Sinopharm Tech Holdings Limited - Proxy Solicitation & Information Statement 2013

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 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, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company 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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(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 8156)
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(I) PROPOSED SHARE CONSOLIDATION;

(II) PROPOSED ADOPTION OF NEW SHARE OPTION SCHEME; (III) REFRESHMENT OF GENERAL MANDATE; AND
(IV) NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial adviser to the Company

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Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

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普頓資本有限公司 PROTON CAPITAL LIMITED

A letter from the Board is set out from pages 7 to 15 of this circular. A letter from the Independent Board Committee is set out on page 16 of this circular. A letter from the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders, is set out from pages 17 to 22 of this circular.

A notice convening the extraordinary general meeting of the Company (the “ EGM ”) to be held at 11:00 a.m. on Thursday, 31 January 2013 at Room 2201, 22/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, is set out from pages 31 to 33 of this circular. A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Tricor Standard Limited at 26th Floor, Tesbury Centre, 28 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 EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting should you so wish and in such event, the instrument appointing the proxy shall be deemed to be revoked.

This circular will remain on the “Latest Company Announcements” page of the GEM website at http://www. hkgem.com for a minimum period of 7 days from the date of its posting and on the website of the Company at http://www.cvg.com.hk.

For identification purposes only

15 January 2013

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. 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.

CONTENT

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Letter from the Independent Financial Adviser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Appendix – Summary of the principal terms of the New Share Option Scheme. . . . . . . . . . . . 23
Notice of EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

DEFINITIONS

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

“Adoption Date” the date on which the New Share Option Scheme is adopted (conditionally or unconditionally) by the Shareholders
“AGM” the annual general meeting of the Company held on 6 November 2012
“Announcement” the announcement of the Company dated 4 January 2013 in relation to the proposed Share Consolidation
“associate(s)” shall have the meaning ascribed to this term under the GEM Listing Rules
“Best Frontier” Best Frontier Investments Limited, a company incorporated in the British Virgin Islands with limited liability
“Board” the board of Directors “Business Day” a day (other than a Saturday and Sunday) on which licensed banks are generally open for business for more than five hours in Hong Kong
“CCASS” the Central Clearing and Settlement System established and operated by HKSCC
“Company” China Vanguard Group Limited (眾彩科技股份有限公司*), a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on GEM
“Consolidated Share(s)” ordinary share(s) of par value of HK$0.05 each in the share capital of the Company upon the Share Consolidation becoming effective
“connected person(s)” shall have the meaning ascribed to this term under the GEM Listing Rules
“controlling shareholders(s)” shall have the meaning ascribed to this term under the GEM Listing Rules
“Director(s)” director(s) of the Company
“EGM”

the extraordinary general meeting of the Company to be convened on 31 January 2013, to consider and, if thought fit, approve the proposed Share Consolidation, the adoption of the New Share Option Scheme and the Refreshment of General Mandate

DEFINITIONS

“Eligible Consultant(s)”	any consultant of the Company or of any subsidiary of the
	Company or such other persons who, at the sole determination
	of the Board, have contributed to the Group at the time when an
	Option is granted to such persons
“Eligible Employee(s)”	any employee, and any director (including executive,
	non-executive and independent non-executive directors) of the
	Company or of any subsidiary of the Company at the time when
	an Option is granted to such persons
“Eligible Person(s)”	the Eligible Consultant and the Eligible Employee
“Existing General Mandate”	the general mandate granted to the Directors by the Shareholders
	at the AGM to allot, issue and deal with up to 654,378,767
	new Shares, representing 20% of the issued share capital of the
	Company as at the date of the AGM
“Existing Share Certificate(s)”	certificates for the Shares in green colour
“GEM”	the Growth Enterprise Market of the Stock Exchange
“GEM Listing Rules”	the Rules Governing the Listing of Securities on GEM of the
	Stock Exchange
“Group”	the Company and its subsidiaries
“HKSCC”	Hong Kong Securities Clearing Company Limited
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee”	an independent board committee of the Company comprising all
	the three independent non-executive Directors, namely Mr. Zhang
	Xiu Fu, Mr. Yang Qing Cai and Mr. To Yan Ming Edmond
“Independent Financial Adviser”	Proton Capital Limited, a licensed corporation to carry out Type 1
	(dealing in securities) and Type 6 (advising on corporate finance)
	regulated activities as defined under the SFO and the independent
	financial adviser to the Independent Board Committee and the
	Independent Shareholders in respect of the Refreshment of
	General Mandate

DEFINITIONS

“Independent Shareholders”	any Shareholders other than the controlling shareholders of
	the Company and their associates or, if there is no controlling
	shareholders, the Directors (excluding independent non-executive
	Directors), the chief executive of the Company and their
	respective associates
“Issue Mandate”	the new mandate proposed to be sought at the EGM to authorise
	the Directors to allot, issue and deal with the Shares not exceeding
	20% of the issued share capital of the Company as at the date of
	the EGM
“Last Trading Day”	3 January 2013, being the last full trading day for the Shares on
	the Stock Exchange before the release of the Announcement
“Latest Practicable Date”	10 January 2013, being the latest practicable date prior to the
	printing of this circular for the purpose of ascertaining certain
	information referred to in this circular
“Madam Cheung”	Madam Cheung Kwai Lan, an executive Director and the
	chairman of the Board
“New Share Certificate(s)”	certificates for the Consolidated Shares in yellow colour
“New Share Option Scheme”	the share option scheme proposed to be adopted by the Company
	at the EGM, the principal terms of which are set out in the
	Appendix to this circular
“Old Share Option Scheme”	the share option scheme of the Company adopted on 18 October
	2002
“Option(s)”	the share options granted under the share option scheme of the
	Company
“PRC”	the People’s Republic of China which for the purposes of this
	circular, excludes Hong Kong, the Macau Special Administrative
	Region of the PRC and Taiwan
“Refreshment of General Mandate”	the proposed refreshment of the Existing General Mandate and
	grant of the Issue Mandate
“Registrar”	the branch share registrar of the Company in Hong Kong, being
	Tricor Standard Limited, at 26th Floor, Tesbury Centre, 28
	Queen’s Road East, Wanchai, Hong Kong
“SFO”	Securities and Futures Ordinance (Cap. 571 of the Laws of Hong
	Kong) as amended from time to time

DEFINITIONS

“Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of the
	Company prior to the Share Consolidation becoming effective
“Share Consolidation”	the consolidation of every five (5) issued and unissued Shares of
	HK$0.01 each in the share capital of the Company into one (1)
	Consolidated Share of HK$0.05
“Shareholders”	the holder(s) of issued Shares or Consolidated Shares (as the case
	may be)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“substantial shareholder(s)”	shall have the meaning ascribed to this term under the GEM
	Listing Rules
“%” or “per cent.”	percentage or per centum

In the event of any inconsistency, the English text of this circular shall prevail over the Chinese text.

