Hony Media Group — AGM Information 2004

Apr 30, 2004

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 manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your securities in China Strategic 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, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited 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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CHINA STRATEGIC HOLDINGS LIMITED （中策集團有限公司）

(Incorporated in Hong Kong with limited liability) Stock code: 235

PROPOSAL TO REFRESH THE 10% GENERAL LIMIT ON GRANT OF OPTIONS UNDER THE SHARE OPTION SCHEME, GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE NEW SHARES, PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND NOTICE OF ANNUAL GENERAL MEETING

A notice of the Annual General Meeting to be held at 11th Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong on 29th June, 2004 at 11:30 a.m. is set out on pages 15 to 22 of this circular. A form of proxy for use by the Shareholders at the Annual General Meeting is enclosed. Whether or not you intend to attend the Annual General Meeting in person, please complete the form of proxy enclosed in accordance with the instructions printed thereon and return it to the share registrars of the Company, Standard Registrars Limited at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as practicable but in any event not later than 48 hours before the time appointed for holding the Annual General Meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Annual General Meeting should you so wish.

30th April, 2004

CONTENTS

	Page
Responsibility statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Explanatory statement for the repurchase mandate. . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Explanatory statement for the proposed amendments to the Articles . . . . . . . . . . .	13
Notice of Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15

— i —

RESPONSIBILITY STATEMENT

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

— ii —

DEFINITIONS

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

“Annual General Meeting”	the annual general meeting of the Company to be held at
	11th Floor, Paul Y. Centre, 51 Hung To Road, Kwun
	Tong, Kowloon, Hong Kong on 29th June, 2004 at 11:30
	a.m., or any adjournment thereof (or as the case may be)
“Articles”	the articles of association of the Company
“associate(s)”	has the same meaning ascribed to it under the Listing
	Rules
“Board”	the board of Directors
“CAO”	the Companies (Amendment) Ordinance 2003
“Company”	China Strategic Holdings Limited, a company
	incorporated in Hong Kong with limited liability, and
	the shares of which are listed on the main board of the
	Stock Exchange
“Companies Ordinance”	the Companies Ordinance (Chapter 32 of the Laws of
	Hong Kong)
“connected person(s)”	has the same meaning ascribed to it under the Listing
	Rules
“Directors”	the directors of the Company
“General Mandate”	a general mandate to allot, issue and deal with new Shares
	not exceeding 20% of the aggregate nominal amount of
	the share capital of the Company in issue as at the date
	of passing of the ordinary resolution in relation thereof
“Group”	the Company and its subsidiaries
“Hanny”	Hanny Holdings Limited, a company incorporated in
	Bermuda whose shares are listed on the Stock Exchange
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong

— 1 —

DEFINITIONS

“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Latest Practicable Date”	26th April, 2004, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“Paul Y.”	Paul Y. — ITC Construction Holdings Limited, a
	company incorporated in Bermuda whose securities are
	listed on the Stock Exchange
“Refreshment”	the proposed refreshment of the 10% general limit on
	grant of options under the Share Option Scheme and all
	other share option scheme(s) of the Company
“Repurchase Mandate”	authority to repurchase the fully paid up Shares of up to
	10% of the aggregate nominal amount of the share capital
	of the Company in issue as at the date of passing of the
	ordinary resolution in relation thereof
“SFO”	the Securities and Futures Ordinance (Chapter 571 of
	the Laws of Hong Kong) as amended from time to time
“Share Option Scheme”	the share option scheme adopted by the Company at an
	extraordinary general meeting dated 4th June, 2002
“Shareholder(s)”	the holder(s) of the Share(s)
“Share(s)”	the ordinary share(s) of HK$0.10 each in the share capital
	of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers
“%”	per cent.
“2003 Annual Report”	the annual report of the Company for the year ended
	31st December, 2003

— 2 —

LETTER FROM THE BOARD

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CHINA STRATEGIC HOLDINGS LIMITED （中策集團有限公司）

(Incorporated in Hong Kong with limited liability)

