GC Construction Holdings Limited — Proxy Solicitation & Information Statement 2004

May 3, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold all your shares of Fushan Holdings Limited , you should hand this circular to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

福 山 控 股 有 限 公 司 FUSHAN HOLDINGS LIMITED (Incorporated in Hong Kong with limited liability under the Hong Kong Companies Ordinance) (Stock code: 639)

PROPOSALS FOR GRANT OF GENERAL MANDATES TO ISSUE AND REPURCHASE SECURITIES AND AMENDMENTS TO ARTICLES OF ASSOCIATION

This circular is despatched together with the 2003 Annual Report of the Company.

A notice convening the Annual General Meeting of Fushan Holdings Limited to be held at the Function Room, Basement, Luk Kwok Hotel, 72 Gloucester Road, Wanchai, Hong Kong on Friday, 18 June 2004 at 3:00 p.m. is set out on pages 6 to 12 of the 2003 Annual Report of the Company. Whether or not you are able to attend the meeting, please complete and return the proxy form in accordance with the instructions printed thereon to the Company’s share registrars, Tengis Limited at G/F, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible but in any event not later than 3:00 p.m. on 16 June 2004. Completion of the proxy form will not preclude Shareholders from attending and voting at the meeting in person should they so wish.

Hong Kong, 30 April 2004

DEFINITIONS

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

“AGM”	The annual general meeting of the Company to be held at
	the Function Room, Luk Kwok Hotel, Basement, 72
	Gloucester Road, Wanchai, Hong Kong on Friday, 18 June
	2004 at 3:00 p.m.
“2003 Annual Report”	the annual report of the Company for the financial year
	ended 31 December 2003
“Articles”	The articles of association of the Company
“associate(s)”	has the meaning ascribed to it under rule 1.01 of the Listing
	Rules in relation to any director, chief executive, substantial
	shareholders or management shareholders (in each case
	being an individual)
“Board”	the board of Directors of the Company for the time being
	or a duly authorized committee thereof
“business day”	a day on which the Stock Exchange is open for the business
	of dealing in securities
“Company”	Fushan Holdings Limited, a company incorporated in Hong
	Kong with limited liability whose shares are listed on the
	Stock Exchange
“connected person(s)”	has the meaning ascribed to it under rule 1.01 of the Listing
	Rules
“Directors”	directors of the Company for the time being
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Issue Mandate”	the general and unconditional mandate proposed under
	ordinary resolution numbered 4A in the notice of the AGM
	set out on pages 6 to 12 of the 2003 Annual Report to be
	granted to the Directors to issue and allot securities of the
	Company, the details of which are described on page 3 of
	this circular
“Latest Practicable Date”	13 April 2004, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained therein

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DEFINITIONS

“Listing Committee” the listing committee of the directors of the Stock Exchange “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “Repurchase Mandate” the general and unconditional mandate proposed under ordinary resolution numbered 4B in the notice of AGM set out on pages 6 to 12 of the 2003 Annual Report to be granted to the Directors to repurchase securities of the Company, the details of which are described on page 4 of this circular

“Share(s)” ordinary share(s) of HK$0.10 each (or such other amount as such ordinary share(s) may be divided or consolidated or converted into) in the capital of the Company “Shareholder(s)” registered holder(s) for the time being of Shares issued “Share Repurchase Rules” the relevant rules set out in the Listing Rules to regulate the repurchase by companies with primary listing on the Stock Exchange of their own securities on the Stock Exchange “Stock Exchange” The Stock Exchange of Hong Kong Limited “Substantial Shareholders” has the meaning ascribed to it under rule 1.01 of the Listing Rules “Takeover Code” the Hong Kong Code on Takeovers and Mergers “$” Hong Kong dollars “%” per cent

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LETTER FROM THE BOARD

福 山 控 股 有 限 公 司 FUSHAN HOLDINGS LIMITED

(Incorporated in Hong Kong with limited liability under the Hong Kong Companies Ordinance)

Directors:

Mr. Wong Lik Ping (Chairman) Mr. So Kwok Hoo Mr. Li King Luk Mr. Kee Wah Sze Mr. Ng Ching Wo

Registered Office:

12th Floor, Kwan Chart Tower No. 6 Tonnochy Road Wanchai Hong Kong

• Independent Non-Executive Directors

26 April 2004

To the Shareholders

Dear Sir or Madam,

PROPOSALS FOR GRANT OF GENERAL MANDATES TO ISSUE AND REPURCHASE SECURITIES AND AMENDMENTS TO ARTICLES OF ASSOCIATION

1. INTRODUCTION

At the AGM, ordinary resolutions will be proposed to grant to the Directors general and unconditional mandates to issue and repurchase securities of the Company since the previous general mandates granted on 20 June 2003 to the Directors will expire at the AGM and a special resolution will be proposed to amend the Articles to align the changes that will be required under the revised Listing Rules effective on 31 March 2004.

