Grand Pharmaceutical Group Limited — Proxy Solicitation & Information Statement 2006

Mar 8, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

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

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

MAxx BIOSCIENCE HOLDINGS LIMITED （曼盛生物科技集團有限公司 [*] ）

(Incorporated in Bermuda with limited liability)

(stock code: 512)

PROPOSALS FOR CHANGE OF AUDITORS, GENERAL MANDATES TO ISSUE AND TO REPURCHASE SHARES AND NOTICE OF SPECIAL GENERAL MEETING

a notice convening the special general meeting of Maxx bioscience Holdings limited to be held at rooms 2201-2203, 22nd floor, World Wide House, 19 des voeux road central, Hong kong on 30 March 2006 at 11:00 a.m. or any adjournment thereof is set out on pages 10 to 12 of this circular.

a form of proxy for use at the special general meeting of Maxx bioscience Holdings limited is enclosed with this circular. Whether or not you are able to attend and vote at such meeting, please complete and return the enclosed proxy form in accordance with the instructions printed thereon and return the same to Maxx bioscience Holdings limited’s branch share registrar in Hong kong, computershare Hong kong investor services limited, at 46th floor, Hopewell centre, 183 Queen’s road east, Wanchai, Hong kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the special general meeting or any adjournment thereof. completion and return of the proxy form will not preclude you from attending and voting at the special general meeting or any adjournment thereof should you so wish and in such case the proxy form shall be deemed to be revoked.

• For identification purpose only

8 March 2006

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . change of auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . general mandate to repurchase shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . general mandate to issue shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . sgM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . procedure for demanding a poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3 4 4 5 5 6 6 6
Appendix — Explanatory Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10

— i —

DEFINITIONS

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

“bdo”	bdo Mccabe lo limited, certified public accountants
“board”	the board of directors
“bye-laws”	the bye-laws of the company
“change of auditors”	the proposed appointment of bdo as the new auditors of the
	company following the resignation of kll upon the approval
	of the shareholders by an ordinary resolution at the sgM and
	to hold office until the conclusion of the next annual general
	meeting
“company”	Maxx bioscience Holdings limited, a company incorporated
	in bermuda, the issued shares of which are listed on the stock
	exchange
“director(s)”	the director(s) of the company
“group”	the company and its subsidiaries
“issue Mandate”	a general and unconditional mandate to be granted to the directors
	to allot, issue and deal with shares up to a maximum of 20 per
	cent of the issued share capital of the company as at the date of
	passing of the relevant resolution
“kll”	kll associates cpa limited, certified public accountants
“latest practicable date”	3 March 2006, being the latest practicable date prior to the
	printing of this circular
“listing rules”	The rules governing the listing of securities on the stock
	exchange
“repurchase Mandate”	a general and unconditional mandate to be granted to the directors
	to exercise all powers of the company to repurchase on the stock
	exchange, or any other stock exchange on which the shares of
	the company may be listed, shares up to a maximum of 10 per
	cent of the issued share capital of the company as at the date of
	passing of the relevant resolution

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DEFINITIONS

“sfo”	securities and futures ordinance (chapter 571 of laws of Hong
	kong)
“sgM”	the special general meeting of the company to be convened
	and held at rooms 2201-2203, 22nd floor, World Wide House,
	19 des voeux road central, Hong kong on 30 March 2006 at
	11:00 a.m., the notice of which is set out on pages 10 to 12 of
	this circular
“share(s)”	share(s) of Hk$0.01 each in the capital of the company
“shareholder(s)”	registered holder(s) of the share(s)
“stock exchange”	The stock exchange of Hong kong limited
“Takeovers code”	The codes on Takeovers and Mergers and share repurchases
	issued by the Hong kong securities and futures commission
“Hk$”	Hong kong dollar(s)

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LETTER FROM THE BOARD

MAxx BIOSCIENCE HOLDINGS LIMITED （曼盛生物科技集團有限公司 [*] ）

(Incorporated in Bermuda with limited liability)

