Global Link Communications Holdings Limited — Proxy Solicitation & Information Statement 2004

Jun 28, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) 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.

This circular, for which the directors (the “Directors”) of Global Link Communications Holdings Limited collectively and individually accept full responsibility, including particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of the Stock Exchange (“GEM Listing Rules”) for the purpose of giving information with regard to the Global Link Communications Holdings Limited. The Directors, having made all reasonable enquiries, confirmed that, to the best of their knowledge and belief, (i) the information contained in the circular are accurate and complete in all material respects and not misleading; (ii) there are no other facts the omission of which would make any statement herein misleading; and (iii) opinions expressed in this circular have been arrived at after due and careful consideration on the basis and assumptions of reasonableness and fairness.

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

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

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GLOBAL LINK COMMUNICATIONS HOLDINGS LIMITED

(incorporated in the Cayman Islands with limited liability) Stock Code: 8060

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES REFRESHMENT OF THE SHARE OPTION SCHEME LIMIT AMENDMENTS OF THE ARTICLES OF ASSOCIATION

This circular will remain on the GEM website at www.hkgem.com on the “Latest Company Announcements” page for at least 7 days from the date of its posting and on the website of the Company at www.glink.com.cn.

Whether or not you intend to attend the annual general meeting (the “AGM”) of Global Link Communications Holdings Limited, you are requested to complete and return the accompanying proxy form to the share registrar of the Company, Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time appointed for holding the AGM. The return of the proxy form will not preclude you from attending and voting in person in the AGM if you so wish.

28 June 2004

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET OF THE STOCK EXCHANGE OF HONG KONG LIMITED

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the Internet website operated by the Stock Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website at www.hkgem.com in order to obtain up-to-date information on GEM-listed issuers.

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LETTER FROM THE BOARD OF DIRECTORS

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GLOBAL LINK COMMUNICATIONS HOLDINGS LIMITED

(incorporated in the Cayman Islands with limited liability) Stock Code: 8060

Executive Directors: Registered office: Ma Yuanguang (Chairman and Century Yard Chief Executive Officer) Cricket Square Hu Zhi Jian Hutchins Drive Li Guo Ping P.O. Box 2681 GT Chau Siu Piu George Town Grand Cayman Non-executive Director: Cayman Islands British West Indies

Non-executive Director: Cayman Islands Wing Kee Eng, Lee British West Indies Independent non-executive Directors: Head office and principal place Hu Tiejun of business in Hong Kong: Lu Ting Jie Room 2102, Manley Commercial Building 367-375 Queen’s Road Central Hong Kong

28 June 2004

To the shareholders

Dear Sir or Madam

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES REFRESHMENT OF THE SHARE OPTION SCHEME LIMIT AMENDMENTS OF THE ARTICLES OF ASSOCIATION

INTRODUCTION

At the annual general meeting of Global Link Communications Holdings Limited (the “ Company ”) for the year ended 31 March 2004 (the “ AGM ”) to be held at The Constable, 1/F., InterContinental Grand Stanford Hong Kong, 70 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong on Thursday, 29 July 2004 at 2:30 p.m., resolutions will be proposed to grant to the directors (the “ Directors ”) of the Company general mandates to allot, issue and deal with new shares of the Company and to repurchase shares of the Company. Resolution will also be proposed to refresh the limit of the share options to be granted under the share option scheme (the “ Share Option Scheme ”) adopted by the Company on 24 October 2002. In addition to that, special resolutions will be proposed to amend the articles of association (the “ Articles of

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LETTER FROM THE BOARD OF DIRECTORS

Association ”) of the Company in order to comply with the amended Appendix 3 of the GEM Listing Rules which has come effective on 31 March 2004. This circular contains the explanatory statement in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market (“ GEM ”) of the Stock Exchange and to give all the information reasonably necessary to enable shareholders of the Company to make an informed decision on whether to vote for or against the resolutions.

