Sinopharm Tech Holdings Limited — Proxy Solicitation & Information Statement 2006

Sep 29, 2006

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 Vanguard Group Limited (the “Company”), 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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(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 8156)
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(1) PROPOSED GRANT OF GENERAL MANDATES TO ALLOT AND ISSUE NEW SHARES AND REPURCHASE BY THE COMPANY OF ITS OWN SHARES;

(2) PROPOSED REFRESHMENT OF THE SCHEME MANDATE LIMIT;

(3) PROPOSED RE-ELECTION OF DIRECTORS; (4) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY; AND (5) NOTICE OF ANNUAL GENERAL MEETING

A notice convening an annual general meeting of the Company to be held at 30th Floor, Sunshine Plaza, 353 Lockhart Road, Hong Kong at 10:30 a.m. on Tuesday, 24 October 2006 is set out on pages 20 to 26 of this circular. A form of proxy for use at the annual general meeting is enclosed with this circular.

Whether or not you are able to attend the annual general meeting, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the office of the Company’s branch share registrar and transfer office in Hong Kong, Standard Registrars Limited, at 26th Floor, Tesbury Centre, 28 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 annual general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the annual general meeting or any adjournment thereof should you so wish.

This circular will remain on the GEM website at http://www.hkgem.com on the “Latest Company Announcements” page for at least seven days from the date of its posting.

* For identification purpose only

28 September 2006

CHARACTERISTICS OF GEM

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the Internet website operated by the Stock Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website in order to obtain up-to-date information on GEM-listed issuers.

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CONTENTS

Page

Characteristics of GEM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	i
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
General Mandate and Repurchase Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Refreshment of the Scheme Mandate Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Conditions of the refreshment of the Scheme Mandate Limit. . . . . . . . . . . . . . .	8
Re-election of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Amendments to the Articles of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Action to be taken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Appendix I – Explanatory statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix II – Procedures by which Shareholders may demand
a poll at general meeting pursuant to the
Articles of Association . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Appendix III – Details of Directors proposed to be re-elected
at the AGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Notice of the AGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20

– ii –

DEFINITIONS

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

“AGM”

the annual general meeting of the Company to be convened and held to consider and, if thought fit, to approve, among other things, the proposed grant of the General Mandate and the Repurchase Mandate, the Proposed Refreshment, the proposed amendments to the Articles of Association and the re-election of Directors

• “Articles of Association” the articles of association of the Company, and “ Article ” shall mean an article of the Articles of Association

• “associate(s)” has the meaning ascribed thereto in the GEM Listing Rules

• “Board” the board of Directors

• “CG Code” the Code on Corporate Governance Practices contained in Appendix 15 of the GEM Listing Rules

• “Company” China Vanguard Group Limited, a company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on GEM

• “Directors” the directors of the Company

• “Eligible Participants” means:

• (i) any employee (whether full time or part time, including any executive Director, non-executive Director and independent non-executive Director) of the Company, any subsidiary or any Invested Entity; or

• (ii) any supplier of goods or services to any member of the Group or any Invested Entity; or

• (iii) any customer of the Group or any Invested Entity; or

– 1 –

DEFINITIONS

• (iv) any person or entity that provides research, development or other technological support to the Group or any Invested Entity; or

	(v) any shareholder of any member of the Group or any
	Invested Entity or any holder of any securities
	issued by any member of the Group or any Invested
	Entity
“GEM”	Growth Enterprise Market of the Stock Exchange
“GEM Listing Rules”	the Rules Governing the Listing of Securities on GEM
“General Mandate”	the general mandate proposed to be granted to the
	Directors at the AGM to issue further new Shares not
	exceeding 20% of the issued share capital of the
	Company at the date of the passing of such resolution
“Group”	the Company and all of its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“Invested Entity”	means any entity in which any member of the Group
	holds any equity interest
“Latest Practicable Date”	26 September 2006, being the latest practicable date prior
	to the printing of this circular for the purpose of
	ascertaining certain information contained in this circular
“Options”	the options granted under the Share Option Scheme to
	subscribe for Shares in accordance with the terms thereof
“PRC”	the People’s Republic of China
“Pre-IPO Share Option Scheme”	the pre-IPO share option scheme of the Company adopted
	pursuant to the ordinary resolution passed by the
	Shareholders on 18 October 2002
“Proposed Refreshment”	the proposed refreshment of the Scheme Mandate Limit
	under the Share Option Scheme at the AGM

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DEFINITIONS

“Repurchase Mandate”

• the repurchase mandate proposed to be granted to the Directors at the AGM to exercise the powers of the Company to repurchase up to a maximum of 10% of the issued share capital of the Company at the date of the passing of such resolution

• “Scheme Mandate Limit”

• the total number of Shares which may be issued upon exercise of all options granted under the Pre-IPO Share Option Scheme and the Share Option Scheme and any other share option schemes of the Group must not in aggregate exceed 10% of the Shares in issue as at the date on which dealings in the Shares first commence on GEM which may be refreshed pursuant to the rules of the Share Option Scheme. If the Scheme Mandate Limit is refreshed, the total number of Shares which may be issued upon exercise of all options granted must not in aggregate exceed 10% of the Shares in issue as at the date of the AGM

• “SFO” the Securities and Futures Ordinance (Chapter 571 of Laws of Hong Kong)

• “Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company

• “Share Option Scheme” the existing share option scheme of the Company adopted pursuant to the ordinary resolution passed by the Shareholders on 18 October 2002

• “Shareholder(s)” holder(s) of the Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Takeovers Code” the Hong Kong Code on Takeovers and Mergers “HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent.