(stock code: 512)

Executive Directors: Ms. lo Yuk Yee (Chairman) Ms. He Jin Hong Mr. siu siu ling, robert Mr. Ha sze Tung sharp stone Mr. Hu Min

Independent non-executive Directors: Mr. Wong Wai kin Mr. Ma shui kin Ms. so Tosi Wan, Winnie

Registered office: clarendon House 2 church street Hamilton HM11 bermuda

Principal place of business in Hong Kong: room 3802 Wu chung House 213 Queen’s road east Wanchai Hong kong

8 March 2006

To the Shareholders

dear sir or Madam,

PROPOSALS FOR CHANGE OF AUDITORS, GENERAL MANDATES TO ISSUE AND TO REPURCHASE SHARES AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

on 21 february 2006, the board announced the change of auditors.

The purpose of this circular is to provide the shareholders with further information on (i) the change of auditors and (ii) ordinary resolutions to be proposed at the sgM including (a) an ordinary resolution relating to the change of auditors; and (b) ordinary resolutions relating to the granting to the directors the issue Mandate for the issue of the company’s shares and the repurchase Mandate for repurchase by the company of its own shares.

• For identification purpose only

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LETTER FROM THE BOARD

CHANGE OF AUDITORS

kll will resign as auditors of the company with effect from 15 March 2006 because of the combination of their practice with that of bdo which took place on 1 august 2005. kll remain in existence after the combination of practices. for that reason, bdo will be appointed as the new auditors of the company following the resignation of kll upon the approval by the shareholders by an ordinary resolution at the sgM and to hold office until the conclusion of the next annual general meeting of the company.

kll confirmed in their letters of resignation, issued pursuant to the professional ethics statement 1.207a issued by the Hong kong institute of certified public accountants, dated 16 february 2006 to the directors and the audit committee of the company respectively that there are no circumstances connected with their resignation which they considered should be brought to the attention of the members or creditors of the company or its subsidiaries. kll has also issued a professional clearance letter to bdo dated 16 february 2006 confirming that there are no circumstances surrounding the change of auditors which they believed bdo should be aware of.

The board also confirms that there are no circumstances in respect of the resignation of kll and the change of auditors which it considers should be brought to the attention of the shareholders. The board and the audit committee of the company are not aware of any disagreement between the company and kll and that there are no unusual or unresolved issues up to the date of resignation of kll. no audit work for the year ended 31 december 2005 has been commenced by kll before their resignation.

after consultation with bdo, the board does not consider that the change of auditors will affect the release of the company’s annual results for the year ended 31 december 2005.

GENERAL MANDATE TO REPURCHASE SHARES

at the latest annual general meeting of the company held on 30 June 2005, the directors did not seek the approval from the shareholders to grant a general mandate to repurchase shares. at the sgM, an ordinary resolution will be proposed that the directors be granted 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 of the company may be listed, shares up to a maximum of 10 per cent of the issued share capital of the company as at the date of passing of the relevant resolution.

as at the latest practicable date, there was a total of 1,073,934,000 shares in issue. subject to the passing of the resolutions granting the repurchase Mandate and on the basis that no further shares are issued or repurchased before the sgM, the company will be allowed to repurchase a maximum of 107,393,400 shares.

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LETTER FROM THE BOARD

GENERAL MANDATE TO ISSUE SHARES

at the latest annual general meeting of the company held on 30 June 2005, the directors did not seek the approval from the shareholders to grant a general mandate to allot, issue and deal with shares. an ordinary resolution will be proposed that the directors be granted a general and unconditional mandate to allot, issue and deal with shares up to a maximum of 20 per cent of the issued share capital of the company as at the date of passing of the relevant resolution.

as at the latest practicable date, there was a total of 1,073,934,000 shares in issue. subject to the passing of the resolution granting the issue Mandate and on the basis that no further shares are issued or repurchased before the sgM, the company will be allowed to issue a maximum of 214,786,800 shares.

