Digital China Holdings Limited — Proxy Solicitation & Information Statement 2012

Jul 9, 2012

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Digital China Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim 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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GENERAL MANDATES

TO ISSUE SHARES AND TO REPURCHASE SHARES, RE-ELECTION OF RETIRING DIRECTORS

AND

NOTICE OF ANNUAL GENERAL MEETING

A notice convening the AGM is set out on pages 13 to 17 of this circular. If you are not able to attend the AGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Abacus Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the AGM or any adjourned meeting thereof (as the case may be). Completion and return of the accompanying form of proxy will not preclude you from attending and voting in person at the AGM or any adjourned meeting thereof (as the case may be) should you so wish.

• For identification purpose only

10 July 2012

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2. Issue Mandate and Repurchase Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
3. Re-election of the Retiring Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
4. AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
5. Voting at the AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
6. Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
7. General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix I — Explanatory Statement for the Repurchase Mandate . . . . . . . . . . . . . . .	6
Appendix II — Particulars of the Retiring Directors subject to Re-election . . . . . . . . .	9
Notice of AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13

– i –

DEFINITIONS

In this circular, except where the context otherwise requires, the following expressions shall have the following meanings:

‘‘AGM’’ the annual general meeting of the Company to be held at Granville Room, Lower Lobby, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Monday, 27 August 2012 at 9: 30 a.m. or any adjournment thereof, notice of which is set out on pages 13 to 17 of this circular

• ‘‘Board’’ the board of Directors ‘‘Bye-Laws’’ the bye-laws of the Company

• ‘‘Company’’ Digital China Holdings Limited (神州數碼控股有限公司*), an exempted company incorporated in Bermuda with limited liability, the Shares of which are listed on the main board of the Stock Exchange

• ‘‘Director(s)’’ the director(s) of the Company

• ‘‘Extension Mandate’’ an authorisation to extend the Issue Mandate by an amount representing the aggregate nominal amount of the Share repurchased under the Repurchase Mandate

• ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong

• ‘‘HKEx’’ Hong Kong Exchanges and Clearing Limited

• ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the People’s Republic of China

• ‘‘Issue Mandate’’ a general and unconditional mandate to the Directors to exercise all the powers of the Company to allot, issue and deal with new Shares not exceeding 20% of the issued share capital of the Company as at the date of passing of the ordinary resolution in relation thereof

• ‘‘Latest Practicable 3 July 2012, being the latest practicable date prior to the printing Date’’ of this circular for ascertaining certain information contained herein

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange, as amended from time to time

• ‘‘Repurchase Mandate’’ a general and unconditional mandate to the Directors to exercise all the powers of the Company to repurchase Shares up to 10% of the issued share capital of the Company as at the date of passing of the ordinary resolution in relation thereof

• For identification purpose only

– 1 –

DEFINITIONS

‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended from time to time ‘‘Share(s)’’ the ordinary share(s) of HK$0.10 each in the share capital of the Company

‘‘Shareholder(s)’’ holder(s) of the Share(s) ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘Takeovers Code’’ the Codes on Takeovers and Mergers and Share Repurchases, as amended from time to time

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LETTER FROM THE BOARD

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Executive Directors: Mr. GUO Wei (Chairman) Mr. LIN Yang (Chief Executive Officer)

Non-executive Director:

Registered Office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Mr. Andrew Y. YAN

Independent Non-executive Directors: Mr. HU Zhaoguang Mr. WONG Man Chung, Francis Ms. NI Hong (Hope) Mr. ONG Ka Lueng, Peter

Head Office and Principal Place of Business in Hong Kong: Suite 2008, 20th Floor Devon House Taikoo Place 979 King’s Road Quarry Bay Hong Kong 10 July 2012

To the Shareholders

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASE SHARES, RE-ELECTION OF RETIRING DIRECTORS AND NOTICE OF ANNUAL GENERAL MEETING

1. INTRODUCTION

At the AGM, ordinary resolutions will be proposed to approve (1) the granting of the Issue Mandate, (2) the granting of the Repurchase Mandate, (3) the granting of Extension Mandate, and (4) the re-election of the retiring Directors.