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LETTER FROM THE BOARD

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 8156)

Executive Directors: Madam Cheung Kwai Lan Mr. Chan Tung Mei Mr. Lau Hin Kun Mr. Chan Ting

Non-executive Director: Mr. Shaw Kyle Arnold Junior

Independent non-executive Directors: Mr. Tian He Nian Mr. Zhao Zhi Ming Mr. To Yan Ming, Edmond

Registered office: Century Yard Cricket Square Hutchins Drive P.O. Box 2681 GT George Town Grand Cayman British West Indies Cayman Islands

Head office and principal place of business in Hong Kong: 30th Floor, Sunshine Plaza 353 Lockhart Road Hong Kong

28 September 2006

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED GRANT OF GENERAL MANDATES TO ALLOT AND ISSUE NEW SHARES AND REPURCHASE BY THE COMPANY OF ITS OWN SHARES; (2) PROPOSED REFRESHMENT OF THE SCHEME MANDATE LIMIT; (3) PROPOSED RE-ELECTION OF DIRECTORS; (4) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY; AND (5) NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

At the AGM to be held at 30th Floor., Sunshine Plaza, 353 Lockhart Road, Hong Kong on Tuesday, 24 October 2006 at 10:30 a.m., resolutions will be proposed, among other matters:

(a) ordinary resolution to re-elect the Directors;

* For identification purpose only

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LETTER FROM THE BOARD

• (b) special resolution to amend the Articles of Association;

• (c) ordinary resolution to grant the General Mandate to the Directors;

• (d) ordinary resolution to grant the Repurchase Mandate to the Directors;

• (e) ordinary resolution to increase the number of Shares to be allotted and issued under the General Mandate by an additional number representing such number of Shares repurchased under the Repurchase Mandate; and

• (f) to approve the Proposed Refreshment.

The purpose of this circular is to provide you with information relating to the resolutions to be proposed at the AGM for the grant of the General Mandate and the Repurchase Mandate, the re-election of Directors, the amendments to the Articles of Association and the Proposed Refreshment, and to give you the notice of the AGM.

GENERAL MANDATE AND REPURCHASE MANDATE

The General Mandate and the Repurchase Mandate shall be effective until whichever is the earliest of:

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

• (b) the expiration of the period within which the next annual general meeting of the Company is required by the Articles of Association, or any applicable law of the Cayman Islands to be held; or

• (c) the passing of an ordinary resolution by the Shareholders in general meeting revoking or varying the authority given to the Directors.

General Mandate

The Company has in issue an aggregate of 624,052,807 Shares as at the Latest Practicable Date. Subject to the passing of the proposed resolution for the approval of the General Mandate and in accordance with the terms therein, the Company would be allowed to allot and issue up to a maximum of 124,810,561 Shares, representing 20% of the aggregate nominal amount of the issued Shares at the time of the passing of the resolution approving the General Mandate on the basis that no further Shares will be issued or repurchased by the Company prior to the AGM.

The Directors have no immediate plans to issue any new Shares which may fall to be issued under the Share Option Scheme.

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LETTER FROM THE BOARD

Repurchase Mandate

Under the GEM Listing Rules, the Company is required to give to the Shareholders all information which is reasonably necessary to enable the Shareholders to make an informed decision as to whether to vote for or against the resolution relating to the Repurchase Mandate. The explanatory statement required by the GEM Listing Rules to be included in this circular is set out in the Appendix I to this circular.

REFRESHMENT OF THE SCHEME MANDATE LIMIT

The Company adopted the Share Option Scheme pursuant to the ordinary resolution passed by the Shareholders on 18 October 2002. Under the Share Option Scheme, the original Scheme Mandate Limit was set at 10% of the Shares in issue as at the date of adoption of the Share Option Scheme, i.e. 40,000,000 Shares, which represented a maximum number of Shares that might be issued upon the exercise of all Options under the Share Option Scheme. All the 40,000,000 Options under the Share Option Scheme adopted on 18 October 2002 were granted to certain Eligible Participants in 2004 of which 200,000 Options had been exercised as at the Latest Practicable Date.

Subject to prior Shareholders’ approval, the Company may, at any time thereafter, refresh the Scheme Mandate Limited to the extent not exceeding 10% of the Shares in issue as at the aforesaid approval. Pursuant to the ordinary resolution passed by the Shareholders on 31 October 2005, the Scheme Mandate Limit was refreshed so that the total number of Shares which may fall to be issued upon exercise of all Options to be granted under the Share Option Scheme shall not exceed 48,213,000 Shares, being 10% of the issued share capital of the Company as at 31 October 2005. There were 40,210,000 Options granted to certain Eligible Participants in March 2006 pursuant to the Scheme Mandate Limit refreshed on 31 October 2005 of which no Options were exercised as at the Latest Practicable Date.

Further, pursuant to the ordinary resolution passed by the Shareholders on 12 April 2006, the Scheme Mandate Limit was refreshed so that the total number of Shares which may fall to be issued upon exercise of all Options to be granted under the Share Option Scheme shall not exceed 60,987,280 Shares, being 10% of the issued share capital of the Company as at 12 April 2006. No Options were granted after the refreshment of the Scheme Mandate Limit on 12 April 2006.

As at the Latest Practicable Date, there were in aggregate 80,210,000 Options granted to 34 Eligible Participants in 2004 and 2006 of which 200,000 Options had been exercised and 80,010,000 Options remain outstanding. Upon exercise of all the 80,010,000 outstanding Options, 80,010,000 Shares would fall to be issued.

Besides the Share Option Scheme, the Company adopted the Pre-IPO Share Option Scheme pursuant to the ordinary resolution passed by the Shareholders on 18 October 2002. Up to the Latest Practicable Date, 40,000,000 options were granted under the Pre-IPO Share Option Scheme of which 37,000,000 options had been exercised and 3,000,000 options had

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LETTER FROM THE BOARD

been lapsed. Pursuant to Rule 23.03 of the GEM Listing Rules, the total number of Shares which may be issued upon the exercise of all options to be granted under all of the share option scheme of the Company must not exceed 10% of the Shares in issue as at the date of approval of the refreshed Scheme Mandate Limit. Options previously granted under the share option schemes (including without limitation those outstanding, cancelled, lapsed or exercised or exercised in accordance with the Share Option Scheme) will not be counted for the purpose of calculating the Scheme Mandate Limit as refreshed.