For identification purposes only

EXPECTED TIMETABLE

Set out below is the proposed timetable for the implementation of the Share Consolidation:

Event	Time and date
	2013
Despatch of Circular with notice of EGM on or before. . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 15 January
Despatch and publication of notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 15 January
Latest time for lodging proxy form of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11:00 a.m. Tuesday,
	29 January
Date of EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	.11:00 a.m. Thursday,
	31 January
Announcement on results of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Thursday, 31 January
Effective date of Share Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . .Friday, 1 February
Dealings in Consolidated Shares commence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . .9:00 a.m. Friday,
	1 February
First day for free exchange of Existing Share Certificates
for New Share Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . .Friday, 1 February
Original counter for trading in Shares in board lots of 5,000 Shares
(in the form of Existing Share Certificates) temporarily closes . . . . . . . . . . . . . . .	. . . .9:00 a.m. Friday,
	1 February
Temporary counter for trading in Consolidated Shares in board
lots of 1,000 Consolidated Shares (in the form of Existing
Share Certificates) opens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . .9:00 a.m. Friday,
	1 February
Original counter for trading in Consolidated Shares in board
lots of 5,000 Consolidated Shares (only New Share Certificates can
be traded at this counter) re-opens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. Wednesday,
	20 February
Parallel trading in Consolidated Shares (in the form of New Share
Certificates and Existing Share Certificates) commences . . . . . . . . . . . . . . . . . . . 9:00 a.m. Wednesday,
	20 February
Designated broker starts to stand in the market to provide matching
services for odd lots of Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. Wednesday,
	20 February

EXPECTED TIMETABLE

Event

Time and date 2013

Temporary counter for trading in Consolidated Shares in board lots of 1,000 Consolidated Shares (in the form of Existing Share Certificates) closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. Tuesday, 12 March Parallel trading in Consolidated Shares (in the form of New Share Certificates and Existing Share Certificates) ends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 12 March Designated broker ceases to stand in the market to provide matching services for odd lots of Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 12 March Last day for free exchange of Existing Share Certificates for New Share Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 14 March

All times and dates in this circular refer to Hong Kong local times and dates. Dates or deadlines specified in the expected timetable above are indicative only and may be extended or varied by the Company. Any changes to the expected timetable will be published or notified to the Shareholders as and when appropriate.

LETTER FROM THE BOARD

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

Executive Directors:

Madam Cheung Kwai Lan (Chairman) Mr. Chan Ting (Chief Executive Officer) Mr. Wang Yong Chun Ms. Chan Siu Sarah

Non-executive Director: Mr. Chan Tung Mei

Independent non-executive Directors:

Mr. Zhang Xiu Fu Mr. Yang Qing Cai Mr. To Yan Ming Edmond

Registered Office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and principal place of business in Hong Kong: Room 2201, 22/F. Hopewell Centre 183 Queen’s Road East Wanchai, Hong Kong

15 January 2013

To the Shareholders,

Dear Sir or Madam,

(I) PROPOSED SHARE CONSOLIDATION; (II) PROPOSED ADOPTION OF NEW SHARE OPTION SCHEME; (III) REFRESHMENT OF GENERAL MANDATE; AND (IV) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the Announcement dated 4 January 2013.

The purposes of this circular are to provide you with information in respect of (i) the proposed Share Consolidation; (ii) the proposed adoption of New Share Option Scheme; (iii) the Refreshment of General Mandate; (iv) the recommendation from the Independent Board Committee to the Independent Shareholders giving its recommendations in relation to the Refreshment of General Mandate; (v) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders containing its advice and recommendations on the Refreshment of General Mandate; and (vi) the notice of the EGM.

For identification purposes only

LETTER FROM THE BOARD

I. PROPOSED SHARE CONSOLIDATION

The Board proposes to put forward to the Shareholders a proposal to effect the proposed Share Consolidation, whereby every five (5) issued and unissued Shares of par value of HK$0.01 each will be consolidated into one (1) Consolidated Share of par value of HK$0.05 in compliance with Rule 17.76 of the GEM Listing Rules.

Conditions precedent to the Share Consolidation

The Share Consolidation is conditional upon (i) the passing of the relevant ordinary resolution to approve the Share Consolidation by the Shareholders at the EGM; and (ii) the Listing Committee of the Stock Exchange granting approval to the listing of, and permission to deal in, the Consolidated Shares.

The Share Consolidation will become effective on the next Business Day immediately following the fulfillment of the above conditions.

Effect of the Share Consolidation

As at the Latest Practicable Date, the authorised share capital of the Company was HK$200,000,000 divided into 20,000,000,000 Shares of HK$0.01 each, of which 3,771,893,839 Shares had been issued and were fully paid or credited as fully paid. Assuming that no further Shares are issued or repurchased between the Latest Practicable Date and the date of the EGM, immediately after the Share Consolidation becoming effective, the authorised share capital of the Company will become HK$200,000,000 divided into 4,000,000,000 Consolidated Shares of HK$0.05 each, of which 754,378,767 whole Consolidated Shares will be in issue which are fully paid or credited as fully paid following the Share Consolidation.

Upon the Share Consolidation becoming effective, the Consolidated Shares will rank pari passu in all respects with each other. Fractional Consolidated Shares will not be issued by the Company to the Shareholders. Any fractional entitlements of the Consolidated Shares will be aggregated, sold and retained for the benefit of the Company.

Other than the relevant expenses, including but not limited to professional fees and printing charges incurred, the implementation of the Share Consolidation will have no effect on the consolidated net asset value of the Group, nor will it alter the underlying assets, business, operations, management or financial position of the Company or the interests of the Shareholders, save for any fractional Consolidated Shares to which Shareholders may be entitled. The Directors believe that the Share Consolidation will not have any material adverse effect on the financial position of the Group.

LETTER FROM THE BOARD

Board lot size

Board lot size for trading will remain unchanged at 5,000 shares for the Consolidated Shares per board lot, which is the same board lot size for trading in the Shares on GEM. Based on the closing price of HK$0.093 per Share (i.e. HK$0.465 per Consolidated Share assuming the Share Consolidation becoming effective) on the Last Trading Day, the value of each board lot of 5,000 Consolidated Shares would be HK$2,325.

Reasons for the Share Consolidation

The Share Consolidation will increase the trading price per board lots of the Shares, which will reduce the overall transaction costs of dealings in the Shares. The Board also believes that the Share Consolidation may attract more investors and extend the shareholders’ base of the Company. In view of the above, the Board considers that the Share Consolidation is in the interests of the Company and the Shareholders as a whole.

Free exchange of certificates for the Consolidated Shares and trading arrangement

Subject to the Share Consolidation becoming effective, which is expected to be on Friday, 1 February 2013, Shareholders may, from Friday, 1 February 2013 to Thursday, 14 March 2013 (both dates inclusive), submit the Existing Share Certificates in green colour to the Company’s branch share registrar, Tricor Standard Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, to exchange, at the expense of the Company, for the New Share Certificates, which will be yellow in colour. It is expected that the New Share Certificates will be available to the Shareholders for collection within ten Business Days from the date of submission for the exchange. Thereafter, the Existing Share Certificates will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may be from time to time be specified by the Stock Exchange) for each New Share Certificate or each Existing Share Certificate submitted for cancellation, whichever the number of certificates issued or cancelled is higher. Nevertheless, the Existing Share Certificates will continue to be good evidence of legal title and may be exchanged for the New Share Certificates at any time but are not accepted for trading and settlement.

