MGM China Holdings Limited — Proxy Solicitation & Information Statement 2002

Apr 22, 2002

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 stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold all your shares in China Insurance International Holdings Company Limited, you should at once hand this circular to the purchaser or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser.

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.

CHINA INSURANCE INTERNATIONAL HOLDINGS COMPANY LIMITED 中 保 國 際 控 股 有 限 公 司

(Incorporated in Hong Kong with limited liability)

PROPOSED GENERAL MANDATES TO ISSUE SHARES AND REPURCHASE SHARES

A notice convening the second annual general meeting of China Insurance International Holdings Company Limited to be held at 24/F, Ming An Plaza Phase II, No. 8 Sunning Road, Causeway Bay, Hong Kong on 22 May 2002 at 11:00 a.m. is set out in the annual report and accounts despatched to shareholders. Whether or not you are able to attend the meeting, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to the registered office of the Company at 12/F, Ming An Plaza Phase II, No. 8 Sunning Road, Causeway Bay, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the meeting. Completion and return of the form of proxy will not prevent shareholders from attending and voting at the meeting if they so wish.

17 April 2002

DEFINITIONS

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

“Annual General Meeting”	the second annual general meeting of the Company to be
	held on 22 May 2002 at 11:00 a.m., or any adjournment
	thereof.
“CICL”	China Insurance Company, Limited, a PRC state-owned
	company established in the People’s Republic of China and
	is the ultimate holding company of the Company
“Code”	the Hong Kong Code on Takeovers and Mergers
“Company”	China Insurance International Holdings Company Limited
“Companies Ordinance”	Hong Kong Companies Ordinance (Chapter 32)
“Directors”	directors 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”	16 April 2002, being the latest practicable date prior to the
	printing
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Proposed Repurchase Mandate”	a general mandate proposed to be granted to the Directors
	at the Annual General Meeting to repurchase shares not
	exceeding 10 per cent of the aggregate nominal amount of
	the issued share capital of the Company as at the date of
	passing of the relevant resolution granting the Proposed
	Repurchase Mandate
“Share(s)”	share(s) of HK$0.05 each in the capital of the Company
“Shareholder(s)”	holder(s) of Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited

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LETTER FROM THE BOARD

CHINA INSURANCE INTERNATIONAL HOLDINGS COMPANY LIMITED 中 保 國 際 控 股 有 限 公 司

(Incorporated in Hong Kong with limited liability)

Executive Directors: Mr Yang Chao (Chairman) Mr Zhang Xiaoshu Mr Miao Jianmin Mr Ng Yu Lam Kenneth Dr Dong Ming Mr Lau Siu Mun Sammy

Registered Office:

12/F, Ming An Plaza Phase II No. 8 Sunning Road Causeway Bay Hong Kong

Non-executive Directors:

Mr Zheng Changyong Dr Wu Jiesi * Mr Lau Wai Kit *

* Independent

17 April 2002

To the Shareholders

Dear Sir or Madam,

PROPOSED GENERAL MANDATES TO ISSUE SHARES AND REPURCHASE SHARES

INTRODUCTION

On 26 March 2002 the Directors of China Insurance International Holdings Company Limited announced the audited consolidated results of the Company for the year ended 31 December 2001 and the proposal to seek general mandates at the Annual General Meeting to be held on 22 May 2002 for the Directors to issue Shares and repurchase Shares. This circular gives you details of those general mandates and seeks your approval of such general mandates at the Annual General Meeting.

GENERAL MANDATE TO ISSUE SHARES

In order to ensure flexibility and discretion to the Directors, in the event that it becomes desirable to issue any Share, approval is to be sought from Shareholders, pursuant to the

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LETTER FROM THE BOARD

Listing Rules on the Stock Exchange, for a general mandate to issue Shares. At the Annual General Meeting, an ordinary resolution No. (6)(A) will be proposed to grant a general mandate to the Directors to exercise the powers of the Company to allot and issue new Shares in the share capital of the Company up to 20 per cent of the aggregate nominal amount of the Company in issue immediately after the passing of the resolution in relation to such general mandate. In addition, subject to a separate approval of the ordinary resolution No. (6)(C), the number of Shares purchased by the Company under ordinary resolution No. (6)(B) will also be added to the 20 per cent general mandate as mentioned in the ordinary resolution No. (6)(A).

GENERAL MANDATE TO REPURCHASE SHARES

In addition, an ordinary resolution No. (6)(B) will be proposed to approve the granting of a Proposed Repurchase Mandate to the Directors to exercise the powers of the Company to repurchase Shares representing up to 10 per cent of the aggregate nominal amount of share capital in issue immediately after the passing of the resolution in relation to such Proposed Repurchased Mandate.