GENERAL MANDATES

At the AGM, separate ordinary resolutions will be proposed to renew the general mandates given to the Directors (i) to allot, issue and otherwise deal with shares (“ Shares ”) of HK$0.01 each in the Company not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company at the date of passing of the resolution; (ii) to exercise all powers (the “ Repurchase Mandate ”) of the Company to repurchase issued and fully paid Shares on the GEM up to a maximum of 10% of the aggregate nominal amount of the issued share capital of the Company at the date of the passing of the resolution; (iii) to extend the general mandate granted to the Directors to allot, issue and deal with additional Shares as mentioned in paragraph (i) above by the amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the Repurchase Mandate. The Repurchase Mandate allows the Company to make or agree to make repurchases only during the period ending on the earliest of (a) the date of the next annual general meeting, (b) the date by which the next annual general meeting of the Company is required to be held by law or by its articles of association; or (c) the date upon which such authority is revoked or varied by an ordinary resolution of the shareholders in a general meeting of the Company. The existing general mandates to issue and repurchase Shares granted to the Directors at the annual general meeting of the Company on 25 July 2003 will expire at the AGM.

EXPLANATORY STATEMENT

An explanatory statement containing all relevant information relating to the proposed Repurchase Mandate is set out in the Appendix to this circular. The explanatory statement provides you information reasonably necessary to enable you to make an informed decision on whether to vote for or against the resolution to grant the Repurchase Mandate to the Directors.

REFRESHMENT OF THE SHARE OPTION SCHEME LIMIT

The number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised at any time under the Share Option Scheme and any other share option scheme adopted by the Company shall not exceed such number of Shares as 30% of the issued share capital of the Company from time to time. No options may be granted under the Share Option Scheme or any other share option scheme adopted by the Company if the grant of such option will result in the limit referred to in this paragraph being exceeded.

The total number of Shares which may be issued upon exercise of all options (excluding, for this purpose, options which have lapsed in accordance with the terms of the Share Option Scheme and any other share option scheme of the Company) to be granted under the Share Option Scheme and any other share option scheme of the Company must not in aggregate exceed 65,000,000 Shares, representing 10% of the Shares in issue as at the date of approval of the Share Option Scheme (the “ Share Option Scheme Limit ”).

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LETTER FROM THE BOARD OF DIRECTORS

On 23 June 2004 (the “ Latest Practicable Date ”), being the latest practicable date prior to printing of this circular, options (excluding options which have lapsed in accordance with the terms of the Share Option Scheme and any other share option scheme of the Company) to subscribe up to 62,405,000 Shares, representing approximately 9.45% of the issued share capital of the Company have been granted under the Share Option Scheme and the Pre-IPO share option scheme adopted by the Company on 24 October 2002.

The purpose of the Share Option Scheme is to enable the Company to grant options to selected participants as incentive or rewards for their contribution to the Company and its subsidiaries. In order to enhance the purpose of the Share Option Scheme, the Directors proposed to refresh the Share Option Scheme Limit at the AGM.

Assuming no further allotment and issue of Shares and/or repurchase of Shares up to the date of the AGM, upon the approval of the refreshment of the Share Option Scheme Limit by the shareholders of the Company at the AGM, the refreshed Share Option Scheme Limit will allow the Company to grant options entitling holders thereof to subscribe for up to 66,002,450 Shares, being 10% of the Shares then in issue as at the AGM. For the purpose of calculating the Share Option Scheme Limit in this paragraph, options (including those outstanding, cancelled, lapsed or exercised in accordance with the Share Option Scheme and any other share option scheme of the Company) previously granted under the Share Option Scheme and any other share option scheme of the Company will not be counted.

On the same assumption, the Directors expect that the grant of options in full under the refreshed Share Option Scheme Limit hereof will not cause the Shares to be issued upon the full exercise of the then outstanding options granted and available to be granted under the Share Option Scheme or any other share option scheme of the Company to be in excess of 30% of the Shares in issue from time to time.

The terms of the Share Option Scheme in compliance with Rule 23.03 of the GEM Listing Rules have been disclosed in the prospectus (the “ Prospectus ”) of the Company dated 31 October 2002. Apart from the number of Shares which may be issued under the refreshed Share Option Scheme Limit, the Directors confirmed that there has been no change to the terms of the Share Option Scheme as disclosed in the Prospectus.

Application will be made to the Stock Exchange by the Company for the approval of the listing of and permission to deal in the Shares, representing a maximum of 10% of the Shares in issue as at the date of the AGM approving the refreshment of the Share Option Scheme Limit, which may be issued pursuant to the exercise of the options under the Share Option Scheme and any other share option scheme(s) of the Company.

