Shui On Land Limited — Proxy Solicitation & Information Statement 2004

Jun 2, 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 stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Natural Beauty Bio-Technology Limited , you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale 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.

NATURAL BEAUTY BIO-TECHNOLOGY LIMITED 自然美生物科技有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 157)

GENERAL MANDATES TO REPURCHASE AND ISSUE SHARES AND AMENDMENTS TO THE ARTICLES OF ASSOCIATION

A notice convening the annual general meeting of Natural Beauty Bio-Technology Limited (the “Company”) to be held at Chater Room II, Function Room Level, The Ritz-Carlton Hong Kong, 3 Connaught Road Central, Hong Kong on Friday, 25 June 2004 at 11:00 a.m. is set out in the 2003 annual report of the Company.

Whether or not you propose to attend the meeting, you are requested to complete the proxy form in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Hong Kong Registrars Limited at Rooms 1901-5, 19th 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 the holding of the meeting. Completion and return of the proxy form will not preclude shareholders from attending and voting in person at the meeting should they so wish.

20 May 2004

LETTER FROM THE CHAIRMAN

NATURAL BEAUTY BIO-TECHNOLOGY LIMITED 自然美生物科技有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 157)

Executive Directors: Dr. Tsai Yen Yu (Chairman) Lee Ming Ta Su Chien Cheng

Non-Executive Director: Su Sh Hsyu

Independent Non-Executive Directors: Yeh Liang Fei Chen Shieh Shu Chen

Registered Office: P.O. Box 309 Ugland House South Church Street George Town Grand Cayman Cayman Islands British West Indies

Principal Office in Hong Kong: 4th Floor, Manson House 74-78 Nathan Road Kowloon, Hong Kong

20 May 2004

To the Shareholders:

Dear Sirs or Madams,

GENERAL MANDATES TO REPURCHASE AND ISSUE SHARES AND AMENDMENTS TO THE ARTICLES OF ASSOCIATION

INTRODUCTION

By resolutions of the shareholders (the “Shareholders”) of Natural Beauty BioTechnology Limited (the “Company”) passed on 29 May 2003, the directors of the Company (the “Directors”) were granted a general mandate to allot, issue and deal with the shares of HK$0.10 each in the issued share capital of the Company (the “Shares”) and a general mandate to repurchase the Shares. These mandates will expire at the conclusion of the forthcoming annual general meeting. Resolutions will be proposed at the forthcoming annual general meeting to seek the shareholders’ approval for the renewal of these general mandates and for the amendments to the articles of association of the Company (the “Articles”).

– 1 –

LETTER FROM THE CHAIRMAN

The purpose of this document is to provide you with information regarding some of the resolutions to be proposed at the annual general meeting of the Company to be held on 25 June 2004 (the “Annual General Meeting”) to enable the Shareholders to make an informed decision on whether to vote, for or against the resolutions.

The resolutions include (i) granting to the Directors a general and unconditional mandate to repurchase shares in the capital of the Company up to 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the resolution (the “Repurchase Mandate”); (ii) granting to the Directors a general and unconditional mandate (a) to allot, issue and deal with new Shares representing up to 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the resolution (the “Share Issue Mandate”) and (b) to extend the Share Issue Mandate by the nominal amount of any Shares repurchased by the Company pursuant to the Repurchase Mandate; and (iii) approving the amendments to the Articles.

GENERAL MANDATE TO REPURCHASE SHARES

At the Annual General Meeting, an ordinary resolution will be proposed to grant to the Directors a general and unconditional mandate to exercise all the powers of the Company to repurchase Shares at any time until the next annual general meeting of the Company following the passing of the resolution or such earlier date as stated in the resolution. The maximum number of Shares that may be repurchased pursuant to the Repurchase Mandate will be such number of shares which represents 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the resolution.

In accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) (the “Listing Rules”), the Company is required to send to the Shareholders an explanatory statement which is set out in the appendix of this document.

GENERAL MANDATE TO ISSUE SHARES

At the Annual General Meeting, an ordinary resolution will be proposed to grant to the Directors a general and unconditional mandate to allot, issue and deal with new Shares at any time until the next annual general meeting of the Company following the passing of the resolution or such earlier date as stated in the resolution representing up to 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of the resolution.

Subject to the passing of the aforesaid ordinary resolutions of the Repurchase Mandate and the Share Issue Mandate, an ordinary resolution will also be proposed to authorise the Directors to allot and issue shares in the capital of the Company in the amount not exceeding the aggregate nominal amount of the shares in the capital of the Company repurchased pursuant to the Repurchase Mandate.