Executive Directors: Chan Kwok Keung, Charles (Chairman and Chief Executive Officer) Yap, Allan (Vice Chairman) Li Wa Kin (Deputy Managing Director) Chau Mei Wah, Rosanna Chan Ling, Eva

Registered office: 8th Floor Paul Y. Centre 51 Hung To Road Kwun Tong Kowloon Hong Kong

Independent non-executive Directors: David Edwin Bussmann Fung Wan Yiu, Agnes

Alternate Directors:

Chan Kwok Hung (Alternate to Chan Kwok Keung, Charles) Lui Siu Tsuen, Richard (Alternate to Yap, Allan)

30th April, 2004

To the Shareholders

Dear Sir/Madam,

PROPOSAL TO REFRESH THE 10% GENERAL LIMIT ON GRANT OF OPTIONS UNDER THE SHARE OPTION SCHEME, GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE NEW SHARES,

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

The purpose of this circular is to provide you with information regarding certain ordinary and special resolutions to be proposed at the Annual General Meeting to enable you to make an informed decision on whether to vote for or against those resolutions.

— 3 —

LETTER FROM THE BOARD

At the Annual General Meeting, resolutions, amongst others, will be proposed for the Company to approve (i) the Refreshment; (ii) the proposed granting of the Repurchase Mandate and the General Mandate to the Directors; and (iii) the amendments to the Articles to align with the amended Listing Rules which have become effective on 31st March, 2004 and the SFO and the CAO which have become effective on 1st April, 2003 and 13th February, 2004 respectively.

REFRESHMENT OF THE 10% GENERAL LIMIT ON GRANT OF OPTIONS UNDER THE SHARE OPTION SCHEME

On 4th June, 2002, the Company adopted the Share Option Scheme in compliance with the Listing Rules in respect of the share option schemes of a listed company.

As at 4th June, 2002, being the date on which the Shares were listed on the Stock Exchange and the Share Option Scheme became unconditional, the maximum number of Shares which may be issued upon exercise of all options to be granted under the Share Option Scheme and all the other share option scheme(s) of the Company is 46,097,894 Shares, being 10% of the Shares in issue on such date.

As at the Latest Practicable Date, out of the total of 25,000,000 options granted under the Share Option Scheme (including exercised, outstanding, cancelled or lapsed), 25,000,000 options have been exercised, and none of the options were outstanding, lapsed or cancelled.

Unless the 10% general limit on grant of options under the Share Option Scheme and other share option scheme(s) of the Company is “refreshed”, only up to 21,097,894 Shares may be issued pursuant to the grant of further options under the Share Option Scheme.

The Refreshment will enable the Company to grant further options to eligible participants, being any employee, executive or officer of the Group (including executive and non-executive directors of the Group) and any supplier, consultant, agent, adviser, shareholder, customer, partner, business associate who, at the sole discretion of the Board, will contribute or has contributed to the Group as incentives or rewards.

Proposal

It is therefore proposed that subject to the approval of the Shareholders at the Annual General Meeting and such other requirements prescribed under the Listing Rules, the general limit on grant of options under the Share Option Scheme and all other share option scheme(s) of the Company will be refreshed to 10% of the Shares in issue as at the date of the approval by the Shareholders at the Annual General Meeting and options previously granted under the Share Option Scheme and any other share option scheme(s) of the Company (including those outstanding, cancelled, lapsed in accordance with such scheme(s) or exercised options) will not be counted for the purpose of calculating the limit as refreshed.

— 4 —

LETTER FROM THE BOARD

Pursuant to the Listing Rules, the Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option scheme(s) of the Company at any time will not exceed 30% of the Shares in issue from time to time. No options shall be granted under any scheme(s) of the Company or any of its subsidiaries if this will result in the 30% limit being exceeded.

As at the Latest Practicable Date, there were 881,595,087 Shares in issue. Assuming that no further Shares will be issued prior to the date of approving the refreshed general limit by the Shareholders, the maximum number of options that can be granted by the Company under the refreshed limit would be 88,159,058 Shares.