AMENDMENTS OF ARTICLES OF ASSOCIATION

The Stock Exchange has announced amendments to the GEM Listing Rules which include, among others, amendments to Appendix 3 of the GEM Listing Rules that has come effective on 31 March 2004. Appendix 3 of the GEM Listing Rules sets out the provisions with which a list company’s articles of association should conform.

In order to comply with the amended GEM Listing Rules, the Directors wish to seek the approval of shareholders at the AGM to adopt the proposed amendments to the Articles of Association. The proposed amendments to the Articles of Association are summarised as follows:-

(i) a definition of “associate” will be added to Article 2;

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LETTER FROM THE BOARD OF DIRECTORS

• (ii) Article 76 will be amended so that where any shareholder is, under the GEM 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 shareholder in contravention of such requirement or restriction shall not be counted;

• (iii) Article 88 will be amended so that the minimum seven-day period for lodgment by shareholders of the notice to nominate a Director shall commence no earlier than the day after the despatch of the notice of the meeting appointed for such election and end no later than seven days before the date of such meeting; and

• (iv) Article 103 will also be amended so that Directors shall abstain from voting at the board meeting on any matter in which any of his associates (as defined under the GEM Listing Rules) has a material interest and are not to be counted towards the quorum of the relevant board meeting.

The full text of the proposed amendments to the Articles of Association are set out in the notice of the AGM of the Company set out on pages 10 to 16 of this circular.

RE-ELECTION OF DIRECTORS

As at the date of this circular, the executive Directors are Ma Yuanguang (Chairman), Hu Zhi Jian, Li Guo Ping and Chau Siu Piu; the non-executive Director is Wing Kee Eng, Lee; and the independent non-executive Directors are Hu Tiejun and Lu Ting Jie.

Pursuant to Article 87 of the Articles of Association, at each annual general meeting, one third of the Directors for the time being (or if their number is not a multiple of three, then the number to but not greater than one third) will retire from office by rotation provided that no Director holding office as chairman and/or managing director shall be subject to retirement by rotation, or be taken into account in determining the number of Directors to retire. The Directors to retire in every year will be those who have been longest in office since their last re-election or appointment but as between persons who became or were last re-elected Directors on the same day those to retire will (unless they otherwise agree among themselves) be determined by lot.

Accordingly, at the AGM, Mr. Chau Siu Piu and Mr. Wing Kee Eng, Lee will retire by rotation, and being eligible, offer themselves for re-election at the AGM.

Mr. Chau Siu Piu, aged 36, is the co-funder of the Group. Mr. Chau is responsible for the general administration and business development of the Group and participated in the management and daily operation of the Group. Mr. Chau received his degree from the Economics Department of Zhongshan (Sun Yatsen) University. Mr. Chau has entered into a service contract with the Company for a term of two years commencing from 1 November 2002 and such service contract may be terminated by either party thereto giving to the other not less than three months’ prior notice. Mr. Chau is entitled to a fixed remuneration of HK$252,000 per year, which is based on the prevailing market rates in Hong Kong. As at the Latest Practicable Date, Mr. Chau is interested in 77,883,680 shares and 7,778,000 share options of the Company representing approximately 11.80% and 1.18% respectively of the total issued share capital of the Company as at the Latest Practicable Date. Save as disclosed herewith, Mr. Chau and the Company are not aware of any other matters that need to be brought to the attention of holders of securities of the Company.

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LETTER FROM THE BOARD OF DIRECTORS

Mr. Wing Kee Eng, Lee, aged 51, joined the Group in May 2002. Mr. Lee has over 20 years of experience in the telecommunications industry. Mr. Lee pursued his career with Harris Corporation where he had been a visiting engineer, senior engineer and the head of sales of the Pan Asia Pacific region. Mr. Lee has also been the vice president of the marketing department of one telecom operator in the United States. Mr. Lee has been appointed for an initial term of two years commencing from 1 November, 2002 and is subject to retirement by rotation in accordance with the Artilces of Association. Mr. Lee is entitled to a fixed remuneration of HK$50,000 per year, which is based on the estimated time to be spent by Mr. Lee. As at the Latest Practicable Date, Mr. Lee is interested in 2,778,000 share options of the Company representing 0.42% of the total issued share capital of the Company as at the Latest Practicable Date. Save as disclosed herewith, Mr. Lee and the Company are not aware of any other matters that need to be brought to the attention of holders of securities of the Company.