• For identification purpose only

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with the information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed resolutions at the AGM.

2. ISSUE MANDATE AND REPURCHASE MANDATE

At the annual general meeting of the Company held on 15 August 2011, general mandates were granted to the Directors to issue, allot and deal with additional Shares and to exercise all the powers of the Company to repurchase its own Shares. These general mandates will lapse at the conclusion of the forthcoming AGM. The Directors believe that renewal of these general mandates will be in the interests of the Company and the Shareholders as a whole.

At the AGM, an ordinary resolution, full text of which is set out as resolution no. 5(1) in the notice of AGM, will be proposed to the Shareholders to grant to the Directors the Issue Mandate. As at the Latest Practicable Date, the issued share capital of the Company comprised 1,092,853,581 on the basis that no further Shares are issued or repurchased by the Company prior to the date of the AGM, the Company will be allowed to issue up to a maximum of 218,570,716 Shares, being 20% of the issued share capital of the Company as at the Latest Practicable Date.

At the AGM, an ordinary resolution, full text of which is set out as resolution no. 5(2) in the notice of AGM, will be proposed to the Shareholders to grant to the Directors the Repurchase Mandate. An explanatory statement in compliance with Rule 10.06(1)(b) of the Listing Rules relating to the Repurchase Mandate is set out in Appendix I to this circular.

In addition, an ordinary resolution, full text of which is set out as resolution no. 5(3) in the notice of AGM, will be proposed at the AGM to grant to the Directors the Extension Mandate.

3. RE-ELECTION OF THE RETIRING DIRECTORS

Resolution no. 3 as set out in the notice of AGM relates to re-election of the retiring Directors.

Pursuant to Bye-Law 99 of the Bye-Laws, Mr. LIN Yang, Mr. WONG Man Chung, Francis and Mr. ONG Ka Lueng, Peter will retire from office by rotation at the AGM and being eligible, have offered themselves for re-election.

Particulars of the retiring Directors subject to re-election are set out in Appendix II to this circular.

4. AGM

The notice convening the AGM is set out on pages 13 to 17 of this circular.

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LETTER FROM THE BOARD

A form of proxy for use at the AGM is enclosed with this circular and such form is also available at the websites of the Company at www.digitalchina.com.hk and the HKEx at www.hkexnews.hk. If you are not able to attend the AGM in person, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Abacus Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the AGM or any adjourned meeting thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM or any adjourned meeting thereof (as the case may be) should you so wish.

5. VOTING AT THE AGM

Pursuant to Rule 13.39(4) of the Listing Rules, all votes of the Shareholders at a general meeting must be taken by poll. As such, all resolutions to be proposed at the AGM will be put to vote by way of poll.

After the closure of the AGM, the poll results will be published on the Company’s website at www.digitalchina.com.hk and the HKEx’s website at www.hkexnews.hk.

6. RECOMMENDATION

The Directors believe that (1) the grant of the Issue Mandate, (2) the grant of Repurchase Mandate, (3) the grant of Extension Mandate, and (4) the re-election of the retiring Directors are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend you to vote in favour of the relevant resolutions to be proposed at the AGM.

7. GENERAL INFORMATION

Your attention is drawn to additional information as set out in the appendices to this circular.

Yours faithfully, By Order of the Board GUO Wei Chairman

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APPENDIX I

EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

The following explanatory statement contains all the information required by the Listing Rules in connection with the Repurchase Mandate.

SHARE CAPITAL

As at the Latest Practicable Date, the authorised share capital of the Company was HK$200,000,000 divided into 2,000,000,000 Shares of HK$0.10 each and the number of Shares in issue was 1,092,853,581.