Conditions

As required by the Share Option Scheme and the Listing Rules, an ordinary resolution will be proposed at the Annual General Meeting to approve the “refreshed” general limit of the Share Option Scheme and all other share option scheme(s) of the Company such that the total number of Shares which may be issued upon exercise of all options to be granted under the refreshed general limit must not exceed 10% of the total number of Shares in issue as at the date of approving of the refreshed general limit.

The adoption of the refreshed general limit of the Share Option Scheme and other share option scheme(s) of the Company is conditional upon:

• (a) the Shareholders passing an ordinary resolution to approve the refreshment of the 10% general limit on grant of options under the Share Option Scheme and all other share option scheme(s) of the Company at the Annual General Meeting; and

• (b) the Stock Exchange granting the approval of the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of any options granted under the refreshed general limit of the Share Option Scheme and all other share option scheme(s) of the Company.

Application for Listing

Application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Shares which may fall to be issued upon the exercise of any options that may be granted under the Refreshment.

— 5 —

LETTER FROM THE BOARD

GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE NEW SHARES

General mandate to repurchase Shares

At the Annual General Meeting, ordinary resolution no. 5 will be proposed that the Directors be given the Repurchase Mandate. Under the Repurchase Mandate, the maximum number of Shares that the Company may repurchase shall not exceed 10% of the issued and fully paid up share capital of the Company as at the date of passing of the resolution. The Company’s authority is restricted to repurchase Shares of the Company on the market in accordance with the Listing Rules. The mandate allows the Company to make repurchases only during the period ending on the earliest of the date of the next annual general meeting of the Company, the date by which the next annual general meeting of the Company is required to be held by the Articles or any applicable law of Hong Kong or the date upon which such authority is revoked or varied by an ordinary resolution of the Shareholders at a general meeting of the Company.

In accordance with the Listing Rules, an explanatory statement is set out in Appendix I of this circular to provide you with requisite information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed ordinary resolution for the grant of the Repurchase Mandate at the Annual General Meeting.

General mandate to issue new Shares

At the Annual General Meeting, ordinary resolutions nos. 6 and 7 will also be proposed that the Directors be given the General Mandate in order to ensure flexibility and discretion to the Directors to issue new Shares. In addition, a resolution will also be proposed to extend the General Mandate by adding to it the number of such Shares repurchased under the Repurchase Mandate.

Amendments to the Articles

The Stock Exchange has revised the Listing Rules and the new Listing Rules have become effective on 31st March, 2004. In addition, the SFO and the CAO have recently become effective on 1st April, 2003 and 13th February, 2004 respectively.

The Board therefore proposes to make certain amendments to the Articles in compliance with the revised Listing Rules and at the same time bring the Articles up to date with the SFO and Companies Ordinance.

Amendment to Article 85(b) will be proposed to reflect the enactment of the SFO which includes the definition of “clearing house”.

— 6 —

LETTER FROM THE BOARD

Pursuant to the Companies Ordinance as amended by the CAO, a director may be removed by an ordinary resolution instead of a special resolution notwithstanding any provision in a company’s constitution. In this regard, an amendment to the Articles to reflect this legislative change will also be proposed at the Annual General Meeting.

The corporate governance issues including, among other things, disclosure of information on proposed directors before election at general meeting and notices to be given in relation thereto, and voting of members at general meeting and of directors at board meeting on any matter in which the directors and/or his associates have a material interest as required under Appendix 3 to the revised Listing Rules will also be incorporated in the proposed amendments to the Articles.

Set out in the special resolution no. 8 of the notice of Annual General Meeting on pages 15 to 22 of this circular are amendments to the Articles that are proposed. A summary of the proposed amendments are also set out in the Appendix II of this circular.

ANNUAL GENERAL MEETING

A notice of the Annual General Meeting is set out on pages 15 to 22 of this circular. At the Annual General Meeting, in addition to the ordinary business of the meeting, resolutions will be proposed to approve the Refreshment, the General Mandate, the Repurchase Mandate and the amendments to the Articles respectively.