– 2 –

LETTER FROM THE CHAIRMAN

AMENDMENTS TO THE ARTICLES OF ASSOCIATION

As announced by the Stock Exchange in its press release dated 30 January 2004, the Stock Exchange has revised the Listing Rules based on the results of the Consultation Conclusions on Proposed Amendments to the Listing Rules relating to Corporate Governance Issues issued in January 2003. Such revisions to the Listing Rules took effect on 31 March 2004 and include revisions to Appendix 3 to the Listing Rules, which sets out the requirements that the articles of association of an issuer shall comply with.

To ensure compliance with the revised Appendix 3 to the Listing Rules, listed issuers must amend their articles of association at the earliest opportunity and, in any event, no later than the conclusion of their next annual general meeting after 31 March 2004.

To align the Articles with the requirements of the revised Appendix 3 to the Listing Rules, the Board of Directors proposes a special resolution at the Annual General Meeting to amend the Articles. In general, the proposed amendments to the Articles are to be made to conform to the following in relation to corporate governance:

• (a) the minimum seven-day period for lodgment by the Shareholders of notice to propose a person for election as a Director and by such person of his willingness to be elected 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 7 days prior to the date of such meeting;

• (b) a Director shall not vote on any board resolution approving any contract or arrangement or any other proposal in which he or any of his associates (as newly defined in the Listing Rules) has a material interest nor shall he be counted in the quorum present at the meeting subject to the exceptions specified in the Articles as the Stock Exchange may approve; and

• (c) where any Shareholder 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 Shareholder in contravention of such requirement or restriction shall not be counted.

With the repeal of the Securities and Futures (Clearing House) Ordinance and the enactment of the Securities and Futures Ordinance on 1 April 2003, the Board of Directors also proposes to amend the Articles so that the Securities and Futures (Clearing House) Ordinance referred to in the definition of “recognized clearing house” in the Articles will be replaced by the Securities and Futures Ordinance.

A full text of the proposed amendments to the Articles is contained in resolution numbered 6 in the notice of the Annual General Meeting set out in the annual report accompanying this document.

– 3 –

LETTER FROM THE CHAIRMAN

PROCEDURE FOR DEMANDING A POLL

The procedure by which Shareholders may demand a poll at the Annual General Meeting pursuant to clause 81 of the Articles is as follows:

A resolution put to the vote of the Annual General Meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is duly demanded. A poll may be demanded by:

• (a) the chairman of the Annual General Meeting; or

• (b) at least five Shareholders present in person or by proxy and entitled to vote; or

• (c) any Shareholder or Shareholders present in person or by proxy or, in the case of a Shareholder being a corporation, by its duly authorised representative and representing in the aggregate not less than one-tenth of the total voting rights of all Shareholders having the right to attend and vote at the Annual General Meeting; or

• (d) any Shareholder or Shareholders present in person or by proxy or, in the case of a Shareholder being a corporation, by its duly authorised representative and holding shares conferring a right to attend and vote at the meeting on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

ANNUAL GENERAL MEETING

The notice of Annual General Meeting, which contains, inter alia, ordinary resolutions to approve the Repurchase Mandate, Share Issue Mandate and the extension of the Share Issue Mandate and a special resolution to approve the amendments to the Articles, is set out in the annual report accompanying this document.

RECOMMENDATION

The Board of Directors considers that the grant of the Repurchase Mandate, the grant and the extension of the Share Issue Mandate and the amendments to the Articles are in the best interests of the Company and therefore recommend you to vote in favour of the resolutions to be proposed at the Annual General Meeting.

Yours faithfully, Dr. Tsai Yen Yu

Chairman

– 4 –

APPENDIX

EXPLANATORY STATEMENT

This explanatory statement contains the information required under Rule 10.06(l)(b) of the Listing Rules. Its purpose is to provide the Shareholders with information reasonably necessary to enable them to make an informed decision on whether to vote for or against the resolution approving the Repurchase Mandate.

1. Share Capital

As at 20 May 2004, the latest practicable date prior to the printing of this document (the “Latest Practicable Date”), the issued and fully-paid share capital of the Company was 2,000,000,000 shares of HK$0.10 each.

Subject to the passing of the ordinary resolution granting the Repurchase Mandate and on the basis that no further Shares are issued or repurchased prior to the Annual General Meeting, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 200,000,000 Shares.

