Fujian Holdings Limited

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 Fujian Holdings Limited (the “Company”), you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company 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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(Incorporated in Hong Kong with limited liability)

(Stock Code: 181)

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL, SUBSCRIPTION OF SHARES,

SHARE CONSOLIDATION, CHANGE OF BOARD LOT SIZE, AMENDMENT TO ARTICLES OF ASSOCIATION, TERMINATION OF EXISTING SHARE OPTION SCHEME,

ADOPTION OF NEW SHARE OPTION SCHEME

AND RENEWAL OF GENERAL MANDATE TO ISSUE SHARES

A letter from the board of directors of the Company is set out on pages 3 to 15 of this circular.

A notice convening an extraordinary general meeting of the Company to be held at 10:00 a.m. on Monday, 10 May, 2004 at The Boardroom, 1st Floor, South Pacific Hotel, 23 Morrison Hill Road, Wanchai, Hong Kong or any adjournment thereof is set out on pages 25 to 28 of this circular. A form of proxy for use at the extraordinary general meeting is enclosed.

Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the registered office of the Company at Unit 3213, 32nd Floor, Cosco Tower, 183 Queen’s Road Central, Hong Kong, as soon as practicable and in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjournment meeting (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 meeting or any adjournment thereof should you so wish.

16 April, 2004

CONTENTS

		Page
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		ii
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2.	Increase in authorised share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
3.	The Subscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
4.	Share Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
5.	Amendment to Articles of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
6.	Change of board lot size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
7.	Odd lots arrangement and fractional entitlement of the Consolidated
	Shares and matching services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
8.	Parallel trading arrangements and free exchange of new share certificates . . . . . . . . .	11
9.	Termination of Existing Share Option Scheme and adoption of
	New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
10.	Renewal of the General Mandate to issue shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
11.	The EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
12.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
13.	Business of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
14.	Responsibility statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
15.	Documents available for inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Appendix – Summary of the principal terms and conditions of
	the New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		25

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EXPECTED TIMETABLE

Set out below is an indicative timetable for, among other things, the proposed Share Consolidation, the proposed adoption of the New Share Option Scheme and the trading arrangements and exchange of share certificates.

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Latest time for lodging forms of proxy for the EGM . . . . . . . . . . . . . . . . . . 10:00a.m. on Saturday, 8 May The EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10:00a.m. on Monday, 10 May Adoption date of the New Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 10 May Effective date of the Share Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 11 May Dealings in Consolidated Shares commence . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30a.m. on Tuesday, 11 May Existing counter for trading in the existing Shares in board lots of 200,000 Shares closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30a.m. on Tuesday, 11 May Temporary counter for trading in the Consolidated Shares in board lots of 20,000 Consolidated Shares opens . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30a.m. on Tuesday, 11 May First day of free exchange of existing share certificates for new share certificates for the Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 11 May Existing counter for trading in the Consolidated Shares in board lots of 20,000 Consolidated Shares reopens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9:30a.m. on Tuesday, 25 May Parallel trading commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9:30a.m. on Tuesday, 25 May Temporary counter for trading in the Consolidated Shares in board lots of 20,000 Consolidated Shares closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00p.m. on Wednesday, 16 June Parallel trading ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00p.m. on Wednesday, 16 June Last day for free exchange of existing share certificates for new share certificates for the Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 24 June

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DEFINITIONS

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

“Associates” has the meaning ascribed thereto in the Listing Rules “Board” the board of Directors or a duly authorised committee thereof “Business Day” any day on which the Stock Exchange is open for the business of dealing in securities
“CCASS” the Central Clearing and Settlement System established and operated by HKSCC
“Company” Fujian Holdings Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Stock Exchange
“Consolidated Share(s)” ordinary share(s) of HK$0.125 each in the share capital of the Company upon the Share Consolidation taking effect
“Controlling Shareholder” has the meaning ascribed thereto in the Listing Rules
“Directors” the directors of the Company for the time being

“EGM” an extraordinary general meeting of the Company to be held at 10:00 a.m. on Monday, 10 May, 2004 at The Boardroom, 1st Floor, South Pacific Hotel, 23 Morrison Hill Road, Wanchai, Hong Kong or any adjournment thereof, notice of which is set out on pages 25 and 28 of this circular

“Existing Share Option Scheme” the share option scheme adopted by a resolution of the then shareholders of the Company in general meeting on 22 January, 1997

“FIDC” Fujian Investment and Development Company Limited, a company incorporated in British Virgin Islands which wholly owns HC Technology
“FIDC Group” FIDC and its subsidiaries

“General Mandate” a general mandate to allot, issue and otherwise deal with the shares of the Company with an aggregate nominal value not exceeding 20% of the aggregate nominal value of the share capital of the Company in issue at the date of the passing of the relevant resolution granting the general mandate;

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DEFINITIONS

“Goldride”
Goldride Holdings Limited, the subscriber under the Subscription Agreement and whose, together with its ultimate beneficial owner, Mr. Anthony Espina, are not connected persons as defined under the Listing Rules
“Group” the Company and its subsidiaries
“HC Technology”
HC Technology Capital Company Limited, the Controlling Shareholder of the Company
“Hong Kong” the Hong Kong Special Administrative Region of the Peoples’ Republic of China
“HKSCC”

Hong Kong Securities Clearing Company Limited

“Latest Practicable Date” 15 April, 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange, as amended from time to time
“New Share Option Scheme” the share option scheme proposed to be adopted by the Company at the EGM, the principal terms of which are set out in the Appendix to this circular
“PRC” the People’s Republic of China

“Share Consolidation” the proposed consolidation of all the issued and unissued Shares on the basis of every 10 Shares be consolidated into 1 Consolidated Share

“Shareholder(s)” holder(s) of the Share(s) in issue
“Share(s)” existing ordinary share(s) of HK$0.0125 each in the capital of the Company
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Subscription” the subscription of 898,484 new Shares by Goldride pursuant to the Subscription Agreement
“Subscription Agreement” the subscription agreement dated 15 April, 2004 entered into between the Company and Goldride
“HK$ and cents” Hong Kong dollar and cents respectively, the lawful currency of Hong Kong
“%” per cent.

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LETTER FROM THE BOARD

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FUJIAN HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability)

(Stock Code: 181)

Executive Directors: Wang Xiaowu (Chairman) Mei Qinping Chen Danyun

Registered office:

Unit 3213, 32nd Floor Cosco Tower, 183 Queen’s Road Central, Hong Kong

Independent non-executive Directors: Lam Kwong Siu Cheung Wah Fung, Christopher

16 April, 2004

To the Shareholders

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL, SUBSCRIPTION OF SHARES,

SHARE CONSOLIDATION, CHANGE OF BOARD LOT SIZE, AMENDMENT TO ARTICLES OF ASSOCIATION, TERMINATION OF EXISTING SHARE OPTION SCHEME, ADOPTION OF NEW SHARE OPTION SCHEME AND RENEWAL OF GENERAL MANDATE TO ISSUE SHARES

Dear Sir or Madam,

1. INTRODUCTION

On 16 April, 2004, the Board announced that it proposes to put forward the following proposals to the Shareholders:

the increase of the authorised share capital of the Company from HK$379,138,058.71 to HK$380,000,000;

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LETTER FROM THE BOARD

pursuant to the Subscription Agreement, the issue and allotment of 898,484 Shares to an independent third party, Goldride, whose together with its ultimate beneficial owner, Mr. Anthony Espina, are not connected persons, as defined under the Listing Rules, of the Company;
the Share Consolidation, pursuant to which every 10 Shares of HK$0.0125 each are consolidated into one Consolidated Share of HK$0.125 each and corresponding amendment to the relevant provision in the Articles of Association of the Company;
the change of board lot size from 200,000 Shares to 20,000 Consolidated Shares;
the termination of the Existing Share Option Scheme and adoption of the New Share Option Scheme; and
the renewal of the General Mandate.