Details of the Directors who are proposed to be re-elected at the Annual General Meeting are set out in the 2003 Annual Report.

A form of proxy for use by the Shareholders at the Annual General Meeting is enclosed. Whether or not you intend to attend and vote at the Annual General Meeting in person, you are requested to complete the form of proxy enclosed in accordance with the instructions printed thereon and return it to the share registrars of the Company, Standard Registrars Limited at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, as soon as practicable but in any event not less than 48 hours before the time appointed for holding the Annual General Meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Annual General Meeting should you so wish.

— 7 —

LETTER FROM THE BOARD

Pursuant to Article 80 of the Articles, every resolution submitted to a general meeting shall be determined on a show of hands in the first instance by the Shareholders present in person, but a poll may be demanded (before or upon the declaration of the result of the show of hands) by the Chairman or by:

• (a) at least 3 Shareholders present in person or by proxy for the time being entitled to vote at the meeting; or

• (b) any Shareholder or Shareholders present in person or by proxy and representing not less than one-tenth of the total voting rights of all the Shareholders having the right to vote at the meeting; or

• (c) any Shareholder or Shareholders 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.

RECOMMENDATION

The Directors consider that (i) the Refreshment; (ii) the proposed granting of the Repurchase Mandate and the General Mandate to the Directors; and (iii) the proposed amendments to the Articles are in the best interests of the Company and the Shareholders as a whole and, accordingly, the Directors recommend all Shareholders to vote in favour of the ordinary and special resolutions nos. 4 to 8 to be proposed at the Annual General Meeting in respect thereof.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the registered office of the Company during the normal business hours from the date of this circular up to and including the date of the Annual General Meeting:

• (i) the memorandum and the Articles of the Company; and

• (ii) the Share Option Scheme.

Yours faithfully,

For and on behalf of

China Strategic Holdings Limited Chan Ling, Eva Executive Director

— 8 —

EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

APPENDIX I

This Appendix serves as an explanatory statement required by Rule 10.06(1)(b) of the Listing Rules and also as a memorandum of the terms of a proposed repurchase of shares required by section 49BA(3)(b) of the Companies Ordinance, to provide you with all the information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed resolutions.

LISTING RULES

The Listing Rules permit companies whose primary listings are on the Stock Exchange to repurchase their own shares on the Stock Exchange subject to certain restrictions, the most important of which are summarised below:

(a) Shareholders’ approval

All proposed repurchases of shares on the Stock Exchange by a company with its primary listing on the Stock Exchange must be approved in advance by an ordinary resolution, either by way of a general mandate or by specific approval.

(b) Source of funds

Repurchases of shares must be funded entirely from the company’s available cashflow or working capital facilities and will be made out of funds legally available for such purpose in accordance with the company’s memorandum and articles of association and the laws of Hong Kong.

REASONS FOR SHARES REPURCHASE

The Directors believe that it is in the best interests of the Company and the Shareholders to continue to have a general authority from the Shareholders to enable the Directors to repurchase Shares on the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net value of the Company and its assets and/or its earnings per share and will only be made when the Directors believe that such repurchases will benefit the Company and the Shareholders as a whole.

SHARE CAPITAL

As at the Latest Practicable Date, (i) the Company had 881,595,087 Shares in issue or an issued share capital of HK$88,159,508.70; and (ii) there were no share options outstanding under the Share Option Scheme entitling holders thereof to subscribe for Shares.

— 9 —

EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

APPENDIX I

Subject to the passing of the proposed ordinary resolution approving the Repurchase Mandate no further Shares is issued, allotted or repurchased by the Company prior to the Annual General Meeting, the exercise of the Repurchase Mandate in full would result in up to 88,159,508 Shares, representing the share capital of HK$8,815,950.80, being repurchased by the Company during the period prior to the next annual general meeting of the Company following the passing of the resolution referred to herein to the date upon which such authority is revoked or varied by an ordinary resolution of the Shareholders at a general meeting of the Company.