GENERAL INFORMATION

The notice for the AGM is set out on pages 10 to 16 of this circular.

Under the Articles of Association, at any general meeting a resolution put to the vote of the meeting is to be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by (i) the chairman of the meeting or (ii) at least three members present in person or, in case of a member being a corporation, by its duly authorised representative or by proxy for the time being entitled to vote at the meeting or (iii) any member or members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting or (iv) a member of members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

Whether or not you intend to attend the AGM in person, you are requested to complete and return the accompanying proxy form to the share registrar of the Company, Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time appointed for holding the AGM. The return of the proxy form will not preclude you from attending and voting in person if you so wish.

RECOMMENDATION

The Directors consider that (i) the general mandates; (ii) refreshment of Share Option Scheme Limit; and (iii) amendments of Articles of Association proposed are in the interest of the Company and so recommend you to vote in favour of the relevant resolutions at the AGM.

Yours faithfully

By order of the Board

Global Link Communications Holdings Limited

Ma Yuanguang

Chairman

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EXPLANATORY STATEMENT

APPENDIX

This is an explanatory statement given to all shareholders of the Company, as required by the GEM Listing Rules, to provide requisite information of the Repurchase Mandate.

1. GEM LISTING RULES FOR REPURCHASES OF SHARES

The GEM Listing Rules permit companies whose primary listing is on the Stock Exchange to repurchase their fully-paid shares on GEM subject to certain restrictions, the more important of which are summarised below:

(a) Shareholders’ approval

All proposed repurchase of securities on the Stock Exchange by a company with primary listing on the Stock Exchange must be approved in advance by an ordinary resolution, either by way of general mandate or by special approval of a particular transaction.

(b) Share capital

Under the Repurchase Mandate, the number of Shares that the Company may repurchase shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company at the date of the passing of the relevant resolutions. The Company’s authority is restricted to purchases made on GEM in accordance with the GEM Listing Rules. As at the Latest Practicable Date, there were in issue an aggregate of 660,024,500 Shares. Exercise in full of the Repurchase Mandate, on the basis that no further Shares would be issued or repurchased prior to the date of the AGM, would accordingly result in up to 66,002,450 Shares being repurchased by the Company.

(c) Reasons for repurchase

The Directors have no present intention to repurchase any Shares but consider that the Repurchase Mandate will provide the Company with the flexibility to make such repurchase as and when appropriate and is beneficial to the Company. Such repurchases may, depending on the market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share and/or earnings per Share. As compared with the financial position of the Company as at 31 March 2004 (being the date of its latest published audited accounts), the Directors consider that there would not be any material adverse impact on the working capital and on the gearing position of the Company in the event that the proposed repurchases were to be made in full during the proposed repurchase period. However, the Directors will not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or on its gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

(d) Funding of repurchases

Repurchase of the Shares will be funded out of funds legally available for such purpose in accordance with the memorandum and articles of association of the Company and the applicable laws of the Cayman Islands.

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EXPLANATORY STATEMENT

APPENDIX

The Company is empowered by its memorandum and articles of association to repurchase its Shares. The Cayman Islands law provides that the amount of capital repaid in connection with a share repurchase may only be paid out of either the capital paid up on the relevant shares, or the profits that would otherwise be available for distribution by way of dividend or the proceeds of a new issue of shares made for such purpose. The amount of premium payable on redemption may only be paid out of either the profits that would otherwise be available for distribution by way of dividend or out of the share premium of the Company. Under the Cayman Islands law, the repurchased Shares will remain part of the authorised but unissued share capital.

(e) Connected persons

None of the Directors nor, to the best of the knowledge and belief of the Directors having made all reasonable enquiries, any of the associates (as defined in the GEM Listing Rules) of any of the Directors has any present intention, in the event that the proposed Repurchase Mandate is approved by the Company’s shareholders, to sell Shares to the Company.

At the Latest Practicable Date, no connected person (as defined in the GEM Listing Rules) of the Company has notified the Company that he/she has a present intention to sell Shares to the Company nor has he/she undertaken not to sell any of the Shares held by him/her to the Company in the event that the Company is authorised to make repurchases of Shares.

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the Repurchase Mandate and in accordance with the GEM Listing Rules, the memorandum and articles of association of the Company and any applicable laws of the Cayman Islands.