The purpose of this circular is to provide you with additional information on the above proposals and to seek your approval of certain proposals in the upcoming EGM. A notice of the EGM in relation to the proposals that require your approval is set out on pages 25 to 28 of this circular.

2. INCREASE IN AUTHORISED SHARE CAPITAL

Pursuant to the capital restructuring carried out in December, 2003, details of which were set out in a circular of the Company dated 9 October, 2003, the table below contains the information relating to the share capital of the Company as at the Latest Practicable Date:

Shareholding structure of the Company as at the Latest Practicable Date Number of authorised shares 30,331,044,697 Authorised share capital HK$379,138,058.7125 Number of issued shares 5,199,101,516 Nominal value per share HK$0.0125 Total issued share capital HK$64,988,768.95 Number of unissued share 25,131,943,181 Total unissued share capital HK$314,149,289.7625

In order to better facilitate the proposed Share Consolidation as set out in section 4 below as well as to round up the various figures relating to the capital structure of the Company, the Board proposes to increase the authorised share capital of the Company from HK$379,138,058.71 to HK$380,000,000 by the creation of 68,955,303 unissued Shares and to increase the issued share capital of the Company by the issue and allotment of 898,484 new Shares to an independent third party as set out in section 3 below.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, the authorised share capital of the Company was HK$379,138,058.71 divided into 30,331,044,697 Shares, of which 5,199,101,516 Shares were issued and credited as fully paid, as shown in the table above. Upon the increase of the authorised share capital of the Company and the issue and allotment of the said 898,484 new Shares, the authorised share capital of the Company will be increased to HK$380,000,000 divided into 30,400,000,000 Shares, of which 5,200,000,000 Shares will be issued and credited as fully paid.

An ordinary resolution to increase the authorised share capital of the Company will be proposed at the EGM.

3. THE SUBSCRIPTION

On 15 April, 2004, the Company and an independent third party, Goldride, entered into the Subscription Agreement, pursuant to which Goldride has conditionally agreed to subscribe for 898,484 Shares at a subscription price of HK$0.03 per Share. The Directors have conditionally agreed to exercise their power to issue and allot 898,484 Shares, representing 0.01% of the enlarged issued share capital of the Company, to Goldride pursuant to the Subscription Agreement and to be issued under the General Mandate granted to Directors at the extraordinary general meeting of the Company held on 3 November, 2003. The interests of the Shareholders in the Company before and after the completion of the Subscription are set out in the table titled “Shareholding structure of the Company before and after the Subscription” below. The completion of the Subscription will not result in the limit under the existing General Mandate being exceeded.

THE SUBSCRIPTION AGREEMENT

Date

15 April, 2004

Parties

(a) The Company
(b) Goldride

Goldride, together with its ultimate beneficial owner, Mr. Anthony Espina, are not connected persons, as defined under the Listing Rules, of the Company. Goldride Securities Limited which is also beneficially owned by Mr. Anthony Espina will provide matching services for the odd lots of the Consolidated Shares resulting from the proposed Share Consolidation and change in board lot size of the Consolidated Shares as described in section 7 below. It has previously provided such matching services to the Shareholders when the Company changed the board lot size of the Shares being effective from 17 December 2003.

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LETTER FROM THE BOARD

The Subscription

Pursuant to the Subscription Agreement, Goldride has conditionally agreed to subscribe for 898,484 Shares to be issued by the Company at HK$0.03 each, representing 0.01% of the enlarged issued share capital of the Company. The closing price of the Shares as at the Latest Practicable Date is HK$0.028 per Share whereas the 10 days’ (with the last day ending on the Latest Practicable Date) average closing price of the Shares is HK$0.0298 per Share. Thus the subscription price of HK$0.03 for each Share agreed under the Subscription Agreement represents a premium of 0.67% of the 10 days’ average closing price of the Shares of HK$0.0298. The table titled “Shareholding structure of the Company before and after the Subscription” below sets forth the number and percentage shareholding in the Company of the Shareholders before and after the completion of the Subscription.

Neither Goldride nor its beneficial owner currently holds any Shares. Upon the completion of the Subscription Agreement, Goldride will be interested in 0.01% of the enlarged issued share capital of the Company.

The total consideration for the Subscription is HK$26,954.52, which was determined after arm’s length negotiations between the parties, with reference to the average closing price of the Shares for the five Business Days immediately before the entering into the Subscription Agreement. The Directors are also of the view that the subscription price of HK$0.03 under the Subscription was determined on an arm’s length basis.

The consideration

The consideration of HK$26,954.52 payable by Goldride under the Subscription Agreement will be paid to the Company upon completion of the Subscription.

Conditions

The Subscription will be subject to and conditional upon the Listing Committee of the Stock Exchange granting the approval of the listing of, and permission to deal in the new Shares being issued under the Subscription Agreement.

Proceeds of the Subscription

The net proceeds receivable by the Company under the Subscription are estimated to be approximately HK$26,954.52. It is intended that the net proceeds will be utilized for general working capital purposes.

During the past twelve months, the Company has raised a total sum of HK$53,379,932.17. An amount of HK$34,000,000 was raised from the issue of 2,344,827,586 new Shares at HK$0.0145 each to HC Technology during the restructuring exercise conducted in late 2003. Out of these proceeds, HK$11,300,000 was utilised for repaying debts under the debt restructuring and HK$3,426,000 was repaid to certain creditors of the Company. The balance of HK$19,274,000 has been retained by the Company for general working capital purposes. Reference is made to the circular of the Company issued on 9 October, 2003. The Company raised another amount of HK$19,379,932.17 from a further issue of

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LETTER FROM THE BOARD

800,000,000 new Shares to HC Technology in December 2003. As at the Latest Practicable Date, other than the amounts used to repay debts of the Company as mentioned above, approximately HK$2,244,157 from the total sum raised in the past twelve months had been utilised. The unutilised balance of approximately HK$36,409,775 is intended to be used as future general capital of the Company.

Other terms of the Subscription Agreement

(a) The Shares allotted and issued pursuant to the Subscription Agreement will rank equally in all respects among themselves and with the Shares then in issue on the date of allotment and issue of the Shares.
(b) In the event that the conditions set out in the Subscription Agreement not fulfilled in full by the date stipulated in the Subscription Agreement, being 17 May, 2004, or such later date as the Company and Goldride may agree, the Subscription Agreement shall terminate and neither the Company nor Goldride shall have any obligations and liabilities thereunder.

Reasons for the Subscription

The Subscription was entered into to better facilitate the proposed Share Consolidation as set out in section 4 below as well as to round up the various figures relating to the capital structure of the Company.

To the knowledge of the Directors, Goldride or its beneficial owner, Mr. Anthony Espina, does not presently have any intention or arrangement to dispose of the Shares issued under the Subscription to any connected persons, as defined under the Listing Rules, of the Company.

Shareholding structure of the Company before and after the Subscription

Shareholders of the Company HC Technology Sino Earn Holdings Limited Jian Xing Finance Limited Goldride Public	Existing shareholding structure of the Company Number of issued Shares % 2,792,413,792 53.7 725,533,823 14.0 151,393,534 2.9 – – 1,529,760,367 29.4 5,199,101,516 100	Shareholding structure of the Company immediately after the completion of the Subscription Number of issued Shares % 2,792,413,792 53.7 725,533,823 14.0 151,393,534 2.9 898,484 0.01 1,529,760,367 29.4 5,200,000,000 100	Shareholding structure of the Company immediately after the completion of the Subscription Number of issued Shares % 2,792,413,792 53.7 725,533,823 14.0 151,393,534 2.9 898,484 0.01 1,529,760,367 29.4 5,200,000,000 100
			100

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LETTER FROM THE BOARD

Completion of the Subscription

Completion of the Subscription will take place immediately after all the conditions of the Subscription are fulfilled (or such other date as may be agreed between the Company and Goldride).