The purpose of this circular is to provide you with information regarding the proposed resolutions relating to the granting of the general mandates and amendment to the Articles to enable you to make an informed voting decision.

2. GENERAL MANDATES TO ISSUE SECURITIES

At the AGM, an ordinary resolution will be proposed to grant the Directors a general and unconditional mandate to allot, issue and deal with new securities of the Company up to a maximum of 20% of the aggregate nominal value of the issued share capital of the Company as at the date of passing such resolution. Another ordinary resolution will be proposed to increase the aforesaid 20% limit by the amount of any securities of the Company repurchased by the Company under the authority of the Repurchase Mandate up to a maximum of 10% of the aggregate nominal value of the issued share capital of the Company as at the date of passing of such resolution.

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LETTER FROM THE BOARD

3. GENERAL MANDATE TO REPURCHASE SECURITIES

At the AGM, an ordinary resolution will be proposed that the Directors be granted the Repurchase Mandate to exercise all powers of the Company to repurchase securities not exceeding 10% of the aggregate nominal value of the issued share capital of the Company as at the date of passing of such resolution. The Company’s authority is restricted to the purchase of the Company’s securities on the Stock Exchange and otherwise in accordance with the Listing Rules.

In accordance with the Share Repurchase Rules, which regulate the repurchase by companies with a primary listing on the Stock Exchange of their own securities, the Company is required to send to Shareholders an explanatory statement containing information reasonably necessary to enable Shareholders to make an informed decision on whether to vote for or against the resolution to approve the purchase by the Company of its own Shares. This explanatory statement is set out in the Appendix I to this circular.

4. AMENDMENTS TO THE ARTICLES

At the AGM, a special resolution will be proposed to amend the Articles. With the coming into force of the amendments to the Listing Rules on 31 March 2004, the Directors proposed to amend the Articles so as to align the changes that will be required under the revised Listing Rules. The full text of the proposed amendments to the Articles is set out in Resolution No. 5 of the notice of AGM. A summary of the proposed amendments is also set out in Appendix II of this circular.

5. ANNUAL GENERAL MEETING

Notice of the AGM to be held at the Function Room, Basement, Luk Kwok Hotel, 72 Gloucester Road, Wanchai, Hong Kong, is set out on pages 6 to 12 of the 2003 Annual Report which is despatched to Shareholders together with this circular. The resolutions relating to the Issue Mandate, the Repurchase Mandate and the amendments to the Articles are set out in full in the notice of AGM.

A form of proxy for the AGM is enclosed with the 2003 Annual Report. Whether or not you intend to be present at the meeting, you are requested to complete the proxy form and return it to the Company’s share registrars Tengis Limited at the address stated therein and in accordance with the instructions printed thereon not less than 48 hours before the time fixed for holding the meeting. The completion of a form of proxy will not preclude you from attending and voting at the said meeting in person.

6. RECOMMENDATION

The Directors believe that the granting of the Issue Mandate, the Repurchase Mandate and the amendments to the Articles are in the best interests of the Company and the Shareholders as a whole and recommend you to vote in favor of such resolutions at the AGM.

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LETTER FROM THE BOARD

7. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. 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.

Yours faithfully By Order of the Board So Kwok Hoo Executive Director

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EXPLANATORY STATEMENT ON SHARE REPURCHASE

APPENDIX I

This appendix serves as an explanatory statement, as required by the Share Repurchase Rules, to provide requisite information to you for your consideration of the proposal to permit the repurchase of securities of the Company up to a maximum of 10 percent of the issued share capital of the Company as at the date of passing resolution number 4B (“Ordinary Resolution”) referred to in the notice convening the AGM dated 14 April 2004.

1. SHAREHOLDERS’ APPROVAL

The Share Repurchase Rules provide that all on-market share repurchase made by the Company with its primary listing on the Stock Exchange must be of fully paid up shares and approved in advance by an ordinary resolution, either by way of a general mandate or by special approval in relation to specific transactions.

2. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 2,080,800,000 Shares.

Subject to the passing of the Ordinary Resolution and on the basis that no further Shares are issued or repurchased prior to the AGM, the Company would be allowed to repurchase a maximum of 208,080,000 Shares.