(f) Effect of takeovers code and minimum public float

If as a result of a repurchase of Shares, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of Rule 32 of the Hong Kong Code on Takeovers and Mergers (“ Code ”). As a result, a shareholder, or a group of shareholders acting in concert (within the meaning under the Code), depending on the level of increase in the shareholder’s interests, could obtain or consolidate control of the Company and become(s) obliged to make a mandatory offer in accordance with Rule 26 of the Code.

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EXPLANATORY STATEMENT

APPENDIX

As at the Latest Practicable Date, the register of the shareholders maintained by the Company pursuant to Section 336 under Part XV of the Securities and Futures Ordinance (Cap. 571 of the laws of Hong Kong) showed that the Company has been notified of the following interests, being 5% or more of the Company’s issued share capital:

		Approximate	Approximate percentage	Approximate percentage
		percentage of		of shareholding if the
Name of	Number of	existing		Repurchase Mandate
shareholder	Shares held	shareholding		is exercised in full
Ma Yuanguang	170,530,000	25.84%		28.71%
Hu Zhi Jian	84,660,000	12.83%		14.25%
Chau Siu Piu	77,883,680	11.80%		13.11%
Li Guo Ping	58,120,000	8.81%		9.78%
Leung Kin Man	50,000,000	7.58%		8.42%

In the event that the Directors shall exercise in full the Repurchase Mandate, the total interests of the above shareholders would be increased to approximately the respective percentages shown in the last column above and such increase will not give rise to an obligation to make a mandatory offer under Rule 26 of the Code.

Assuming that there is no issue of Shares in the Company between the Latest Practicable Date and the date of a repurchase, an exercise of the Repurchase Mandate whether in whole or in part will not result in less than the relevant prescribed minimum percentage of the Shares of the Company being held by the public as required by the Stock Exchange. The Directors have no intention to exercise the Repurchase Mandate to an extent as may result in a public shareholding of less than such prescribed minimum percentage.

2. SHARE PURCHASE MADE BY THE COMPANY

The Company had not repurchased any of the Shares during the previous six months immediately preceding the Latest Practicable Date.

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EXPLANATORY STATEMENT

APPENDIX

3. SHARE PRICES

During each of the previous 12 months prior to the Latest Practicable Date, the highest and lowest traded prices for Shares on the GEM were as follows:

	Price	per Share
	Highest	Lowest
Month	HK$	HK$
2003
June	1.680	1.070
July	1.480	1.340
August	1.390	1.330
September	1.430	0.360
October	0.420	0.175
November	0.230	0.150
December	0.164	0.098
2004
January	0.155	0.135
February	0.140	0.130
March	0.130	0.110
April	0.113	0.072
May	0.080	0.073

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NOTICE OF ANNUAL GENERAL MEETING

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GLOBAL LINK COMMUNICATIONS HOLDINGS LIMITED

(incorporated in the Cayman Islands with limited liability)

Stock Code: 8060

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the annual general meeting of GLOBAL LINK COMMUNICATIONS HOLDINGS LIMITED (the “Company”) will be held at The Constable, 1/F., InterContinental Grand Stanford Hong Kong, 70 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong on Thursday, 29 July 2004 at 2:30 p.m. for the following purposes:–

1. To receive and consider the audited consolidated financial statements and the reports of the directors and auditors for the year ended 31 March 2004.

2. To elect directors of the Company (the “Directors”) and to authorise the board of directors (the “Board of Directors”) of the Company to fix the remuneration of the Directors.

3. To appoint auditors and to authorise the Board of Directors to fix their remuneration.

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

5. A. “ THAT

   • (a) subject to paragraph (c) of this Resolution, the exercise by the Directors during the Relevant Period (as hereinafter defined) to allot, issue and deal with the new shares in the capital 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;

   • (b) the approval in paragraph (a) of this Resolution shall authorise the Directors during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such power after the end of the Relevant Period;

   • (c) the aggregate nominal amount of the share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors pursuant to the approval in paragraph (a) of this Resolution, otherwise than pursuant to (i) a Right Issue (as hereinafter defined), (ii) the exercise of any option scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company

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NOTICE OF ANNUAL GENERAL MEETING

and its subsidiaries and/or other eligible persons of shares or rights to acquire shares of the Company or (iii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of the cash payment for a dividend on shares of the Company in accordance with the articles of association of the Company, shall not exceed 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of this Resolution and the said approval shall be limited accordingly;

• (d) for the purpose of this Resolution, “Relevant Period” means the period from the passing of this Resolution until whichever is the earliest of:

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

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable law to be held; and

• (iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting.”