Application for listing

An application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Shares in issue upon the new Shares being issued under the Subscription Agreement.

4. SHARE CONSOLIDATION

The Board proposes to consolidate every 10 Shares of HK$0.0125 each into one Consolidated Share of HK$0.125 each pursuant to the Share Consolidation.

Upon the increase of the authorised share capital of the Company, the completion of the Subscription and the Share Consolidation becoming effective, the authorised share capital of the Company will be HK$380,000,000 comprising 3,040,000,000 Consolidated Shares, of which 520,000,000 Consolidated Shares will be issued and credited as fully paid, representing an issued share capital of HK$65,000,000, and 2,520,000,000 Consolidated Shares, representing a share capital of HK$315,000,000, will be unissued.

As at the Latest Practicable Date, the Company has no outstanding warrants, share options or any other types of securities which are convertible into Shares.

Details of the share capital of the Company before and after the Share Consolidation

	Position after the increase in	Position after the increase in
	authorised share capital and	authorised share capital and
	completion of the	completion of the
	Subscription but before	Subscription and subsequent
	Share Consolidation	to Share Consolidation
Number of authorised shares	30,400,000,000	3,040,000,000
Authorised share capital	HK$380,000,000	HK$380,000,000
Number of issued shares	5,200,000,000	520,000,000
Nominal value per share	HK$0.0125	HK$0.125
Total issued share capital	HK$65,000,000	HK$65,000,000
Number of unissued share	25,200,000,000	2,520,000,000
Total unissued share capital	HK$315,000,000	HK$315,000,000

Reasons for the Share Consolidation

The Board is of the view that the proposed Share Consolidation will increase the nominal value and trading price of the shares of the Company. The Board further believes that such increase would attract more international institutional investors, who, as expected by the Board, tend to acquire higher

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LETTER FROM THE BOARD

value shares in term of absolute trading price, in investing in the Company’s shares, thereby extending the shareholder base of the Company.

Based on the above, the Board is of the view that the proposed Share Consolidation is in the interests of the Company and the Shareholders as a whole.

Effect of the Share Consolidation

The closing price per Share on the Latest Practicable Date was HK$0.028. Based on such closing price and the change in board lot size proposed in section 6 below, the value per board lot before and after the Share Consolidation is expected to be the same of approximately HK$5,600.

The Consolidated Shares will rank pari passu in all respects with each other and the Share Consolidation will not result in any change in the relative rights of the Shareholders.

Save for the expenses to be incurred, the implementation of the Share Consolidation will not result in any change to the underlying assets, business operations, management or financial position of the Group. The Board believes that the Share Consolidation will not have any material adverse effect on the financial position of the Group.

Conditions to the Share Consolidation

The Share Consolidation is conditional upon, inter alia:

(a) the completion of the Subscription;
(b) the passing by the Shareholders of an ordinary resolution to be proposed at the EGM approving the Share Consolidation; and
(b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Consolidated Shares in issue upon the Share Consolidation becoming effective.

None of the above conditions can be waived and the Company does not have any intention to waive the same.

The Share Consolidation will become effective on the Business Day immediately following the passing of the relevant ordinary resolution approving the Share Consolidation at the EGM.

Application for listing

An application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Consolidated Shares in issue upon the Share Consolidation becoming effective.

Subject to the granting of the approval for the listing of, and permission to deal in, the Consolidated Shares by the Stock Exchange, the Consolidated Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date for dealings in

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LETTER FROM THE BOARD

the Consolidated Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

5. AMENDMENT TO ARTICLES OF ASSOCIATION

Upon the Share Consolidation becoming effective, the nominal value of the shares of the Company will increase by a factor of ten. As such, the Board proposes to the Shareholders to approve a special resolution at the EGM to amend the relevant provision of the Articles of Association of the Company.

6. CHANGE OF BOARD LOT SIZE

The Shares are currently traded in board lots of 200,000 Shares. The Board proposes a change of the board lot size for trading from 200,000 Shares to 20,000 Consolidated Shares.

The Share Consolidation and the change of board lot size will not change the existing value of each board lot of shares of the Company.

The Board is of the opinion that the decrease in the board lot size will enable the Company to widen its shareholder base.

7. ODD LOTS ARRANGEMENT AND FRACTIONAL ENTITLEMENT OF THE CONSOLIDATED SHARES AND MATCHING SERVICES

Any fractional entitlement to the Consolidated Shares will be aggregated, sold and retain for the benefit of the Company. In order to alleviate the difficulties arising from the existence of odd lots of the Consolidated Shares as a result of the Share Consolidation and change in board lot size of the Consolidated Shares, the Company has agreed to procure Goldride Securities Limited to stand in the market on best effort basis to provide matching services for the odd lots of the Consolidated Shares during the period from 11 May, 2004 to 16 June, 2004 (both dates inclusive). Shareholders who wish to take advantage of this matching facility either to dispose of their odd lots of the Consolidated Shares or to top up to board lots of 20,000 Consolidated Shares, may contact Mr. Anthony Espina of Goldride Securities Limited of Suite 3414-3415, 34th Floor, Jardine House, 1 Connaught Place, Hong Kong at telephone number 2869 9500 and fax number 2877 1694.

To the understanding of the Directors, the matching services provided by Goldride Securities Limited will not result in a disposal of shares of the Company to any connected persons, as defined under the Listing Rules, of the Company, other than as necessary to top up to whole board lots of the consolidated.

Holders of Consolidated Shares in odd lots should note that successful matching of odd lots is not guaranteed.

Shareholders are recommended to consult their licensed securities dealer, bank manager, solicitor, professional accountant or other professional advisers if they are in any doubt about the facility described above.

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LETTER FROM THE BOARD

8. PARALLEL TRADING ARRANGEMENTS AND FREE EXCHANGE OF NEW SHARE CERTIFICATES

New certificates for the Consolidated Shares will be in green colour in order to distinguish them from certificates for existing Shares which are blue in colour.

Subject to the Share Consolidation becoming unconditional, the arrangements proposed for dealings in the Consolidated Shares are expected to be as follows:

(a) With effect from 9:30 a.m., Tuesday, 11 May, 2004, the present counter for trading in the Shares in board lots of 200,000 Shares will be temporarily closed and a temporary counter for trading in the Consolidated Shares in board lots of 20,000 Consolidated Shares will be set up. Accordingly, one Consolidated Share will be deemed to represent 10 Shares. The blue certificates for the existing Shares may be traded at this temporary counter;
(b) With effect from 9:30 a.m., Tuesday, 25 May, 2004, the present counter for trading in the Shares will be reopened for trading in the Consolidated Shares in board lots of 20,000 Consolidated Shares. Only the new green share certificates for the Consolidated Shares may be traded at this counter;
(c) During the period from Tuesday, 25 May, 2004, to Wednesday, 16 June, 2004, (both dates inclusive), there will be parallel trading in the above two counters; and
(d) Dealings in the Consolidated Shares represented by the blue certificates for the Shares will cease after the close of trading at 4:00 p.m., Wednesday, 16 June, 2004. With effect from 9:30 a.m., Thursday, 17 June, 2004, trading will only be in the new green share certificates for the Consolidated Shares in board lots of 20,000 Consolidated Shares and the temporary counter for trading in the blue share certificates for the Consolidated Shares in board lots of 20,000 Consolidated Shares will be removed.

The blue share certificates for the Shares will only be valid for delivery and settlement in respect of dealings for the period up to 4:00 p.m., Wednesday, 16 June, 2004 and thereafter will not be accepted for dealing purposes. However, the blue share certificates for the Shares will continue to be good evidence of legal title to the Consolidated Shares on the basis of every ten Shares for one Consolidated Share and may be exchanged for new green share certificates for the Consolidated Shares at any time. Such Shareholders shall tender their blue share certificates for the Shares in exchange for new green share certificates for the Consolidated Shares in board lots of 20,000 Consolidated Shares so that their shareholding may be accurately represented by those new green share certificate(s) for the Consolidated Shares.