in addition, if the repurchase Mandate and the issue Mandate are granted, an ordinary resolution will be proposed at the sgM that the directors be granted an extension of issue Mandate, which provides that any shares repurchased under the repurchase Mandate will be added to the total number of shares which may be allotted and issued under the issue Mandate.

an explanatory statement required by the listing rules to be sent to the shareholders in connection with the repurchase Mandate is set out in appendix of this circular. The explanatory statement contains all information reasonably necessary to enable the shareholders to make an informed decision on whether to vote for or against the relevant resolutions at the sgM.

SGM

set out on pages 10 to 12 of this circular is a notice convening the sgM to consider and, if thought fit, to approve the ordinary resolutions relating to the change of auditors and the granting to the directors the issue Mandate for the issue of the company’s shares and the repurchase Mandate for repurchase by the company of its own shares.

a form of proxy for use at the sgM is enclosed herewith. Whether or not you are able to attend and vote at such meeting, please complete the enclosed form of proxy and return it to the company’s branch share registrar in Hong kong, computershare Hong kong investor services limited, at 46th floor, Hopewell centre, 183 Queen’s road east, Wanchai, Hong kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the sgM or any adjournment thereof. completion and return of the form of proxy will not preclude you from attending and voting in person at the sgM or any adjournment thereof if you so wish and in such case the proxy form shall be deemed to be revoked.

— 5 —

LETTER FROM THE BOARD

PROCEDURE FOR DEMANDING A POLL

pursuant to the bye-laws of the company 66(1), at any general meeting a resolution put to the vote of a 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 by:

• (a) the chairman of the meeting; or

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

• (c) any member or members present in person or by proxy or representative 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) any member or members present in person or by proxy or representative 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.

RECOMMENDATION

The directors consider that the proposed ordinary resolutions for the change of auditors and the proposed granting of the general mandates to the directors to issue and repurchase shares are in the best interests of the company and the shareholders. The directors therefore recommend the shareholders to vote in favour of the relevant resolutions as set out in the notice of the sgM.

MISCELLANEOUS

The english text of this circular shall prevail over the chinese text.

by order of the board of Maxx Bioscience Holdings Limited Ha Sze Tung Sharp Stone Director

— 6 —

ExPLANATORY STATEMENT

APPENDIx

This Appendix serves as an explanatory statement, as required by the Listing Rules, to provide certain information to you for your consideration of the Repurchase Mandate.

1. SHARE CAPITAL

as at the latest practicable date, there was a total of 1,073,934,000 shares in issue.

subject to the passing of the resolutions granting the issue Mandate and the repurchase Mandate and on the basis that no further shares are issued or repurchased before the sgM, the company will be allowed to issue a maximum of 214,786,800 shares and to repurchase a maximum of 107,393,400 shares, being 20 per cent and 10 per cent respectively of the issued capital of the company as at the date of passing of the relevant resolutions.

2. REASONS FOR REPURCHASES

The directors believe that it is in the best interests of the company and the shareholders to seek a general authority from the shareholders to enable the company to repurchase its shares on the stock exchange. such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value and/or earnings per share of the company and will only be made when the directors believe that such a repurchase will benefit the company and the shareholders.

The directors have no present intention to repurchase any shares but consider the repurchase Mandate will provide the company the flexibility to make such repurchase when appropriate and beneficial to the company.

3. FUNDING OF REPURCHASES

The company is empowered by its Memorandum of association and bye-laws to repurchase its shares. The companies act 1981 (as amended) of bermuda provides that the amount of capital repaid in connection with the share repurchases may only be paid out of capital paid up on the relevant shares, funds of the company that would otherwise be available for dividend or distribution or the proceeds of a new issue of shares made for such purpose. in repurchasing shares, the company will only apply funds legally available for such purpose in accordance with its bye-laws and the laws of bermuda. in accordance with the listing rules, the listing of all shares which are repurchased by the company (whether on the stock exchange or otherwise) shall be automatically cancelled upon repurchase and the company would apply for listing of any further issue of that type of shares in the normal way.