As at the Latest Practicable Date, the Company has issued 624,052,807 Shares. Pursuant to the terms of the Share Option Scheme and in compliance with the GEM Listing Rules, the maximum number of Shares which may be issued upon the exercise of all the Options to be granted under the Share Option Scheme under the Scheme Mandate Limit as refreshed should be 62,405,280 Shares (assuming no further issue or purchase of Shares prior to the AGM), representing 10% of the issued share capital of the Company as at the date of approval of the Proposed Refreshment by the Shareholders at the AGM.

It is proposed that subject to the GEM Listing Committee of the Stock Exchange granting the listing of, and permission to deal in the Shares to be issued pursuant to the exercise of Option to be granted under the refreshed Scheme Mandate Limit and the passing of the relevant resolution at the AGM, the Scheme Mandate Limit be refreshed so that the total number of Shares, which may be issued upon exercise of all options to be granted under all of the schemes of the Company, shall not exceed 10% of the Shares in issue as at the date of approval of the Proposed Refreshment by the Shareholders at the AGM. No options can be granted under the Pre-IPO Share Option Scheme. Options previously granted under the Share Option Scheme and the Pre-IPO Share Option Scheme (including without limitation those outstanding, cancelled, lapsed or exercised in accordance with the Share Option Scheme) will not be counted for the purpose of calculating the Scheme Mandate Limit as refreshed.

Pursuant to the GEM 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 schemes 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.

All the options of the Pre-IPO Share Option Schemes have been granted prior to the listing of Shares in November 2002 and the scheme mandate limit of the Pre-IPO Share Option Scheme has not been refreshed since its adoption.

No adjustment has been made to the Options granted under the Share Option Scheme.

The Company confirms that there is no grantee who has been granted with the Options or the options granted under the Pre-IPO Share Option Scheme, the exercise of which will result in the total number of Shares issued and to be issued to that grantee exceeding 1% of the issued share capital of the Company in the 12-month period up to and including the date of such grant pursuant to Rule 23.03(4) of the GEM Listing Rules.

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LETTER FROM THE BOARD

The Proposed Refreshment will enable the Company to grant further Options to Eligible Participants so as to encourage the Eligible Participants to perform their best in achieving the goals of the Group and to recognise the contribution of and provide incentives to the employees and directors of the Group to work towards enhancing the values of the Company and Shares for the benefit of the Company and Shareholders as a whole.

CONDITIONS OF THE REFRESHMENT OF THE SCHEME MANDATE LIMIT

The Proposed Refreshment is conditional upon:

• (i) the passing of the necessary ordinary resolution by the Shareholders at the AGM to approve the Proposed Refreshment; and

• (ii) the GEM Listing Committee of the Stock Exchange granting the listing of, and permission to deal in the Shares to be issued pursuant to the exercise of the Options to be granted under the refreshed Scheme Mandate Limit.

Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of Options to be granted under the refreshed Scheme Mandate Limit.

RE-ELECTION OF DIRECTORS

According to Article 99, any Director appointed as an addition to the existing Board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election. According to Article 116, one-third of the Directors for the time being, or, if their number is not three or a multiple of three, then the number nearest to but not exceeding one-third, shall retire from office by rotation at every annual general meeting of the Company. A retiring Director shall be eligible for re-election.

In accordance with Article 99, Mr. Zhao Zhi Ming and Mr. To Yan Ming, Edmond shall retire from their offices as independent non-executive Directors. Being eligible, each of Mr. Zhao Zhi Ming and Mr. To Yan Ming, Edmond will offer himself for re-election as independent non-executive Director. In accordance with Article 116, Madam Cheung Kwai Lan shall retire from her office as executive Director and Mr. Shaw Kyle Arnold Junior shall retire from his office as non-executive Director. Being eligible, Madam Cheung Kwai Lan will offer herself for re-election as executive Director and Mr. Shaw Kyle Arnold Junior will offer himself for re-election as non-executive Director.

At the AGM, an ordinary resolution will be proposed to re-elect each of Madam Cheung Kwai Lan as executive Director, Mr. Shaw Kyle Arnold Junior as non-executive Director, Mr. Zhao Zhi Ming as independent non-executive Director and Mr. To Yan Ming, Edmond as independent non-executive Director.

Particulars relating to Madam Cheung Kwai Lan, Mr. Shaw Kyle Arnold Junior, Mr. Zhao Zhi Ming and Mr. To Yan Ming, Edmond are set out in Appendix II to this circular.

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LETTER FROM THE BOARD

AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The GEM Listing Rules have been amended by the Stock Exchange by inserting a new CG Code as Appendix 15 replacing Rules 5.35 to 5.45 of the GEM Listing Rules and adding a new Appendix 16 on the requirements for a corporate governance report to be included in annual reports of listed issuers. Such amendments took effect on 1 January 2005. Further amendments have been made to the GEM Listing Rules with effect from 1 March 2006 requiring that, among other matters, the Articles of Association shall provide that Directors may be removed at any time by ordinary resolution of the Shareholders.

The Directors therefore propose to put forward to the Shareholders for approval of a special resolution to amend the Articles of Association at the AGM. The amendments are to bring the current Articles of Association in line with, including but not limited to, (i) paragraph A.4.2 of the CG Code which provides that every director, including those appointed for a specific term, should be subject to retirement by rotation at least once every three years and all directors appointed to fill a casual vacancy should be subject to election by the shareholders at the first general meeting after their appointment; and (ii) paragraph 4(3) of Appendix 3 to the GEM Listing Rules which provides that any director may be removed by ordinary resolution in general meeting before the expiration of his period of office.