Shareholders are urged to exchange their existing blue share certificates for the Shares for new green share certificates for the Consolidated Shares during the period from Tuesday, 11 May, 2004 to Thursday, 24 June, 2004 (both dates inclusive). This may be done free of charge by delivering the existing blue share certificates for the Shares to the Company’s branch share registrar in Hong Kong, Standard Registrars Limited, at Ground Floor, BEA Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong. Thereafter, existing blue share certificates for the Shares will remain effective as documents of title, on the basis of 10 Shares for 1 Consolidated Shares, and may be accepted for exchange only on

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LETTER FROM THE BOARD

payment of a fee of HK$2.50, (or such higher amount as may be stipulated in the Listing Rules from time to time) for each new green share certificate to be issued or each existing blue share certificate submitted. A Shareholder will be entitled to aggregate his/her/its Shares registered in his/her/its name in order to obtain new green share certificates for Consolidated Shares in board lots of 20,000 Consolidated Shares.

It is expected that new green share certificates for the Consolidated Shares will be available for collection on or after the tenth Business Day from the date of submission of the existing blue share certificates for the Shares to the Company’s branch share registrar at the above address for exchange. Unless otherwise instructed, new green share certificates for the Consolidated Shares will be issued in board lots of 20,000 Consolidated Shares.

9. TERMINATION OF EXISTING SHARE OPTION SCHEME AND ADOPTION OF NEW SHARE OPTION SCHEME

The Board noted that on 23 August, 2001, the Stock Exchange announced amendments to Chapter 17 of the Listing Rules which came into effect on 1 September, 2001. As a result of the amendments to the Listing Rules, the Board has not been able to grant options under the Existing Share Option Scheme. In compliance with the amendments to the Listing Rules, the Board considers that it is in the best interest of the Company to terminate the Existing Share Option Scheme and to adopt the New Share Option Scheme of which is in compliance with Chapter 17 of the Listing Rules.

As at the date of this circular, no share options were granted under the Existing Share Option Scheme of which is outstanding and it is proposed that the Existing Share Option Scheme will be terminated upon the approval and adoption of the New Share Option Scheme. The Directors do not intend to grant any share options under the Existing Share Option Scheme before the termination of the same. At the EGM, an ordinary resolution will be proposed for the Company to terminate the Existing Share Option Scheme and to approve and adopt the New Share Option Scheme.

The adoption of the New Share Option Scheme is conditional upon, inter alia,

(a) the passing of an ordinary resolution by the Shareholders at the EGM approving the termination of the Existing Share Option Scheme and the adoption of the New Share Option Scheme; and
(b) the Listing Committee of the Stock Exchange granting the approval for the listing of, and permission to deal in, up to 520,000,000 Shares, representing 10% of the total number of Shares in issue as at the date of the EGM (assuming that no Shares will be issued or repurchased by the Company and that 898,484 Shares has been issued pursurant to the Subscription prior to the date of the EGM), which may be issued upon the exercise of the subscription rights under the options that may be granted under the New Share Option Scheme.

Application will be made to the Listing Committee of the Stock Exchange for the approval of the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of the options to be granted under the New Share Option Scheme.

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LETTER FROM THE BOARD

The purpose of the New Share Option Scheme is to provide participants of the same with the opportunity to acquire proprietary interests in the Company and to encourage them to work towards enhancing the value of the Company and its shares for the benefit of the Company and its Shareholders as a whole. The Board believes that the New Share Option Scheme could assist in attracting and retaining those participants who have contributed to the success of the Company. This may be achieved by granting the options under the New Share Option Scheme to the participants who are regarded as valuable human resources of the Group based on factors such as years of service, work experience and knowledge in the industry, or who have contributed to the growth and success of the Group based on their performance, provision of goods and services, term of relationship with the Group and other relevant factors.

The rules of the New Share Option Scheme provide that the Board is empowered with the authority to determine the terms and conditions of any option under the New Share Option Scheme based, in each case, on relevant factors as the Board considers appropriate. The Board believes that its authority under the New Share Option Scheme to specify a minimum holding period and/or performance targets as conditions of any option under the New Share Option Scheme granted, the requirement for a minimum subscription price and the selection criteria prescribed by its rules will serve to protect the value of the Company and achieve the purpose of the New Share Option Scheme.

The Directors consider that it is not possible to state the value of all options that may be granted pursuant to the New Share Option Scheme as if they had been granted on the Latest Practicable Date, because the calculation of the value of the options is based on a number of variables such as the exercise price, exercise period, interest rate, expected volatility and other relevant variables. As none of the options have been granted under the New Share Option Scheme, certain variables are not available for the calculation of the value of such options. The Directors believe that any calculation of the value of the options as at the Latest Practicable Date based on a great number of speculative assumptions would not be meaningful to the Shareholders.

A summary of the principal terms of the New Share Option Scheme is set out in the Appendix to this circular, which serves as a summary of the terms of the New Share Option Scheme but does not constitute the full terms of the same. The full terms of the New Share Option Scheme may be inspected in accordance with the section below headed “Documents available for inspection”.

10. RENEWAL OF GENERAL MANDATE TO ISSUE SHARES

Since the last annual general meeting of the Company, there has only been one refreshment of the General Mandate to allot, issue and deal with the Shares of which was approved by the Shareholders at the extraordinary general meeting of the Company held on 3 November, 2003. Pursuant to this General Mandate, the Company has only issued 800,000,000 Shares to HC Technology on 11 December, 2003 at a subscription price of HK$0.025 per Share. The net proceeds received by the Company were HK$19,379,932.17, after deducting all the necessary costs incurred. These proceeds were used as general working capital of the Company. As at the date of this circular, none of the said proceeds has been utilised and is being kept in a Hong Kong dollars interest-bearing account and will be used as future working capital.

The issue of 800,000,000 Shares to HC Technology had already used up a substantive part of the General Mandate, that is, approximately 18.2% out of the 20% limit under the General Mandate. The

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LETTER FROM THE BOARD

proposed issue of 898,484 Shares pursuant to the Subscription Agreement will further use up approximately 0.2% of the General Mandate. To enable the Directors to have the flexibility of allotting, issuing and dealing with the Shares, the Board recommended that a new General Mandate representing up to 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the EGM be granted to the Directors at the EGM.

The proposed renewal of the General Mandate will require the Controlling Shareholder and its Associates to abstain from voting in favour of the proposal. As such, HC Technology, which is currently holding 53.7% of the Shares and having no Associates, shall abstain from voting for the proposal to renew the General Mandate to issue Shares.

11. THE EGM

The EGM will be convened for the purpose of, considering and, if thought fit, passing the resolutions by the Shareholders relating to the proposed increase in the authorised share capital of the Company, the Share Consolidation, amendment to the Articles of Association of the Company, termination of the Existing Share Option scheme and adoption of the New Share Option Scheme, and renewal of the General Mandate, of which are contained in the notice of the EGM as set out on pages 25 to 28 of this circular. As mentioned in the last section, the proposed renewal of the General Mandate will require the Controlling Shareholder and its Associates to abstain from voting in favour of the proposal. As such, HC Technology, which is currently holding 53.7% of the Shares and having no Associates, shall abstain from voting for the proposal to renew the General Mandate.

The EGM will be held at 10:00a.m. on Monday, 10 May, 2004 at The Boardroom, 1st Floor, South Pacific Hotel, 23 Morrison Hill Road, Wanchai, Hong Kong.