Odd lots arrangements and matching services

In order to alleviate difficulties arising from the existence of odd lots of the Consolidated Shares, the Company has appointed Yee On Securities Limited to stand in the market to provide matching services, on a best effort basis, to those Shareholders who wish to acquire odd lots of the Consolidated Shares to make up a full board lot, or to dispose of their holdings of odd lots of the Consolidated Shares from Wednesday, 20 February 2013 to Tuesday, 12 March 2013 (both days inclusive). Holders of odd lots of the Consolidated Shares who wish to take advantage of this facility either to dispose of their odd lots of the Consolidated Shares or top up to a full board lot may, directly or through their brokers, contact Cecilia Ho of Yee On Securities Limited at Unit A, 22/F., EIB Centre, 40-44 Bonham Street, Sheung Wan, Hong Kong with telephone number at 2815 5351 during this period.

LETTER FROM THE BOARD

Holders of odd lots of the Consolidated Shares should note that successful matching of the sale and purchase of odd lots of the Consolidated Shares is not guaranteed. Any Shareholders, who is in any doubt about the odd lot matching facility, is recommended to consult his/her/its own professional advisers.

Listing application

An application has been made by the Company to the Listing Committee of the Stock Exchange for the listing of, and the permission to deal in, the Consolidated Shares.

Subject to the granting of the listing of, and permission to deal in, the Consolidated Shares on the Stock Exchange, the Consolidated Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Consolidated Shares on the Stock Exchange or, under contingent situation, such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

No part of the securities of the Company is listed or dealt in on which listing or permission to deal is being or is proposed to be sought on other stock exchanges.

II. PROPOSED ADOPTION OF THE NEW SHARE OPTION SCHEME

The Old Share Option Scheme was adopted by the Company on 18 October 2002 and has a term of ten years. The Old Share Option Scheme has expired on 17 October 2012. As at the Latest Practicable Date, the Company had no outstanding share option pursuant to the Old Share Option Scheme.

As the Old Share Option Scheme has expired, the Directors proposed to adopt the New Share Option Scheme, the principal terms of which are set out in the Appendix to this circular. Adoption of the New Share Option Scheme is conditional upon (i) the approval of the adoption of the New Share Option Scheme by the Shareholders at the EGM; and (ii) the Stock Exchange granting approval for the listing of, and permission to deal in, the Shares which may be issued upon exercise of the Options which may be granted under the New Share Option Scheme.

The purpose of the New Share Option Scheme is to enable the Company to grant Options to selected Eligible Persons as incentives or rewards for their contribution or potential contribution to the Group. The Directors consider that the New Share Option Scheme will provide the participants with the opportunity to acquire proprietary interests in the Company and will encourage such participants to work towards enhancing the value of the Company and the Shares for the benefit of the Company and the Shareholders as a whole.

As at the Latest Practicable Date, the Company had 3,771,893,839 Shares in issue (equivalent to 754,378,767 whole Consolidated Shares). Assuming that no further Shares will be issued or repurchased prior to the date of the EGM, the total number of Shares which may be issued upon exercise of all of the Options which were granted under the Old Share Option Scheme and which may be granted under the New Share Option Scheme on the date of its adoption would be 377,189,383 Shares (equivalent to 75,437,876 whole Consolidated Shares), representing 10% of the total number of Shares in issue as at the date of the adoption of the New Share Option Scheme.

LETTER FROM THE BOARD

The New Share Option Scheme does not specify a minimum period for which an Option must be held nor a performance target which must be achieved before an Option can be exercised. However, the rules of the New Share Option Scheme provide that the Board may determine, at its sole discretion, such terms and conditions on the grant of an Option. This determination may vary on a case by case basis but no such terms will be imposed the result of which will be to the advantage of the participant. The basis for the determination of the subscription price is specified in the rules of the New Share Option Scheme.

As at the Latest Practicable Date, no Options had been granted under the New Share Option Scheme and thus the Company considers that it would not be appropriate to disclose in this circular the value of the Options which may be granted under the proposed New Share Option Scheme as if they had been granted as at the Latest Practicable Date, as various determining factors for the calculation of such value cannot be reasonably ascertained at this stage. It would not be meaningful and may even be misleading to the Shareholders if the value of the Options is calculated based on a set of speculative assumptions. However, the Company will disclose the value of any Options granted during a financial year or a particular period in its annual report and interim report based on the Black-Scholes option pricing model, the binomial model or a generally accepted comparable methodology.

An application will be made to the Stock Exchange for the approval of the listing of, and permission to deal in, the Shares which may fall to be issued upon the exercise of the Options which may be granted under the New Share Option Scheme.

A copy of the New Share Option Scheme will be available for inspection at the principal place of business of the Company at Room 2201, 22/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, during normal business hours up to and including the date of the EGM. A copy of the New Share Option Scheme will also be available for inspection at the EGM.

III. REFRESHMENT OF GENERAL MANDATE

Background of the Refreshment of General Mandate

At the AGM held on 6 November 2012, Shareholders approved, among other things, an ordinary resolution to grant the Directors the Existing General Mandate to issue, allot and deal with up to 654,378,767 Shares (equivalent to 130,875,753 whole Consolidated Shares), representing 20% of the share capital of the Company as at the date of the AGM.

As set out in the announcement of the Company dated 11 December 2012 regarding the loan capitalisation (the “ Loan Capitalisation ”), the Company entered into a subscription agreement with Capital Day Investments Limited (“ Capital Day ”) on 11 December 2012, pursuant to which the Company has agreed to allot and issue and Capital Day has agreed to subscribe for 500,000,000 Shares (equivalent to 100,000,000 whole Consolidated Shares) at the subscription price of HK$0.071 per Share for a total consideration of HK$35,500,000. The said total consideration was settled by capitalising the indebtedness of approximately HK$35,532,000 due from the Company to Capital Day.

LETTER FROM THE BOARD

Reasons for the Refreshment of General Mandate

The Company is an investment holding company. The Group is engaged in: (i) supply of software, equipment and services to the lottery industry and the establishment of traditional and non-traditional lottery outlets in the PRC; (ii) land and property development in the PRC; and (iii) supply of equipment and services to the entertainment industry in the PRC.

Since the granting of the Existing General Mandate at the AGM held on 6 November 2012, there has been no refreshment of the Existing General Mandate. Therefore, after the Loan Capitalisation, only 154,378,767 additional Shares (equivalent to whole 30,875,753 Consolidated Shares) can be issued under the Existing General Mandate, representing approximately 23.59% of the Existing General Mandate.

The Board would like to provide flexibility for the Company to raise funds for its future business development and/or any opportunities to be identified by the Company, including but not limited to the capital injection for the current investment (if any) and the new lottery projects in Zhejiang and Jilin, the PRC through equity financing.