Subject to the passing of the ordinary resolution for approving the Repurchase Mandate at the AGM and on the basis that no further Shares will be issued or repurchased prior to the AGM, the Company would be allowed under the Repurchase Mandate to repurchase up to a maximum of 109,285,358 Shares during the period in which the Repurchase Mandate remains in force. Any Shares repurchased pursuant to the Repurchase Mandate must be fully paid-up.

REASONS FOR THE REPURCHASE

The Directors believe that the Repurchase Mandate is in the interests of the Company and the Shareholders as a whole. Such repurchases may, depending on the market conditions and funding arrangements, result in an increase in net assets and/or earnings per Share. The Directors are seeking the Repurchase Mandate to give the Company the flexibility to repurchase Shares if and when appropriate. The Directors will decide the number of Shares to be repurchased on each occasion and the price and other terms upon which the same are repurchased at the relevant time having regard to the circumstances then pertaining.

FUNDING OF REPURCHASE

It is envisaged that any repurchase would be funded out of funds legally available for such purpose under the Companies Act 1981 of Bermuda (as amended) and the memorandum of association and the Bye-Laws, i.e. either from the capital paid up thereon or out of the funds of the Company which would otherwise be available for dividend or distribution or from proceeds of a new issue of Shares made for such purpose. The premium payable on repurchase (if any) shall be provided for out of the funds of the Company which would otherwise be available for dividend or distribution or out of the Company’s share premium account before the Shares are repurchased. The working capital or gearing position of the Company could be adversely affected (as compared with the position disclosed in the audited consolidated financial statements of the Company for the year ended 31 March 2012) in the event that the proposed Repurchase Mandate were to be carried out in full at any time during the period which the Repurchase Mandate remains in force. However, the Directors do not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital or gearing position of the Company as is from time to time appropriate.

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APPENDIX I

EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

CONNECTED PERSONS AND DIRECTORS’ UNDERTAKING

None of the Directors nor, to their best knowledge and having made all reasonable enquiries, any of their associates (as defined in the Listing Rules) presently intend to sell Shares to the Company in the event that the Repurchase Mandate is granted by the Shareholders.

No connected persons (as defined in the Listing Rules) of the Company have notified the Company of a present intention to sell Shares to the Company and no such persons have undertaken not to sell any such Shares to the Company in the event that the Repurchase Mandate is granted by the Shareholders.

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the Repurchase Mandate in accordance with the Listing Rules, the Bye-Laws and the applicable laws of Bermuda.

TAKEOVERS CODE

If, as a result of a share repurchase, a Shareholder’s proportionate interest in the voting rights of the Company is increased, such increase will be treated as an acquisition for the purpose of the Takeovers Code. Accordingly, a Shareholder or a group of Shareholders acting in concert could obtain or consolidate control of the Company and become obliged to make a mandatory offer under Rules 26 and 32 of the Takeovers Code. As at the Latest Practicable Date, according to the register kept by the Company under Section 336 of Part XV of the SFO and to the best knowledge of the Directors, Kosalaki Investments Limited was the single largest shareholder of the Company, holding 149,414,286 Shares (representing approximately 13.67% of the issued share capital of the Company). In the event that the Repurchase Mandate were to be exercised in full and assuming that there is no alteration to the existing shareholdings of the Company, the shareholding of Kosalaki Investments Limited would increase to approximately 15.19% of the issued share capital of the Company. Unless its shareholdings is aggregated with other parties which are deemed by the Securities and Futures Commission to be its concert parties, such increase in its shareholdings as a result of the exercise in full of the Repurchase Mandate will not give rise to an obligation to make a mandatory offer under Rules 26 and 32 of the Takeovers Code.

Save as aforesaid, the Directors are not aware of any consequences which would arise under the Takeovers Code as a result of exercising the Repurchases Mandate in full. The Directors do not currently intend to exercise the Repurchase Mandate to an extent which would trigger a mandatory offer under Rules 26 and 32 of the Takeovers Code. In addition, the Directors do not intend to exercise the Repurchase Mandate to an extent which would result in the number of Shares in the hands of the public falling below 25% of the issued share capital of the Company.