A form of proxy for use at the EGM is enclosed. Whether or not you are able to attend the EGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the registered office of the Company at Unit 3213, 32nd Floor Cosco Tower, 183 Queen’s Road Central, Hong Kong, as soon as practicable and in any event not less than 48 hours before the time appointed for the holding of the EGM. Completion and return of a form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

12. RECOMMENDATION

The Board is of the opinion that the resolutions proposed in this circular are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends that the Shareholders should vote in favour of all the resolutions to be proposed at the EGM.

13. BUSINESS OF THE GROUP

The Group is principally engaged in investment holding, property investment in Hong Kong and hotel operation in the PRC.

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LETTER FROM THE BOARD

14. RESPONSIBILITY STATEMENT

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

15. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the registered office of the Company at Unit 3213, 32nd Floor Cosco Tower, 183 Queen’s Road Central, Hong Kong during normal business hours from the date of this circular for the period up to 30 April, 2004 and at the EGM:

the Memorandum and Articles of Association of the Company;
the announcement of the Company dated 16 April, 2004;
the rules of the New Share Option Scheme; and
the Subscription Agreement

Yours faithfully, By order of the Board Fujian Holdings Limited Wang Xiaowu Chairman

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APPENDIX SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE NEW SHARE OPTION SCHEME

The following is a summary of the principal terms and conditions of the New Share Option Scheme proposed to be adopted by the Company:–

1. Who may join and purpose

The Board may, on any Business Day within 2 years commencing on the date of adoption of the New Share Option Scheme, at its discretion grant a right to subscribe (“ Option ”) for the shares of the Company (“ Shares ”) pursuant to the New Share Option Scheme to:–

(i) any executive, non-executive or independent non-executive director of any member of the Group or an entity in which the Group holds an interest (“ Affiliate ”);
(ii) any employee or officer (whether full time or part time) (“ Employee ”) of the Group or an Affiliate;
(iii) any shareholder of any member of the Group or an Affiliate who has, in the opinion of the Board, contributed or may contribute to the development and growth of the Group;
(iv) any customer, supplier, agent, partner, consultant or adviser of or contractor to any member of the Group or an Affiliate; or
(v) the trustee of any trust the beneficiary of which or any discretionary trust the discretionary objects of which include any director, Employee, customer, supplier, agent, partner, consultant or adviser of or contractor to any member of the Group or an Affiliate; or
(vi) a company beneficially owned by any director, Employee, consultant, customer, supplier, agent, partner or adviser of or contractor to any member of the Group or an Affiliate.

In order for a person to satisfy the Board that he is qualified to be (or, where applicable, continues to qualify to be) an eligible participant who satisfies the eligibility criteria set out in the New Share Option Scheme (“ Eligible Participant ”), such person shall provide all such information as the Board may request for the purpose of assessing his eligibility (or continuing eligibility). The Board shall (subject to the provisions of the New Share Option Scheme) have absolute discretion as to whether or not to grant Options to any particular Eligible Participant.

The purpose of the New Share Option Scheme is to recognise and acknowledge the contributions that the Eligible Participants have made or may make to the Group. Apart from the discretion to determine the exercise price, the Directors will have an absolute discretion to impose performance targets on the Option holders before any Option can be exercised taking into account objectives of the New Share Option Scheme.

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SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE NEW SHARE OPTION SCHEME

APPENDIX

2. Price of Shares

The subscription price shall, subject to the adjustment as stated in the New Share Option Scheme, be a price determined by the Board at the time of grant of the relevant Option and notified to each Eligible Participant who accepts the offer by the Company of the granting of the Option (“ Grantee ”) and shall not be less than the highest of (a) the closing price of a Share as stated in the Stock Exchange’s daily quotations sheet on the date of grant of the relevant Option, which must be a Business Day; and (b) an amount equivalent to the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet for the five Business Days immediately preceding the date of grant of the relevant Option and (c) the nominal value of a Share.

3. Maximum number of Shares available for subscription

(i) Subject to paragraphs (ii), (iii) and (iv) below, the maximum number of Shares in respect of which Options may be granted under the New Share Option Scheme and any other schemes involving the issue or grant of options or similar rights over Shares or other securities by the Company (excluding those options that have already been granted by the Company prior to the date of approval of the New Share Option Scheme (“ Scheme Mandate Limit ”) shall not, in aggregate, exceed 10% of the Shares in issue as at the date of passing the relevant resolution adopting the New Share Option Scheme unless approved by the Shareholders pursuant to paragraphs (ii) and (iii) below.
Note: As at the Latest Practicable Date, the Company had an aggregate of 5,199,101,516 issued Shares of HK$0.0125 each. Assuming that there will be not be any issue of new Shares or repurchase of issued Shares from the Latest Practicable Date to the date of the EGM, on which the New Shares Option Scheme is expected to be adopted by the Shareholders and that the 898,484 Shares has been issued pursuant to the subscription before the date of the EGM, the total number of shares in issue as at the date of the EGM will be 5,200,000,000 Shares and then the Scheme Mandate Limit shall be 520,000,000 Shares.
(ii) Subject to paragraphs (iii) and (iv), the Scheme Mandate Limited may be refreshed by the Shareholders in general meeting from time to time provided always that the Scheme Mandate Limit so refreshed must not exceed 10% of the Shares in issue as at the date of approval of such refreshment by the Shareholders in general meeting. Upon such refreshment, all Options granted under the New Share Option Scheme and any other share options schemes of the Company (including those exercised, outstanding, cancelled, lapsed in accordance with the terms of the New Share Option Scheme or any other share option schemes of the Company) prior to the approval of such refreshment shall not be counted for the purpose of calculating whether the refreshed Scheme Mandate Limit has been exceeded. A circular must also be sent to the Shareholders containing such information from time to time as required by the Stock Exchange.
(iii) Subject to paragraph (iv) below, the Board may seek separate Shareholders’ approval in general meeting to grant Options beyond the Scheme Mandate Limit (whether or not refreshed) provided that the Options in excess of the Scheme Mandate Limit (whether or not refreshed) are granted only to the Eligible Participants specified by the Company before such approval is sought and the Company must issue a circular to the Shareholders containing such information from time to time required by the Listing Rules in relation to any such proposed grant to such Eligible Participants.

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APPENDIX SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE NEW SHARE OPTION SCHEME

(iv) The maximum number of Shares which may be issued upon the exercise of all outstanding Options granted and yet to be exercised under the New Share Option Scheme and any other schemes involving the issue or grant of options or similar rights over Shares or other securities by the Company must not, in aggregate, exceed 30% of the Shares in issue from time to time.

4. Maximum entitlement of each participant

Unless approved by the Shareholders, no Option may be granted to any Eligible Participants which if exercised in full would result in the total number of Shares issued and to be issued upon exercise of the Options already granted or to be granted to such Eligible Participant under the New Share Option Scheme (including exercised, cancelled and outstanding Options) in the 12-month period up to and including the date of such new grant exceeding 1% of the issued share capital of the Company as at the date of such new grant.

5. Grant of Options to Directors, chief executive or substantial shareholders of the Company or any of their respective Associates

Any grant of the Options to a connected person of the company (which shall have the meaning ascribed to it under the Listing Rules), must be approved by the independent non-executive Directors (excluding any independent non-executive Director who is the Grantee of the Options).

Where any grant of Options to a substantial shareholder (which shall have the meaning ascribed to it under the Listing Rules) or an independent non-executive Director or any of their respective associates (which shall have the meaning ascribed to it under the Listing Rules), which will result in the total number of Shares issued and to be issued upon exercise of all Options already granted and to be granted (including Options exercised, cancelled and outstanding) under the New Share Option Scheme and any other schemes of the Company to such person in the 12-month period immediately preceding and including the date of such grant to such person:–

(i) exceeding 0.1% of the Shares in issue as at the date of such grant; and
(ii) having an aggregate value, based on the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the date of each grant of option, in excess of HK$5 million;

any further proposed grant of Options must be subject to the approval by the Shareholders at general meetings taken on a poll. All connected persons (which shall have the meaning ascribed to it under the Listing Rules) of the Company must abstain from voting in such general meeting.