FUNDING OF REPURCHASE

In repurchasing the Shares, the Company may only apply funds entirely from the Company’s available cashflow or working capital facilities and will be made out of funds legally available for such purpose in accordance with its memorandum and Articles and the applicable laws of Hong Kong.

It is envisaged that the funds required for any repurchase of Shares would be derived from the capital paid up on the Shares being repurchased and from the distributable profits of the Company.

The exercise of the Repurchase Mandate in full will not have a material adverse impact on the working capital or gearing level of the Company as compared with the position disclosed in its most recent published audited accounts as at 31st December, 2003. However, the Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse impact on the working capital or gearing level of the Company which in the opinion of the Directors are from time to time appropriate for the Company.

DISCLOSURE OF INTERESTS

None of the Directors or, to the best of their knowledge having made all reasonable enquiries, any of their respective associates has any present intention, in the event that the Repurchase Mandate is approved by the Shareholders, to sell any Shares to the Company or its subsidiaries (as defined in the Companies Ordinance).

No connected person has notified the Company that he/she has a present intention to sell any Shares to the Company nor has undertaken not to sell any of the Shares held by him/her to the Company, in the event that the Repurchase Mandate is approved by the Shareholders.

— 10 —

EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

APPENDIX I

UNDERTAKING OF THE DIRECTORS

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the Listing Rules and the applicable laws of the Hong Kong.

EFFECT OF THE TAKEOVERS CODE

If, as a result of Shares repurchase by a company, a shareholder’s proportionate interest in the voting rights of the company increases, such increase will be treated as an acquisition of voting rights for the purposes of the Takeovers Code. Accordingly, a shareholder, or group of shareholders acting in concert, 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, each of Paul Y. and Hanny beneficially held 258,819,795 Shares and 258,819,794 Shares respectively, each representing approximately 29.36% of the existing issued share capital of the Company and in aggregate approximately 58.72% of the existing issued share capital of the Company. In the event that the Directors exercise the Repurchase Mandate in full to repurchase the Shares in accordance with the terms of the ordinary resolution to be proposed at the Annual General Meeting and assuming no further Shares are issued by the Company, the increase in the shareholding of each of Paul Y. and Hanny in the Company to approximately 32.62% of the issued share capital of the Company and 64.24% of the issued share capital of the Company in aggregate will not give rise to an obligation to make a mandatory offer under Rules 26 and 32 of the Takeovers Code.

Assuming that there is no further issue of Shares between the Latest Practicable Date and date of repurchase, the exercise of Repurchase Mandate whether in whole or in part will not result in less than 25% of the issued share capital of the Company being held by the public as required by Rule 8.08 of the Listing Rules. The Directors have no intention to exercise the Repurchase Mandate to an extent as may result in a public shareholding of less than such prescribed percentage.

SHARE REPURCHASES BY THE COMPANY

The Company did not repurchase any of its Shares (whether on the Stock Exchange or otherwise) in the six months preceding the Latest Practicable Date.

— 11 —

EXPLANATORY STATEMENT FOR THE REPURCHASE MANDATE

APPENDIX I

SHARE PRICES

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

	Price	per Share
	Highest	Lowest
	HK$	HK$
2003
April	*(Note)	*(Note)
May	0.080	0.080
June	0.090	0.080
July	0.150	0.100
August	0.195	0.138
September	0.215	0.158
October	0.260	0.142
November	0.180	0.154
December	0.184	0.163
2004
January	0.380	0.160
February	0.570	0.380
March	0.720	0.455

Note: No transaction has been recorded.

— 12 —

APPENDIX II EXPLANATORY STATEMENT FOR THE PROPOSED AMENDMENTS TO THE ARTICLES

This appendix summarizes the proposed amendments to the Articles to reflect the legislative changes to the SFO and the CAO which have become effective on 1st April, 2003 and 13th February, 2004 respectively and to incorporate the changes that are required under the revised Listing Rules which have become effective on 31st March, 2004.