Given that equity financing (i) does not incur any interest paying obligations on the Group as compared with bank financing; (ii) is less costly and time-consuming than raising funds by way of rights issue or open offer; and (iii) provides the Company with the capability to capture any capital raising or prospective investment opportunity as and when it arises, the Board proposes the Refreshment of General Mandate for the Directors to allot, issue and deal with new Shares with an aggregate nominal amount of not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of the EGM. The Company had no current plan to utilise the Issue Mandate as at the Latest Practicable Date. The Issue Mandate is proposed to the Shareholders prior to the Company’s next annual general meeting and therefore, under Rule 17.42A of the GEM Listing Rules, the Refreshment of General Mandate will be subject to the Independent Shareholders’ approval at the EGM.

Equity fund raising activities in the past twelve months

Save for the Loan Capitalisation, the Company had not conducted any other equity fund raising activities in the past twelve months immediately prior to the Latest Practicable Date.

Potential dilution to shareholding of the existing public Shareholders

The table below sets out the shareholding structure of the Company (i) as the Latest Practicable Date; and (ii) upon full utilisation of the Issue Mandate (assuming no other Shares would be issued or repurchased by the Company)

LETTER FROM THE BOARD

(a) Before the Share Consolidation becoming effective:

Name of Shareholders Madam Cheung and her associates_(Note)_ Capital Day Investments Limited Existing public Shareholders Shares to be issued under the Issue Mandate Total	Upon full utilisation of the Issue Mandate As at the (assuming no other Shares would be Latest Practicable Date issued or repurchased by the Company) Number of Shares % Number of Shares % 1,678,527,322 44.50 1,678,527,322 37.08 500,000,000 13.26 500,000,000 11.05 1,593,366,517 42.24 1,593,366,517 35.20 – – 754,378,767 16.67 3,771,893,839 100.00 4,526,272,606 100.00	Upon full utilisation of the Issue Mandate As at the (assuming no other Shares would be Latest Practicable Date issued or repurchased by the Company) Number of Shares % Number of Shares % 1,678,527,322 44.50 1,678,527,322 37.08 500,000,000 13.26 500,000,000 11.05 1,593,366,517 42.24 1,593,366,517 35.20 – – 754,378,767 16.67 3,771,893,839 100.00 4,526,272,606 100.00
		100.00

(b) After the Share Consolidation becoming effective:

Name of Shareholders Madam Cheung and her associates_(Note)_ Capital Day Investments Limited Existing public Shareholders Shares to be issued under the Issue Mandate Total	Upon full utilisation of the Issue Mandate As at the (assuming no other Shares would be Latest Practicable Date issued or repurchased by the Company) Number of Number of Consolidated Shares % Consolidated Shares % 335,705,464 44.50 335,705,464 37.08 100,000,000 13.26 100,000,000 11.05 318,673,303 42.24 318,673,303 35.20 – – 150,875,753 16.67 754,378,767 100.00 905,254,520 100.00	Upon full utilisation of the Issue Mandate As at the (assuming no other Shares would be Latest Practicable Date issued or repurchased by the Company) Number of Number of Consolidated Shares % Consolidated Shares % 335,705,464 44.50 335,705,464 37.08 100,000,000 13.26 100,000,000 11.05 318,673,303 42.24 318,673,303 35.20 – – 150,875,753 16.67 754,378,767 100.00 905,254,520 100.00
		100.00

Note: 1,676,457,322 Shares (equivalent to 335,291,464 whole Consolidated Shares) are held by Best Frontier which is owned as to approximately 99.89% and 0.11% by Madam Cheung and Mr. Chan Tung Mei respectively. Each of Madam Cheung and Mr. Chan Tung Mei is spouse to each other. Accordingly, Madam Cheung is deemed to be interested in the Shares held by Best Frontier and Mr. Chan Tung Mei is deemed to be interested in all the 1,676,457,322 Shares (equivalent to 335,291,464 whole Consolidated Shares) by virtue of being the spouse of Madam Cheung under the SFO. The 2,070,000 Shares (equivalent to 414,000 whole Consolidated Shares) are owned by Madam Cheung who is the spouse of Mr. Chan Tung Mei. Accordingly, Mr. Chan Tung Mei is deemed to be interested in such Shares under the SFO.

The table above illustrates that the shareholdings of the existing public Shareholders would decrease from approximately 42.24% as at the Latest Practicable Date to approximately 35.20% upon full utilisation of the Issue Mandate (assuming no other Shares would be issued or repurchased by the Company). Such potential dilution to the shareholdings of the existing public Shareholders represents a dilution of approximately 7.04 percentage point.

LETTER FROM THE BOARD

General

As at the Latest Practicable Date, the issued share capital of the Company consisted of 3,771,893,839 Shares (equivalent to 754,378,767 whole Consolidated Shares). An ordinary resolution will be proposed to the Independent Shareholders to approve the Refreshment of General Mandate to authorise the Directors to allot, issue and deal with new Shares, being the number of Shares not exceeding 20% of the issued share capital of the Company as at the date of the EGM.

The Issue Mandate will, if granted, remain effective until the earliest of (i) the conclusion of the next annual general meeting of the Company; (ii) the date by which the next annual general meeting is required to be held; and (iii) the date upon which such authority is revoked or varied by an ordinary resolution of the Shareholders in a general meeting of the Company.

The Independent Board Committee, comprising Mr. Zhang Xiu Fu, Mr. Yang Qing Cai and Mr. To Yan Ming Edmond, all being the independent non-executive Directors, has been formed to consider the Refreshment of General Mandate. Proton Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

Pursuant to Rule 17.42A of the GEM Listing Rules, any controlling shareholders and their associates, or where there is no controlling shareholders, the Directors (excluding independent nonexecutive Directors) and the chief executive of the Company and their respective associates shall abstain from voting in favour of the relevant ordinary resolution to approve the Refreshment of General Mandate to be proposed at the EGM. As at the Latest Practicable Date, Madam Cheung and her associates owned 1,678,527,322 Shares (equivalent to 335,705,464 whole Consolidated Shares), representing approximately 44.50% of the issued share capital of the Company. Accordingly, Madam Cheung and her associates shall abstain from voting in favour of the relevant ordinary resolution regarding the Refreshment of General Mandate to be proposed at the EGM. The vote of the Independent Shareholders in respect of the Refreshment of General Mandate at the EGM will be taken by way of poll.

EGM

A notice of the EGM is set out from pages 31 to 33 of this circular. The EGM will be convened at Room 2201, 22/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, on Thursday, 31 January 2013 at 11:00 a.m. for the purpose of considering, and if thought fit, the passing of the relevant resolutions approving (i) the Share Consolidation; (ii) the adoption of the New Share Option Scheme; and (iii) the Refreshment of General Mandate.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend the meeting in person, you are requested to complete and return the accompanying form of proxy to the Company’s branch share registrar in Hong Kong, Tricor Standard Limited at 26th Floor, Tesbury Centre, 28 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 EGM. Completion and return of the form of proxy shall not preclude you from attending and voting at the EGM should you so wish and in such event, the instrument appointing the proxy shall be deemed to be revoked.

LETTER FROM THE BOARD

RECOMMENDATION

The Directors are of the opinion that the Share Consolidation, the adoption of the New Share Option Scheme and the Refreshment of General Mandate are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Therefore, the Directors recommend the Shareholders to vote in favour of the relevant ordinary resolutions to be proposed at the EGM.

