Goldstone Capital Group Limited — Proxy Solicitation & Information Statement 2006

Jun 9, 2006

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 licensed securities dealer, bank, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Grand Investment International Ltd., you should at once hand this circular together with the accompanying form of proxy to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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(Stock Code: 1160)

(A) PROPOSED BONUS ISSUE OF SHARES (B) PROPOSED ALTERATIONS OF THE BYE-LAWS

(C) GRANT OF GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES AND

(D) RE-ELECTION OF DIRECTORS

A notice convening the annual general meeting of the Company to be held at Unit B, 22nd Floor, Entertainment Building, 30 Queen’s Road Central, Hong Kong on Monday, 3 July 2006 at 2: 00 p.m. is set out on pages 18 to 25 of this circular.

Whether or not you are able to attend the meeting, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and deposit the same as soon as possible and in any event not later than 48 hours before the time of the meeting or any adjournment thereof to the Company’s Hong Kong branch share registrars, Computershare Hong Kong Investor Services Limited, at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so wish.

• For identification purpose only

9 June 2006

CONTENTS

		Pages
Expected Timetable . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Letter from the Board
— Introduction . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
— Proposed Bonus Issue . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
— Proposed Alterations of the Bye-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		7
— Issue Mandate . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
— Repurchase Mandate and Extension	Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
— Re-election of Directors . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
— Procedures for demanding a poll by	Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
— Actions to be taken . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
— Recommendation . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
— Documents available for inspection	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
— General information . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
— Responsibility statement . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Appendix I — Explanatory statement	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix II — Particulars of the Retiring Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		16
Notice of the Annual General Meeting . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18

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EXPECTED TIMETABLE

The expected timetable is set out below:

2006

Last day of dealings in Shares cum-entitlement
to the final dividend for the financial year ended
31 March 2006 by way of the Bonus Issue . . .	. . . . . . . . . . . . . . . . . . . Monday, 26 June
Latest time for lodging transfer of Shares . . . . .	. . . . . . . . 4: 00 p.m. on Wednesday, 28 June
Closure of Register of Members to determine
entitlement to the final dividend for the
financial year ended 31 March 2006 by way of the Bonus Issue . . . . . . .Thursday, 29 June to
	Monday, 3 July
	(both days inclusive)
Latest time for lodging forms of proxy for
the Annual General Meeting . . . . . . . . . . . . .	. . . . . . . . . . 2: 00 p.m. on Saturday, 1 July
Annual General Meeting . . . . . . . . . . . . . . . .	. . . . . . . . . . . 2: 00 p.m. on Monday, 3 July
Record date for determination of entitlement to
the final dividend for the year ended 31 March 2006
by way of the Bonus Issue . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . Monday, 3 July
Register of Members re-opens . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . Tuesday, 4 July
Announcement of results of the Annual General Meeting . . . . . . . . . . . . . . . . Tuesday, 4 July
Despatch of the certificates for the Bonus Shares	. . . . . . . . . . . . . . . . . . . Monday, 10 July
Commencement of dealings in the Bonus Shares .	. . . . . . . . . . . . . . . . . Wednesday, 12 July

Note: All times in this circular refer to Hong Kong time.

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DEFINITIONS

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

• ‘‘Annual General the annual general meeting of the Company to be held at Unit B, 22nd Meeting’’ Floor, Entertainment Building, 30 Queen’s Road Central, Hong Kong on Monday, 3 July 2006 at 2: 00 p.m. to consider and, if thought fit, to approve, among other matters, the proposed Bonus Issue, the proposed alterations of the Bye-Laws, the proposed grant of the Issue Mandate, the Repurchase Mandate and the Extension Mandate and the re-election of Directors, the notice of which is set out on pages 18 to 25 of this circular, and any adjournment thereof

• ‘‘associates’’ has the meaning ascribed to it under the Listing Rules ‘‘Board’’ the board of Directors ‘‘Bonus Issue’’ the proposed issue of Bonus Shares to the Qualifying Shareholders on the basis of one Bonus Share for every five existing Shares held on the Record Date (in lieu of the whole of a dividend on Shares recommended by the Directors for the financial year ended 31 March 2006 of the Company) upon and subject to the terms of this circular

• ‘‘Bonus Shares’’ up to 12,000,000 new Shares to be allotted and issued pursuant to the Bonus Issue

• ‘‘Bye-Laws’’ the bye-laws of the Company adopted pursuant to a written resolution passed by the then sole Shareholder on 13 February 2004, as from time to time altered

• ‘‘CCASS’’ Central Clearing and Settlement System ‘‘Corporate Governance the Code on Corporate Governance Practices which is set out in Code’’ Appendix 14 to the Listing Rules

• ‘‘Company’’ Grand Investment International Ltd., an exempted company incorporated in Bermuda with limited liability, and the issued Shares of which are listed on the main board of the Stock Exchange

• ‘‘Companies Act’’ the Companies Act 1981 of Bermuda ‘‘connected person(s)’’ has the meaning ascribed to it under the Listing Rules ‘‘Director(s)’’ director(s) of the Company ‘‘Extension Mandate’’ a general and unconditional mandate proposed to be granted to the Directors to the effect that the total number of Shares which may be allotted and issued under the Issue Mandate may be increased by an additional number representing such number of Shares actually repurchased under the Repurchase Mandate

• ‘‘HKSCC’’ Hong Kong Securities Clearing Company Limited

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DEFINITIONS

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

• ‘‘Issue Mandate’’ a general and unconditional mandate proposed to be granted to the Directors to exercise the power of the Company to allot, issue or otherwise deal with new Shares up to a maximum of 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing the relevant resolution at the Annual General Meeting

• ‘‘Latest Practicable Date’’ 7 June 2006, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange ‘‘Qualifying the Shareholder(s), other than Overseas Shareholder(s), whose name(s) Shareholder(s)’’ appear on the Register of Members on the Record Date;

• ‘‘Overseas Shareholder(s) whose name(s) appear(s) on the Register of Members of Shareholder(s)’’ the Company as at the close of business on the Record Date and whose address(es) as shown in the Register of Members on that date is(are) outside Hong Kong and in respect of whom the Directors, based on legal opinions, consider the exclusion from the Bonus Issue to be necessary or expedient on account either of the legal restrictions under the law of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place

• ‘‘Record Date’’ Monday, 3 July 2006 ‘‘Register of Members’’ the principal or branch register of members of the Company maintained in Bermuda or Hong Kong respectively

• ‘‘Registrar’’ the Hong Kong branch share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited, at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong

• ‘‘Repurchase Mandate’’ a general and unconditional mandate proposed to be granted to the Directors to enable them to repurchase the Shares on the Stock Exchange, the aggregate nominal amount of which shall not exceed 10% of the aggregate nominal amount of the share capital in issue as at the date of passing the relevant resolution at the Annual General Meeting

• ‘‘Share(s)’’ ordinary share(s) of HK$0.10 each in the share capital of the Company ‘‘Shareholder(s)’’ holder(s) of the Shares ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘Takeovers Code’’ Hong Kong Code on Takeovers and Mergers ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong ‘‘%’’ per cent.