An explanatory statement required by the Listing Rules to be sent to the Shareholders in connection with the Proposed Repurchase Mandate is set out in the Appendix to 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 Annual General Meeting.

FORM OF PROXY

A form of proxy for use at the Annual General Meeting is enclosed with the annual report of the Company. Whether or not you intend to be present at the meeting, you are requested to complete the form of proxy and return it to the Company in accordance with the instruction printed thereon not less than 48 hours before the time fixed for the holding of the Annual General Meeting. Completion and delivery of the form of proxy will not prevent the Shareholders from attending and voting at the Annual General Meeting if they so wish.

RECOMMENDATION

The Directors consider that the proposed ordinary resolutions for the granting to the Directors of the general mandate to issue Shares and the Proposed Repurchase Mandate are in the interests of the Group and its Shareholders as a whole. The Directors therefore recommend the Shareholders to vote in favour of all the resolutions to be proposed at the Annual General Meeting.

GENERAL INFORMATION

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

Yours faithfully, for and on behalf of the Board Yang Chao Chairman

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EXPLANATORY STATEMENT

APPENDIX

The following is the explanatory statement required to be sent to Shareholders under the Listing Rules in connection with the Proposed Repurchase Mandate and also constitutes the Memorandum required under Section 49BA of the Companies Ordinance.

SHARE CAPITAL

As at the Latest Practicable Date, the number of Shares of the Company in issue was 1,273,311,592. Subject to the passing of the resolution granting the Proposed Repurchase Mandate and on the basis that no further Shares are issued or repurchased before the Annual General Meeting, the Company will be allowed to repurchase a maximum of 127,331,159 Shares during the period ending on the earlier of the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required to be held by law or the date upon which such authority is revoked or varied by a resolution of the Shareholders in general meeting.

REASONS FOR REPURCHASE

The Directors believe that the ability to repurchase Shares is in the interests of the Company and its Shareholders.

Repurchases may, depending on the circumstances, result in an increase in net assets and/or earnings per share. The Directors are seeking the grant of a general mandate to repurchase Shares to give the Company the flexibility to do so if and when appropriate. The timing and the number(s), the price and other terms upon which the same are repurchased will be decided by the Directors at the relevant time having regard to the circumstances then pertaining.

FUNDING OF REPURCHASE

Repurchases must be made out of funds which are legally available for such purpose in accordance with the memorandum and articles of association of the Company and the laws of Hong Kong. It is envisaged that the funds required for any repurchase would be derived from the distributable profits of the Company.

There could be an adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited accounts contained in the annual report of the Company for the financial year ended 31 December 2001) in the event that the proposed share repurchases were to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the general mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital of the Company or its gearing level which in the opinion of the Directors is from time to time appropriate for the Company.

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EXPLANATORY STATEMENT

APPENDIX

GENERAL

To the best of their knowledge, having made all reasonable enquiries, none of the Directors nor any of their associates (as defined in the Listing Rules) currently intend to sell any Shares to the Company or its subsidiaries in the event that the general mandate is granted by Shareholders.

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

No connected persons (as defined in the Listing Rules) of the Company have notified it of a present intention to sell Shares to the Company and no such persons have undertaken not to sell any such Shares to the Company in the event that the Proposed Repurchase Mandate is granted.

If on the exercise of the power to repurchase Shares pursuant to the Proposed Repurchase Mandate, 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 Code on Takeovers and Mergers (“Takeover Code”). As a result, 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 Rules 26 and 32 of the Takeover Code.

As at the Latest Practicable Date, CICL beneficially held 674,243,705 Shares, representing approximately 52.95% of the issued share capital of the Company. In the event that the Directors should exercise in full the Proposed Repurchase Mandate, the shareholding of CICL in the Company will be increased to approximately 58.84% of the issued share capital of the Company. The Directors are not aware of any consequences which may arise under the Takeover Code as a result of any repurchases made under the Proposed Repurchase Mandate. The Directors do not propose to exercise the Proposed Repurchase Mandate to such extent that the public shareholding would be reduced to less than 25% of the issued share capital of the Company.

No purchase has been made by the Company of its Shares in the six months prior to the date of this circular.

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EXPLANATORY STATEMENT

APPENDIX

SHARE PRICES

The following table shows the highest and lowest prices at which the Shares have been traded on the Stock Exchange in each of the last twelve months.

Month	Highest	Lowest
	trade price	trade price
	HK$	HK$
2001
April	1.8500	1.3000
May	2.3500	1.7100
June	3.0000	2.2000
July	3.0000	2.5750
August	3.4250	2.4250
September	3.4000	2.4500
October	3.8500	3.0500
November	4.8000	3.5500
December	5.1500	4.4500
2002
January	5.0500	4.1000
February	4.9250	4.3750
March	4.8250	4.3000

Source: The Stock Exchange of Hong Kong Limited

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