3. REASONS FOR REPURCHASE

The Directors believe that the Repurchase Mandate is in the best interests of the Company and the Shareholders. Such repurchase may, depending on market conditions and funding arrangement at the time, lead to an enhancement of the net assets and/or earnings per Share and will only be made when the Directors believe that such a repurchase will benefit the Company and the Shareholders.

4. FUNDING OF REPURCHASES

In repurchasing securities, the Company may only apply funds legally available for such purpose in accordance with its Memorandum and Articles and the Laws of Hong Kong.

The Directors do consider that there may be impact on the working capital of the Company as compared with the position disclosed in the Company’s audited accounts for the year ended 31 December 2003, if any mandate to repurchase securities is exercised in full during the proposed repurchase period. However, the Directors do not propose to exercise the Repurchase Mandate to such an extent as would, in any circumstances, have a material adverse effect on the working capital which in the opinion of the Directors of the Company is from time to time appropriate for the Company to do so.

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EXPLANATORY STATEMENT ON SHARE REPURCHASE

APPENDIX I

5. SHARE PRICES

The highest and lowest prices for the Shares having traded on the Stock Exchange in each of the previous twelve months immediately prior to the Latest Practicable Date were as follows:–

		Shares
	Highest		Lowest
	HK$		HK$
2003:
April	0.355		0.290
May	0.330		0.280
June	0.300		0.255
July	0.270		0.200
August	0.340		0.235
September	0.380		0.280
October	0.350		0.250
November	0.280		0.240
December	0.280		0.245
2004:
January	0.405		0.235
February	0.365		0.300
March	0.380		0.246

6. DISCLOSURE OF INTERESTS

The Directors have undertaken to the Stock Exchange to exercise the power of the Company to make repurchase pursuant to the Repurchase Mandate in accordance with the Listing Rules and the Laws of Hong Kong.

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates presently intend to sell Shares to the Company or its subsidiaries under the Repurchase Mandate in the event that the Repurchase Mandate is approved by its Shareholders.

The Company has not been notified by any connected persons of the Company that they have a present intention to sell any Shares to the Company or its subsidiaries, or that they have undertaken not to do so in the event that the Repurchase Mandate is approved by its Shareholders.

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EXPLANATORY STATEMENT ON SHARE REPURCHASE

APPENDIX I

7. TAKEOVER CODE

If on the exercise of the power to repurchase securities pursuant to the Repurchase Mandate, a shareholder’s proportionate interest in the voting rights of the Company will increase, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeover Code. As a result, a shareholder or group of shareholders acting in concert (within the meaning under the Takeover Code) could obtain or consolidate control of the Company and may become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeover Code.

As at the Latest Practicable Date, the Substantial Shareholders of the Company, China Merit Limited and Mr. Wong Lik Ping (who is the beneficial owner of the entire share capital of China Merit Limited), together hold a total of 55.78% of the Company’s issued share capital. They have indicated that they intend to vote in favour of the resolution in respect of the Repurchase Mandate at the AGM.

In the event that the Directors exercise in full the power to repurchase securities under the Repurchase Mandate and if there is no other change in the issued share capital of the Company, the deemed interests of Mr. Wong Lik Ping in the capital of the Company would be increased to approximately 61.98% and the shareholding of China Merit would be increased to approximately 57.14%. The Directors are not aware of any consequences which may arise under the Takeover Code as a result of any repurchases made under the Repurchase Mandate. The Company will not purchase Shares which would result in the number of Shares held by the public being reduced to less than 25%.

8. SHARES REPURCHASES MADE BY COMPANY

No purchases of shares have been made by the Company itself in the six months prior to the date of this circular, whether on the Stock Exchange or otherwise.

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SUMMARY OF THE PROPOSED AMENDMENTS TO ARTICLES

APPENDIX II

This appendix summarises the proposed amendments to the Articles in the special resolution number 5 in the notice convening the AGM dated 14 April 2004 to align the changes that will be required under the revised Listing rules effective on 31 March 2004.

• (a) adding the following new definition immediately after the definition of “Articles” or “these present” in Article 1:

• “ “associate” in relation to any Director, chief executive or substantial shareholder shall have the same meaning as defined under Rule 1.01 of the Listing Rules.”

• (b) adding the following new definition immediately after the definition of “in writing” or “written” in Article 1:

• “ “Listing Rules” means the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited.”

• (c) inserting in Article 68 the words “a poll is required under the Listing Rules or” in the 2nd line immediately after the word “unless”.