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LETTER FROM THE BOARD

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(Stock Code: 1160)

Executive Directors: Mr Lee Tak Lun Ms Lee Wai Tsang Rosa Ms Chung Wing Han Wendy Mr Chou Ping-chun, Benji

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Non-executive Director: Mr Lee Woo Sing (Chairman)

Independent non-executive Directors: Mr Lu Fan Mr Yao Cho Fai Andrew Dr Zhang Hongru

Head office and principal place of business in Hong Kong: Unit B, 22nd Floor Entertainment Building 30 Queen’s Road Central Hong Kong

9 June 2006

To the Shareholders

Dear Sir/Madam

(A) PROPOSED BONUS ISSUE OF SHARES (B) PROPOSED ALTERATIONS OF THE BYE-LAWS

(C) GRANT OF GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES AND

(D) RE-ELECTION OF DIRECTORS

INTRODUCTION

It was announced on 25 May 2006 in conjunction with the announcement of the Company’s final results for the financial year ended 31 March 2006 that the Directors recommended a final dividend of HK$0.20 per Share for the financial year ended 31 March 2006 and that such final dividend is proposed to be paid by way of the Bonus Issue.

The Board also proposes to amend the Bye-Laws to, among other matters, reflect the Corporate Governance Code which replaced the Code of Best Practice in Appendix 14 to the Listing Rules. The Code, subject to certain transitional arrangements, took effect on 1 January 2005. Certain minor housekeeping amendments to the Bye-Laws will also be proposed at the Annual General Meeting.

Furthermore, the Board proposes that the General Mandate and the Repurchase Mandate be granted to the Directors following the approval of the Bonus Issue at the Annual General Meeting.

The primary purpose of this circular is to provide you with information in connection with the convening of the Annual General Meeting and explanation in connection with the matters (including the Bonus Issue, the proposed alterations of the Bye-Laws and the grant of the General Mandate and the Repurchase Mandate) to be dealt with at the Annual General Meeting.

• For identification purpose only

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LETTER FROM THE BOARD

PROPOSED BONUS ISSUE

Basis of the Bonus Issue

The Bonus Issue will be made on the basis of one new Share, credited as fully paid, for every five existing Shares held by the Shareholders whose names appear on the Register of Members on the Record Date.

Status of the Bonus Shares

The Bonus Shares will, subject to the Memorandum of Association and the Bye-Laws of the Company, rank pari passu in all respects with the Shares in issue on the date of issue. Holders of the Bonus Shares will be entitled to receive all future dividends and distributions which are declared, made or paid after the date on which the Bonus Shares are allotted.

Fractions of the Bonus Shares

Fractional entitlements to the Bonus Shares will be disregarded and the benefit thereof will accrue to the Company. Given the Bonus Issue is made on the basis of one Bonus Share for every five existing Shares held on the Record Date, the Company does not expect that there will be any fraction of Bonus Shares.

Effect to the shareholding on the Bonus Issue

The existing authorised share capital of the Company is HK$20,000,000 divided into 200,000,000 Shares. As at the Latest Practicable Date, there were 60,000,000 Shares in issue in the share capital of the Company. On the basis that no further Shares are issued or repurchased on or before 3 July 2006 (being the date of the Annual General Meeting and the Record Date), up to 12,000,000 Bonus Shares will be issued under the Bonus Issue and the amount of HK$12,000,000, being part of the Company’s share premium account, will be capitalized and accordingly such sum will be applied in paying up in full the 12,000,000 Bonus Shares. After completion of the Bonus Issue, there will be a total of 72,000,000 Shares in the enlarged issued share capital of the Company. The 12,000,000 Bonus Shares represent 20 per cent. of the existing issued share capital of the Company and 16.67 per cent. of the enlarged issued share capital of the Company.

Share certificates

Subject to the fulfillment of the conditions of the Bonus Issue, certificates in respect of the Bonus Shares will be sent to the persons entitled thereto at their respective addresses shown in the Register of Members or in the case of joint holders, to the address of the joint holder whose name stands first in the Register of Members in respect of the joint holding. It is expected that certificates for the Bonus Shares will be posted to those entitled thereto at their own risk on or around Monday, 10 July 2006.

Application for listing

The Bonus Issue is conditional upon (i) the passing at the Annual General Meeting of the ordinary resolution to approve the Bonus Issue and (ii) the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Shares to be issued under the Bonus Issue.

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LETTER FROM THE BOARD

Application will be made to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Bonus Shares to be issued pursuant to the Bonus Issue.

Subject to the granting of the listing of and permission to deal in the Bonus Shares on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Bonus Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Bonus Shares on the Stock Exchange or such other date as may be determined by HKSCC. Settlement of transactions between participants of the Stock Exchange or 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.

No part of the share capital of the Company is listed or dealt in on any other stock exchange and no such listing or permission to deal is being or proposed to be sought. The Bonus Shares will not be listed or traded on any other stock exchange other than the Stock Exchange and no such listing or permission to deal is being or proposed to be sought. Dealings in the Bonus Shares will be subject to payment of stamp duty in Hong Kong.

Closure of Register of Members

The Register of Members will be closed from Thursday, 29 June 2006 to Monday, 3 July 2006, both days inclusive, during which period no transfer of Shares will be effected. In order to qualify for the final dividend to be paid by way of the Bonus Issue, all transfers accompanied by the relevant share certificates must be lodged with the Registrar at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong not later than 4: 00 p.m. on Monday, 26 June 2006.

Shareholders resident outside Hong Kong

As at the Latest Practicable Date and based on the information provided by the Registrar to the Company, none of the Shareholders as recorded on the Register of Members had address(es) which is/are outside Hong Kong.