A circular must be despatched to the Shareholders explaining the proposed grant, disclosing the number and terms of the Options to be granted and containing a recommendation from the independent Directors on whether or not to vote in favour of the proposed grant and including all the information as required under the Listing Rules.

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APPENDIX SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE NEW SHARE OPTION SCHEME

6. Time of exercise of Option

An Option may be exercised in accordance with the terms of the New Share Option Scheme at any time during the period to be notified by the Board to each Grantee which the Board may in its absolute discretion determine, save that such period shall not be more than 10 years from the Business Day on which the Option is deemed to have been granted and accepted. A consideration of HK$1 will be payable upon acceptance of the offer. There is no minimum period for which an Option must be held before it can be exercised.

7. Performance target

Unless the Board otherwise determined and stated in the offer of grant of Options to the grantee, a grantee is not required to achieve any performance target before any granted Options can be exercised.

8. Restrictions on the time of grant of options

The Board shall not offer the grant of an Option to any Eligible Participant (i) after a price sensitive event has occurred or a price sensitive matter has been the subject of a decision, until such price sensitive information has been announced pursuant to the relevant requirements of the Listing Rules; or (ii) within the period commencing one month (or as the Listing Rules may require from time to time) immediately preceding the earlier of the date of the board meeting for the approval of the Company’s interim or annual results and the deadline for the Company to publish its interim or annual results announcement under the Listing Rules, until such information has been announced pursuant to the relevant requirements of the Listing Rules.

9. Rights are personal to grantee

An Option shall be personal to the Grantee and shall not be assignable and no Grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest in favour of any third party over or in relation to any Option, failing which the Option (to the extent it has not already been exercised) shall lapse.

10. Rights on death

In the event of death of the Grantee (being an individual) before exercising the Option in full, his legal personal representatives may exercise the Option up to the Grantee’s entitlement (to the extent exercisable as at the date of his death and not exercised) within the period of 12 months following his death or such longer period as the Board may determine.

11. Rights on ceasing employment

(i) Subject to paragraphs (ii) and (iv) below, in the event of the Grantee who is an Employee of the Group or an Affiliate ceasing to be an Employee of any member of the Group or an Affiliate for any reason other than his death or the termination of his employment on one or more of the grounds that he has been guilty of serious misconduct, or has become insolvent

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APPENDIX SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE NEW SHARE OPTION SCHEME

or is unable or has no reasonable prospects of being able to pay his debts within the meaning of the Bankruptcy Ordinance (Chapter 6 of the Laws of Hong Kong) or has made any arrangements or composition with his creditors generally, or has been convicted of any criminal offence involving his integrity or honesty, the Option (to the extent exercisable as at the date of the relevant event and not exercised) shall lapse on the date of cessation of such employment and not be exercisable unless the Board otherwise determines in which case the Option (to the extent exercisable as at the date of the relevant event and not exercised) shall be exercisable within such period as the Board may determine.

(ii) Subject to paragraph (iv), where the Grantee is an Employee of any member of the Group or an Affiliate at the time of the grant of the relevant Option(s), in the event that such Grantee shall cease to be an Employee of any member of the Group or an Affiliate but becomes, or continues to be, a director, consultant, customer, supplier, agent, partner, shareholder, or adviser of or contractor to any member of the Group or an Affiliate, then the Option (to the extent exercisable as at the date on which such Grantee ceases to be an Employee of any member of the Group or an Affiliate and not exercised) shall lapse on the date of cessation of such employment and not be exercisable unless the Board otherwise determines in which case the Option (to the extent exercisable at the date of the relevant event and not exercised) shall be exercisable within such period as the Board may determine.
(iii) Subject to paragraph (iv), in the event of the Grantee, who is a director, consultant, customer, supplier, agent, partner, shareholder or adviser of or contractor to any member of the Group or an Affiliate but not an Employee of any member of the Group or an Affiliate, ceasing to be a director, consultant, customer, supplier, agent, partner, shareholder or adviser of or contractor to any member of the Group or an Affiliate (as the case may be) for any reason other than his death (in the case of a Grantee being an individual), the Option (to the extent exercisable as at the date of such cessation and not exercised) shall lapse on the date of the relevant event unless the Board otherwise determines in which case the Option (to the extent exercisable at the date of the relevant event and not exercised) shall be exercisable within such period as the board may determine.
(iv) In the event of the Grantee, who is a director or Employee of any member of the Group or an Affiliate, ceasing to be a director or Employee of any member of the Group or an Affiliate but becomes, or continues to be, a director or Employee of any other member of the FIDC Group, the Option shall only lapse on the date the Grantee ceases to be a director or Employee of such member of the FIDC Group and not be exercisable unless the Board otherwise determines in which case the Option (to the extent exercisable as at the date of the relevant event and not exercised) shall be exercisable within such period as the Board may determine.

12. Effect of alterations to capital

(i) In the event of any alteration in the capital structure of the Company and such event arises from a capitalisation issue, rights issue, consolidation or subdivision of Shares or reduction of capital of the Company, to the extent that the Option is unexercised, corresponding

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APPENDIX SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE NEW SHARE OPTION SCHEME

alterations (if any) shall be made in (i) the number or nominal amount of Shares subject to the Option so far as unexercised; and/or (ii) the exercise price; and/or (iii) the maximum number of Shares referred to in paragraph 3(i) above.

(ii) Any adjustments must give a participant the same proportion of the equity capital as that to which that person was previously entitled, but no such adjustments may be made to the extent that a Share would be issued at less than its nominal value. The issue of securities as consideration in a transaction may not be regarded as a circumstance requiring adjustment. In respect of any such adjustments, other than any made on a capitalisation issue, an independent financial adviser or the Company’s auditors must confirm to the Directors in writing that the adjustments satisfy the requirements set out in this paragraph.

13. Rights on a general offer

If a general offer (whether by way of takeover offer or scheme of arrangement or otherwise in like manner) is made to all the holders of Shares (or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in concert with the offeror) and such offer becomes or is declared unconditional (within the meaning of the Hong Kong Code on Takeovers and Mergers) prior to the expiry date of the relevant Option, the Grantee shall be entitled to exercise the Option (to the extent exercisable as at the date on which the general offer becomes or is declared unconditional and not exercised) in full or in part at any time within such period as shall be notified by the Company.

14. Rights on winding-up

If notice is duly given by the Company to Shareholders to convene a general meeting for the purpose of considering and, if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall forthwith give notice thereof to the Grantee and the Grantee may, by notice in writing to the Company accompanied by the remittance for the total exercise price payable in respect of the exercise of the relevant Option (such notice to be received by the Company not later than 3 Business Days (excluding any period(s) of closure of the Company’s share registers) prior to the proposed meeting) exercise the Option (to the extent exercisable as at the date of the notice to the Grantee and not exercised) either in full or in part and the Company shall, as soon as possible and in any event no later than the Business Day (excluding any period(s) of closure of the Company’s share registers) immediately prior to the date of the proposed meeting, allot and issue such number of Shares to the Grantee which fall to be issued on such exercise, credited as fully paid and registered the Grantee as holder thereof. If such resolution is duly passed, all Options shall, to the extent that they have not been exercised, thereupon lapse and not be exercisable.

15. Rights on a compromise or arrangement

In the event of a compromise or arrangement between the Company and its shareholders or creditors being proposed in connection with a scheme for the reconstruction or amalgamation of the Company, the Company shall give notice thereof to all Grantees on the same date as it despatches notice of the meeting to its shareholders or creditors to consider such a compromise or arrangement and thereupon the Grantees may, by notice in writing to the Company accompanied by the remittance for the

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APPENDIX SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE NEW SHARE OPTION SCHEME

total exercise price payable in respect of the exercise of the relevant Option (such notice to be received by the Company not later than 3 Business Days (excluding any period(s) of closure of the Company’s share registers) prior to the proposed meeting) exercise the Option (to the extent exercisable as at the date of the notice to the Grantee and not exercised) either in full or in part and the Company shall, as soon as possible and in any event not later than the Business Day (excluding any period(s) of closure of the Company’s share registers) immediately prior to the date of the proposed meeting, allot and issue such number of Shares to the Grantee which fall to be issued on such exercise, credited as fully paid and registered the Grantee as holder thereof. Upon such compromise or arrangement becoming effective, all Options shall lapse except insofar as exercised under this paragraph.