Apart from the above, the Company would like to take this opportunity to amend the Articles in respect of the demand of a poll in the circumstances as required by Rule 13.47(3) of the GEM Listing Rules which provides that if the chairman of the meeting and/or the directors individually or collectively hold proxies in respect of shares representing 5% or more of the total voting rights at a particular meeting, and if on a show of hands a meeting votes in the opposite manner to that instructed in those proxies, the chairman and/or the directors holding the proxies as aforesaid collectively shall demand a poll.

The proposed amendments to Articles of Association are stated in the proposed special resolution no. 4 in the notice convening the AGM as set out on pages 20 to 26 of this circular.

RESPONSIBILITY STATEMENT

This document, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (i) the information contained in this document is accurate and complete in all material aspects and not misleading; (ii) there are no other matters the omission of which would make any statement in this document misleading; (iii) all opinions expressed in this document have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

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LETTER FROM THE BOARD

ACTION TO BE TAKEN

Whether or not you intend to attend the AGM, you are requested to complete and return the form of proxy accompanying the annual report of the Company in accordance with the instructions printed thereon not less than 48 hours before the time appointed for holding the AGM or any adjournment thereof. The completion and return of a form of proxy will not preclude you from attending and voting at the AGM or any adjournment thereof in person if you so wish.

RECOMMENDATION

The Directors believe that the proposed grant of the General Mandate and the Repurchase Mandate, the proposed re-election of Directors, the proposed amendments to the Articles of Association and the Proposed Refreshment are in the best interests of the Company and the Shareholders as a whole and recommend the Shareholders to vote in favour of the above resolutions to be proposed at the AGM.

GENERAL

Your attention is drawn to the information set out in the appendices to this Circular.

Yours faithfully For and on behalf of the Board of China Vanguard Group Limited Chan Ting Director

– 10 –

EXPLANATORY STATEMENT

APPENDIX I

This Appendix serves as an explanatory statement, as required by the GEM Listing Rules, to provide the requisite information to you for your consideration of the Repurchase Mandate.

1. Repurchase of securities from connected parties

The GEM Listing Rules prohibit a company from knowingly purchasing securities on the Stock Exchange from a “connected person”, that is, a director, chief executive or substantial shareholder or management shareholder of the Company or any of its subsidiaries or their respective associates and a connected person is prohibited from knowingly selling his/her/its securities to the Company.

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

2. Share capital

As at the Latest Practicable Date, the issued share capital of the Company comprised 624,052,807 fully paid Shares.

Subject to the passing of the proposed resolution for the approval of the Repurchase Mandate and on the basis that no further Shares are issued or repurchased by the Company prior to the AGM, the Company will be allowed under the Repurchase Mandate to repurchase a maximum of 62,405,280 Shares, representing 10% of the issued share capital of the Company as at the Latest Practicable Date.

3. Reasons for the repurchase

The Directors believe that the Repurchase Mandate is in the best interests of the Company and the Shareholders as a whole. An exercise of the Repurchase Mandate may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets per Share and/or earnings per Share and will only be made when the Directors believe that a repurchase will benefit the Company and the Shareholders as a whole.

4. Funding of repurchases

Pursuant to the Repurchase Mandate, repurchases would be funded entirely from the Company’s available cash flow or working capital facilities which will be funds legally available under the Cayman Islands law and the memorandum and articles of association of the Company for such purpose.

An exercise of the Repurchase Mandate in full could have a material adverse impact on the working capital and gearing position of the Company compared with those as at 30 June 2006, being the date of its latest published audited consolidated accounts. The Directors do not, however, intend to make any repurchase in circumstances that would have a material adverse impact on the working capital or gearing position of the Company.

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EXPLANATORY STATEMENT

APPENDIX I

5. Share prices

The highest and lowest prices at which the Shares have traded on the Stock Exchange in each of the previous twelve calendar months were as follows:

Month							Highest	Lowest
							HK$	HK$
2005
September							Suspended
October							Suspended
November							1.300	0.990
December							1.390	1.150
2006
January							2.800	1.390
February							2.875	2.150
March							3.000	2.400
April							3.125	2.350
May							2.750	1.870
June							2.150	1.890
July							2.200	1.970
August							2.210	1.810
September	(up	to	the	Latest	Practicable	Date)	1.960	0.920

6. Disclosure of interests and minimum public holding

None of the Directors or, to the best of their knowledge having made all reasonable enquiries, their associates, have any present intention to sell to the Company or its subsidiaries any of the Shares in the Company if the Repurchase Mandate is approved at the AGM and exercised.

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 GEM Listing Rules and applicable laws of the Cayman Islands.

If a Shareholder’s proportionate interest in the voting rights of the Company increases on the Company exercising its powers to repurchase Shares pursuant to the Repurchase Mandate, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers 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 Takeovers Code.

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APPENDIX I

EXPLANATORY STATEMENT

As at the Latest Practicable Date, the following Shareholders are interested in more than 10% of the Shares then in issue:

	Number of	Percentage
Name	Shares	holding
Madam Cheung Kwai Lan (Note)	242,510,000	38.86%
Mr. Chan Tung Mei (Note)	242,510,000	38.86%
Best Frontier Investments Limited (Note)	241,130,000	38.64%
Oppenheimer Funds, Inc.	110,000,000	17.63%

Note: These Shares represent: (i) 241,130,000 Shares owned by Best Frontier Investments Limited which is owned as to 99.89% and 0.11% by Madam Cheung Kwai Lan and Mr. Chan Tung Mei respectively; and (ii) 1,380,000 Shares owned by Madam Cheung Kwai Lan who is the spouse of Mr. Chan Tung Mei and accordingly, Mr. Chan Tung Mei is deemed to be interested in these 1,380,000 Shares under the SFO.