If as at the close of business on the Record Date, a Shareholder’s address as recorded on the Register of Members is in a place outside Hong Kong, that Shareholder may not be eligible to participate in the Bonus Issue. If necessary, the Board will make enquiries as to whether the Bonus Issue to the Overseas Shareholders may contravene the applicable securities legislation of the relevant overseas places or the requirements of the relevant regulatory body or stock exchange. If, after making such enquiry, the Board is of the opinion that it would be necessary or expedient, on account either of the legal restrictions under the laws of the relevant place or any requirement of the relevant regulatory body or stock exchange in that place, not to offer to such Overseas Shareholders, no issue of the Bonus Shares will be made to such Overseas Shareholders. Such Overseas Shareholders receiving a copy of this circular outside Hong Kong may not treat the same as an invitation to participate in the Bonus Issue unless such invitation could lawfully be made to him/her without having to comply with any registration or other legal requirements in the relevant territory. In the circumstance, such Overseas Shareholders will not be permitted to participate in the Bonus Issue and the benefit thereof will accrue to the Company.

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LETTER FROM THE BOARD

PROPOSED ALTERATIONS OF THE BYE-LAWS

In November 2004, the Stock Exchange made amendments to the Listing Rules which came into effect on 1 January 2005. Amongst the various changes, the Corporate Governance Code was introduced. It sets out principles of good corporate governance, and two levels of recommendations being the code provisions and the recommended best practices. Issuers, such as the Company, are expected to comply with, but may choose to deviate from the code provisions whereas the recommended best practices are for guidance only. The Company intends to implement the code provisions of the Corporate Governance Code to the extent that it is reasonable, practicable and in the interest of the Company to do so. In this connection, it is proposed that certain provisions of the existing Bye-Laws be changed to the effect that:

• (a) voting by poll can be required by Director(s) attending the meeting holding proxies in respect of Shares representing 5% or more of the total voting rights at the meeting;

• (b) all Directors appointed by the Board in the general meeting to fill a casual vacancy should be subject to election by the Shareholders at the first general meeting after their appointment;

• (c) all Directors should be subject to retirement by rotation at least once every three years; and

• (d) any Director may be removed in general meeting by ordinary resolution before the expiration of the period of office of the relevant Director.

Certain minor housekeeping amendments to the existing Bye-Laws will also be proposed.

The full text of the proposed alterations of the Bye-Laws is set out in resolution no. 9 of the notice of the Annual General Meeting set out on pages 18 to 25 of this circular.

ISSUE MANDATE

At the Annual General Meeting, an ordinary resolution will be proposed that the Directors be granted the Issue Mandate, that is, a general and unconditional mandate to allot, issue and deal with new Shares up to 20% of the aggregate nominal share capital of the Company in issue as at the date of passing of the relevant resolution.

As at the Latest Practicable Date, a total of 60,000,000 Shares were in issue. Subject to the passing of the proposed resolutions approving the Bonus Issue and the granting of the Issue Mandate to the Directors and on the basis that no Shares will be issued or repurchased by the Company prior to the Annual General Meeting, the Company will be allowed under the Issue Mandate to issue a maximum of 12,000,000 Shares.

REPURCHASE MANDATE AND EXTENSION MANDATE

At the Annual General Meeting, an ordinary resolution will also be proposed to give the Directors the Repurchase Mandate, that is, a general and unconditional mandate to exercise all powers of the Company to repurchase, on the Stock Exchange, or on any other stock exchange on which the Shares may be listed, Shares up to a maximum of 10% of the nominal share capital of the Company in issue as at the date of passing of the relevant resolution. In addition, an ordinary resolution regarding the Extension Mandate will be proposed at the Annual General Meeting to

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LETTER FROM THE BOARD

authorise the increase in the total number of new Shares which may be allotted and issued under the Issue Mandate by an additional number representing such number of Shares actually repurchased under the Repurchase Mandate.

The Repurchase Mandate and the Issue Mandate would expire at the earliest of: (a) the conclusion of the next annual general meeting of the Company; or (b) the end of the period within which the Company is required by the Companies Act or the Bye-Laws to hold its next annual general meeting; or (c) when revoked or varied by ordinary resolution(s) of the Shareholders in a general meeting prior to the next annual general meeting of the Company.

Under the Listing Rules, the Company is required to give to its Shareholders all information which is reasonably necessary to enable Shareholders to make an informed decision as to whether to vote for or against the resolution in respect of the Repurchase Mandate at the Annual General Meeting. An explanatory statement for such purpose is set out in the Appendix I to this circular.

The Directors wish to state that they have no immediate plans to repurchase any existing shares or to issue new shares pursuant to the Repurchase Mandate, the New Issue Mandate and the Extension Mandate. The mandates being proposed and if granted by the Shareholders will, however, give the Company the flexibility to do so. The Directors will not exercise the mandates in a way which would breach the minimum percentage of listed securities in public hands as prescribed by the Stock Exchange from time to time.

RE-ELECTION OF DIRECTORS

The Board currently consists of eight Directors, namely:

Executive Directors	Date of appointment
Ms Chung Wing Han Wendy	22 April 2003
Mr Chou Ping-chun, Benji	13 February 2004
Mr Lee Tak Lun	1 June 2005
Ms Lee Wai Tsang, Rosa	1 June 2005
Non-Executive Director
Mr Lee Woo Sing (Chairman)	22 April 2003
Independent non-Executive Directors
Mr Lu Fan	1 June 2005
Mr Yao Cho Fai Andrew	13 February 2004
Dr Zhang Hongru	13 February 2004

According to Bye-Law 113(A) of the Bye-Laws, at each annual general meeting, one third of the Directors for the time being, or if their number is not three or a multiple of three, then the number nearest to but not exceeding one-third, shall retire from office by rotation provided that no Director holding office as Chairman or Deputy Chairman under Bye-Law 140 or the office of Managing Director or Joint Managing Director under Bye-Law 128 shall be subject to retirement by rotation or be taken into account in determining the number of Directors to retire. A retiring Director shall be eligible for re-election.

According to Bye-Law 113(B) of the Bye-Laws, the Directors to retire by rotation shall include (so far as necessary to obtain the number required) any Director who wishes to retire and not to offer himself for re-election. Any further Directors so to retire shall be those who have been longest

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LETTER FROM THE BOARD

in office since their last re-election or appointment and so that as between persons who became or were last re-elected Directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot.

Pursuant to Bye-Law 113(A) of the Bye-Laws, Mr Yao Cho Fai Andrew and Dr Zhang Hongru will retire and, being eligible, offer themselves for re-election at the Annual General Meeting.

Particulars of the Directors who will retire and offer themselves for re-election at the Annual General Meeting are set out in Appendix II to this circular.

PROCEDURES FOR DEMANDING A POLL BY SHAREHOLDERS

Bye-Law 73 of the Bye-Laws sets out the following procedure by which Shareholders may demand a poll.