Your attention is drawn to the letter from the Independent Board Committee to the Independent Shareholders set out on page 16 of this circular and the letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders set out from pages 17 to 22 of this circular.

RESPONSIBILITY STATEMENT

This circular, 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 the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive; and there are no other matters the omission of which would make any statement in this circular misleading.

COMPETING INTERESTS

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors or management shareholders (as defined in the GEM Listing Rules) or any of their respective associates had any business or interest which competes or may compete with the business of the Group, or have or may have any other conflicts of interest with the Group.

For and on behalf of the Board of China Vanguard Group Limited 眾彩科技股份有限公司* Chan Siu Sarah Executive Director

For identification purposes only

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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

15 January 2013

To the Independent Shareholders

Dear Sir or Madam,

REFRESHMENT OF GENERAL MANDATE

We refer to the circular of the Company dated 15 January 2013 (the “ Circular ”), of which this letter forms part. Unless the context otherwise requires, capitalised terms used in this letter will have the same meanings as defined in the Circular.

We have been appointed to advise the Independent Shareholders in connection with the terms of the Issue Mandate. Proton Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

We are of the view that the terms of the Issue Mandate, after taking into account the advice of the Independent Financial Adviser as set out from pages 17 to 22 of the Circular, are fair and reasonable so far as the Independent Shareholders are concerned, and that the Refreshment of General Mandate is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Refreshment of General Mandate.

Yours faithfully,

Mr. Zhang Xiu Fu

Mr. Yang Qing Cai Mr. To Yan Ming Edmond

Independent non-executive Directors

For identification purposes only

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the text of a letter received from Proton Capital Limited, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders regarding the Refreshment of General Mandate for the purpose of inclusion in this circular.

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普頓資本有限公司 PROTON CAPITAL LIMITED

Suites 06-07, 28th Floor, Shui On Centre 6-8 Harbour Road, Wanchai, Hong Kong

15 January 2013

To: The independent board committee and the independent shareholders of China Vanguard Group Limited

Dear Sirs,

REFRESHMENT OF GENERAL MANDATE

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in connection with the grant of Issue Mandate, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 15 January 2013 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

As at the Latest Practicable Date, the Existing General Mandate had been utilised as to 500,000,000 Shares (equivalent to 100,000,000 whole Consolidated Shares), representing approximately 76.41% of the number of new Shares which were allowed to be allotted, issued and dealt with under the AGM. Therefore, the Board proposes to seek approval of the Independent Shareholders for the Refreshment of General Mandate such that the Directors will be granted the authority to allot, issue and deal with new Shares with an aggregate nominal amount of not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the relevant resolution at the EGM. Pursuant to Rule 17.42A(1) of the GEM Listing Rules, the granting of the Issue Mandate requires the approval of the Independent Shareholders at the EGM at which any of the controlling shareholders (as defined in the GEM Listing Rules) and their associates or, where there are no controlling shareholders (as defined in the GEM Listing Rules), the Directors (excluding the independent non-executive Directors), the chief executive of the Company and their respective associates are required to abstain from voting in favour of the relevant resolution proposed for the approval of such grant, and under Rule 17.47(4) of the GEM Listing Rules, any vote of the Shareholders at a general meeting must be taken by way of poll. As at the Latest Practicable Date, Madam Cheung and her associates owned 1,678,527,322 Shares (equivalent to 335,705,464 whole Consolidated Shares), representing approximately 44.50% of the issued share capital of the Company. Accordingly, Madam Cheung and her associates shall abstain from voting in favour of the relevant resolution regarding the Refreshment of General Mandate to be proposed at the EGM.

An Independent Board Committee comprising Mr. Zhang Xiu Fu, Mr. Yang Qing Cai and Mr. To Yan Ming Edmond (all being independent non-executive Directors) has been established to consider the Refreshment of General Mandate. We, Proton Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 17.92 of the GEM Listing Rules.

The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries, which to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in the Circular misleading.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent indepth investigation into the business and affairs of the Company or its subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the grant of Issue Mandate. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. Nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company. Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of Proton Capital Limited is to ensure that such information has been correctly extracted from the relevant sources.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Refreshment of General Mandate, we have taken into consideration the following principal factors and reasons:

(1) Background of the grant of Issue Mandate

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Directors were authorised to allot and issue up to 654,378,767 Shares new Shares (equivalent to 130,875,753 whole Consolidated Shares) under the Existing General Mandate which was granted to the Directors at the AGM. With reference to the announcement of the Company dated 11 December 2012 regarding the Loan Capitalisation, the Company entered into a subscription agreement with Capital Day Investments Limited (“ Capital Day ”) on 11 December 2012, pursuant to which the Company had agreed to allot and issue and Capital Day had agreed to subscribe for 500,000,000 Shares (equivalent to 100,000,000 whole Consolidated Shares) (the “ Subscription Shares ’) at the subscription price of HK$0.071 per Share for a total consideration of HK$35,500,000. The said total consideration was settled by capitalising the indebtedness of approximately HK$35,532,000 due from the Company to Capital Day. Since the Subscription Shares were allotted and issued under the Existing General Mandate, the Existing General Mandate has been utilised as to 500,000,000 Shares (equivalent to 100,000,000 whole Consolidated Shares), representing approximately 76.41% of the Existing General Mandate.

If the Issue Mandate is not granted, only 154,378,767 additional Shares (equivalent to 30,875,753 whole Consolidated Shares) may be further allotted and issued by the Directors under the Existing General Mandate. Given that the Existing General Mandate has been largely utilised as a result of the Loan Capitalisation, the Board proposes to seek approval of the Independent Shareholders for the Refreshment of General Mandate such that the Directors will be granted the authority to allot, issue and deal with new Shares not exceeding 20% of the total issued share capital of the Company as at the date of passing the relevant resolution at the EGM.

As at the Latest Practicable Date, the Company had 3,771,893,839 Shares in issue (equivalent to 754,378,767 whole Consolidated Shares). On the basis that no Share would be issued and/or repurchased by the Company from the Latest Practicable Date up to the date of the EGM, the grant of Issue Mandate would allow the Directors to allot, issue and deal with up to 754,378,767 new Shares (equivalent to 150,875,753 Consolidated Shares), representing 20% of the total issued share capital of the Company as at the date of the EGM.

(2) Reasons for the grant of Issue Mandate

With reference to the Board Letter, the Board would like to provide flexibility for the Company to raise funds for its future business development and/or any opportunities to be identified by the Company, including but not limited to the capital injection for the current investment (if any) and the new lottery projects in Zhejiang and Jilin, the PRC through equity financing.

Given that equity financing (i) does not incur any interest paying obligations on the Group as compared with bank financing; (ii) is less costly and time-consuming than raising funds by way of rights issue or open offer; and (iii) provides the Company with the capability to capture any capital raising or prospective investment opportunity as and when it arises, the Board proposes the Refreshment of General Mandate for the Directors to allot, issue and deal with new Shares with an aggregate nominal amount of not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of the EGM. According to the Board Letter, the Company had no current plan to utilise the Issue Mandate as at the Latest Practicable Date.