ARTICLE 16 — TIME LIMIT FOR ISSUANCE OF SHARE CERTIFICATES BY THE COMPANY

Article 16 will be amended to shorten the period and in particular, to allow the Company to issue share certificate to members in the register at a time limit as prescribed in the Law or as the Exchange may from time to time determine.

ARTICLE 85(b) — CLEARING HOUSE WITHIN THE MEANING OF SFO

Article 85(b) will be amended to reflect the enactment of SFO which includes the definition of “clearing house”.

ARTICLE 89(C) — VOTING RESTRICTIONS UNDER LISTING RULES

Article 89(C) will be added pursuant to the revised Listing Rules so that where any shareholder is subject to voting restrictions under the Listing Rules, any votes cast by or on behalf of such shareholder in contravention of such restriction shall not be counted.

ARTICLE 107(A)(ii) — DIRECTOR’S INTERESTS

Article 107(A)(ii) will be amended to provide that Directors shall not vote for transactions in which they or their associates have a material interest. The new interpretation of “associate(s)” under the revised Listing Rules will also be adopted. Article 107(A)(ii) will also be amended so that a Director’s vote shall not be counted in the quorum present at a meeting at which any contract or arrangement in which he or his associates is materially interested is considered. It will also provide resolutions when questions relating to material interest of a Director or his associate(s) arise.

ARTICLE 120 — APPOINTMENT OF DIRECTORS

Article 120 will be amended to specify the lodgment period of the nomination of directors by shareholders, which will commence no earlier than the day after the despatch of the notice of the meeting appointed for such election and end no later than 7 days prior to the date of such meeting.

— 13 —

EXPLANATORY STATEMENT FOR THE PROPOSED AMENDMENTS TO THE ARTICLES

APPENDIX II

ARTICLE 122 — REMOVAL OF DIRECTORS

Article 122 will be amended to allow the shareholders of the Company to remove the directors before expiration of his period of office by ordinary resolution.

— 14 —

NOTICE OF ANNUAL GENERAL MEETING

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CHINA STRATEGIC HOLDINGS LIMITED （中策集團有限公司）

(Incorporated in Hong Kong with limited liability) (Stock Code: 235)

NOTICE IS HEREBY GIVEN that the annual general meeting of CHINA STRATEGIC HOLDINGS LIMITED (the “Company” ) will be held at the 11th Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong on 29th June, 2004 at 11:30 a.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive and consider the report of the directors, audited financial statements and auditors’ report for the year ended 31st December, 2003.

2. To re-elect retiring directors and to authorise the directors to fix the remuneration of the directors.

3. To re-appoint auditors and to authorise the directors to fix the remuneration of the auditors.

AS SPECIAL BUSINESS

1. To consider and, if thought fit, pass with or without modifications, the following resolution as an ordinary resolution of the Company:

“THAT conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited (the “Stock Exchange” ) granting listing of, and permission to deal in, the shares of HK$0.10 each in the share capital of the Company ( “Shares” ) to be issued pursuant to the exercise of options which may be granted under the New Scheme Limit (as defined below), the refreshment of the scheme limit of the Company’s share option scheme adopted on 4th June, 2002 and all other share option scheme(s) of the Company, up to 10 per cent. of the number of Shares in issue as at the date of passing this resolution (the “New Scheme Limit” ) be and is hereby approved and any director of the Company be and is hereby authorised to do such act and execute such document to effect the New Scheme Limit.”