At any general meeting, a resolution put to the vote of the meeting shall 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 duly demanded. A poll may be demanded by:

• (i) the Chairman of the meeting; or

• (ii) at least three members present in person or by proxy for the time being entitled to vote at the meeting; or

• (iii) any member or members present in person or by proxy and representing not less than onetenth of the total voting rights of all the members having the right to vote at the meeting; or

• (iv) a member or members present in person 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 up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

ACTIONS TO BE TAKEN

At the Annual General Meeting, ordinary resolutions or, as the case may be, special resolution will be proposed to approve, among other matters, the proposed Bonus Issue, the proposed alterations of the Bye-Laws, the grant of the Issue Mandate, the Repurchase Mandate and the Extension Mandate.

Whether or not you are able to attend the Annual General Meeting in person, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not later than 48 hours before the time for the Annual General Meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Annual General Meeting or any adjournment thereof should you so wish.

RECOMMENDATION

The Directors believe that the proposed Bonus Issue, the proposed alterations of the Bye-Laws, the Issue Mandate, the Repurchase Mandate and the Extension Mandate are in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

The Directors believe that:

• (a) the Bonus Issue provide the Shareholders with the opportunity to continue participate in the growth of the Company by way of capitalization of a portion of the share premium account of the Company;

• (b) an exercise of the Issue Mandate will enable the Company to take advantage of market conditions to raise additional capital for the Company as and when the opportunity arises;

• (c) the Repurchase Mandate may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share and/or earnings per Share, which will only be exercised when the Directors believe that repurchases of Shares will benefit the Company and the Shareholders.

An exercise of the Repurchase Mandate in full may have a material adverse impact on the working capital and/or gearing position of the Company as compared with that as at 31 March 2006, being the date of its latest audited financial statements. The Directors do not, however, intend to make any repurchase in circumstances that would have a material adverse impact on the working capital or gearing of the Company.

Accordingly, the Directors recommend Shareholders to vote in favour of the ordinary resolutions and, as the case may be, the special resolution for approving, among other matters, the proposed Bonus Issue, the proposed alterations of the Bye-Laws, the Issue Mandate, the Repurchase Mandate and the Extension Mandate at the Annual General Meeting. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the memorandum of association of the Company and the Bye-Laws will be available for inspection at the head office and principal place of business in Hong Kong of the Company at Unit B, 22nd Floor, Entertainment Building, 30 Queen’s Road Central, Hong Kong during normal business hours on any business day from the date hereof up to and including the date of the Annual General Meeting.

GENERAL INFORMATION

Your attention is drawn to the additional information set out in the Appendix I to this circular.

RESPONSIBILITY STATEMENT

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 not contained in this circular, the omission of which would make any statement herein misleading.

Yours faithfully,

For and on behalf of the Board

Grand Investment International Ltd. Lee Woo Sing Chairman

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EXPLANATORY STATEMENT

APPENDIX I

This Appendix I serves as an explanatory statement, as required by the Listing Rules, to provide requisite information as to the proposed Repurchase Mandate.

1. LISTING RULES RELATING TO THE REPURCHASE OF SHARES

The Listing Rules permit companies whose primary listing is on the Stock Exchange to repurchase their shares on the Stock Exchange and any other stock exchange on which the securities of the company are listed and such exchange is recognised by the Securities and Futures Commission of Hong Kong subject to certain restrictions. Among such restrictions, the Listing Rules provide that the shares of such company must be fully paid up and all repurchase of shares by such company must be approved in advance by an ordinary resolution of shareholders, either by way of a general repurchase mandate or by specific approval of a particular transaction.

2. SHARE CAPITAL

As at Latest Practicable Date, there were a total of 60,000,000 Shares in issue.

Subject to the passing of the proposed resolution granting the Repurchase Mandate and on the basis that no further Shares are issued or repurchased prior to the Annual General Meeting, the Company will be allowed under the Repurchase Mandate to repurchase a maximum of 6,000,000 Shares.

3. REASONS FOR THE REPURCHASE

The Directors believe that it is in the best interests of the Company and the Shareholders as a whole to seek a general authority from the Shareholders to enable the Company to repurchase the Shares on the Stock Exchange or any other stock exchange on which the Shares are listed. Share repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share and/or earnings per Share and will only be made when the Directors believe that such repurchase will benefit the Company and the Shareholders.

4. FUNDING OF REPURCHASES

In repurchasing the Company’s securities, the Company may only apply funds legally available for the purpose in accordance with the Company’s memorandum of association, the Bye-Laws, the Companies Act and other applicable laws of Bermuda.

Taking into account the current working capital position of the Company, the Directors consider that, if the Repurchase Mandate were to be exercised in full, it might have a material adverse effect on the working capital and/or the gearing position of the Company as compared with the position as at 31 March 2006, being the date of its latest audited financial statements. However, the Directors do not intend to make any repurchases to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements or the gearing position of the Company which in the opinion of the Directors are from time to time appropriate for the Company.

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EXPLANATORY STATEMENT

APPENDIX I

5. SHARE PRICES

The highest and lowest prices at which the Shares have been traded on the Stock Exchange during each of the previous twelve calendar months before the Latest Practicable Date were as follows:

	Highest	Lowest
	$	$
2005
June	1.13	1.02
July	1.05	1.00
August	1.01	1.00
September	1.01	1.01
October	1.01	1.01
November	1.01	1.01
December	1.01	1.01
2006
January	1.01	1.01
February	1.01	1.00
March	1.02	1.00
April	1.02	1.02
May	1.02	1.02
June (Note)	1.02	1.02

Note: Up to the Latest Practicable Date

6. THE TAKEOVERS CODE AND MINIMUM PUBLIC HOLDING

If a Shareholder’s proportionate interest in the voting rights of the Company increases on the Company exercising its powers to repurchase Shares pursuant to the Repurchase Mandate, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code. As a result, a Shareholder or group of Shareholders acting in concert (as defined in the Takeovers Code) could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 or Rule 32 of the Takeovers Code.