Having considered the above, we concur with the Directors that the Refreshment of General Mandate would allow the Directors to allot, issue and deal with new Shares not exceeding 20% of the total issued share capital of the Company as at the date of passing the relevant resolution at the EGM and hence

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

provide the opportunity to with the capability to capture any capital raising or prospective investment opportunity as and when it arises. Accordingly, we are of the view that the grant of Issue Mandate is in the interests of the Company and the Shareholders as a whole.

(3) Fund raising activities in the past twelve months

Save for the Loan Capitalisation, the Company had not conducted any other equity fund raising activities in the past twelve months immediately prior to the Latest Practicable Date.

(4) Flexibility in financing

As advised by the Directors, given that only a further of 154,378,767 Shares (equivalent to 30,875,753 whole Consolidated Shares) could be issued under the Existing general Mandate, the Group does not obviate the possibilities of capturing investor interests and obtaining equity financing in a timely manner should there be equity investor(s) indicating interest in the existing and prospective businesses of the Company. The Directors believe that the grant of Issue Mandate will provide the Group with the capability to capture any capital raising or prospective investment opportunity as and when it arises, which is in the interests of the Company and the Shareholders as a whole.

As discussed in the foregoing, we consider that the Refreshment of General Mandate would provide the Company with the capability to capture any capital raising or prospective investment opportunity as and when it arises. The grant of Refreshment of General Mandate would provide the Company with the flexibility as allowed under the Listing Rules to allot and issue new Shares for equity fund raising activities, such as placing of new Shares as and when such opportunities arise. Given the financial flexibility available to the Company as discussed above, we are of the opinion that the grant of Issue Mandate is in the interests of the Company and the Shareholders as a whole.

(5) Other financing alternatives

We have enquired into the Directors and the Directors confirmed that apart from equity financing, the Group will also consider debt financing, such as bank borrowings and issue of bonds, to be other possible fund raising alternatives available to the Group. However, the Directors are of the view that the ability of the Group to obtain bank borrowings usually depends on the Group’s profitability, financial position and the then prevailing market condition. Furthermore, such alternative may be subject to lengthy due diligence and negotiations with banks. In light of also that debt financing will usually incur interest burden on the Group, the Directors consider debt financing to be relatively costly, uncertain and timeconsuming as compared to equity financing, such as placing of new Shares, for the Group to obtain additional funding.

The Directors confirmed that they would exercise due and careful consideration when choosing the optimal financing method available to the Group to the best of their knowledge and belief. With this being the case, along with the fact that the grant of Issue Mandate will provide the Company with an additional alternative and it is reasonable for the Company to have the flexibility in deciding the financing methods for its future business development, we are of the view that the grant of Issue Mandate is in the interests of the Company and the Shareholders as a whole.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(6) Potential dilution to shareholding of the existing public Shareholders

The table below sets out the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) upon full utilisation of the Issue Mandate (assuming no other Shares are issued or repurchased by the Company):

(i) Before the Share Consolidation becoming effective:

Madam Cheung and her associates_(Note)_ Capital Day Investments Limited Existing public Shareholders Shares to be issued under the Issue Mandate Total	As at the Latest Practicable Date Number of Approximately shares % 1,678,527,322 44.50 500,000,000 13.26 1,593,366,517 42.24 – – 3,771,893,839 100.00	Upon full utilisation of the Issue Mandate (assuming no other Shares would be issued or repurchased by the Company) Number of Approximately shares % 1,678,527,322 37.08 500,000,000 11.05 1,593,366,517 35.20 754,378,767 16.67 4,526,272,606 100.00	Upon full utilisation of the Issue Mandate (assuming no other Shares would be issued or repurchased by the Company) Number of Approximately shares % 1,678,527,322 37.08 500,000,000 11.05 1,593,366,517 35.20 754,378,767 16.67 4,526,272,606 100.00
			100.00

(ii) After the Share Consolidation becoming effective:

Madam Cheung and her associates_(Note)_ Capital Day Investments Limited Existing public Shareholders Shares to be issued under the Issue Mandate Total	As at the Latest Practicable Date Number of Approximately shares % 335,705,464 44.50 100,000,000 13.26 318,673,303 42.24 – – 754,378,767 100.00	Upon full utilisation of the Issue Mandate (assuming no other Shares would be issued or repurchased by the Company) Number of Approximately shares % 335,705,464 37.08 100,000,000 11.05 318,673,303 35.20 150,875,753 16.67 905,254,520 100.00	Upon full utilisation of the Issue Mandate (assuming no other Shares would be issued or repurchased by the Company) Number of Approximately shares % 335,705,464 37.08 100,000,000 11.05 318,673,303 35.20 150,875,753 16.67 905,254,520 100.00
			100.00

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Note: 1,676,457,322 Shares (equivalent to 335,291,484 Consolidated Shares) are held by Best Frontier which is owned as to approximately 99.89% and 0.11% by Madam Cheung and Mr. Chan Tung Mei respectively. Each of Madam Cheung and Mr. Chan Tung Mei is spouse to each other. Accordingly, Madam Cheung is deemed to be interested in the Shares held by Best Frontier and Mr. Chan Tung Mei is deemed to be interested in all the 1,676,457,322 Shares (equivalent to 335,291,484 Consolidated Shares) by virtue of being the spouse of Madam Cheung under the SFO. The 2,070,000 Shares (equivalent to 414,000 Consolidated Shares) are owned by Madam Cheung who is the spouse of Mr. Chan Tung Mei. Accordingly, Mr. Chan Tung Mei is deemed to be interested in such Shares under the SFO.

The table above illustrates that the shareholdings of the existing public Shareholders would decrease from approximately 42.24% as at the Latest Practicable Date to approximately 35.20% upon full utilisation of the Issue Mandate (assuming no other Shares are issued or repurchased by the Company). Such potential dilution to the shareholdings of the existing public Shareholders represents a dilution of approximately 7.04 percentage point.

Taking into account that the grant of Issue Mandate (i) would provide an alternative to increase the amount of capital which may be raised under the Issue Mandate; (ii) would provide more options of financing to the Group; and (iii) the shareholding interests of all the Shareholders in the Company will be diluted in proportion to their respective shareholdings upon any utilisation of the Issue Mandate, we are of the opinion that the potential dilution to the shareholdings of the existing public Shareholders as just mentioned is acceptable.

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that the Refreshment of General Mandate is fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Refreshment of General Mandate and we recommend the Independent Shareholders to vote in favour of the ordinary resolution in this regard.

Yours faithfully, For and on behalf of

Proton Capital Limited Josephine Lau

Director – Corporate Finance

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

The following is a summary of the principal terms of the New Share Option Scheme proposed to be approved by the Shareholders at the EGM:

(1) PURPOSE

The purpose of the New Share Option Scheme is to enable the Group to the Options to selected persons as incentives or rewards for their contribution to the Group.