In the event that the Directors exercise in full the power to repurchase Shares in accordance with the Repurchase Mandate, the total interests of the above Shareholders in the Shares would be increased to:

Name	Percentage holding
Madam Cheung Kwai Lan	43.18%
Mr. Chan Tung Mei	43.18%
Best Frontier Investments Limited	42.93%
Oppenheimer Funds, Inc.	19.59%

On the basis of the current shareholding of Madam Cheung Kwai Lan, Mr. Chan Tung Mei, Best Frontier Investments Limited and parties acting in concert with them, an exercise of the Repurchase Mandate in full will result in them becoming obliged to make a mandatory offer under Rule 26 of the Takeovers Code.

The Directors have no intention to exercise any of the Repurchase Mandate to such an extent that will result in a requirement of Madam Cheung Kwai Lan, Mr. Chan Tung Mei, Best Frontier Investments Limited and parties acting in concert with them to make a mandatory offer under the Takeovers Code.

Accordingly, save as disclosed above, the Directors are not aware of any consequences which may arise under the Takeovers Code as consequences of any purchase made under the Repurchase Mandate. In addition, the Company may not repurchase Shares which would result in the amount of Shares held by the public being reduced to less than 25%.

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EXPLANATORY STATEMENT

APPENDIX I

7. Shares repurchase made by the Company

No repurchases of Shares have been made by the Company (whether on the Stock Exchange or otherwise) during the six months immediately prior to the Latest Practicable Date.

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APPENDIX II PROCEDURES BY WHICH SHAREHOLDERS MAY DEMAND A POLL AT GENERAL MEETING PURSUANT TO THE ARTICLES OF ASSOCIATION

The procedures by which the Shareholders may demand a poll at general meeting of the Company are set out in this Appendix.

According to Article 80, at any general meeting a resolution put to the vote of the 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 meeting; or

• (b) at least five Shareholders present in person or by proxy or, in the case of corporations, by their duly authorised representatives, and entitled to vote or who represent 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 meeting; or

• (c) any Shareholder or Shareholders present in person or by proxy or, in the case of corporations, by their duly authorised representatives, 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.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE AGM

APPENDIX III

The details of the Directors who will retire from office by rotation at the AGM and being eligible, will offer themselves for re-election at the AGM, are set out below:

Madam Cheung Kwai Lan

Madam Cheung Kwai Lan, aged 68, is the chairman of the Company and the executive Director. Madam Cheung is also one of the founders of the Group. She has served the Group for more than 6 years and is the director of various subsidiaries of the Group. Madam Cheung is responsible for business development, strategic planning and marketing for the Group. She is the vice president of the Zhang Xueliang Foundation ( ). She graduated from Shanxi Tai Yuan Medical School in 1960 and was a researcher at Shanxi Province Tai Yuan (Atomic Energy) Research Institute ( ), which was one of the institutions of the Chinese Academy of Science. She also participated in the research and development of the radioactive material Cobalt 60 for imaging and cancer treatment. She is an executive director of Aptus Holding Limited, an indirect subsidiary of the Company listed on the GEM. Save for the above, Madam Cheung does not hold any directorship in other public listed company or any other position with the Company and other members of the Group in the past three years.

Madam Cheung is the mother of Mr. Chan Ting and the wife of Mr. Chan Tung Mei, both being the executive Directors. She is interested in 242,510,000 Shares representing approximately 38.86% of the issued share capital of the Company, in which 241,130,000 Shares are owned through her shareholding in Best Frontier Investments Limited. Save as disclosed, Madam Cheung does not have any relationships with other Directors, senior management, management Shareholders, substantial Shareholders or controlling Shareholders, nor any interests in the Shares within the meaning of Part XV of the SFO.

Madam Cheung has entered into a service contract with the Company for a term of three years from 18 October 2002, which is renewable automatically for successive terms of one year unless terminated by not less than six months’ notice in writing served by either party on the other. Madam Cheung is entitled to an annual emolument of HK$1,950,000, which is determined by the Board with reference to her duties and responsibility and discretionary bonus provided that the total amount of bonuses payable to all Directors for such year (if any) shall not be less than 10% of the profit for the relevant financial year if the profit for such financial year is not less than HK$12,000,000. Her appointment is subject to normal retirement and re-election by the Shareholders pursuant to the Articles of Association.

There is no information relating to Madam Cheung that is required to be disclosed pursuant to Rules 17.50(2) (h) to (v) of the GEM Listing Rules.

Save as disclosed herein, there is no other matter that needs to be brought to the attention of the Shareholders.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE AGM

APPENDIX III

Mr. Shaw Kyle Arnold Junior

Mr. Shaw Kyle Arnold Junior, aged 45, is the non-executive Director. Mr. Shaw is a partner and managing director of Shaw Kwei & Partners, a private equity fund manager focused on Asia. He has been involved in Asian private equity since 1986, and has successfully organized and managed Asian private equity funds for two U.S. financial institutions: Security Pacific Bank and Tudor Investment Corp. He has been involved in a variety of investment transactions throughout Asia, including Hong Kong and China. He received a M.B.A. degree from the Wharton School of the University of Pennsylvania and a Bachelor of Science in Commerce, majoring in Finance, from the University of Virginia. He joined the Group in May 2003. Mr. Shaw was a non-executive director of Suga International Holdings Limited, the shares of which are listed on the main board of the Stock Exchange. Save for the above, Mr. Shaw does not hold any directorship in other public listed company or any other position with the Company and other members of the Group in the past three years.

