Sihuan Pharmaceutical Holdings Group Ltd. — Proxy Solicitation & Information Statement 2011

Aug 31, 2011

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 a 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 Sihuan Pharmaceutical Holdings Group Ltd., you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim 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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Sihuan Pharmaceutical Holdings Group Ltd. 四 環 醫 藥 控 股 集 團 有 限 公 司

(Incorporated in Bermuda with limited liability)

(Stock code: 0460)

PROPOSED SPECIAL DIVIDEND, RE-ELECTION OF DIRECTORS AND

NOTICE OF SPECIAL GENERAL MEETING

A notice convening the special general meeting of Sihuan Pharmaceutical Holdings Group Ltd. (the ‘‘Company’’) to be held at Regus Conference Centre, 35/F Central Plaza, 18 Harbour Road, Wanchai, Hong Kong on Monday, 19 September 2011 at 10 a.m. is set out on pages 9 to 10 of this circular. A form of proxy for use at the special general meeting is also enclosed. Such form of proxy is also published on the website of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk). 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 Company’s Hong Kong Share Registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, 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 or any adjournment thereof. Completion and return of the form of proxy will not preclude shareholders from attending and voting at the meeting (or any adjourned meeting thereof) if they so wish.

1 September 2011

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
APPENDIX I — DETAILS OF DIRECTORS PROPOSED
FOR RE-ELECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
NOTICE OF SPECIAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9

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DEFINITIONS

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

‘‘Board’’ the board of Directors

‘‘Bye-Laws’’ the bye-laws of the Company, as amended, supplemented or modified from time to time

• ‘‘China’’ the People’s Republic of China

• ‘‘Company’’ Sihuan Pharmaceutical Holdings Group Ltd., a company incorporated in Bermuda with limited liability, with its shares listed on the main board of the Stock Exchange

• ‘‘Director(s)’’ the director(s) of the Company

• ‘‘Dividend Record 27 September 2011, being the record date for determining Date’’ entitlement to the Special Dividend

• ‘‘Special General the special general meeting of the Company to be held at Regus Meeting’’ Conference Centre, 35/F Central Plaza, 18 Harbour Road, Wanchai, Hong Kong on Monday, 19 September 2011 at 10 a.m. or any adjournment thereof and notice of which is set out on pages 9 to 10 of this circular

• ‘‘Group’’

• the Company and its subsidiaries

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

• ‘‘Latest Practicable 30 August 2011, being the latest practicable date prior to the Date’’ printing of this circular for the purpose of ascertaining certain information contained in this circular

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange, as amended from time to time

• ‘‘Qualifying Shareholders whose name appear on the register of members of Shareholders’’ the Company as at the close of business on the Dividend Record Date to determine the entitlements of the Shareholders to the proposed Special Dividend

• ‘‘Share(s)’’ ordinary share(s) of nominal value of HK$0.01 each in the capital of the Company

• ‘‘Shareholder(s)’’ the holder(s) of the Share(s)

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DEFINITIONS

• ‘‘Special Dividend’’

‘‘Stock Exchange’’

• RMB7.8 cents on each Share recommended by the Board and subject to approval by the Shareholders at the Special General Meeting, payable in cash to each Shareholder whose name appears on the register of members of the Company on the Dividend Record Date

The Stock Exchange of Hong Kong Limited

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LETTER FROM THE BOARD

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Sihuan Pharmaceutical Holdings Group Ltd. 四 環 醫 藥 控 股 集 團 有 限 公 司

(incorporated in Bermuda with limited liability)

(Stock code: 0460)

Executive Directors: Dr. Che Fengsheng Dr. Guo Weicheng Mr. Meng Xianhui

Non-executive Directors: Dr. Zhang Jionglong Mr. Homer Sun Mr. Eddy Huang

Independent Non-executive Directors: Mr. Patrick Sun Mr. Bai Huiliang Mr. Xu Kangsen

Registered office: Clarendon House 2 Church Street P.O. Box HM1022 Hamilton HM DX Bermuda

Principal place of business in Hong Kong: 8th Floor Gloucester Tower The Landmark 15 Queen’s Road Central Hong Kong 1 September 2011

To the Shareholders

Dear Sir or Madam

PROPOSED SPECIAL DIVIDEND, RE-ELECTION OF DIRECTORS AND

NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

The purpose of this circular is to give you notice of the Special General Meeting and the proposals of payment of Special Dividend and re-election of Directors to be put forward at the Special General Meeting.