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APPENDIX I

EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

SHARE PURCHASES MADE BY THE COMPANY

No repurchase of Shares (whether on the Stock Exchange or otherwise) has been made by the Company during the six months preceding the Latest Practicable Date.

MARKET PRICES

The highest and lowest prices at which the Shares were traded on the Stock Exchange in each of the previous twelve calendar months preceding the Latest Practicable Date and up to that date were as follows:

	Highest	Lowest
	HK$	HK$
2011
July	13.680	12.100
August	13.540	11.100
September	13.500	9.800
October	12.500	8.070
November	13.260	10.960
December	13.300	11.480
2012
January	13.100	11.740
February	15.980	12.540
March	16.440	14.740
April	16.620	14.460
May	14.940	11.940
June	14.600	12.220
July (up to the Latest Practicable Date)	13.700	13.500

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APPENDIX II

PARTICULARS OF THE RETIRING DIRECTORS SUBJECT TO RE-ELECTION

Information as required to be disclosed under the Listing Rules on the retiring Directors for re-election at the AGM are set out as follows:

Mr. LIN Yang, aged 45, has been an Executive Director of the Company since 21 February 2001. He is also the Chief Executive Officer of the Group since 1 April 2011 and is responsible for the overall business management of the Group. Mr. LIN graduated in 1988 with a Bachelor’s Degree in Computing Communications from the Xidian University and in 2005 with a Master Degree in Business Administration from Cheung Kong Graduate School of Business. Mr. LIN was previously the Executive Vice President and the President of the Group and was appointed the Chief Executive Officer of the Group in April 2011. He joined the Legend group in 1990 and has over 21 years of management experience in distribution business. Mr. LIN was awarded the Lifetime Achievement Award by the IT Channel Elite Panel in 2001, recognized as the Most Influential Figure in IT Distribution of 20 Years in 2005. He has been appointed as the Director for IT Channel Profession Council, under the MIIT (Ministry of Industry and Information Technology). Save as disclosed above, Mr. LIN has not held any directorships in any public listed companies in the last three years and has no other major appointments and professional qualifications. He is also a director of certain subsidiaries of the Company.

Other than the relationship arising from his directorships in the Company, Mr. LIN does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders (as respectively defined in the Listing Rules) of the Company.

As at the Latest Practicable Date, Mr. LIN is personally interested in 56,000 Shares representing approximately 0.01% of the issued share capital of the Company. Mr. LIN has also been granted options to subscribe for 1,000,000 Shares during the exercisable period from 21 May 2009 to 20 May 2016 at an exercise price of HK$5.89 per Share. Mr. LIN has been granted 1,000,000 restricted share units (‘‘RSUs’’) which will be vested on 1 August 2014 subject to fulfillment of certain performance targets. Each RSU granted under the restricted share award scheme (‘‘RSA Scheme’’) of the Company adopted on 28 March 2011 represents one ordinary share of the Company and will be held by the trustee until vesting in accordance with the provisions of the RSA Scheme. Save as disclosed above, Mr. LIN does not have, and is not deemed to have, any interest in any Shares or underlying Shares within the meaning of Part XV of the SFO.

Mr. LIN is subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with Bye-Law 99 of the Bye-Laws. Mr. LIN entered into a service agreement with the Company which shall continue in force until terminated by (i) either the Company or Mr. LIN serving on the other not less than 3 months’ notice, or (ii) his retirement as a director without being re-elected as a director by the Shareholders in an annual general meeting in accordance with the Bye-Laws, or (iii) in the event of Mr. LIN’s default under the terms of the service agreement. With reference to Mr. LIN’s responsibilities and the Company’s business performance, as well as remuneration benchmark in the industry and the prevailing market conditions, the salary of Mr. LIN is determined by the Board and reviewed by Remuneration Committee provided that pursuant

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PARTICULARS OF THE RETIRING DIRECTORS SUBJECT TO RE-ELECTION

APPENDIX II

to the service agreement, no reduction of the current salary shall be made without his prior written consent. Pursuant to the service agreement, a discretionary bonus may be payable to Mr. LIN for each completed year of service in recognition of his contribution to the Company. Such bonus is determined at the Company’s sole discretion with reference to the accomplishment of the important tasks and the Company’s business performance, as well as remuneration benchmark in the industry and the prevailing market conditions. For the year ended 31 March 2012, Mr. LIN is entitled to a salary (included allowances, benefits in kind and pension scheme contributions) of HK$2,663,000 and a performance related bonus of HK$1,207,000.