There might be an adverse impact on the working capital or gearing position of the company as compared with the position disclosed in the audited consolidated accounts contained in the annual report for the year ended 31 december 2004 in the event that

— 7 —

ExPLANATORY STATEMENT

APPENDIx

the repurchase Mandate was to be carried out in full at any time during the proposed repurchase period. However, the directors do not propose to exercise the repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the company or the gearing levels of the company.

4. SHARE PRICES

The following table shows the highest and lowest prices at which the shares have been traded on the stock exchange during each of the twelve months preceding the latest practicable date:

practicable date:
	Share	Prices
	Per Share
Month	Highest	Lowest
	HK$	HK$
2005
March	0.124	0.105
april	0.150	0.106
May	0.127	0.100
June	0.112	0.094
July	0.108	0.080
august	0.119	0.086
september	0.114	0.093
october	0.098	0.075
november	0.097	0.075
december	0.124	0.092
2006
January	0.120	0.100
february	0.104	0.090

5. UNDERTAKING

The directors have undertaken to the stock exchange that they will exercise the powers of the company to make repurchases pursuant to the repurchase Mandate in accordance with the listing rules and the applicable laws of bermuda so far as the same may be applicable and in accordance with the regulations set out in the Memorandum of association of the company and the bye-laws.

none of the directors nor, to the best of their knowledge having made all reasonable enquiries, any of their associates (as defined in the listing rules) have any present intention to sell shares to the company under the repurchase Mandate if such mandate is approved by the shareholders.

— 8 —

ExPLANATORY STATEMENT

APPENDIx

no connected person (as defined in the listing rules) of the company has notified the company that he has a present intention to sell shares to the company, nor has undertaken not to do so, in the event that the repurchase Mandate is approved by the shareholders.

6. TAKEOVERS CODE

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 purposes of rule 32 of the Takeovers code. accordingly, a shareholder, or a group of shareholders acting in concert, depending on the level of increase of the shareholders’ interest, could obtain or consolidate control of the company and become obliged to make a mandatory offer in accordance with rule 26 of the Takeovers code.

as at the latest practicable date, outwit investments limited was beneficially interested in 548,554,454 shares, representing approximately 51.08% of the issued share capital of the company. 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 percentage of the issued share capital of the company beneficially interested by outwit investments limited would be increased to approximately 56.75%. such increase would not give rise to an obligation to make a mandatory offer under rule 26 of the Takeovers code and/or reduce the amount of shares held by the public to less than 25%.

save as disclosed above, the directors are currently not aware of any consequences which will arise under the Takeovers code as a result of any purchase made under the repurchase Mandate.

7. SHARE REPURCHASES MADE BY THE COMPANY

no shares had been repurchased by the company, whether on the stock exchange or otherwise, in the last six months preceding the latest practicable date.

— 9 —

NOTICE OF SGM

MAxx BIOSCIENCE HOLDINGS LIMITED （曼盛生物科技集團有限公司 [*] ）

(Incorporated in Bermuda with limited liability)

(stock code: 512)

NOTICE IS HEREBY GIVEN that the special general meeting of Maxx bioscience Holdings limited (the “company”) will be held at rooms 2201-2203, 22nd floor, World Wide House, 19 des voeux road central, Hong kong on 30 March 2006 at 11:00 a.m. (or any adjournment thereof) for the following purposes:

ORDINARY RESOLUTIONS

1. To appoint bdo Mccabe lo limited as auditors of the company to fill the casual vacancy created by the resignation of kll associates cpa limited and to hold office until the conclusion of the next annual general meeting and that the board of directors of the company be authorised to fix their remuneration.

