JY GAS LIMITED — Proxy Solicitation & Information Statement 2004

Nov 8, 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 Shares in China City Natural Gas 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 the 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.

*

(Incorporated in Bermuda with limited liability) (Stock Code: 603)

PROPOSALS RELATING TO INCREASE IN AUTHORISED SHARE CAPITAL

AND

CHANGE OF COMPANY NAME

A notice convening the Special General Meeting to be held at Garden Rooms, 2/F, The Royal Garden, 69 Mody Road, Tsimshatsui East, Kowloon, Hong Kong on Wednesday, 1 December 2004 at 9:15 a.m. is set out in this circular. A form of proxy for use by the Shareholders at the Special General Meeting is enclosed with this circular. If you do not intend to attend and vote at the Special General Meeting in person, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited at 46/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event, not less than 48 hours before the time appointed for holding the Special General Meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Special General Meeting or any adjourned meeting should you so wish.

8 November 2004

* for identification purposes only

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Proposed Increase in Authorised Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Proposed Change of Company Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Special General Meeting and Proxy Arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Poll Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Notice of Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6

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DEFINITIONS

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

• “Authorised Share Capital”

the authorised share capital of the Company

• “Board”

• the board of Directors

• “Bye-laws”

the bye-laws of the Company

• “Company”

• China City Natural Gas Holdings Limited, a company incorporated in Bermuda with limited liability, and the securities of which are listed on the Stock Exchange

• “Director(s)”

• the director(s) of the Company

• “Group”

• the Company and its subsidiaries

• “Hong Kong”

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

• “Latest Practicable Date”

• 5 November 2004, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein

• “Listing Rules”

• the Rules Governing the Listing of Securities on the Stock Exchange

• “MOU”

• the Memorandum of Understanding entered into between the Company and Mr Zhu Kun and Mr Li Li Jun in relation to a possible acquisition of a majority stake in Shanghai Holdfast Science & Technology Co., Ltd., details of which were contained in the Company’s announcement dated 20 October 2004

• “Rights Issue”

• the proposed issue of Shares to the qualifying Shareholders by way of rights issue on the basis of two rights shares for every ten Shares with three bonus shares for every two fully paid rights shares taken up, details of which were contained in the Company’s announcement dated 25 October 2004

• “Share(s)”

• the ordinary share(s) of HK$0.025 each in the share capital of the Company

• “Shareholder(s)”

the holder(s) of the Share(s)

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DEFINITIONS

“Special General Meeting”	the special general meeting of the Company to be held at
	Garden Rooms, 2/F, The Royal Garden, 69 Mody Road,
	Tsimshatsui East, Kowloon, Hong Kong on Wednesday, 1
	December 2004 at 9:15 a.m. (or as the case may be, as
	soon as practicable after the conclusion of the special
	general meeting of the Company convened to be held on
	the same date at 9:00 a.m. for purpose of approving the
	issue of bonus shares as announced on 25 October 2004)
	to consider and, if thought fit, approve the increase in
	Authorised Share Capital and change of name of the
	Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent.

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LETTER FROM THE BOARD

*

(Incorporated in Bermuda with limited liability)

Executive Directors: Mr WONG Kui Shing, Danny (Chairman and Chief Executive Officer) Mr Masanori SUZUKI (Deputy Chairman) Mr Eiji SATO Mr WONG King Shiu, Daniel Mr KAN Kwok Shu Mr LIN Che Chu, George

Independent Non-executive Directors: Mr CHEUNG Man Yau, Timothy Mr CHUK Che Shing Mr KIM Kwi Nam, Takao

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

Head office and principal place of business in Hong Kong: 31/F Shui On Centre 6-8 Harbour Road Wanchai Hong Kong

8 November 2004

To the Shareholders

Dear Sir or Madam

PROPOSALS RELATING TO INCREASE IN AUTHORISED SHARE CAPITAL AND CHANGE OF COMPANY NAME

INTRODUCTION

On 28 October 2004, the Company announced the proposals relating to the increase in Authorised Share Capital and change of name of the Company.

The purpose of this circular is to provide you with information regarding the ordinary and special resolutions in respect of the proposals to be put forward at the Special General Meeting to enable you to make an informed decision on whether to vote for or against those resolutions.

A notice convening the Special General Meeting to be held at Garden Rooms, 2/F, The Royal Garden, 69 Mody Road, Tsimshatsui East, Kowloon, Hong Kong on Wednesday, 1 December 2004 at 9:15 a.m. is set out on pages 6 to 7 of this circular for the purposes of considering and, if thought fit, passing the relevant ordinary and special resolutions.

* for identification purposes only

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LETTER FROM THE BOARD

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

The Board proposed to increase the Authorised Share Capital from HK$500,000,000 divided into 20,000,000,000 Shares to HK$1,250,000,000 divided into 50,000,000,000 Shares by the creation of 30,000,000,000 new Shares, which will rank pari passu with the existing Shares.

As at the Latest Practicable Date, the Authorised Share Capital was HK$500,000,000, divided into 20,000,000,000 Shares, of which 10,241,841,423 Shares were issued, representing approximately 51.2% of the Authorised Share Capital.