16. Ranking of Shares

The Shares to be allotted upon the exercise of any Option shall be subject to all the provisions of the articles of association of the Company in force as at the date of allotment and shall rank pari passu in all respects with the existing fully paid Shares in issue on such date of allotment and accordingly shall entitle the holders to participate in all dividends or other distributions paid or made on or after such date of allotment other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefore shall be before the date of allotment. A Share allotted upon the exercise of an Option shall not carry voting rights until the name of the Grantee has been duly entered into the register of members of the Company as the holder thereof.

17. Period of the New Share Option Scheme

The New Share Option Scheme shall be valid and effective for a period of 2 years commencing on the date of adoption of the New Share Option Scheme, after which no further Options will be granted but the provisions of the New Share Option Scheme shall remain in full force and effect to the extent necessary to give effect to the exercise of any Options granted prior thereto or otherwise as may be required in accordance with the provisions of the New Share Option Scheme

18. Alteration

The New Share Option Scheme may be altered in any respect by resolution of the Board except that the following matters shall require Shareholders’ approval at general meeting:–

(i) the provisions of the New Share Option Scheme relating to the matters set out in Rule 17.03 of the Listing Rules cannot be altered to the advantage of the Eligible Participant;
(ii) any alterations to the terms and conditions of the New Share Option Scheme which are of a material nature, except where such alterations take effect automatically under the existing terms of the New Share Option Scheme; and
(iii) any change to the authority of the Board or administrator of the New Share Option Scheme in relation to any alternation to the terms of the New Share Option Scheme,

provided always that the amended terms of the New Share Option Scheme must continue to comply with the relevant provisions of the Listing Rules as may be amended from time to time.

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APPENDIX SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE NEW SHARE OPTION SCHEME

19. Lapse of Option

An Option (to the extent such Option has not already been exercised) shall lapse and not be exercisable on the earliest of:–

(i) the expiry of the exercise period of the Options;
(ii) the expiry of any of the periods referred to in paragraphs 9 and 10 above;
(iii) the expiry of the period referred to in paragraph 12 above;
(iv) the date of the commencement of the winding-up of the Company in respect of the situation contemplated in paragraph 13 above;
(v) the date when the proposed compromise or arrangement becomes effective in respect of the situation contemplated in paragraph 14 above;
(vi) the date on which a situation as contemplated under paragraph 8 arises;
(vii) the date on which the Grantee commits a breach of any terms or conditions attached to the grant of the Option, unless otherwise resolved to the contrary by the Board; or
(viii) the date on which the Board resolves that the grantee has failed or otherwise is or has been unable to meet the continuing eligibility criteria as may be prescribed pursuant to the New Share Option Scheme.

20. Cancellation of Options

The Board shall have the absolute discretion to cancel any Options granted at any time at the request of the Grantee provided that where an Option is cancelled and a new Option is proposed to be issued to the same Grantee, the issue of such new Option may only be made with available Shares in the authorised but unissued share capital of the Company, and available and ungranted Options within the limits referred to in paragraph 3 above (and for the purpose of calculating such limits, all cancelled Options shall be treated as granted Options).

21. Termination of the New Share Option Scheme

The Company may by resolution in general meeting or the Board may at any time terminate the New Share Option Scheme and in such event, no further Option will be offered but the provisions of the New Share Option Scheme shall remain in force to the extent necessary to give effect to the exercise of any Option granted prior thereto or otherwise as may be required in accordance with the provisions of the New Share Option Scheme. Options granted prior to such termination but not yet exercised at the time of termination shall continue to be valid and exercisable in accordance with the New Share Option Scheme.

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APPENDIX SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE NEW SHARE OPTION SCHEME

22. Conditions of the New Share Option Scheme

(i) The New Share Option Scheme shall take effect subject to the passing of the necessary resolution to adopt the New Share Option Scheme by the Shareholders in an extraordinary general meeting of the Company and is conditional upon the Stock Exchange granting approval for the listing of and permission to deal in any Shares to be issued and allotted by the Company pursuant to the exercise of Options in accordance with the terms and conditions of the New Share Option Scheme.
(ii) Reference in (i) above to the Stock Exchange granting the approval for listing of and permission to deal in any Shares shall include where such approval for listing and permission to deal in any Shares are granted subject to conditions.

23. Disclosure in annual and interim reports

The Company shall disclose details of the New Share Option Scheme in its annual and interim reports in compliance with the requirements of the Listing Rules in force from time to time.

24. Administration of the New Share Option Scheme

The New Share Option Scheme shall be subject to the administration of the Board whose decision (save as otherwise provided in the Share Option Scheme) shall be final and binding on all parties.

25. Present status of the New Share Option Scheme

As at the date of this circular, no Option has been granted or agreed to be granted under the New Share Option Scheme.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [67 x 72] intentionally omitted <==

FUJIAN HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability)

(Stock Code: 181)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“ EGM ”) of Fujian Holdings Limited (the “ Company ”) will be held at 10:00a.m. on Monday, 10 May, 2004 at The Boardroom, 1st Floor, South Pacific Hotel, 23 Morrison Hill Road, Wanchai, Hong Kong, for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolutions:

ORDINARY RESOLUTIONS

“ THAT the authorised capital of the Company be and is hereby increased from HK$379,138,058.71 to HK$380,000,000.”
“ THAT , subject to the ordinary resolution numbered 1 set out in the notice of extraordinary general meeting of the Company dated 16 April, 2004 of which this resolution forms part (the “ Notice ”) being duly passed and conditional upon the Listing Committee of the Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) granting the approval of the listing of, and permission to deal in, the Consolidated Shares (as defined below), with effect from the business day in Hong Kong immediately following the passing of this resolution,
(a) every ten issued and unissued shares of HK$0.0125 each in the capital of the Company (“ Shares ”) be consolidated into one Share of HK$0.125 each ( “ Consolidated Share ”);
(b) all of the Consolidated Shares resulting from such consolidation shall rank pari passu in all respect with each other and have the rights and privileges and be subject to the restrictions contained in the articles of association of the Company; and
(c) any Director be and is hereby authorised generally to do all such acts, deeds and things as he may consider appropriate to effect and implement any of the foregoing.”
“ THAT , subject to and conditional upon the Listing Committee of the Stock Exchange granting the approval of the listing of, and permission to deal in, such number of shares of the Company which may fall to be allotted and issued pursuant to the exercise of options which may be granted under the share option scheme of the Company (the “ New Scheme ”) up to 10% of the shares in the Company in issue as at the date on which this resolution is

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NOTICE OF EXTRAORDINARY GENERAL MEETING

passed, the terms of which are set out in the printed document marked “A” now produced to the EGM and signed by the Chairman for the purpose of identification,