Mr. Shaw is interested in 46,600,000 Shares representing approximately 7.47% of the issued share capital of the Company, in which:

• (i) 1,030,000 Shares were beneficially owned by Shaw, Kwei & Partners (Asia) Ltd. of which Mr. Shaw is deemed under the SFO to have an interest by reason of his being the indirect controlling shareholder of Shaw, Kwei & Partners (Asia) Ltd. through his controlled corporation Haven Associates Limited.

• (ii) 24,620,000 shares beneficially owned by China Value Investment Limited which is wholly-owned by Asian Value Investment Fund L. P. (“ AVIF, L. P. ”), a limited liability partnership, whose general partner Shaw, Kwei & Partners (Asia) Ltd. (having a 1% interest in AVIF, L. P.) and its indirect controlling shareholder, Mr. Shaw, are both deemed under the SFO to have interest in the same 24,620,000 shares.

• (iii) 20,950,000 shares beneficially owned by Javelin Capital Holdings Limited which is wholly-owned by Asian Value Investment Fund II, L. P. (“ AVIF II, L. P. ”), a limited liability partnership, whose general partner SKP Capital Limited (having a 1.19% interest in AVIF II, L. P.) and its indirect controlling shareholder, Mr. Shaw, are both deemed under the SFO to have interest in the same 20,950,000 shares.

Mr. Shaw has also been granted 1,200,000 options on 19 October 2004 under the share option scheme of the Company adopted on 18 October 2002.

Save as disclosed, Mr. Shaw does not have any relationships with other Directors, senior management, management Shareholders, substantial Shareholders or controlling Shareholders, nor any interests in the Shares within the meaning of Part XV of the SFO.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE AGM

APPENDIX III

Mr. Shaw has not entered into any service contract with the Company and he has no fixed term of service with the Company. Mr. Shaw is entitled to an annual emolument of HK$78,000 which is determined by the Board with reference to the Company’s performance and profitability as well as the prevailing market conditions. His appointment is subject to normal retirement and re-election by the Shareholders pursuant to the Articles of Association.

There is no information relating to Mr. Shaw that is required to be disclosed pursuant to Rules 17.50(2) (h) to (v) of the GEM Listing Rules.

Save as disclosed herein, there is no other matter that needs to be brought to the attention of the Shareholders.

Mr. Zhao Zhi Ming

Mr. Zhao Zhi Ming, aged 64, is the independent non-executive Director. Mr. Zhao is the committee member of (the Specialist Committee of the China Development Bank) and the Professor of (LiaoNing Technical University). After graduation from the university in 1965, he had worked for several governmental authorities of the PRC, such as (Tianjin Government), (National Energy Investment Company of the PRC) and (China Development Bank). Mr. Zhao has been engaged in the general management, investment, review and approval, and risk management of some sizable national infrastructure projects in the PRC. He has extensive knowledge of and experience in management, investment and capital markets. Mr. Zhao is also an independent non-executive director, a member of the audit committee and the remuneration committee of Aptus Holdings Limited, an indirect non wholly-owned subsidiary of the Company listed on the GEM. Mr. Zhao joined the Group in December 2005 and he is also a member of the audit committee and the remuneration committee of the Company. Save for the above, Mr. Zhao does not hold any directorship in other public listed company or any other position with the Company and other members of the Group in the past three years.

Mr. Zhao does not have any relationships with other Directors, senior management, management Shareholders, substantial Shareholders or controlling Shareholders, nor any interests in the Shares within the meaning of Part XV of the SFO.

Mr. Zhao has not entered into any service contract with the Company. He will have no fixed term of service with the Company. Mr. Zhao is entitled to an annual emolument of HK$78,000 which is determined by the Board with reference to the Company’s performance and profitability as well as the prevailing market conditions. His appointment is subject to normal retirement and re-election by the Shareholders pursuant to the Articles of Association.

There is no information relating to Mr. Zhao that is required to be disclosed pursuant to Rules 17.50(2) (h) to (v) of the GEM Listing Rules.

Save as disclosed herein, there is no other matter that needs to be brought to the attention of the Shareholders.

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE AGM

APPENDIX III

Mr. To Yan Ming, Edmond

Mr. To Yan Ming, Edmond, aged 34, is the independent non-executive Director. Mr. To holds a bachelor degree in commerce in accounting from Curtin University of Technology in Western Australia. He is practicing accountant and presently the director of Fortitude C.P.A. Limited. He is a member of both the CPA Australia and Hong Kong Institute of Certified Public Accountants. He worked for one of the international accounting firms, Deloitte Touche Tohmatsu and has over 8 years of experience in auditing, accounting, floatation and taxation matters. Mr. To is also an independent non-executive director, a member of the audit committee and the remuneration committee of Aptus Holdings Limited, an indirect non wholly-owned subsidiary of the Company listed on the GEM. He was an independent non-executive director of Rontex International Holdings Limited, a company listed on the main board of the Stock Exchange. Mr. To joined the Group in January 2006 and he is also a member of the audit committee and the remuneration committee of the Company. Save for the above, Mr. To does not hold any directorship in other public listed company or any other position with the Company and other members of the Group in the past three years.

Mr. To does not have any relationships with other Directors, senior management, management Shareholders, substantial Shareholders or controlling Shareholders, nor any interests in the Shares within the meaning of Part XV of the SFO.

Mr. To has not entered into any service contract with the Company. He will have no fixed term of service with the Company. Mr. To is entitled to an annual emolument of HK$78,000 which is determined by the Board with reference to the Company’s performance and profitability as well as the prevailing market conditions. His appointment is subject to normal retirement and re-election by the Shareholders pursuant to the Articles of Association.

There is no information relating to Mr. To that is required to be disclosed pursuant to Rules 17.50(2) (h) to (v) of the GEM Listing Rules.

Save as disclosed herein, there is no other matter that needs to be brought to the attention of the Shareholders.