Mr. WONG Man Chung, Francis, aged 47, has been an Independent Non-executive Director of the Company since 23 August 2006. Mr. WONG is also a member of each of the Audit Committee and Remuneration Committee of the Company. He holds a Master Degree in Management conferred by Guangzhou Jinan University, the People’s Republic of China. Mr. WONG is a fellow member of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants, a Certified Tax Advisor of the Taxation Institute of Hong Kong, an associate member of the Institute of Chartered Accountants in England and Wales and a member of the Society of Chinese Accountants and Auditors. He is a Certified Public Accountant (Practising) and has over 24 years of experience in auditing, taxation, management and financial advisory. Previously, Mr. WONG worked for KPMG, an international accounting firm, for 6 years and the Hong Kong Securities Clearing Company Limited for 2 years. Mr. WONG has the appropriate professional qualifications, accounting and related financial management expertise as required under Rule 3.10 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

Mr. WONG is currently an Independent Non-executive Director, the Chairman of the Audit Committee and the Remuneration Committee as well as a member of the Nomination Committee of China Oriental Group Company Limited; and an Independent Non-executive Director, the Chairman of the Audit Committee and a member of the Nomination Committee and the Remuneration Committee of both Wai Kee Holdings Limited and eForce Holdings Limited (all listed on the Main Board of The Stock Exchange of Hong Kong Limited). He was an Independent Non-executive Director of Lightscape Technologies Inc (listed and traded on the OTC Bulletin Board in the United States of America), Enviro Energy International Holdings Limited (formerly known as Sys Solutions Holdings Limited, listed on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited) and Yardway Group Limited (listed on the Main Board of The Stock Exchange of Hong Kong Limited). Mr. WONG is a Director of both Union Alpha C.P.A. Limited and Union Alpha CAAP Certified Public Accountants Limited, both are professional accounting firms, and a Founding Director and member of Francis M C Wong Charitable Foundation Limited, a charitable institution. Save as disclosed above, Mr. WONG has not held any directorships in any public listed companies in the last three years and has no other major appointments and professional qualifications. He does not hold any other position with the Company and other members of the Company’s group.

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APPENDIX II

PARTICULARS OF THE RETIRING DIRECTORS SUBJECT TO RE-ELECTION

As at the Latest Practicable Date, Mr. WONG does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders (as respectively defined in the Listing Rules) of the Company.

As at the Latest Practicable Date, Mr. WONG does not have, and is not deemed to have, any interest in any Shares or underlying Shares within the meaning of Part XV of the SFO.

There is no service agreement between the Company and Mr. WONG. The appointment of Mr. WONG is not subject to fixed term of service, but is subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with Bye-Law 99 of the Bye-Laws. The annual director’s fee of Mr. WONG is HK$300,000 which was determined by reference to the remuneration benchmark in the market.