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EXPLANATORY STATEMENT

APPENDIX I

As at the Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of the Securities and Futures Ordinance (‘‘SFO’’) (Chapter 571 of the Laws of Hong Kong) and so far as is known to, or can be ascertained after reasonable enquiry by the Directors, the following persons were directly or indirectly interested in 5% or more of the issued capital of the Company:

Name Capacity Number of Shares 1. Optimize Capital Investments Limited (‘‘Optimize Capital’’) (Note 1) Beneficial owner 5,000,000 (long position) (Note 1) 2. Lee Tak Lun (Note 1) Interest of a controlled corporation (Note 1) 5,000,000 (long position) (Note 1) (Notes 2 to 4) Interest of a controlled corporation (Notes 2 to 4) 11,000,000 (long position) (Notes 2 to 4) 3. Grand Finance Group Company Limited (‘‘Grand Finance’’) (Notes 2 to 5) Registered and beneficial owner (Notes 2 to 5) 11,000,000 (long position) (Notes 2 to 5) 4. Billion Sky Limited (Notes 2 to 4) Interest of a controlled corporation (Notes 2 to 4) 11,000,000 (long position) (Notes 2 to 4) 5. Bright Pearl Limited (Notes 2 and 5) Interest of a controlled corporation (Note 2 and 5) 11,000,000 (long position) (Notes 2 and 5)	Approximate percentage of existing shareholding 8.33% 8.33% 18.33% 26.66% 18.33% 18.33% 18.33%	Approximate percentage of shareholding if the Repurchase Mandate is exercised in full 9.26% 9.26% 20.37%
		29.63%
		20.37% 20.37% 20.37%

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EXPLANATORY STATEMENT

APPENDIX I

					Approximate
					percentage of
					shareholding
					if the
				Approximate	Repurchase
				percentage of	Mandate is
			Number of	existing	exercised
	Name	Capacity	Shares	shareholding	in full
6.	Jumbo China	Interest of a	11,000,000	18.33%	20.37%
	Holdings	controlled corporation	(long position)
	Limited (Notes	(Notes 2 to 4)	(Notes 2 to 4)
	2 to 4)
7.	Win Key	Interest of a	11,000,000	18.33%	20.37%
	Investments	controlled corporation	(long position)
	Limited (Notes	(Notes 2 to 4)	(Notes 2 to 4)
	2 to 4)
8.	Chow Chuen	Interest of a	11,000,000	18.33%	20.37%
	Chung (Notes 2	controlled corporation	(long position)
	and 5)	(Notes 2 and 5)	(Notes 2 and 5)
9.	Ho Kin (Notes 2	Interest of a	11,000,000	18.33%	20.37%
	and 5)	controlled corporation	(long position)
		(Notes 2 and 5)	(Notes 2 and 5)
10.	Kam Kin Ming	Interest of a	11,000,000	18.33%	20.37%
	(Notes 2 and 5)	controlled corporation	(long position)
		(Notes 2 and 5)	(Notes 2 and 5)

Notes:

1. Optimize Capital is a company incorporated in the British Virgin Islands, and is owned as to 90% by Mr Lee Tak Lun and as to 10% by his daughter, Ms Lee Wai Tsang Rosa. Mr Lee Tak Lun is the son of Mr Lee Woo Sing. Mr Lee Woo Sing is a non-executive Director, while Mr. Lee Tak Lun and Ms. Lee Wai Tsang Rosa were appointed Directors of the Company on 1 June 2005.

2. Grand Finance is a company incorporated in Hong Kong, the entire issued capital of which is beneficially owned as to 58% by Jumbo China Holdings Limited and 42% by Bright Pearl Limited. Jumbo China Holdings Limited and Bright Pearl Limited are taken to be interested in these Shares.

3. The entire issued share capital of Jumbo China Holdings Limited is beneficially owned as to 79.31% by Billion Sky Limited, 7.76% by Ms Chung Wing Han Wendy, an executive Director and 12.93% by independent third parties. Billion Sky Limited is taken to be interested in these Shares.

4. The entire issued share capital of Billion Sky Limited is beneficially owned as to 52.42% by Win Key Investments Limited (the entire issued share capital of which is beneficially owned by Mr Lee Tak Lun), 23.79% by Lee Woo Sing Holdings Ltd. (which is owned as to 10% by Mr. Lee Woo Sing and 90% by his wife, Yao Yuen Yuen), 23.79% by independent third parties. Win Key Investments Limited and Mr. Lee Tak Lun are taken to be interested in these Shares.

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EXPLANATORY STATEMENT

APPENDIX I

1. The entire issued share capital of Bright Pearl Limited is beneficially owned as to 33.33% by Mr Chow Chuen Chung, 33.33% by Mr Ho Kin and 33.33% by Mr Kam Kin Ming.

In the event that the Directors should exercise in full the power to repurchase Shares which is proposed to be granted pursuant to the Repurchase Mandate, the interest of each of Optimize Capital, Mr Lee Tak Lun, Grand Finance, Jumbo China Holdings Limited, Bright Pearl Limited, Billion Sky Limited, Win Key Investments Limited, Mr Chow Chuen Chung, Mr Ho Kin and Mr Kam Kin Ming would be increased to approximately 9.26%, 29.63%, 20.37%, 20.37%, 20.37%, 20.37%, 20.37%, 20.37%, 20.37% and 20.37% respectively of the issued share capital of the Company. Such increase would not give rise to an obligation to make a mandatory offer under Rule 26 and Rule 32 of the Takeovers Code or result in the aggregate amount of the share capital of the Company in public hands being reduced to less than 25 per cent., and/or resulted in non-compliance with Rule 21.04 of the Listing Rules.

Save as disclosed above, the Directors are not aware of any consequence which would arise under the Takeovers Code as a result of any repurchases pursuant to the Repurchase Mandate.

The Directors have no intention to exercise the Repurchase Mandate to such an extent that will result in the number of Shares in the hands of public falling below the prescribed minimum percentage of 25%.

7. SHARE REPURCHASE MADE BY THE COMPANY

The Company had not purchased any of its Shares (whether on the Stock Exchange or otherwise) during the six months preceding the Latest Practicable Date.

8. GENERAL

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates have any present intention to sell any Shares to the Company if the Repurchase Mandate is approved by the Shareholders.

The Directors have undertaken to the Stock Exchange that they will only exercise the power of the Company to make repurchase pursuant to the Repurchase Mandate in accordance with the Listing Rules and the applicable laws of Bermuda.

No connected person of the Company has notified the Company that he has a present intention to sell any Shares to the Company nor has any such connected person undertaken not to sell any Shares held by him to the Company in the event that the Repurchase Mandate is granted.

— 15 —

PARTICULARS OF THE RETIRING DIRECTORS

APPENDIX II

The following are the particulars of the Directors, who will retire at the Annual General Meeting and who being eligible, will offer themselves for re-election at the Annual General Meeting.

Dr Zhang Hongru, aged 49, is an independent non-executive Director. Dr Zhang is an executive Director and general manager of Tianjin Development Holdings Limited (stock code: 882), which is a company listed on the Main Board in Hong Kong. Dr Zhang is also an executive Director and general manager of Tsinlien Group Company Limited. He is qualified as a senior economist and an attorney in the PRC. He is also a part-time professor of Nankai University, the PRC.

As at the Latest Practicable Date, Dr Zhang did not have, directly and indirectly, any interest in shares in the Company within the meaning of Part XV of the SFO.