— 15 —

NOTICE OF ANNUAL GENERAL MEETING

1. To consider and, if thought fit, pass with or without modifications, the following resolution as an ordinary resolution of the Company:

“THAT:

• (a) subject to paragraph (c) below, the exercise by the directors of the Company during the Relevant Period of all the powers of the Company to purchase issued shares of HK$0.10 each in the capital of the Company subject to and in accordance with all applicable laws and requirements of the Rules Governing the Listing of Securities on the Stock Exchange as amended from time to time be and is hereby generally and unconditionally approved;

• (b) the approval in paragraph (a) shall be in addition to any other authorisation given to the directors of the Company and shall authorise the directors on behalf of the Company during the Relevant Period to procure the Company to purchase its shares at a price determined by the directors;

• (c) the aggregate nominal amount of the shares which are authorised to be purchased by the directors of the Company pursuant to the approval in paragraph (a) shall not exceed 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing this resolution, and the said approval shall be limited accordingly; and

• (d) for the purposes of this resolution:

• “Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:

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

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

• (iii) the date upon which the authority set out in this resolution is revoked or varied by way of ordinary resolution of the Company in general meeting.”

— 16 —

NOTICE OF ANNUAL GENERAL MEETING

1. To consider and, if thought fit, pass with or without modifications, the following resolution as an ordinary resolution of the Company:

“THAT:

• (a) subject to paragraph (c) below, the exercise by the directors of the Company during the Relevant Period of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements, options and rights of exchange or conversion which might require the exercise of such powers be and is hereby generally and unconditionally approved;

• (b) the approval in paragraph (a) shall be in addition to any other authorisation given to the directors of the Company and shall authorise the directors of the Company during the Relevant Period to make or grant offers, agreements, options and rights of exchange or conversion which might require the exercise of such powers after the end of the Relevant Period;

• (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the directors of the Company pursuant to the approval granted in paragraph (a), otherwise than pursuant to (i) a Rights Issue, or (ii) the share option scheme of the Company approved by the Stock Exchange, or (iii) any scrip dividend 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 articles of association of the Company, shall not exceed 20 per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this resolution, and the said approval shall be limited accordingly; and

• (d) for the purposes of this resolution:

“Relevant Period” shall have the same meaning as that ascribed to it under resolution no. 5 as set out in the notice convening the meeting of which this resolution forms part; and

“Rights Issue” means an offer of shares open for a period fixed by the directors of the Company to holders of shares on the register on a fixed record date in proportion to their then holdings of such shares (subject to such exclusions 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 any relevant jurisdiction, or the requirements of any recognised regulatory body or any stock exchange, in any territory outside Hong Kong).”

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NOTICE OF ANNUAL GENERAL MEETING

1. To consider and, if thought fit, pass with or without modifications, the following resolution as an ordinary resolution of the Company:

“THAT conditional upon the passing of the resolutions nos. 5 and 6 as set out in the notice convening the meeting of which these resolutions form part, the general mandate granted to the directors of the Company pursuant to the resolution no. 6 as set out in the notice convening the meeting of which this resolution forms part be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of share capital of the Company purchased by the Company under the authority granted pursuant to the resolution no. 5 as set out in the notice convening the meeting of which this resolution forms part, provided that such amount shall not exceed 10 per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this resolution.”

1. To consider and, if thought fit, pass the following resolution as a special resolution of the Company:

“THAT the articles of association of the Company (the “Articles”) be and are hereby amended by:

• (a) by deleting the words “twenty-one days” in line 2 of Article 16 and replacing with the words “the relevant time limit as prescribed in the Companies Ordinance or as the Stock Exchange may from time to time determine, whichever is shorter,”;

• (b) by deleting the words “Securities (Clearing House) Ordinance of Hong Kong” in line 2 of Article 85(b) and replacing with the words “Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)”;

• (c) by adding the following new Article 89(C) immediately after Article 89(B):

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

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NOTICE OF ANNUAL GENERAL MEETING

• (d) by deleting Article 107(A)(ii) in its entirety and replacing it with the following new Article 107(A)(ii):

• “107(A)(ii) Save as otherwise provided by the Articles, a Director shall not vote (or be counted in the quorum at a meeting) on any resolution of the Board in respect of any contract or arrangement or any other proposal in which he or any of his associates has a material interest, but this prohibition shall not apply to any of the following matters:

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

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

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

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

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

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NOTICE OF ANNUAL GENERAL MEETING