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LETTER FROM THE BOARD

RECOMMENDATION OF SPECIAL DIVIDEND

The Board recommended that the Special Dividend of approximately RMB403,652,000 (subject to approval of the Shareholders at the Special General Meeting) be paid to Qualifying Shareholders on or around 11 October 2011.

The Company will apply undistributed profits in the form of cash of the Company for the payment of the Special Dividend.

Based on 5,175,024,000 Shares in issue as at the Latest Practicable Date, the Qualifying Shareholders will receive the Special Dividend in cash of approximately RMB7.8 cents per Share (subject to approval by the Shareholders at the Special General Meeting).

An ordinary resolution will be put forward at the Special General Meeting for payment of the Special Dividend for approval by the Shareholders.

REASON FOR DECLARATION OF SPECIAL DIVIDEND

The Board has carefully considered the Company’s near term financial and cashflow requirements, taking into consideration the Company’s current cash balance, the Company’s cashflow and profits generated from its operations, and cash received from recent asset disposals, its level of undistributed profits as well as taking into consideration the Company’s near term cash needs for capital expenditures, working capital commitments, and strategic activities. Considering that the Company’s cash balance and cash flow from operations remains strong and that sufficient allocation of required cash resources for its capital commitments and strategic investment plans have been made, and considering the minimal interest generated from banking deposits, the Directors consider that it is in the best interest of the Shareholders to distribute a portion of the Company’s undistributed profits in the form of cash as a one off Special Dividend to its Shareholders.

RE-ELECTION OF DIRECTORS

Reference is made to the circular on, amongst other things, re-election of retiring directors published by the Company on 26 April 2011. Mr. Homer Sun and Mr. Eddy Huang did not offer themselves for re-election as Directors at the annual general meeting of the year 2011 of the Company and retired on 3 June 2011.

At a board meeting held on 17 August 2011, the Board appointed Mr. Homer Sun and Mr. Eddy Huang as non-executive directors of the Company to fill casual vacancies on the Board. According to Bye-Law 83(2) of the Bye-Laws, Mr. Homer Sun and Mr. Eddy Huang will hold office until the Special General Meeting and will be subject to re-election at the Special General Meeting.

An ordinary resolution will be put forward at the Special General Meeting for reelection of Directors for approval by the Shareholders.

Details of Mr. Homer Sun and Mr. Eddy Huang are set out in Appendix I to this circular in accordance with the relevant requirements of the Listing Rules.

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LETTER FROM THE BOARD

NOTICE OF SPECIAL GENERAL MEETING

Set out on pages 9 to 10 of this circular is the notice of Special General Meeting at which, inter alia, ordinary resolutions will be proposed to Shareholders to consider and approve the Special Dividend and the re-election of the Directors.

CLOSURE OF REGISTER OF MEMBERS

The transfer books and register of shareholders of the Company will be closed from 23 September 2011 to 27 September 2011, both days inclusive, during which period no share transfers can be registered. In order to qualify for the Special Dividend, all transfers accompanied by the relevant share certificates must be lodged with the Hong Kong Share Registrar of the Company, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4: 30 p.m. on 22 September 2011.

FORM OF PROXY

A form of proxy is enclosed for use at the Special General Meeting. Such form of proxy is also published on the website of the Stock Exchange (www.hkexnews.hk). Whether or not you intend to be present at the Special General Meeting, you are requested to complete the form of proxy and return it to the Company in accordance with the instructions printed thereon not less than 48 hours before the time fixed for the holding of the Special General Meeting or any adjournment thereof. Completion and delivery of the form of proxy will not preclude Shareholders from attending and voting at the Special General Meeting if they so wish.