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NOTICE OF THE AGM

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(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 8156)
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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that an annual general meeting of China Vanguard Group Limited (the “Company”) will be held at 30/F., Sunshine Plaza, 353 Lockhart Road, Hong Kong on Tuesday, 24 October 2006 at 10:30 a.m. to transact the following ordinary business:

1. to receive and consider the audited consolidated financial statements and the reports of the directors (the “ Directors ”) and auditors of Company for the year ended 30 June 2006;

2. to re-elect certain Directors and to authorise the board of Directors to fix their remuneration;

3. to re-appoint auditors of the Company and to authorise the board of Directors to fix their remuneration;

4. to consider, as special business and, if thought fit, pass with or without amendments, the following resolution as a special resolution:

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

• (a) Article 80

by deleting the existing Article 80 in its entirety and substituting therefor the following new Article 80:

• “80. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless voting by way of a poll is required by the Listing Rules or (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 demand. A poll may be demanded by:

• (a) the Chairman of the meeting; or

* For identification purpose only

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NOTICE OF THE AGM

• (b) at least five members present in person or by proxy or, in the case of corporations, by their duly authoirsed representatives, and entitled to vote or who represent in the aggregate not less than one-tenth of the total voting rights of all members having the right to attend and vote at the meeting; or

• (c) any member or members present in person or by proxy or, in the case of corporations, by their duly authorised representatives, 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; or

• (d) if required by the Listing Rules, any Director holding proxies if such aggregate proxies held individually or collectively by the Directors account for five (5) per cent or more of the total voting rights at that meeting, and if on a show of hands in respect of any resolution, the meeting votes in the opposition manner to that instructed in those proxies.

Unless a poll is so demanded and not withdrawn, a declaration by the Chairman that a resolution has on a show of hands been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the Company’s book containing the minutes of proceedings of meetings of the Company shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.”

(b) Article 99

by deleting the existing Article 99 in its entirety and substituting therefor the following new Article 99:

• “99. The Board shall have power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy or as an additional to the Board. Any Director so appointed shall hold office only until the next following general meeting of the Company (in the case of filling a casual vacancy) or until the next following annual general meeting of the Company (in the case of an addition to their number) and shall then be eligible for re-election at that meeting provided that any Director who so retires shall not be taken into account in determining the number of Directors who are to retire at such meeting by rotation pursuant to Article 116.”

(c) Article 106

by deleting the existing Article 106(vii) in its entirety and substituting therefor the following new Article 106(vii):

• “106.(vii) if he shall be removed from office by an ordinary resolution of the members of the Company under Article 122(a).

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NOTICE OF THE AGM

(d) Article 116

by deleting the existing Article 116 in its entirety and substituting therefor the following new Article 116:

• “116. At each annual general meeting, one-third of the Directors for the time being, or, if their number is not three or a multiple of three, then the number nearest to but not less than one-third, shall retire from office by rotation provided that every Director, including those appointed for a specific term, shall be subject to retirement by rotation at least once every three years. The Directors to retire in every year shall be those who have been longest in office since their last election but as between persons who became Directors on the same day those to retire shall (unless they otherwise agree between themselves) be determined by lot. A retiring Director shall retain office until the close of the meeting at which he retires, and shall be eligible for re-election thereat.”

(e) Article 119

by deleting the existing Article 119 in its entirety and substituting therefor the following new Article 119:

• “119. The Company may from time to time in general meeting by ordinary resolution increase or reduce the number of Directors but so that the number of Directors shall not be less than two. Subject to the provisions of these Articles and the Law, the Company may by ordinary resolution elect any person to be a Director either to fill a casual vacancy or as an addition to the existing Directors. Any Director so appointed shall hold office only until the next following general meeting of the Company (in the case of filling a casual vacancy) or until the next following annual general meeting of the Company (in the case of an addition to their number) and shall then be eligible for re-election provided that any Director who so retires shall not be taken into account in determining the number of Directors who are to retire at such meeting by rotation pursuant to Article 116.”

(f) Article 122

by deleting the existing Article 122(a) in its entirety and substituting therefor the following new Article 122(a):

• “122.(a) The Company may by ordinary resolution at any time remove any Director (including a managing Director or other executive Director) before the expiration of his period of office notwithstanding anything in these Articles or in any agreement between the Company and such Director and may by ordinary resolution elect another person in his stead. Any person so elected shall hold office during such time only as the Director in whose place he is elected would have held the same if he had not been removed.””

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NOTICE OF THE AGM

and, as special business and, if thought fit, passing the following resolutions as ordinary resolutions:

1. “ THAT :

2. (a) subject to paragraph (c) of this resolution, pursuant to the Rules (the “ GEM Listing Rules ”) Governing the Listing of Securities on the Growth Enterprise Market (“ GEM ”) of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”), the exercise by the Directors during the Relevant Period of all the powers of the Company to allot, issue and deal with unissued Shares and to make or grant offers, agreements and options, including warrants to subscribe for Shares, which might require the exercise of such powers be and hereby generally and unconditionally approved;

3. (b) the approval in paragraph (a) of this resolution shall authorise the Directors during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period;

4. (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to options or otherwise) by the Directors pursuant to the approval in paragraph (a) of this resolution, otherwise than pursuant to (i) a Rights Issue (as defined below); or (ii) the grant or exercise of any options under the share option scheme of the Company or any other scheme or similar arrangement for the time being adopted for the grant or issue of Shares or rights to acquire Shares; or (iii) any scrip dividend or similar arrangements providing for the allotment and issue of Shares in lieu of the whole or part of a dividend on Shares in accordance with the Articles in force from time to time; or (iv) any issue of Shares upon the exercise of rights of subscription or conversion under the terms of any existing warrants of the Company or any existing securities which carry rights to subscribe for or are convertible into Shares, shall not exceed the aggregate of:

   • (aa) 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue on the date of the passing of this resolution; and

