headed “Notice of Extraordinary General Meeting” on pages 4 to 6 of this circular .

CONVERSION TO FOREIGN INVESTMENT JOINT STOCK LIMITED COMPANY

At the 1999 annual general meeting of the Company held on 19th June, 2000, it was resolved that the Proposed Conversion be approved and the Board was authorized to submit the relevant applications to the relevant authorities of the PRC for approval and record in respect of the Proposed Conversion. Also, it was resolved that conditional on the relevant authorities granting approval to the amendments to the Articles of Association, the Company was authorized to make amendments to Articles 1, 6 and 7 of the Articles of Association to reflect the Proposed Conversion.

— 2 —

LETTER FROM THE BOARD

Subsequent to the 1999 annual general meeting of the Company, the Company has made applications to the relevant PRC authorities for the Proposed Conversion. However, given that the Company was engaged in major asset restructurings in years 2001 and 2002, the applications in relation to the Proposed Conversion were postponed. To enhance development of the Company and to obtain possible PRC tax benefits, the Board intends to reactivate the applications of the Proposed Conversion. In view of the fact that the aforementioned resolutions passed by the Shareholders at the 1999 annual general meeting of the Company in relation to the Proposed Conversion are no longer valid, the Board would like to propose resolutions set out in the Notice and reproduced in the section headed “Notice of Extraordinary General Meeting” on pages 4 to 6 of this circular in relation to the Proposed Conversion for the consideration and approval by the Shareholders at the Extraordinary General Meeting.

RECOMMENDATION

The Directors consider that (i) the proposed appointment of Deloitte Touche Tohmatsu and Deloitte Hua Yung as international auditors and domestic auditors of the Company respectively; (ii) the Proposed Conversion; and (iii) the amendments to the Articles of Association to reflect the Proposed Conversion are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that you vote in favour of the ordinary resolutions and special resolution to be proposed at the Extraordinary General Meeting.

THE EXTRAORDINARY GENERAL MEETING

Notice of the Extraordinary General Meeting was published in The Standard in English and the Hong Kong Economic Times in Chinese on 11th March 2003 and are reproduced on pages 4 to 6 of this circular.

A form of proxy was enclosed and posted with the Notice. Whether or not you intend to be present at the Extraordinary General Meeting, you are requested to complete and return the form of proxy to the Company’s business address at No. 14, Shisiwei Road, Heping District, Shenyang, the PRC or at the Company’s H share registrars in Hong Kong, Hong Kong Registrars Limited, at Rooms 1901-1905, 19th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong not less than 24 hours before the time appointed for holding the Extraordinary General Meeting (and any adjournment thereof).

Yours faithfully,

For and on behalf of

Shenyang Public Utility Holdings Company Limited

Xu Er Hui Chairman

— 3 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

AS EXTRACTED FROM THE NOTICE PUBLISHED ON 11TH MARCH, 2003.

�� ! " # $ % & ' ( SHENYANG PUBLIC UTILITY HOLDINGS COMPANY LIMITED

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “Extraordinary General Meeting”) of Shenyang Public Utility Holdings Company Limited (the "Company") will be held on Saturday, 26th April, 2003 at 9:00 a.m. at 4th Floor, No. 14 Shisiwei Road, Heping District, Shenyang, the PRC for the purpose of considering and, if thought fit, passing resolutions numbered 1 and 2 as ordinary resolutions of the Company and resolution numbered 3 as special resolution of the Company:

By way of Ordinary Resolutions of the Company

1. "THAT Deloitte Touche Tohmatsu and �� !"#$%&'()+ be appointed as international auditors and domestic auditors of the Company respectively to fill the vacancy left by the resignation of PricewaterhouseCoopers and �� !"#$%&'()+,-.*+ to hold office until the conclusion of the forthcoming annual general meeting at a fee to be determined by the directors of the Company"; and

2. " THAT the proposal for the Company's conversion to a foreign investment joint stock limited company (the "Conversion") be approved and that the board of directors of the Company be and is hereby authorised to submit the relevant application to the relevant authorities of the People's Republic of China (the "PRC") for approval and record in respect of the Conversion and subject to the approval being obtained from, and relevant filings being completed with, the relevant government authorities of the PRC, the Conversion shall take effect and the Company shall be converted to a foreign investment joint stock limited company".