VOTING BY POLL

Pursuant to Rule 13.39(4) of the Listing Rules and Bye-Law 66 of the Bye-Laws, at any general meeting a resolution put to the vote of the meeting is to be decided by way of a poll.

On a poll, every Shareholder present in person or by proxy or, in the case of a Shareholder being a corporation, by its duly authorised representative shall have one vote for every fully paid Share of which he is the holder but so that no amount paid up or credited as paid up on a Share in advance of calls or instalments is treated for the foregoing purposes as paid up on the Share. A person entitled to more than one vote on a poll need not use all his votes or cast all the votes he uses in the same way.

An announcement on the results of the voting by poll will be made by the Company after the Special General Meeting in the manner prescribed under Rule 13.39(5) of the Listing Rules.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors consider that the proposed resolutions for the payment of the Special Dividend and the re-election of the Directors are in the interests of the Group and the Shareholders as a whole. The Directors therefore recommend the Shareholders to vote in favour of the resolutions to be proposed at the Special General Meeting.

Yours faithfully By order of the Board Sihuan Pharmaceutical Holdings Group Ltd. Dr. Che Fengsheng Chairman

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APPENDIX I

DETAILS OF DIRECTORS PROPOSED FOR RE-ELECTION

The following are the particulars of the Directors (as required by the Listing Rules) proposed to be re-elected at the Special General Meeting.

Mr. Homer Sun (‘‘Mr. Sun’’), aged 40, is currently a managing director of Morgan Stanley Asia Limited and leads the China investments of Morgan Stanley Private Equity Asia. Mr. Sun has been with Morgan Stanley Asia Limited since 2000 and serves on Morgan Stanley’s China Management Committee, which is comprised of the Firm’s senior business leaders within China. He is currently a non-executive director of China Shanshui Cement Group Limited, a company listed on the Stock Exchange (Stock Code: 691), as well as a non-executive director of China Flooring Holding Company Limited, a company listed on the Stock Exchange (Stock code: 2083). Mr. Sun is also a non-executive director of Yongye International, Inc., a company listed on The NASDAQ Stock Market (Stock code: YONG). Mr. Sun has been a non-executive director of the Company from 28 October 2010 to 3 June 2011. Mr. Sun previously spent six years with Morgan Stanley’s Investment Banking Division in the Mergers and Acquisitions Group in Hong Kong where he worked on a wide range of mergers and acquisitions in Greater China. From 1996 to 2000, he was a corporate attorney specializing in mergers and acquisitions with Simpson Thacher & Bartlett in New York and Hong Kong. Mr. Sun received a Bachelor of Science in Chemical Engineering, magna cum laude, from the University of Michigan in 1993 and a J.D., cum laude, from the University of Michigan Law School in 1996.

Mr. Eddy Huang (‘‘Mr. Huang’’), aged 36, is currently a managing director of Morgan Stanley Asia Limited and a senior member of Morgan Stanley Private Equity Asia focusing on China investments. Mr. Huang has been a non-executive director of the Company from 28 October 2010 to 3 June 2011. He has been with Morgan Stanley Asia Limited since 2003 and advised on a broad range of technology, media and communications transactions for the Investment Banking Division of Morgan Stanley Asia Limited prior to joining Morgan Stanley Private Equity Asia. Prior to joining Morgan Stanley Asia Limited, Mr. Huang was previously with the Investment Banking Division of Morgan Stanley in New York and the Financial Institutions Investment Banking Group of Merrill Lynch in New York. Mr. Huang is currently a director of CIMIC Industrial Group Ltd. and its subsidiary, Shanghai CIMIC Tiles Co., Ltd., which is a Shenzhen listed company (Stock Code: 002162), as well as a non-executive director of China Flooring Holding Company Limited, a company listed on the Stock Exchange (Stock code: 2083). Mr. Huang received a Bachelor of Arts in Economics and East Asian Studies from Yale University in 1997 and a Master of Business Administration from Harvard Business School in 2002.