“Right Issue” means an offer of shares or other securities of the Company open for a period fixed by the Directors to holders of shares of the Company or any class thereof on the register on a fixed record date in proportion to their then holdings of such shares or class thereof (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory outside the Hong Kong Special Administrative Region of the People’s Republic of China).”

• B. “ THAT

• (a) subject to paragraph (b) of this Resolution, the exercise by the Directors during the Relevant Period (as defined below) of all the powers of the Company to purchase its own shares on The Growth Enterprise Market (“GEM”) of The Stock Exchange of Hong Kong Limited (“Stock Exchange”), subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on GEM of the Stock Exchange or of any other stock exchange, be and is hereby generally and unconditionally approved and authorised;

• (b) the aggregate nominal amount of the shares of the Company to be purchased by the Company pursuant to the approval in paragraph (a) of this Resolution during the Relevant Period shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing this Resolution and the said approval shall be limited accordingly; and

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NOTICE OF ANNUAL GENERAL MEETING

• (c) 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 expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable law to be held; and

  • (iii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting.”

• C. “ THAT

conditional upon Resolutions 4A and 4B being passed, the aggregate nominal amount of the number of shares in the capital of the Company which are repurchased by the Company under the authority granted to the Directors as mentioned in Resolution 4B shall be added to the aggregate nominal amount of share capital that may be allotted or agreed conditionally or unconditionally to be allotted by the Directors pursuant to Resolution 4A above.”

1. As special business, to consider and if thought fit, pass the following resolution, with or without amendments, as ordinary resolution:

“ THAT

• (a) conditional on the GEM Listing Committee of the Stock Exchange granting the listing of and permission to deal in the shares of the Company to be issued pursuant to the exercise of any options to be granted under the share option scheme or any other option scheme or similar arrangement for the time being adopted by the Company up to a maximum limit of 10% of the entire issued share capital of the Company in issue on the date of passing of this Resolution, the total number of shares of the Company in respect of which options may be granted under the share option scheme or any other option scheme or similar arrangement for the time being adopted by the Company be refreshed to an aggregate of 10% of the entire share capital of the Company in issue on the date of passing of this Resolution (“Share Option Scheme Limit”); and

• (b) for the purpose of calculating the Share Option Scheme Limit, options (including those outstanding, cancelled, lapsed or exercised in accordance with the share option scheme and any other share option scheme of the Company) previously granted under the share option scheme and any other share option scheme of the Company will not be counted.”

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NOTICE OF ANNUAL GENERAL MEETING

1. As special business, to consider and if thought fit, pass the following resolutions as special resolutions:

2. “ THAT the articles of association of the Company be and are hereby amended as follows:

3. A. by adding the following definition in Article 2 immediately after the definition of “Articles”:

   • “associate” the meaning attributed to it in the rules of the Designated Stock Exchange.

4. B. by deleting Article 76 and substituting thereof the following:

   1. (1) No Member shall, unless the Board otherwise determines, be entitled to attend and vote and to be reckoned in a quorum at any general meeting unless he is duly registered and all calls or other sums presently payable by him in respect of shares in the Company have been paid.

      • (2) Where any Member is, under the rules of the Designated Stock Exchange, 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.

5. C. by deleting Article 88 and substituting thereof the following:

   1. No person other than a Director retiring at the meeting shall, unless recommended by the Directors for election, be eligible for election as a Director at any general meeting unless a Notice signed by a Member (other than the person to be proposed) duly qualified to attend and vote at the meeting for which such notice is given of his intention to propose such person for election and also a Notice signed by the person to be proposed of his willingness to be elected shall have been lodged at the head office or at the Registration Office provided that the minimum length of the period, during which such Notice(s) are given, shall be at least seven (7) days and that the period for lodgment of such Notice(s) shall commence no earlier than the day after the dispatch of the notice of the general meeting appointed for such election and end no later than seven (7) days prior to the date of such general meeting.