By way of a Special Resolution of the Company

1. "THAT conditional on the relevant authorities granting approval to the amendments to the Company's Articles of Association, the following amendments to Articles 1, 6 and 7 be and hereby approved:-

2. (i) Paragraph 2 of Article 1 of the Company's Articles of Association be amended to read as

"The Company was established by way of promotion with the approval document Guo Jing Mao Qi Gai [1999] No. 589 of State Economic and Trade Commission and was registered with the Shenyang Municipal Administration for Industry and Commerce on 2nd July, 1999. The number of the Company's business licence is 2101311101078(1-1). In accordance with the "Interim Regulation concerning Several Issues on the Establishment of Foreign Investment Companies Limited by Shares" and with the approval of the Ministry of Foreign Trade and Economic Co-operation, the Company has become a foreign investment joint stock limited company."

— 4 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

• (ii) Article 6 of the Company's Articles of Association be amended to read as

"In accordance with the "Company Law of the People's Republic of China" ("the Company Law"), "State Council's Special Regulations Regarding the issue of Shares Overseas and the Listing of Shares Overseas by Companies Limited by Shares" ("the Special Regulations"), "Mandatory Provisions for the Articles of Association of Companies to be Listed Outside China" ("the Mandatory Provisions") and other relevant laws and administrative regulations, the Company held an extraordinary general meeting on 13th August, 1999 to amend the Company's articles of association which were approved by the inaugural shareholders meeting on 1st July, 1999 ("the Original Articles of Association"). The Original Articles of Association was amended for the second time at a meeting of the shareholders held on 26th April, 2003 in accordance with the relevant stipulations of the "Interim Regulation concerning Several Issues on the Establishment of Foreign Investment Companies Limited by Shares."

• (iii) Paragraphs 1 and 2 of Article 7 of the Company's Articles of Association be amended to read as

"The Original Articles of Association of the Company came into force on the date on which registration formalities with the Shenyang Municipal Administration for Industry and Commerce were completed. The first amendment to the Original Articles of Association took effect after approval was granted by the competent examination and approval department authorised by the State Council. The second amendment came into force after approval was granted by the Ministry of Foreign Trade and Economic Co-operation."

and that the board of directors of the Company be and is hereby authorised to submit the proposed amendments to the Company's Articles of Association to the relevant authorities of PRC for approval and record, and make any further amendments (if necessary) to the Company's Articles of Association pursuant to the requirements of the relevant authorities in charge of the approval of the Company's Articles of Association."

By Order of the Board Xu Er Hui Chairman

Shenyang, the PRC, 10th March, 2003

Principal place of business in the PRC:

No.14 Shisiwei Road Heping District Shenyang The PRC

— 5 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

1. The register of holders of H shares of the Company will be closed from Thursday, 27th March, 2003 to Friday, 25th April, 2003 (both days inclusive), during which period no transfer of H shares of the Company will be registered. Holders of State shares or H shares of the Company whose names appear in the register of members of the Company as at 4:00p.m. on Wednesday, 26th March, 2003 shall be entitled to attend and to vote at the Extraordinary General Meeting (and any adjournment thereof).

2. Any holder of the State shares or H shares of the Company entitled to attend and vote at the Extraordinary General Meeting (and any adjournment thereof) convened by the above notice is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a holder of the State shares or H shares of the Company.

3. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of such power or authority shall be deposited at the Company's business address at No. 14, Shisiwei Road, Heping District, Shenyang, the PRC or at the Company's H share registrars in Hong Kong, Hong Kong Registrars Limited, at Rooms 1901-1905, 19th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong not less than 24 hours before the time appointed for holding the Extraordinary General Meeting (and any adjournment thereof).

4. Holders of State shares or H shares of the Company who intend to attend the Extraordinary General Meeting should complete the "Reply Slip for Extraordinary General Meeting to be held on 26th April, 2003 (and any adjournment thereof)" and return it to the Company's business address at No. 14, Shisiwei Road, Heping District, Shenyang, the PRC or at the Company's H share registrars in Hong Kong, Hong Kong Registrars Limited, at Rooms 1901-1905, 19th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong] on or before Sunday, 6th April, 2003. The reply slip may be delivered by hand, by post or by fax to the number (852) 2865 0990 / 2529 6087.

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