Mr. ONG Ka Lueng, Peter, aged 48, has been an Independent Non-executive Director of the Company since 29 September 2010. Mr. ONG is also the Chairman of the Remuneration Committee of the Company. Mr. ONG holds a Master of Science Degree and a Bachelor of Science Degree major in Electrical Engineering from Columbia University (New York City). He is acting as the Responsible Officer (Type 1 and 2) for Alpha Securities Co. Ltd. and Alpha Futures Co. Ltd. respectively under the registration of Securities and Futures Commission of Hong Kong. Mr. ONG awarded the BBS, Bronze Bauhinia Star by the Government of the Hong Kong SAR in 2008. Mr. ONG served on the board of The Tung Wah Group of Hospitals from 1998 to 2008 and took the chair of the board from 2007 to 2008. Mr. ONG also joined the Tung Wah Group of Hospitals advisory board from 2008 to 2009. Mr. ONG is currently serving on the hospital governing committee of the Tung Wah Group of Hospitals. He is also a Founding Member and Chairman of the Green Investment Promotion Association. Save as disclosed above, Mr. ONG has not held any directorships in any public listed companies in the last three years and has no other major appointments and professional qualifications. He does not hold any other position with the Company and other members of the Company’s group.

As at the Latest Practicable Date, Mr. ONG does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders (as respectively defined in the Listing Rules) of the Company.

As at the Latest Practicable Date, Mr. ONG does not have, and is not deemed to have, any interest in any Shares or underlying Shares within the meaning of Part XV of the SFO.

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APPENDIX II

PARTICULARS OF THE RETIRING DIRECTORS SUBJECT TO RE-ELECTION

There is no service agreement between the Company and Mr. ONG. The appointment of Mr. ONG is not subject to fixed term of service, but is subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with Bye-Law 99 of the Bye-Laws. The annual director’s fee of Mr. ONG is HK$300,000 which was determined by reference to the remuneration benchmark in the market.

Save as disclosed above, each of the above Directors confirmed that there are no other matters or information relating to their re-election that need to be brought to the attention of the Shareholders or to be disclosed pursuant to any of the requirements under Rule 13.51(2) of the Listing Rules.

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NOTICE OF AGM

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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the annual general meeting of Digital China Holdings Limited (the ‘‘Company’’) will be held at Granville Room, Lower Lobby, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Monday, 27 August 2012 at 9: 30 a.m. for the following purposes:

1. To receive and adopt the audited consolidated financial statements of the Company and its subsidiaries and the reports of the directors and auditors for the year ended 31 March 2012.

2. To declare a final dividend for the year ended 31 March 2012.

3. To re-elect the retiring directors of the Company and authorise the board of directors of the Company to fix the directors’ remuneration.

4. To re-appoint the retiring auditors of the Company and authorise the board of directors of the Company to fix their remuneration.

5. As special business, to consider and, if thought fit, pass the following resolutions as ordinary resolutions with or without modifications:

6. (1) ‘‘THAT:

   • (a) subject to paragraph (b) of this Resolution, the exercise by the directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements and options (including warrants, bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require the exercise of such powers during or after the end of the Relevant Period be and is hereby generally and unconditionally approved;

7. For identification purpose only

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NOTICE OF AGM

• (b) the aggregate nominal amount of share capital allotted, issued or otherwise dealt with, or agreed conditionally or unconditionally to be allotted, issued or otherwise dealt with, (whether pursuant to an option or otherwise) by the directors of the Company pursuant to the approval in paragraph (a) of this Resolution, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined), or (ii) the exercise of rights of subscription or conversion under the terms of any existing warrants, bonds, debentures, notes or other securities issued by the Company, or (iii) the exercise of options granted under any option scheme or similar arrangement for the time being adopted for the grant or issue to eligible participants of the Company and/or any of its subsidiaries of rights to acquire shares of the Company, or (iv) any scrip dividend or similar arrangement providing for the allotment and issue of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Bye-Laws of the Company, or (v) a specific authority granted by the shareholders of the Company in general meeting, shall not exceed twenty per cent. (20%) of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this Resolution, and the said approval shall be limited accordingly; and

• (c) for the purposes of this Resolution:

‘‘Relevant Period’’ means the period from the passing of this Resolution until whichever is the earliest of:

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

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-Laws of the Company or any applicable laws of Bermuda to be held; or

• (iii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given under this Resolution.