(2) WHO MAY JOIN

On and subject to the terms of the New Share Option Scheme, the Board shall be entitled but shall not be bound at any time during the Term (as hereinafter defined) to make an offer to any Eligible Person as the Board may in its absolute discretion select to subscribe for such number of Shares (for the purpose of this Appendix, shall also mean the Consolidated Shares, as the case may be) as the Board may determine at the subscription price (the “ Subscription Price ”).

(3) MAXIMUM NUMBER OF SHARES

The total number of Shares which may be issued upon exercise of all outstanding Options granted and yet to be exercised under this New Share Option Scheme must not exceed 10% of the Shares in issue from time to time.

Subject to the issue of a circular by the Company and the approval of the Shareholders in general meeting and/or such other requirements prescribed under the GEM Listing Rules from time to time, the Board may:

(i) renew this limit at any time to 10% of the Shares in issue as at the date of the approval by the Shareholders in general meeting; and/or
(ii) grant Options beyond the 10% limit to participants specified by the Company before such approval is sought provided that a circular containing a generic description of the identified participants, the number and terms of the Options to be granted, the purpose of granting the Options to the identified participants and how these Options serve such purpose shall be despatched together with the notice of the relevant general meeting.

(4) MAXIMUM NUMBER OF OPTIONS TO ANY ONE INDIVIDUAL

The total number of Shares issued and to be issued upon exercise of the Options granted and to be granted to an Eligible Person (including exercised, cancelled and outstanding Options) in any 12-month period up to the date of grant to each Eligible Person shall not exceed 1% of the Shares in issue, and any further grant of Options in excess of such limit shall be approved by members in general meeting with such Eligible Person and his/her associate abstaining from voting.

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

The maximum number of Shares referred above may be adjusted in such manner as the auditors of the Company (acting as experts and not as arbitrators) shall certify in writing to be fair and reasonable, in the event of any alteration in the capital structure of the Company whether by way of capitalisation of profits or reserves, rights issue, consolidation, sub-division or reduction or similar reorganisation of the share capital of the Company or otherwise howsoever.

(5) PRICE OF SHARES

The Subscription Price shall be a price determined by the Board at its absolute discretion and notified to an Eligible Person provided that it shall be no less than the par value of the Shares and the higher of:

(i) the closing price of the Shares as stated in the Stock Exchange’s daily quotation sheets on the date of grant of the Option, which must be a Business Day; and
(ii) the average of the closing prices of the Shares as stated in the Stock Exchange’s daily quotation sheets for the five Business Days immediately preceding the date of grant of the relevant Option.

(6) GRANTING OPTIONS TO CONNECTED PERSONS

Any grant of Options to a connected person or its associates must be approved by all the independent non-executive Directors (excluding an independent non-executive Director who is the grantee of the Options).

Where any grant of Options to a substantial shareholder of the Company or an independent nonexecutive Director or their respective associates will result in the Shares issued and to be issued upon exercise of all Options already granted and to be granted (including Options exercised, cancelled and outstanding) to such person in the 12-month period up to and including the date of such grant representing in aggregate more than 0.1% of the Shares in issue and having an aggregate value, based on the closing price of the Shares at the date of each grant, over HK$5,000,000.00, such further grant of Options or any change in the terms of Options granted to such Eligible Person must be approved by members of the Company in general meeting taken on a poll.

For the purpose of and in connection with the convening of the general meeting of the Company for considering and (if so thought fit) approving such proposed grant of Options, the connected person involved and all other connected persons of the Company shall be required to abstain from voting in such general meeting.

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

(7) RESTRICTIONS ON THE TIMES OF GRANT OF OPTIONS

The grant of the Options must not be made after a price sensitive development has occurred or a price sensitive matter has been the subject of a decision, until such price sensitive information has been announced pursuant to the requirements of Chapter 16 of the GEM Listing Rules. In particular, during the period of one month immediately preceding the earlier of:

(i) the date of meeting of the Board (as such date is first notified to the Stock Exchange in accordance with Rule 17.48 of the GEM Listing Rules) for the approval of the Company’s results for any year, half-year or quarter-year period or any other interim period; and
(ii) the deadline for the Company to publish an announcement of its results for any year, halfyear or quarter-year period under Rules 18.49, 18.78 or 18.79 of the GEM Listing Rules or any other interim period.

(8) RIGHTS ARE PERSONAL TO GRANTEE

Except for a transfer to an offeror pursuant to an offer made in accordance with the Hong Kong Code on Takeover and Mergers, an Option shall be personal to the grantee and shall not be assignable and no grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest whatsoever in favour of any third party over or in relation to any Option or enter into any agreement so to do. Any breach of the foregoing by a grantee shall entitle the Company to cancel any Option or part thereof granted to such grantee to the extent not already exercised.

(9) TIME OF EXERCISE OF OPTION AND DURATION OF THE SHARE OPTION SCHEME

The Option may (and may only) be exercised by the grantee at any time during the option period in accordance with the terms of the New Share Option Scheme provided that the option period of an Option may not end on a date later than the expiry date of the New Share Option Scheme.

The New Share Option Scheme will remain in force for a period of ten years commencing on the Adoption Date (the “ Term ”) after which period no further Options will be issued but the provisions of this New Share Option Scheme shall remain in full force and effect to the extent necessary to give effect to the exercise of any Options granted or exercised prior thereto or otherwise as may be required in accordance with the provisions of this New Share Option Scheme. Options complying with the provisions of Chapter 23 of the GEM Listing Rules which are granted during the Term may continue to be exercisable in accordance with their terms of issue after the end of the Term.

(10) PERFORMANCE TARGET

Unless the Board otherwise determined and stated in the offer of grant of Options, an Eligible Person to whom any Option is granted is not required to achieve any performance target (or any other target of similar nature) before any exercise of his/her Option.

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

(11) RIGHTS ON CEASING EMPLOYMENT OR DEATH

Subject as hereinafter provided, the Option may (and may only) be exercised by the grantee at any time during the option period, provided that:

(i) in the event of the grantee ceasing to be an Eligible Person for any reason other than on his/ her death or the termination of his/her employment or engagement (as the case may be) on one or more of the grounds specified in sub-paragraph (12), the grantee may (if the date of cessation of employment or engagement is on or after the commencement date) exercise the Option at any time on or before the date which is one month after the date of cessation up to his/her entitlement at the date of cessation to the extent not already exercised; and
(ii) in the event the grantee dies before exercising the Option in full and none of the events which would be a ground for termination of his/her employment or engagement (as the case may be) in sub-paragraph (12) arises, the personal representative of the grantee shall be entitled within a period of 12 months from the date of death of the grantee to exercise the Option up to the entitlement of such grantee as at the date of death in part or in full (to the extent not already exercised even though the option period has not come into effect).

(12) RIGHTS ON DISMISSAL

An Option shall lapse automatically and shall not be exercisable (to the extent not already exercised) on the date on which the grantee ceases to be an Eligible Person by reason of the termination of his/her employment or engagement (as the case may be) on the grounds that he/she has been guilty of persistent or serious misconduct, or appears either to be unable to pay or to have no reasonable prospect of being able to pay his/her debts or has become insolvent or has made any arrangement or composition with his/her creditors generally, or has been convicted of any criminal offence which in the absolute opinion of the Directors involving his/her integrity or honesty or bring the grantee or the Company and/or its subsidiaries into disrepute).