   • (bb) (provided that resolution no. 6 is passed) the nominal amount of any share capital of the Company repurchased by the Company subsequent to the passing of this resolution (up to a maximum equivalent to 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue on the date of the passing of this resolution),

and the authority pursuant to paragraph (a) of this resolution shall be limited accordingly; and

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NOTICE OF THE AGM

• (d) for the purposes of this resolution:

“ Relevant Period ” means the period from the date of 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 the Articles, the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated or revised) of the Cayman Islands (the “ Companies Law ”) or any other applicable law of the Cayman Islands to be held; and

• (iii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the Directors by this resolution;

“ Rights Issue ” means an offer of Shares, or offer or issue of warrants, options or other securities giving rights to subscribe for Shares open for a period fixed by the Directors to holders of Shares on the register on a fixed record date in proportion to their then holdings of Shares (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements, or having regard to any restrictions or obligations under the laws of, or the requirements of, or the expense or delay which may be involved in determining the existence or extent of any restrictions or obligations under the laws of, or the requirements of, any jurisdiction or any recognised regulatory body or any stock exchange applicable to the Company).”

6. “ THAT :

• (a) subject to paragraph (b) of this resolution, the exercise by the Directors of the Company during the Relevant Period of all powers of the Company to repurchase the Shares on the Stock Exchange or any other stock exchange on which the Shares may be listed and recognised by the Securities and Futures Commission of Hong Kong (the “ Securities and Futures Commission ”) and the Stock Exchange for such purpose, and otherwise in accordance with the rules and regulations of the Securities and Futures Commission, the Stock Exchange or of any such other stock exchange as amended from time to time and all other applicable laws in this regard, be and is hereby generally and unconditionally approved;

• (b) the aggregate nominal amount of Shares authorised to be repurchased by the Company pursuant to the approval in paragraph (a) during the Relevant Period shall not exceed 10 per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of the passing of this resolution and the authority pursuant to paragraph (a) of this resolution shall be limited accordingly; and

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NOTICE OF THE AGM

• (c) for the purposes of this resolution, “ Relevant Period ” shall have the same meaning as in resolution no. 5(d).”

• “ THAT subject to the ordinary resolutions nos. 5 and 6 above being duly passed, the unconditional general mandate granted to the Directors to exercise the powers of the Company to allot, issue and deal with unissued Shares and to make or grant offers, agreements and options which might require to exercise of such powers pursuant to resolution no. 5 above be and is hereby extended by the addition thereon of an amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the authority granted pursuant to resolution no. 6, provided that such amount shall not exceed 10 per cent. of the aggregate nominal amount of the issued Shares on the date of the passing of resolution no. 6.”

• “ THAT subject to and conditional upon the granting by the Listing Committee of GEM of the listing of and permission to deal in the Shares which may be issued pursuant to the exercise of option to be granted under the refreshed scheme mandate limit (the “ Scheme Mandate Limit ”) under the share option scheme adopted on 18 October 2002, which entitles the directors of the Company to grant options after the listing of Shares on the Stock Exchange, in the manner as set out in paragraph (a) of this resolution,

• (a) the refreshment of the Scheme Mandate Limit of up to 10 per cent. of the Shares in issue as at the date of passing of this resolution be and is hereby approved; and

• (b) the directors of the Company be and are hereby authorised do all such acts and things and execute all such documents, including under seal where applicable, as they consider necessary or expedient to give effect to the foregoing arrangement.”

By order of the Board China Vanguard Group Limited Chan Ting Director

Hong Kong, 28 September 2006

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NOTICE OF THE AGM

Registered office: Century Yard Cricket Square Hutchins Drive P.O. Box 2681 GT George Town Grand Cayman British West Indies Cayman Islands

Head office and principal place of business in Hong Kong: 30th Floor Sunshine Plaza 353 Lockhart Road Hong Kong

Notes:

1. A member of the Company entitled to attend and vote at the annual general meeting convened by the above notice is entitled to appoint one or more proxy to attend and, subject to the provisions of the Articles, to vote on his behalf. A proxy need not be a member of the Company but must be an individual and must be present in person at the annual general meeting to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of Shares in respect of which each such proxy is so appointed.

2. In order to be valid, the form of proxy must be deposited together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority, at the offices of the Company’s branch share registrar and transfer office in Hong Kong, Standard Registrars Limited, at 26th, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time for holding the meeting or adjourned meeting. Completion and return of a form of proxy will not preclude a shareholder of the Company from attending in person and voting at the annual general meeting or any adjournment thereof, should he so wish.

3. In relation to proposed resolution no. 2 above, Madam Cheung Kwai Lan, Mr. Shaw Kyle Arnold Junior, Mr. Zhao Zhi Ming and Mr. To Yan Ming, Edmond will retire from their offices of Directors at the above meeting pursuant to articles 99 and 116 of the articles of association of the Company and being eligible, will offer themselves for re-election at the annual general meeting.

4. The Articles are written in English. There is no official Chinese translation in respect thereof. Therefore, the Chinese version of proposed resolution no. 4 above on amendments of the Articles is purely a translation only. Should there be any discrepancy, the English version shall prevail.

5. In relation to proposed resolutions nos. 5 and 7 above, approval is being sought from the shareholders for the grant to the Directors of a general mandate to authorise the allotment and issue of shares of the Company under the GEM Listing Rules. The Directors have no immediate plans to issue any new shares of the Company other than Shares which may fall to be issued under the share option scheme of the Company.

6. In relation to proposed resolution no. 6 above, the Directors wish to state that they will exercise the powers conferred thereby to repurchase Shares in circumstances which they deem appropriate for the benefit of the shareholders of the Company. An explanatory statement containing the information necessary to enable the shareholders to make an informed decision to vote on the proposed resolution as required by the GEM Listing Rules is set out in Appendix I to this circular.

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