‘‘Rights Issue’’ means an offer of shares or issue of options, warrants or other securities which carry a right to subscribe for or purchase shares of the Company open for a period fixed by the directors of the Company to holders of shares of the Company on the register of shareholders of the Company (and, where appropriate, to holders of other securities of the Company entitled to the offer) on a fixed record date in proportion to their then holdings of the shares of the Company (or, where appropriate, such other securities) (subject to such exclusions 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

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NOTICE OF AGM

obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong).’’

• (2) ‘‘THAT:

• (a) subject to paragraph (b) of this Resolution, the exercise by the directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase issued shares in the capital of the Company on The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’) or on any other stock exchange on which the shares of the Company may be listed and is recognised by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and/or the requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;

• (b) the aggregate nominal amount of shares of the Company which may be repurchased by the Company pursuant to the approval in paragraph (a) of this Resolution shall not exceed ten per cent. (10%) of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this Resolution, and the said approval shall be limited accordingly; and

• (c) for the purposes of this Resolution, ‘‘Relevant Period’’ means the period from the passing of this Resolution until whichever is the earliest of:

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

  • (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-Laws of the Company or any applicable laws of Bermuda to be held; or

  • (iii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given under this Resolution.’’

• (3) ‘‘THAT conditional upon the passing of Resolutions numbered 5(1) and 5(2) set out in the notice convening this meeting, the general mandate granted to the directors of the Company pursuant to Resolution numbered 5(1) set out in the notice convening this meeting and for the time being in force to exercise the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements and options (including warrants, bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares

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NOTICE OF AGM

of the Company) be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the shares of the Company purchased by the Company under the authority granted pursuant to Resolution numbered 5(2) set out in the notice convening this meeting, provided that such extended amount shall not exceed ten per cent. (10%) of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this Resolution.’’

By Order of the Board GUO Wei Chairman

Hong Kong, 10 July 2012

Notes:

• (i) The register of members of the Company will be closed from Wednesday, 22 August 2012 to Monday, 27 August 2012 (both days inclusive) and on Friday, 31 August 2012 respectively, during which period no transfer of shares will be registered. In order to be eligible to attend and vote at the forthcoming annual general meeting to be held on 27 August 2012, all transfer of shares accompanied by the relevant share certificates must be lodged with the Company’s branch share registrar and transfer office in Hong Kong, Tricor Abacus Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4: 30 p.m. on Tuesday, 21 August 2012. In order to qualify for the final dividend, all transfer of shares accompanied by the relevant share certificates must be lodged with the Company’s branch share registrar and transfer office in Hong Kong, Tricor Abacus Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4: 30 p.m. on Thursday, 30 August 2012.

• (ii) Subject to the shareholders’ approval at the forthcoming annual general meeting or any adjournment thereof (as the case may be), the final dividend of 39.80 HK cents per share will be payable on or about Friday, 7 September 2012 to those shareholders whose names appear on the register of members of the Company at the close of business on Thursday, 30 August 2012.

• (iii) Any shareholder of the Company entitled to attend and vote at the annual general meeting or any adjournment thereof (as the case may be) shall be entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A shareholder who is the holder of two or more shares may appoint more than one proxy to attend and vote instead of him/her. A proxy need not be a shareholder of the Company.

• (iv) Where there are joint holders of any share of the Company, any one of such joint holders may vote at the annual general meeting or any adjournment thereof (as the case may be), either in person or by proxy, in respect of such share as if he/she were solely entitled thereto, but if more than one of such joint holders be present at the

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NOTICE OF AGM

• annual general meeting or any adjournment thereof (as the case may be), then one of the said persons so present whose name stands first on the register of shareholders of the Company in respect of such share shall alone be entitled to vote in respect thereof.

• (v) To be valid, 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 thereof must be deposited at the Company’s branch share registrar and transfer office in Hong Kong, Tricor Abacus Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time appointed for holding the annual general meeting or any adjourned meeting thereof (as the case may be). Delivery of an instrument appointing a proxy shall not preclude a shareholder from attending and voting in person at the annual general meeting or at any adjourned meeting thereof (as the case may be).

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