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NOTICE OF ANNUAL GENERAL MEETING

• D. by deleting Article 103 and substituting thereof the following:

• (1) A Director shall not vote (nor be counted in the quorum) on any resolution of the Board approving any contract or arrangement or any other proposal in which he or any of his associates is materially interested, but this prohibition shall not apply to any of the following matters namely:

  • (i) any contract or arrangement for the giving to such Director or his associate(s) any security or indemnity in respect of money lent by him or any of his associates or obligations incurred or undertaken by him or any of his associates at the request of or for the benefit of the Company or any of its subsidiaries;

  • (ii) any contract or arrangement for the giving of any security or indemnity 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 whether alone or jointly under a guarantee or indemnity or by the giving of security;

  • (iii) any contract or arrangement 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;

  • (iv) 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 or any of its subsidiaries by virtue only of his/their interest in shares or debentures or other securities of the Company;

  • (v) any contract or arrangement 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 a shareholder other than a company in which the Director and/or his associate(s) is/are beneficially interested in five (5) per cent or more of the issued shares or of the voting rights of any class of shares of such company (or any third company through which his interest or that of any of his associates is derived); or

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NOTICE OF ANNUAL GENERAL MEETING

• (vi) any proposal concerning the adoption, modification or operation of a share option scheme, a pension fund or retirement, death or disability benefits scheme or other arrangement which relates both to directors, his associates and employees of the Company or of any of its subsidiaries and does not provide in respect of any Director, or his associate(s), as such any privilege or advantage not accorded to the employees to which such scheme or fund relates.

• (2) A company shall be deemed to be a company in which a Director and/or his associate(s) owns five (5) per cent. or more if and so long as (but only if so long as) he and/or his associates, (either directly or indirectly) are the holders of or beneficially interested in five (5) per cent. or more of any class of the equity share capital of such company or of the voting rights available to members of such company (or of any third company through which his/their interest or that of any of his associates is derived). For the purpose of this paragraph there shall be disregarded any shares held by a Director or his associate(s) as bare or custodian trustee and in which he or any of them has no beneficial interest, any shares comprised in a trust in which the interest of the Director or his associate(s) is/are in reversion or remainder if and so long a some other person is entitled to receive the income thereof, and any shares comprised in an authorised unit trust scheme in which the Director or his associate(s) is/are interested only as a unit holder and any shares which carry no voting right at general meetings and very restrictive dividend and return of capital right.

• (3) Where a company in which a Director and/or his associate(s) holds five (5) per cent. or more is/are materially interested in a transaction, then that Director and/or his associate(s) shall also be deemed materially interested in such transaction.

• (4) 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 and such question is not resolved by his voluntarily agreeing to abstain from voting, such question shall be referred to the chairman of the meeting and his ruling in relation to such other Director shall be final and conclusive except in a case where the nature or extent of the interest of the Director and/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 such question shall be decided by a resolution of the Board (for which purpose

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NOTICE OF ANNUAL GENERAL MEETING

such chairman 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 as known to such chairman has not been fairly disclosed to the Board.”

On behalf of the Board Ma Yuanguang Chairman

Hong Kong, 28 June 2004

As at the date of this announcement, the executive directors of the Company are Mr. Ma Yuanguang, Mr. Hu Zhi Jian, Mr. Li Guo Ping and Mr. Chau Siu Piu; the non-executive director of the Company is Mr. Wing Kee Eng, Lee; and the independent non-executive directors of the Company are Mr. Hu Tiejun and Mr. Lu Ting Jie.

Head office and principal place of business in Hong Kong: Room 2102, Manley Commercial Building, 367-375 Queen’s Road Central, Hong Kong

Notes:

• (1) A member of the Company entitled to attend and vote at the annual general meeting convenued by the above notice is entitled to appoint another person as his proxy to attend and, on a poll, vote on his behalf. A proxy need not be a member of the Company but must attend the annual general meeting to represent the member.

• (2) In order to be valid, the form of proxy must be deposited with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong together with any power of attorney or other authority, under which it is signed, or a notarially certified copy of that power or authority, not less than 48 hours before the time for holding the meeting.

• (3) In the case of joint holders of any shares in the Company, any one of such joint holders may vote at the annual general meeting, either in person or by proxy, in respect of such shares as if he was solely entitled thereto, but if more than one of such joint holders are present at the meeting, either personally or by proxy, that one of the said persons so present whose name stands first on the register of members in respect of such shares shall be accepted to the exclusion of the votes of the other joint registered holders.

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