2. To consider and, if thought fit, pass the following resolutions as ordinary resolutions:

3. (a) “ THAT :

   • (i) subject to sub-paragraph (ii) of this resolution, the exercise by the directors of the company (the “directors”) during the relevant period (as hereinafter defined) of all the powers of the company to allot and issue additional shares in the capital of the company and to make or grant offers, agreements and options which might require the exercise of such powers either during or after the relevant period, be and is hereby generally and unconditionally approved;

   • (ii) the aggregate nominal amount of share capital allotted and issued or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the directors pursuant to the approval in subparagraph (i) of this resolution, otherwise than pursuant to (a) a rights issue (as hereinafter defined); (b) an 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; (c) an issue of shares as scrip dividends or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the company in accordance with the bye-laws of the company from time to time; or (d) an issue of shares under any option scheme or similar arrangement for the

4. For identification purpose only

— 10 —

NOTICE OF SGM

grant or issue to employees of the company and/or any of its subsidiaries of shares or rights to acquire shares, shall not exceed 20% of the aggregate of the nominal amount of the issued share capital of the company at the date of passing of this resolution, and the said approval shall be limited accordingly; and

• (iii) for the purposes of this resolution:

“relevant period” means the period from the passing of this resolution until whichever is the earliest of:

• (a) the conclusion of the next annual general meeting of the company;

• (b) the expiration of the period within which the next annual general meeting of the company is required by the bye-laws of the company or any applicable law to be held; or

• (c) the date on which the authority set out in this resolution is revoked or varied by an ordinary resolution in general meeting.

“rights issue” means an offer of shares open for a period fixed by the directors to holders of shares whose names appear on the register of members of the company on a fixed record date in proportion to their then holdings of such shares (subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restriction or obligations under the laws of, or the requirements of, any recognised regulatory body or any stock exchange in any territory outside Hong kong).”

(b) “ THAT :

• (i) subject to sub-paragraph (ii) of this resolution, the exercise by the directors during the relevant period (as hereinafter defined) of all the powers of the company to repurchase issued shares in the capital of the company (“shares”), subject to and in accordance with all applicable laws and the bye-laws of the company, be and is hereby generally and unconditionally approved;

• (ii) the aggregate nominal amount of shares which the company is authorised to repurchase pursuant to the approval in sub-paragraph (i) above of this resolution shall not exceed 10% of the aggregate nominal amount of the shares in issue as at the date of the passing of this resolution, and the said approval shall be limited accordingly; and

— 11 —

NOTICE OF SGM

• (iii) for the purposes of this resolution:

“relevant period” means the period from the passing of this resolution until whichever is the earliest of:

• (a) the conclusion of the next annual general meeting of the company;

• (b) the expiration of the period within which the next annual general meeting of the company is required by the bye-laws of the company or any applicable law to be held; or

• (c) the date on which the authority set out in this resolution is revoked or varied by an ordinary resolution in general meeting.”

• (c) “ THAT conditional upon resolutions no. 2(a) and 2(b) above 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 no. 2(b) above 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 no. 2(a) above.”

by order of the board of Maxx Bioscience Holdings Limited Ha Sze Tung Sharp Stone Director

Hong kong, 8 March 2006

Notes:

1. any member entitled to attend and vote at a meeting of the company is entitled to appoint another person as his proxy to attend and, vote instead of him. a proxy need not be a member of the company.

2. To be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of attorney or authority must be deposited at the company’s branch share registrar in Hong kong, computershare Hong kong investor services limited at 46th floor, Hopewell centre, 183 Queen’s road east, Wanchai, Hong kong not less than 48 hours before the time appointed for holding of the meeting or any adjournment thereof.

3. Where there are joint holders of a share of the company, any one of such holders may vote at the meeting either personally or by proxy in respect of such share as if he was solely entitled thereto, but if more than one of such holders be present at the meeting personally or by proxy, that one of such holders so present whose name stands first on the register of members of the company in respect of such share shall alone be entitled to vote in respect thereof.

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