Except for a letter of appointment from the Company confirming its appointment of Dr Zhang as independent non-executive Director, there is no service contract entered into between the Company and Dr Zhang. Dr Zhang is not appointed for a specific term except that he is subject to retirement by rotation in accordance with the Bye-Laws. Dr Zhang is entitled to a director’s emolument (which was determined by the Board with reference to the prevailing market condition and comprising only a director’s fee of HK$10,000 per annum. The director’s fee is subject to review by the Board from time to time pursuant to the power given to it under the Bye-Laws.

For the year ended 31 March 2006, Dr Zhang received a fixed remuneration of HK$10,000 from the Company as director’s fee (which was determined by the Board on the basis of his working experience as well as the prevailing market conditions) pursuant to his term of appointment with the Company. Except for the director’s fee, the letter of appointment with Dr Zhang does not provide for any bonus payments, whether fixed or discretionary in nature, or other emoluments.

Other than the relationship arising from his being an independent non-executive Director, Dr Zhang does not have any relationships with any other Directors, senior management, substantial shareholders (as defined in the Listing Rules), or controlling shareholders (as defined in the Listing Rules) of the Company.

As at the Latest Practicable Date and saved as disclosed above, Dr Zhang did not hold any directorship in any public listed companies in the last three years.

Save as disclosed above, there is no information to be disclosed pursuant to the requirements of Rule 13.51(2) of the Listing Rules nor are there other matters that need to be brought to the attention of the Shareholders.

Mr Yao Cho Fai Andrew, aged 40, is an independent non-executive Director. Mr Yao graduated from the University of California, Berkeley with a bachelor degree in finance and holds a master degree in business administration from Harvard University Graduate School of Business Administration, USA. He is currently the chairman and CEO of Van Shung Chong Holdings Limited (stock code: 1001), which is a company listed on the Main Board of the Stock Exchange and also the director of North Asia Strategic Holdings Limited (formerly known as iSteelAsia Holdings Limited) (stock code: 8080), which is a company listed on GEM in Hong Kong. Mr Yao is the winner of the Young Industrialist Award of Hong Kong in 2004.

As at the Latest Practicable Date, Mr Yao did not have, directly and indirectly, any interest in shares in the Company within the meaning of Part XV of the SFO.

— 16 —

PARTICULARS OF THE RETIRING DIRECTORS

APPENDIX II

Except for a letter of appointment from the Company confirming its appointment of Mr Yao as independent non-executive Director, there is no service contract entered into between the Company and Mr Yao. Mr Yao is not appointed for a specific term except that he is subject to retirement by rotation in accordance with the Bye-Laws. Mr Yao is entitled to a director’s emolument (which was determined by the Board with reference to the prevailing market condition and comprising only a director’s fee of HK$10,000 per annum. The director’s fee is subject to review by the Board from time to time pursuant to the power given to it under the Bye-Laws.

For the year ended 31 March 2006, Mr Yao received a fixed remuneration of HK$10,000 from the Company as director’s fee (which was determined by the Board on the basis of his working experience as well as the prevailing market conditions) pursuant to his term of appointment with the Company. Except for the director’s fee, the letter of appointment with Mr Yao does not provide for any bonus payments, whether fixed or discretionary in nature, or other emoluments.

Other than the relationship arising from his being an independent non-executive Director, Mr Yao does not have any relationships with any other Directors, senior management, substantial shareholders (as defined in the Listing Rules), or controlling shareholders (as defined in the Listing Rules) of the Company.

As at the Latest Practicable Date and saved as disclosed above, Mr Yao did not hold any directorship in any public listed companies in the last three years.

Save as disclosed above, there is no information to be disclosed pursuant to the requirements of Rule 13.51(2) of the Listing Rules nor are there other matters that need to be brought to the attention of the Shareholders.

— 17 —

NOTICE OF THE ANNUAL GENERAL MEETING

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==> picture [258 x 46] intentionally omitted <==

(Stock Code: 1160)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that an annual general meeting of Grand Investment International Ltd. (‘‘Company’’) will be held at Unit B, 22nd Floor, Entertainment Building, 30 Queen’s Road Central, Hong Kong on Monday, 3 July 2006 at 2: 00 p.m. for the following purposes: 1. to receive and consider the audited financial statements and the reports of the directors of the Company and the Company’s auditors for the year ended 31 March 2006;

1. to declare a final dividend for the year ended 31 March 2006 (which is to be paid by way of the Bonus Issue (as defined below));

2. to re-elect retiring directors of the Company, namely, Dr Zhang Hongru and Mr Yao Cho Fai Andrew (each as a separate resolution) and to authorise the board of directors of the Company to fix the directors’ remuneration;

3. to re-appoint the Company’s auditors and to authorise the board of directors to fix their remuneration;

and, as special business, to consider and, if thought fit, pass the following resolutions as ordinary or, as the case may be, special resolutions (with or without modifications):

ORDINARY RESOLUTIONS

1. ‘‘THAT subject to the passing of resolution numbered 2 above and conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting or agreeing to grant (subject to allotment) and not having revoked the listing of and permission to deal in the ordinary shares (the ‘‘Shares’’) of HK$0.10 each in the capital of the Company to be issued pursuant to this resolution,

2. (i) a sum of not more than HK$12,000,000 being part of the amount standing to the credit of the share premium account of the Company be capitalized and the directors (the ‘‘Directors’’) of the Company be and they are authorised and directed to appropriate the said sum in paying up in full at par not more than 12,000,000 new Shares (the ‘‘Bonus Shares’’), such Bonus Shares to be allotted, issued and distributed, credited as fully paid, to holders of Shares whose names appear on the register of members of the Company at the close of business on 3 July 2006 in the proportion of one Bonus Share for every five existing Shares held and that the Bonus Shares shall rank for all purposes pari passu with the then existing issued Shares; and

3. For identification purpose only

— 18 —

NOTICE OF THE ANNUAL GENERAL MEETING

• (ii) the Directors be and they are hereby authorised to sign and execute such documents and do all such acts and things incidental to the issue of the Bonus Shares or as they consider necessary or expedient in connection with the issue of the Bonus Shares or as they consider necessary or expedient in connection with the issue of the Bonus Shares (subject to such amendments which the Directors may consider necessary, desirable and in the best interest of the Company).’’