(a) the operation of the share option scheme (“ Existing Scheme ”) adopted by the Company by ordinary resolution of its shareholders on 22 January 1997 be terminated and that no further options will be granted under the Existing Scheme but in all other respects the provisions of the Existing Scheme shall remain in force to the extent necessary to give effect to the exercise of any options granted prior thereto or otherwise as may be required in accordance with the provisions of the Existing Scheme and options granted, if any, prior to such termination shall continue to be valid and exercisable in accordance with the Existing Scheme; and
(b) the rules of the New Scheme be and are hereby approved and adopted and that any Director be and is hereby authorised to do all such acts and to enter into such transactions, arrangements and agreements as may be necessary or expedient in order to give full effect to the New Scheme.”
“ THAT , conditional upon, and with effect from the date on which ordinary resolution numbered 2 set out in the Notice becoming unconditional and effective,
(a) the general mandate granted to the Directors to exercise the powers of the Company generally and conditionally to allot, issue and otherwise deal with the unissued shares of the company and to make or grant offers, agreements and options which might require the exercise of such powers as approved by the shareholders of the Company at the extraordinary general meeting of the Company held on 3 November, 2003 to the extent not already exercised be and is hereby revoked (without prejudice to any valid exercise of such general mandate prior to the passing of this resolution);
(b) subject to paragraph (d) of this resolution, the exercise by the Directors during the Relevant Period (as defined in paragraph (e) of this resolution) of all the powers to allot, issue and otherwise deal with the shares of the Company and to make or grant offers, agreements and options which would or might require the exercise of such powers be and is hereby generally and unconditionally approved;
(c) the approval in paragraph (b) of this resolution shall authorise the Directors during the Relevant Period (as defined in paragraph (e) of this resolution) 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 (as defined in paragraph (e) of this resolution);
(d) the aggregate nominal amount of share capital of the Company 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 pursuant to the approval in paragraph (b) of this resolution, otherwise than pursuant to (i) a Rights Issue (as defined in paragraph (e) of this resolution); (ii) an issue of ordinary shares of the Company upon the exercise of rights of subscription or

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NOTICE OF EXTRAORDINARY GENERAL MEETING

conversion into ordinary shares of the Company; (iii) an issue of ordinary shares of the Company by way of scrip dividend pursuant to the memorandum and articles of association of the Company from time to time; or (iv) the exercise of any option 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 its subsidiaries, of options to subscribe for, or rights to acquire, shares of the Company, shall not in total exceed 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of the passing of this resolution; and

(e) for the purpose 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;
(ii) the revocation or variation of the authority given under this resolution by ordinary resolution of the shareholders in general meeting; or
(iii) the expiration of the period within which the next annual general meeting of the Company is required by the memorandum or articles of association of the Company, or any applicable laws, to be held; and

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

SPECIAL RESOLUTION

“ THAT , conditional upon approval of ordinary resolution numbered 2 set out in the Notice and conditional upon the Listing Committee of the Stock Exchange granting the approval of the listing of, and permission to deal in, the Shares of the Company resulting from the consolidation of existing ordinary shares of HK$0.0125 each in the share capital of the Company on the basis of every ten issued and unissued Shares into one Consolidated Share (“ Share Consolidation ”) and in compliance with the Companies Ordinance (Chapter 32 of the Laws of Hong Kong),

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NOTICE OF EXTRAORDINARY GENERAL MEETING

(a) conditional upon completion of the Share Consolidation, Article 3 of the Company’s existing articles of association be amended by adding the following sentence at the end of paragraph (a) of Article 3:

“Pursuant to various resolutions passed on 10 May, 2004, the share capital of the Company is divided into shares of HK$0.125 each.”; and

(b) any Director be and is hereby authorised generally to do all such acts, deeds and things as he may consider appropriate to effect and implement any of the foregoing.”

Yours faithfully, By order of the Board

Fujian Holdings Limited Wang Xiaowu Chairman

Hong Kong, 16 April, 2004

Notes:

A member of the Company entitled to attend and vote at the EGM by the above notice is entitled to appoint another person as his proxy to attend and vote on his behalf. A member who is the holder of two or more shares of the Company may appoint more than one proxy to attend and vote on his behalf at the EGM. A proxy need not be a member of the Company.
In order to be valid, the form of proxy, together with any power of attorney or other authority (if any) under which it is signed or a certified copy of such power of attorney or other authority, MUST be deposited at the registered office of the Company at Unit 3213, 32nd Floor Cosco Tower, 183 Queen’s Road Central, Hong Kong, not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude members from attending and voting in person at the EGM or any adjournment thereof should they so wish.
Where there are joint holders of any share, any one of such persons may vote at the meeting either personally or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at the meeting personally or by proxy, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of such joint holding.
A form of proxy for use at the EGM is enclosed herewith.

– 28 –

AI assistant

Fujian Holdings Limited — Proxy Solicitation & Information Statement 2004

49013_rns_2004-04-16_fe59436a-6f14-43df-b994-e20f4f984965.pdf

FUJIAN HOLDINGS LIMITED

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL, SUBSCRIPTION OF SHARES,

SHARE CONSOLIDATION, CHANGE OF BOARD LOT SIZE, AMENDMENT TO ARTICLES OF ASSOCIATION, TERMINATION OF EXISTING SHARE OPTION SCHEME,

ADOPTION OF NEW SHARE OPTION SCHEME

AND RENEWAL OF GENERAL MANDATE TO ISSUE SHARES

EXPECTED TIMETABLE

DEFINITIONS

DEFINITIONS

FUJIAN HOLDINGS LIMITED

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL, SUBSCRIPTION OF SHARES,

1. INTRODUCTION

LETTER FROM THE BOARD

2. INCREASE IN AUTHORISED SHARE CAPITAL

3. THE SUBSCRIPTION

THE SUBSCRIPTION AGREEMENT

Date

Parties

The Subscription

The consideration

Conditions

Proceeds of the Subscription

LETTER FROM THE BOARD

Other terms of the Subscription Agreement

Reasons for the Subscription

Shareholding structure of the Company before and after the Subscription

Completion of the Subscription

Application for listing

4. SHARE CONSOLIDATION

Details of the share capital of the Company before and after the Share Consolidation

Reasons for the Share Consolidation

Effect of the Share Consolidation

Conditions to the Share Consolidation

Application for listing

5. AMENDMENT TO ARTICLES OF ASSOCIATION

6. CHANGE OF BOARD LOT SIZE

7. ODD LOTS ARRANGEMENT AND FRACTIONAL ENTITLEMENT OF THE CONSOLIDATED SHARES AND MATCHING SERVICES

Holders of Consolidated Shares in odd lots should note that successful matching of odd lots is not guaranteed.

8. PARALLEL TRADING ARRANGEMENTS AND FREE EXCHANGE OF NEW SHARE CERTIFICATES

LETTER FROM THE BOARD

9. TERMINATION OF EXISTING SHARE OPTION SCHEME AND ADOPTION OF NEW SHARE OPTION SCHEME

LETTER FROM THE BOARD

10. RENEWAL OF GENERAL MANDATE TO ISSUE SHARES

LETTER FROM THE BOARD

11. THE EGM

12. RECOMMENDATION

13. BUSINESS OF THE GROUP

14. RESPONSIBILITY STATEMENT

15. DOCUMENTS AVAILABLE FOR INSPECTION

1. Who may join and purpose

APPENDIX

2. Price of Shares

3. Maximum number of Shares available for subscription

4. Maximum entitlement of each participant

5. Grant of Options to Directors, chief executive or substantial shareholders of the Company or any of their respective Associates

6. Time of exercise of Option

7. Performance target

8. Restrictions on the time of grant of options

9. Rights are personal to grantee

10. Rights on death

11. Rights on ceasing employment

12. Effect of alterations to capital

13. Rights on a general offer

14. Rights on winding-up

15. Rights on a compromise or arrangement

16. Ranking of Shares

17. Period of the New Share Option Scheme

18. Alteration

19. Lapse of Option

20. Cancellation of Options

21. Termination of the New Share Option Scheme

22. Conditions of the New Share Option Scheme

23. Disclosure in annual and interim reports

24. Administration of the New Share Option Scheme

25. Present status of the New Share Option Scheme

FUJIAN HOLDINGS LIMITED

NOTICE OF EXTRAORDINARY GENERAL MEETING

ORDINARY RESOLUTIONS

Fujian Holdings Limited Proxy Solicitation & Information Statement 2004