• (d) renumbering existing Article 73 to Article 73(A) and adding the following new Article 73 (B) immediately after renumbered Article 73(A):

• “73(B) where any member is, under the Listing Rules, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such member in contravention of such requirement or restriction shall not be counted.”

• (e) deleting Article 88 in its entirety and replacing it with the following:

• “88 No person other than a retiring Director shall, unless recommended by the Directors, be eligible for election to the office of Director at any general meeting, unless notice in writing by a member of the Company (not being the person to be proposed) entitled to attend and vote at the meeting for which such notice is given, of his intention to propose such person for election as a Director and also notice in writing signed by the person to be proposed of his willingness to be elected shall have been lodged with the Secretary in the period commencing no earlier than the day after the despatch of the notice of the general meeting appointed for such election and ending no later than seven days prior to the date of such meeting, provided that such period shall be at least seven days.”

• (f) deleting Article 111(C) in its entirety and replacing it with the following:

• “111(C) Subject to Article 111(D) hereof, a Director shall not vote on any board resolution approving any contract or arrangement or any other proposal in which he or any of his associates has a material interest nor shall he be counted in the quorum present at the meeting.”

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SUMMARY OF THE PROPOSED AMENDMENTS TO ARTICLES

APPENDIX II

• (g) deleting Article 111(D) in its entirety and replacing it with the following:

• “111(D) Provided that a Director has disclosed his interest or the interest of any of his associates as required by and subject to the provisions of the Ordinance and the Articles, he may vote on a board resolution in respect of any following contracts or arrangements in which he or any of his associates has a material interest:–

  • (i) the giving of any security or indemnity either:

    • (a) to the Director or his associate(s) in respect of money lent or obligations incurred or undertaken by him or any of them at the request of or for the benefit of the Company or any of its subsidiaries; or

    • (b) to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director or his associate(s) has himself/themselves assumed responsibility in whole or in part and whether alone or jointly under a guarantee or indemnity or by the giving of security;

  • (ii) any proposal concerning an offer of shares or debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase where the Director or his associate(s) is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer;

  • (iii) any proposal concerning any other company in which the Director or his associate(s) is/are interested only, whether directly or indirectly, as an officer or executive or shareholder or in which the Director or his associate(s) is/ are beneficially interested in shares of that company, provided that the Director, and any of his associates are, not in aggregate beneficially interested in 5% or more of the issued shares of any class of such company (or of any third company through which his interest or that of his associates is derived) or of the voting rights;

  • (iv) any proposal or arrangement concerning the benefit of employees of the Company or its subsidiaries including:

    • (a) the adoption, modification or operation of any employees’ share scheme or any share incentive or share option scheme under which the Director or his associate(s) may benefit; or

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SUMMARY OF THE PROPOSED AMENDMENTS TO ARTICLES

APPENDIX II

  - (b) the adoption, modification or operation of a pension fund or retirement, death or disability benefits scheme which relates both to Directors, his associates and employees of the Company or any of its subsidiaries and does not provide in respect of any Director, or his associates(s), as such any privilege or advantage not generally accorded to the class of persons to which such scheme or fund relates; and

  - (c) any contract or arrangement in which the Director or his associate(s) is/are interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his/ their interest in shares or debentures or other securities of the Company.”

• (h) deleting the words “he is to be regarded” in the 1st line of Article 111(E) and replacing them with “he or any of his associates is to be regarded”, adding the word “his” immediately after the words “a sufficient declaration of” and adding the words “or the interest of any of his associates” immediately after the word “interest” in the 3rd line of Article A111(E).

• (i) deleting Article 111(G) in its entirety and replacing it with the following:

• “111G If any question shall arise at any meeting of the Board as to the materiality of the interest of a Director (other than the chairman of the meeting) or his associate(s) or as to the entitlement of any Director (other than such chairman) to vote or be counted in the quorum and such question is not resolved by his voluntarily agreeing to abstain from voting or not to be counted in the quorum, such question shall be referred to the chairman of the meeting and his ruling in relation to such other Director or his associate(s) shall be final and conclusive except in a case where the nature or extent of the interest of the Director or his associate(s) concerned as known to such Director has not been fairly disclosed to the Board. If any question as aforesaid shall arise in respect of the chairman of the meeting or his associate(s), such question shall be decided by a resolution of the Board (for which purpose such chairman shall not be counted in the quorum and shall not vote thereon) and such resolution shall be final and conclusive except in a case where the nature or extent of the interest of such chairman or his associate(s) as known to such chairman has not been fairly disclosed to the Board.”

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