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

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

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

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

If any question shall arise at any meeting of the Board as to the materiality of the interest of a Director (other than the chairman of the meeting) or his associate(s) or as to the entitlement of any Director (other than such chairman) to vote or be counted in the quorum and such question is not resolved by his voluntarily agreeing to abstain from voting or not to be counted in the quorum, such question shall be referred to the chairman of the meeting and his ruling in relation to such other Director or his associate(s) shall be final and conclusive except in a case where the nature or extent of the interest of the Director or his associate(s) concerned as known to such Director has not been fairly disclosed to the Board. If any question as aforesaid shall arise in respect of the chairman of the meeting or his associate(s), such question shall be decided by a resolution of the Board (for which purpose such chairman shall not be counted in the quorum and shall not vote thereon) and such resolution shall be final and conclusive except in a case where the nature or extent of the interest of such chairman or his associate(s) as known to such chairman has not been fairly disclosed to the Board. For the purposes of this paragraph and in relation to an alternate Director, an interest of his appointor or his associate(s) shall be treated as an interest of the alternate Director without prejudice to any interest which the alternate Director has otherwise.”;

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NOTICE OF ANNUAL GENERAL MEETING

• (e) by deleting Article 120 in its entirety and replacing it with the following new Article 120:

• “120. No person, other than a retiring Director, shall, unless recommended by the Directors for election, be eligible for election to the office of Director at any general meeting, unless notice in writing of the intention to propose that person for election as a Director and notice in writing by that person of his willingness to be elected shall have been given to the Company at least seven days before the date of general meeting. Such period for lodgment of the notices shall commence no earlier than the day after the despatch of the notice of the meeting appointed for such election and end no later than seven days prior to the date of such meeting, provided that such period shall be at least seven days.”;

• (f) by deleting the words “special resolution” in the first line in Article 122 and inserting in its place the words “ordinary resolution”;

and THAT any director of the Company be and is hereby authorised to take such further action as he may, in his sole and absolute discretion thinks fit for and on behalf of the Company to implement the aforesaid amendments to the existing articles of association of the Company.”

By Order of the Board

CHINA STRATEGIC HOLDINGS LIMITED Chan Yan Yan, Jenny Company Secretary

Hong Kong, 30th April, 2004

Notes:

• (1) Any shareholder entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a shareholder of the Company.

• (2) In order to be valid, a form of proxy in the prescribed form together with the power of attorney or other authority (if any) under which it is signed must be deposited at the share registrars of the Company, Standard Registrars Limited at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not less than 48 hours before the time fixed for holding the meeting.

• (3) With respect to the resolution set out in resolution no. 4 of the notice, approval is being sought from shareholders for an approval to be given to the directors to refresh the 10% general limit on grant of options under the share option scheme adopted on 4th June, 2002 and all other share option scheme(s) of the Company.

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NOTICE OF ANNUAL GENERAL MEETING

• (4) With respect to the resolution set out in resolution no. 5 of the notice, approval is being sought from shareholders for a general mandate to be given to the directors to purchase shares of the Company.

• (5) With respect to the resolutions set out in resolution nos. 6 and 7 of the notice, approval is being sought from shareholders for general mandates to be given to the directors to allot, issue and deal with shares of the Company in accordance with the Rules Governing the Listing of Securities on the Stock Exchange.

• (6) An explanatory statement containing the information with respect to the resolutions set out in resolution nos. 4 and 5 of the notice of the meeting will be sent to the shareholders together with the 2003 Annual Report.

• (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.

• (9) As at the date hereof, Dr. Chan Kwok Keung, Charles, Dr. Yap, Allan, Mr. Li Wa Kin, Ms. Chau Mei Wah, Rosanna and Ms. Chan Ling, Eva are executive directors of the Company, Mr. David Edwin Bussmann and Ms. Fung Wan Yiu, Agnes are independent non-executive directors of the Company and Messrs. Chan Kwok Hung and Lui Siu Tsuen, Richard are alternate directors of the Company to Messrs. Chan Kwok Keung, Charles and Yap, Allan respectively.

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