• ‘‘THAT:

• (a) subject to paragraph (c) below, pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’), the exercise by the directors of Grand Investment International Ltd. (the ‘‘Company’’) during the Relevant Period (as defined in paragraph (e) below) of all the powers of the Company to allot, issue and deal with the unissued shares (each, a ‘‘Share’’) of HK$0.10 each in the capital of the Company or securities convertible into Shares and to make or grant offers, agreements and options, including warrants to subscribe for Shares, which might require the exercise of such powers be and the same is hereby generally and unconditionally approved;

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

• (c) the aggregate nominal amount of share capital allotted and issued or agreed conditionally or unconditionally to be allotted and issued (whether pursuant to options or otherwise) by the directors of the Company pursuant to the approval in paragraph (a) above, otherwise than pursuant to (i) a Rights Issue (as defined in paragraph (e) below); or (ii) the exercise of any options granted under all share option schemes of the Company adopted from time to time in accordance with the Listing Rules; or (iii) any scrip dividend or similar arrangements providing for the allotment and issue of Shares in lieu of the whole or part of a dividend on Shares in accordance with the bye-laws of the Company in force from time to time; or (iv) any issue of Shares upon the exercise of rights of subscription or conversion under the terms of any warrants of the Company or any securities which are convertible into Shares shall not exceed the aggregate of:

  • (aa) 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue on the date of the passing of this resolution; and

  • (bb) (if the directors of the Company are so authorised by a separate ordinary resolution of the shareholders of the Company) the aggregate nominal amount of any share capital of the Company purchased by the Company subsequent to the passing of this resolution,

and the authority pursuant to paragraph (a) of this resolution shall be limited accordingly; and

— 19 —

NOTICE OF THE ANNUAL GENERAL MEETING

• (d) the general mandate granted to the directors of the Company to exercise the powers of the Company to allot, issue and otherwise deal with Shares as approved by the shareholders of the Company in the annual general meeting held on 22 July 2005 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); and

• (e) for the purposes of this resolution:

‘‘Bonus Issue’’ and ‘‘Bonus Shares’’ have the meanings respectively ascribed to them in the circular of the Company to its shareholders dated 9 June 2006;

‘‘Relevant Period’’ means the period from the date of 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 bye-laws of the Company or the applicable law of Bermuda to be held; or

• (iii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the directors of the Company by this resolution;

‘‘Rights Issue’’ means an offer of Shares, or offer or issue of warrants, options or other securities giving rights to subscribe for Shares open for a period fixed by the directors of the Company to holders of Shares on the Company’s register of members on a fixed record date in proportion to their then holdings of Shares (subject to such exclusion or other arrangements as the directors of the Company may deem necessary or expedient in relation to fractional entitlements, or having regard to any restrictions or obligations under the laws of, or the requirements of, or the expense or delay which may be involved in determining the existence or extent of any restrictions or obligations under the laws of, or the requirements of, any jurisdiction outside Hong Kong or any recognised regulatory body or any stock exchange outside Hong Kong).’’

7. ‘‘THAT:

• (a) subject to paragraph (b) below, the exercise by the directors of Grand Investment International Ltd. (the ‘‘Company’’) during the Relevant Period (as defined in paragraph (d) below) of all powers of the Company to purchase shares (each, a ‘‘Share’’) of HK$0.10 each in the capital of the Company on The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’), or any other stock exchange on which the Shares may be listed and recognised by the Securities and Futures Commission of Hong Kong (the ‘‘SFC’’) and the Stock Exchange for such purpose, and otherwise in accordance with the rules and regulations of the SFC, the Stock Exchange, the Companies Act 1981 of Bermuda and all other applicable laws in this regard, be and the same is hereby generally and unconditionally approved;

— 20 —

NOTICE OF THE ANNUAL GENERAL MEETING

• (b) the aggregate nominal amount of Shares which may be purchased or agreed to be purchased by the Company pursuant to the approval in paragraph (a) during the Relevant Period shall not exceed 10 per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of the passing of this resolution and the authority pursuant to paragraph (a) of this resolution shall be limited accordingly; and

• (c) the general mandate granted to the directors of the Company to exercise the powers of the Company to purchase Shares as approved by the shareholders of the Company in the annual general meeting held on 22 July 2005 be and is hereby revoked (without prejudice to any valid exercise of such general mandate prior to the passing of this resolution); and

• (d) for the purposes of this resolution:

• ‘‘Bonus Issue’’ and ‘‘Bonus Shares’’ have the meanings respectively ascribed to them in the circular of the Company to its shareholders dated 9 June 2006;

‘‘Relevant Period’’ means the period from the date of 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 bye-laws of the Company or the applicable law of Bermuda to be held; or

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

• ‘‘THAT conditional on the passing of resolutions numbered 6 and 7 above, the general mandate granted to the directors of Grand Investment International Ltd. (the ‘‘Company’’) pursuant to paragraph (a) of resolution numbered 6 above be and it is hereby extended by the addition to the aggregate nominal amount of the shares which may be allotted or agreed conditionally or unconditionally to be allotted by the directors of the Company pursuant to or in accordance with such general mandate of an amount representing the aggregate nominal amount of the share capital of the Company purchased or agreed to be purchased by the Company pursuant to or in accordance with the authority granted under paragraph (a) of resolution numbered 7 above.’’

— 21 —

NOTICE OF THE ANNUAL GENERAL MEETING

SPECIAL RESOLUTION

1. ‘‘THAT the bye-laws of the Company (the ‘‘Bye-Laws’’) (a copy of the revised ByeLaws, with mark-up indicating the above proposed alterations, having been produced to the meeting marked ‘‘A’’ and signed by the chairman of the meeting for the purposes of identification) be and they are hereby altered in the following manner:

2. (a) By inserting a new definition of ‘‘Designated Stock Exchange’’ after the definition of ‘‘debenture’’ and ‘‘debenture holder’’ which shall read as follows:

   • ‘‘Designated Stock Exchange’’ shall mean a stock exchange which is an appointed stock exchange for the purposes of the Companies Act in respect of which the shares of the Company are listed or quoted and where such appointed stock exchange deems such listing or quotation to be the primary listing or quotation of the shares of the Company’’

3. (b) by deleting Bye-Law 4 in its entirety and substituting therefor the following new Bye-Law 4:

   1. The Board may issue warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for any class of shares or securities of the Company, which warrants or convertible securities or securities of similar nature may be issued on such terms as the Board may from time to time determine. Where warrants or convertible securities or securities of similar nature are issued to bearer, no certificate thereof shall be issued to replace one that has been lost unless the Board is satisfied beyond reasonable doubt that the original certificate thereof has been destroyed and the Company has received an indemnity in such form as the Board shall think fit with regard to the issue of any such replacement certificate.’’