Save as disclosed above, as at the Latest Practicable Date, Mr. Sun and Mr. Huang do not have any interests in the shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571) of the laws of Hong Kong. Mr. Sun and Mr. Huang do not hold any other position in the Company or any of its subsidiaries (if any) nor did he hold any directorship in any listed public company in Hong Kong or anywhere else in the last three years. Mr. Sun and Mr. Huang do not have any relationship with any other directors, senior management or the substantial or controlling shareholders (as respectively defined in the Listing Rules) of the Company.

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APPENDIX I

DETAILS OF DIRECTORS PROPOSED FOR RE-ELECTION

Mr. Sun and Mr. Huang each has entered into a service contract with the Company for a term of one year commencing from 18 August 2011, and may be terminated by either party giving at least three months’ notice in writing. Mr. Sun and Mr. Huang will not receive any remuneration from the Company. Pursuant to the Bye-laws of the Company, Mr. Sun and Mr. Huang will be subject to retirement by rotation and re-election at the Special General Meeting.

Save as disclosed above, there is no other information relating to Mr. Sun and Mr. Huang that should be disclosed pursuant to any of the requirements of Rule 13.51(2)(h) to (v) of the Listing Rules nor are there any other matters that need to be brought to the attention of the Shareholders.

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NOTICE OF SPECIAL GENERAL MEETING

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Sihuan Pharmaceutical Holdings Group Ltd. 四 環 醫 藥 控 股 集 團 有 限 公 司

(Incorporated in Bermuda with limited liability)

(Stock code: 0460)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the special general meeting of Sihuan Pharmaceutical Holdings Group Ltd. (the ‘‘Company’’) will be held at Regus Conference Centre, 35/F Central Plaza, 18 Harbour Road, Wanchai, Hong Kong on Monday, 19 September 2011 at 10 a.m. for the purpose of considering and, if thought fit, passing (with or without amendments) the following ordinary resolutions:

ORDINARY RESOLUTIONS

1. To approve the proposed Special Dividend (as defined in the circular dated 1 September 2011 of the Company) and authorise directors of the Company to effect the payment of the Special Dividend and to do all acts and things and to take such steps as they may consider necessary, appropriate, desirable or expedient to give effect to or in connection with the payment of the Special Dividend;

2. To re-elect Mr. Homer Sun as a non-executive director of the Company; and

3. To re-elect Mr. Eddy Huang as a non-executive director of the Company.

By order of the Board of Directors Sihuan Pharmaceutical Holdings Group Ltd. Dr. Che Fengsheng Chairman

Hong Kong, 1 September 2011

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NOTICE OF SPECIAL GENERAL MEETING

Registered office: Clarendon House 2 Church Street P.O. Box HM1022 Hamilton HM DX Bermuda

Principal place of business in Hong Kong: 8th Floor Gloucester Tower The Landmark 15 Queen’s Road Central Hong Kong

Notes:

• (i) A shareholder of the Company entitled to attend and vote at the above meeting (or at any adjournment thereof) is entitled to appoint another person as his/her proxy to attend and vote instead of him/her; a proxy need not be a shareholder of the Company.

• (ii) In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the vote(s) of the other joint holder(s) and for this purpose seniority shall be determined as that one of the persons so present whose name stands first on the register of shareholders in respect of such share shall alone be entitled to vote in respect thereof.

• (iii) In order to be valid, a form of proxy must be deposited at the Hong Kong Share Registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong together with the power of attorney or other authority (if any) under which it is signed (or a certified copy thereof) not less than 48 hours before the time appointed for the holding of the above meeting or any adjournment thereof. The completion and return of the form of proxy shall not preclude members of the Company from attending and voting in person at the above meeting (or any adjourned meeting thereof) if they so wish.

• (iv) The transfer books and register of shareholders of the Company will be closed from 15 September 2011 to 19 September 2011, both days inclusive, during which period no share transfers can be registered. In order to qualify for attending and voting at the special general meeting, all transfers accompanied by the relevant share certificates must be lodged with the Hong Kong share registrar of the Company, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4: 30 p.m. on 14 September 2011.

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