There were outstanding share options to subscribe for a total of 394,800,000 Shares and issued convertible notes entitling holders thereof to convert into 2,024,000,000 Shares. Assuming that all these share options and convertible notes are fully exercised and converted into Shares, 2,418,800,000 Shares will have to be issued, representing approximately 12.1% of the Authorised Share Capital. Following the completion of the proposed Rights Issue, not more than 6,330,320,710 Shares will have to be issued, representing approximately 31.7% of the Authorised Share Capital. Accordingly, there will only be 1,009,037,867 Shares, representing approximately 5% of the Authorised Share Capital, left unissued and available for further allotment and issue by the Company.

As previously announced, the Company has entered into the MOU in relation to a possible acquisition of a majority stake in Shanghai Holdfast Science & Technology Co., Ltd., which may lead to a further issue of convertible notes. In view of the aforesaid and the MOU (where the acquisition as contemplated therein may or may not proceed) and in order to accommodate further expansion and growth of the Company, the Board proposed to increase the Authorised Share Capital. The Company will comply with the requirements of the Listing Rules as and when necessary.

PROPOSED CHANGE OF COMPANY NAME

The Board also proposed that the name of the Company be changed from “China City Natural Gas Holdings Limited” to “Nippon Asia Investments Holdings Limited”. It was further proposed that, subject to the change of the English name of the Company becoming effective, the Company will adopt “日本亞太事業投資有限公司 ” as its new Chinese name for identification purposes only.

The Group is principally engaged in investments in Internet, information technology and other activities. The Board considers that the change of name will strengthen the association of the Company with Japanese investors and signify the Company’s intention to explore investment opportunities and participate in investments of larger scale.

The effective date of the change of name will be the date on which the new name is entered by the Registrar of Companies in Bermuda on the register in place of the existing name. Upon the change of name becoming effective, all existing share certificates bearing the current name of the Company will continue to be evidence of title to the ordinary Shares and will continue to be valid for trading, settlement and registration purposes and the rights of the Shareholders will not be affected as a result of the change of name. Should the change of name become effective, any issue of share certificates thereafter will be in the new company name and the securities of the Company will be traded on the Stock Exchange in the new name. The Company will make further announcement when the proposed change of name becomes effective.

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LETTER FROM THE BOARD

SPECIAL GENERAL MEETING AND PROXY ARRANGEMENT

A notice of the Special General Meeting is set out in this circular. At the Special General Meeting, resolutions will be proposed to approve the increase in Authorised Share Capital and change of name of the Company.

A form of proxy for use by the Shareholders at the Special General Meeting is also enclosed with this circular. If you do not intend to attend and vote at the Special General Meeting in person, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited at 46/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as practicable but in any event, not less than 48 hours before the time appointed for holding the Special General Meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the Special General Meeting or any adjourned meeting should you so wish.

POLL PROCEDURE

Pursuant to Bye-law 66, a poll may be demanded by:

• (a) the chairman of the meeting; or

• (b) at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or

• (c) a Shareholder or Shareholders present in person or in the case of a Shareholder 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 Shareholders having the right to vote at the meeting; or

• (d) a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and holding Shares 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 proposals 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 relevant resolutions to be proposed at the Special General Meeting.

Yours faithfully For and on behalf of China City Natural Gas Holdings Limited Wong Kui Shing, Danny Chairman

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NOTICE OF SPECIAL GENERAL MEETING

*

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of the shareholders of China City Natural Gas Holdings Limited (the “Company”) will be held at Garden Rooms, 2/F, The Royal Garden, 69 Mody Road, Tsimshatsui East, Kowloon, Hong Kong on Wednesday, 1 December 2004 at 9:15 a.m. (or as the case may be, as soon as practicable after the conclusion of the special general meeting of the Company convened to be held on the same date at 9:00 a.m. for purpose of approving the issue of bonus shares as announced on 25 October 2004) to consider and, if thought fit, pass the following resolutions:

ORDINARY RESOLUTION

“ THAT the authorised share capital of the Company be increased from HK$500,000,000 divided into 20,000,000,000 shares of HK$0.025 each to HK$1,250,000,000 divided into 50,000,000,000 shares of HK$0.025 each by the creation of 30,000,000,000 new shares of HK$0.025 each in the capital of the Company, such shares to rank pari passu with all the existing shares of the Company and that the directors of the Company be and are hereby authorised to do all such acts, deeds and things as they shall, in their absolute discretion, deem fit in order to effect the foregoing.”

SPECIAL RESOLUTION

“ THAT , subject to the approval of the Registrar of Companies in Bermuda, the name of the Company be changed to “Nippon Asia Investments Holdings Limited” and for identification purposes only, “日本亞太事業投資有限公司 ” be adopted as the Chinese name of the Company and that the directors of the Company be and are hereby authorised to do all such acts, deeds and things as they shall, in their absolute discretion, deem fit in order to effect the foregoing.”

By Order of the Board China City Natural Gas Holdings Limited Wong Kui Shing, Danny Chairman

Hong Kong, 8 November 2004

* for identification purposes only

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NOTICE OF SPECIAL GENERAL MEETING

Notes:

1. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one proxy to attend and vote in his stead in accordance with the Bye-laws of the Company. A proxy need not be a member of the Company but must be present in person to represent the member.

2. A form of proxy for use at the special general meeting is enclosed.

3. To be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed (or a certified copy thereof), must be deposited with the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at 46/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event not less than 48 hours before the time of the special general meeting or any adjourned meeting (as the case may be). Completion and return of the form of proxy will not preclude members from attending and voting in person at the meeting or any adjourned meeting should they so wish.

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