4. (c) by deleting Bye-Law 73 in its entirety and substituting therefor the following new Bye-Law 73:

   • ‘‘73. Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in accordance with these Bye-Laws, at any general meeting on a show of hands every Member present in person (or being a corporation, is present by its duly authorised representative), or by proxy shall have one vote and on a poll every Member present in person or by proxy or, in the case of a Member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or instalments is treated for the foregoing purposes as paid up on the share. Notwithstanding anything contained in these Bye-Laws, where more than one proxy is appointed by a Member which is a clearing house (or its nominee(s)), each such proxy shall have one vote on a show of hands. A resolution put to the vote of a meeting shall be decided on a show of hands unless voting by way of a poll is required by the rules of the Designated Stock Exchange or (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:

     • (a) by the chairman of such meeting; or

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NOTICE OF THE ANNUAL GENERAL MEETING

• (b) by at least three Members present in person or in the 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

• (c) by a 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 Members having the right to vote at the meeting; or

• (d) by a 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 holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right; or

• (e) if required by the rules of the Designated Stock Exchange, by any Director or Directors who, individually or collectively, hold proxies in respect of shares representing five per cent. (5%) or more of the total voting rights at such meeting.

A demand by a person as proxy for a Member or in the case of a Member being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a Member.’’;

• (d) by inserting the following words immediately after the words ‘‘The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.’’ appearing in the sixth line of the existing Bye-Law 75:

‘‘The Company shall only be required to disclose the voting figures on a poll if such disclosure is required by the rules of the Designated Stock Exchange.’’

• (e) by deleting the existing Bye-Law 110 (vii) in its entirety and substituting therefor the following new Bye-Law 110 (vii):

• ‘‘(vii) if he shall be removed from office by an Ordinary Resolution of the Company under Bye-Law 119.’’

• (f) by deleting the existing Bye-Law 113(A) in its entirety and substituting therefor the following new Bye-Law 113(A):

• ‘‘113.(A) Notwithstanding any other provisions in these Bye-Laws or other terms on which any Director may be engaged, at each annual general meeting, one-third of the Directors for the time being (or, if their number is not three or a multiple of three (3), then the number nearest to but not less than one-third) shall retire from office by rotation, provided that every Director, including those appointed for a specific term, shall be subject to retirement by rotation at least once every three years.’’

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NOTICE OF THE ANNUAL GENERAL MEETING

• (g) by deleting existing Bye-Law 116 in its entirety and substituting therefor the following new Bye-Law 116:

• ‘‘116. Subject to the Statues and the provisions of these Bye-Laws, the Company may from time to time in general meeting by Ordinary Resolution elect any person to be a Director either to fill a casual vacancy or as an additional Director.’’

• (h) by deleting existing Bye-Law 117 in its entirety and substituting therefor the following new Bye-Law 117:

• ‘‘117. Subject to authorisation by the shareholders in a general meeting, the Directors shall until and unless such authorization shall be revoked, have power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy or (subject to the provisions of the Companies Act) as an additional Director but so that the number of Directors so appointed shall not exceed the maximum number determined from time to time by the shareholders in general meeting. Any Director so appointed shall hold office only until the next following general meeting of the Company (in the case of the filling of casual vacancy) or the next following annual general meeting of the Company (in the case of an additional Director) and shall then be eligible for re-election at the meeting but shall not be taken into account in determining the Directors or the number of Directors who are to retire by rotation at such meeting.’’

• (i) by replacing the word ‘‘Special’’ appearing in the first line of the existing Bye-Law 117 with the word ‘‘Ordinary’’.’’

By order of the board of directors of Grand Investment International Ltd. Lee Woo Sing Chairman

Hong Kong, 9 June 2006

Registered office: Head office and principal place Clarendon House of business in Hong Kong: 2 Church Street Unit B, 22nd Floor Hamilton HM 11 Entertainment Building Bermuda 30 Queen’s Road Central Hong Kong

— 24 —

NOTICE OF THE ANNUAL GENERAL MEETING

Notes:

1. A member of the Company entitled to attend and vote at the meeting convened by the above notice is entitled to appoint a proxy or, if he is the holder of two or more shares in the Company, more than one proxy to attend and, subject to the provisions of the bye-laws of the Company, vote in his stead. A proxy need not be a member of the Company. A form of proxy for use at the meeting is enclosed herewith.

2. To be valid, the form of proxy together with a power of attorney or other authority, if any, under which it is signed or a certified copy of such power or authority must be deposited with the Company’s Hong Kong branch share registrar (‘‘Branch Registrar’’), Computershare Hong Kong Investor Services Limited, at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong not later than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

3. In relation to proposed resolution nos. 2 and 5, the register of members of the Company will be closed from Thursday, 29 June 2006 to Monday, 3 July 2006 (both dates inclusive) during which period no transfer of shares (‘‘Shares’’) in the Company will be registered. In order to qualify for the final dividend (to be paid by way of the Bonus Issue), all transfers of Shares accompanied by the relevant share certificates must be lodged with the Branch Registrar by no later than 4: 00 pm on Monday, 26 June 2006.

4. In relation to proposed resolution no. 3, Dr Zhang Hongru and Mr Yao Cho Fai Andrew will retire from their office of directors at the above meeting pursuant to the Company’s bye-laws and, being eligible, both of them offer themselves for re-election.

5. In relation to proposed resolutions numbered 6 and 8 above, approval is being sought from the shareholders for the grant to the directors of a general mandate to authorise the allotment and issue of shares under the Listing Rules. The directors have no immediate plans to issue any new shares of the Company other than shares which may fall to be issued under the share option scheme of the Company or any scrip dividend scheme (or other similar arrangement) which may be approved by shareholders.

6. In relation to proposed resolution numbered 7 above, the directors wish to state that they will exercise the powers conferred thereby to purchase shares of the Company in circumstances which they deem appropriate for the benefit of the shareholders. An explanatory statement containing the information necessary to enable the shareholders to make an informed decision to vote on the proposed resolution as required by the Listing Rules is set out in the Appendix I to this circular of which this notice of the Annual General Meeting forms part.

7. Delivery of an instrument appointing a proxy should not preclude a member from attending and voting in person at the above meeting or any adjournment thereof and in such event, the instrument appointing a proxy shall be deemed to be revoked.

8. In the case of joint holders of a share, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he/she were solely entitled thereto to if more than one of such joint holders are present at the above meeting, 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. 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 the joint holding.

As at the date of this circular, the executive Directors comprise Mr Lee Tak Lun, Ms Chung Wing Han Wendy, Ms Lee Wai Tsang Rosa and Mr Chou Ping-chun, Benji. The non-executive Director of the Company comprises Mr Lee Woo Sing. The independent non-executive Directors comprise Dr Zhang Hongru, Mr Yao Cho Fai Andrew and Mr Lu Fan.

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