2. Reasons for Repurchases

The Directors believe that the Repurchase Mandate is in the best interests of the Company and the Shareholders. Whilst it is not possible to anticipate in advance any specific circumstance in which the Directors might think it appropriate to repurchase Shares, they believe that an ability to do so would give the Company additional flexibility that would be beneficial to the Company and its Shareholders as such repurchases may, depending on market conditions and funding arrangements at that time, lead to an enhancement of the net asset value per Share and/or earnings per Share. Shareholders can be assured that the Directors would only make such purchases in circumstances where they consider them to be in the best interests of the Company and the Shareholders.

3. Funding of Repurchases

In making repurchases, the Company may only apply funds legally available for such purposes in accordance with its memorandum and articles of association and the laws of the Cayman Islands. The Company may not purchase shares on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

On the basis of the consolidated financial position of the Company as at 31 December 2003 (being the date to which the latest published audited financial statements of the Company have been made up) and in particular the working capital position of the Company at that time and the number of issued Shares now in issue, the Directors consider that there might be a material adverse impact on the working capital position but that there would not be any material adverse impact on the gearing position of the Company in the event that purchases of all the Shares the subject of the Repurchase Mandate were to be carried out in full during the period of the Repurchase Mandate. The Directors do not propose to exercise the Repurchase Mandate to such extent as could, in the circumstance, have a material adverse effect on the

– 5 –

APPENDIX

EXPLANATORY STATEMENT

working capital or the gearing level of the Company which in the opinion of the Directors is from time to time appropriate for the Company.

4. Prices of Shares

The highest and lowest prices at which the Shares were traded on the Stock Exchange in each of the previous twelve months before the printing of this document were as follows:

	Price per Share	Price per Share
	Highest	Lowest
	traded price	traded price
	HK$	HK$
2003
April	0.630	0.395
May	0.570	0.475
June	0.550	0.495
July	0.640	0.500
August	0.620	0.530
September	0.660	0.560
October	0.680	0.570
November	0.640	0.580
December	0.610	0.550
2004
January	0.610	0.560
February	0.700	0.550
March	0.660	0.560

5. Undertaking

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the Repurchase Mandate in accordance with the Listing Rules, the memorandum and articles of association of the Company and the applicable laws of the Cayman Islands.

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

No connected person (as defined in the Listing Rules) has notified the Company that he has a present intention to sell Shares to the Company or its subsidiaries, or has undertaken not to do so, in the event that the Repurchase Mandate is granted by the Shareholders.

– 6 –

APPENDIX

EXPLANATORY STATEMENT

6. Hong Kong Code on Takeovers and Mergers

If a shareholder’s proportionate interest in the voting capital of the Company increases as a result of a share repurchase, such increase will be treated as an acquisition for the purposes of the Hong Kong Code on Takeovers and Mergers (the “Code”) and, if such increase results in a change of control, may in certain circumstances give rise to an obligation to make a general offer for Shares under Rule 26 of the Code.

As at the Latest Practicable Date, each of Dr. Tsai Yen Yu, Mr. Su Chien Cheng and Ms. Su Sh Hsyu had, together with their respective associates, indirect and/or deemed interests in Shares representing approximately 52.5%, 11.25% and 11.25% of the issued share capital of the Company respectively (75% in aggregate). To the best of the knowledge and belief of the Company, Dr. Tsai Yen Yu, Mr. Su Chien Cheng and Ms. Su Sh Hsyu, together with their respective associates, are the only persons beneficially interested in Shares representing 10% or more of the issued share capital of the Company.

In the event that the Directors exercised in full the power to repurchase Shares which is proposed to be granted pursuant to resolution 5B set out in the notice convening the Annual General Meeting, the indirect and/or deemed shareholdings of each of Dr. Tsai Yen Yu, Mr. Su Chien Cheng and Ms. Su Sh Hsyu, together with their respective associates, in the Company would be increased to approximately 58.33%, 12.50% and 12.50% of the issued share capital of the Company respectively (83.33% in aggregate). The Directors believe that such increases would not give rise to an obligation to make a mandatory offer under Rule 26 of the Code. As the Company must maintain the “minimum prescribed percentage” of 25% of the issued share capital of the Company held by the public in accordance with the requirements of the Listing Rules from time to time, the Directors do not intend to repurchase Shares to such an extent which will result in the amount of Shares held by the public being reduced to less than 25%.

7. Share Repurchases made by the Company

No purchases of Shares have been made by the Company, whether on the Stock Exchange or otherwise, in the previous six months.

– 7 –