(13) RIGHTS ON TAKEOVER

If a general offer by way of takeover is made to all the Shareholders (or all such Shareholders other than the offeror, any person controlled by the offeror and any person acting in association or concert with the offeror) and such offer is made unconditional or becomes or is declared unconditional prior to the expiry date of the relevant Option, the grantee shall be entitled to exercise the Option in full (to the extent not already exercised even though the option period has not come into effect) at any time within 14 days after the date of the announcement of an unconditional offer or within three days after a conditional offer becomes or is declared unconditional (as the case may be) provided that the grantee may only exercise any Option under this clause when the offer is unconditional.

If a general offer by way of scheme of arrangement is made to all the holders of Shares with this New Share Option Scheme having been approved by the necessary number of holders of Shares at the requisite meetings, the grantee may thereafter (but before such time as shall be notified by the Company) exercise the Option (to the extent not already exercised even though the option period has not come into effect) to its full extent or to the extent specified in such notice.

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

(14) RIGHTS ON WINDING-UP

In the event a notice is given by the Company to its members to convene a general meeting for the purpose of considering and, if thought fit, approving a resolution to voluntarily wind-up the Company, the Company shall forthwith give notice thereof to the grantee and the grantee may by notice in writing to the Company prior to the date on which such resolution is passed (such notice to be received by the Company not later than four Business Days prior to the date of the proposed general meeting) exercise the Option (to the extent not already exercised even though the option period has not come into effect) either to its full extent or to the extent specified in such notice and the Company shall as soon as possible and in any event no later than the day immediately prior to the date of the proposed general meeting, allot and issue such number of Shares to the grantee which falls to be issued on such exercise.

(15) RIGHTS ON COMPROMISE OR ARRANGEMENT BETWEEN THE COMPANY AND ITS MEMBERS OR CREDITORS

In the event of a compromise or arrangement between the Company and its members or creditors being proposed in connection with the New Share Option Scheme for the reconstruction or amalgamation of the Company, the Company shall give notice thereof to all grantees on the same day as it gives notice of the meeting to its members or creditors to consider such a scheme or arrangement and the grantee may by notice in writing to the Company accompanied by the remittance for the exercise price in respect of the relevant Option (such notice to be received by the Company not later than two Business Days prior to the date of the proposed meeting) exercise the Option (to the extent not already exercised even though the option period has not come into effect) either to its full extent or to the extent specified in such notice, and the Company shall as soon as possible and in any event no later than the day immediately prior to the date of the proposed meeting, allot and issue such number of Shares to the grantee which falls to be issued on such exercise credited as fully paid and registered the grantee as holder thereof.

(16) RANKING OF SHARES

The Shares to be allotted and issued upon the exercise of an Option will be subject to all the provisions of the articles of association of the Company for the time being in force and will rank pari passu in all respects with the fully paid Shares in issue as from the date when the name of the grantee is registered on the register of members of the Company and accordingly will entitle the holders thereof to participate in all dividends or other distributions (including distributions made upon the liquidation of the Company) paid or made on or after the date when the name of grantee is registered on the register of members of the Company other than any dividend or other distributions previously declared or recommended or resolved to be paid or made if the record date therefore shall be before the date when the name of grantee is registered on the register of members of the Company, provided always that if the date of exercise of the Option falls on a date upon which the register of members of the Company is closed, then the exercise of the Option shall become effective on the first Business Day on which the register of members of the Company is re opened. A Share allotted upon the exercise of an Option shall not carry any voting rights until the name of the grantee has been duly entered into the register of members of the Company as the holder thereof.

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

(17) EFFECT OF ALTERATIONS TO CAPITAL

In the event of a reorganisation or proposed reorganisation, which means any (i) compromise or arrangement; or (ii) offer for Shares which if successful would entitle the offeror to acquire all of the Shares or all of one or more particular class(es) of Shares to which the offer relates, the Company, at its option, may do either of the following:

(a) the Company may irrevocably commute for or into any other security or other property or cash any Option that is still capable of being exercised, upon giving to the grantee to whom such Option has been granted at least 21 days’ written notice of its intention to commute the Option, and during such period of notice, the Option, to the extent that it has not been exercised, may be exercised by the grantee by notice in writing to the Company (to the extent not already exercised even though the option period has not come into effect) either to its full extent or to the extent specified in such notice and on the expiry of such period of notice, the unexercised portion of the Option shall lapse and be cancelled without further effect; or
(b) the Company or any company which is or would be the successor to the Company or which may issue securities in exchange for Shares upon the reorganisation becoming effective, may offer any grantee the opportunity to obtain a new or replacement option over any securities into which the Shares are changed or are convertible or exchangeable, on a basis proportionate to the number of Shares under option. In such event, the grantee shall, if the grantee accepts such offer, be deemed to have released such grantee’s Option over Shares and such Option shall be deemed to have lapsed without further effect.

(18) EXPIRY OF OPTION

An Option shall lapse automatically and shall not be exercisable (to the extent not already exercised) on the earliest of:

(i) the expiry of the relevant option period referred to in sub-paragraph (9);
(ii) the expiry of the periods referred to in sub-paragraphs (11), (14) or (15);
(iii) subject to the High Court of Hong Kong not making an order prohibiting the offeror to acquire the remaining Shares in the offer, the expiry of the period referred to in subparagraph (13);
(iv) subject to the scheme of arrangement becoming effective, the expiry of the period referred to in sub-paragraph (13);

APPENDIX

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

(v) the date on which the grantee ceases to be an Eligible Person by reason of the termination of his/her employment or engagement (as the case may be) on the grounds that he/she has been guilty of persistent or serious misconduct, or appears either to be unable to pay or to have no reasonable prospect of being able to pay his/her debts or has become insolvent or has made any arrangement or composition with his/her creditors generally, or has been convicted of any criminal offence which in the absolute opinion of the directors of the Company involving his/her integrity or honesty or bring the grantee or the Company and/or its subsidiaries into disrepute);
(vi) the date which is 12 months after the date on which the grantee ceases to be an Eligible Person by reason of death;
(vii) the date on which the grantee ceases to be an Eligible Person by reason of:
(a) resignation;
(b) retirement;
(c) expiry of employment contract or consultancy contract (as the case may be);
(d) on any other ground on which an employer would be entitled to terminate his/her employment at common law or pursuant to any applicable laws or under the grantee’s service contract with the Company or the relevant subsidiary;
(e) the company by which he/she is employed and/or of which he/she is a director (if not the Company) or to which he/she is engaged (whether directly or indirectly) (as the case may be) ceasing to be a subsidiary; or
(f) at the discretion of the Board, any reason other than the reasons described in subparagraphs (18)(v) or (vi) or (vii)(a) to (e).

Provided that (1) transfer of employment from one company in the Group to another company in the Group shall not be considered a cessation of employment; and (2) it shall not be considered a cessation of employment if a grantee is placed on such leave of absence is as considered by the relevant company in the Group as continuing intact the employment relationship.

A resolution of the Directors to the effect that the employment or engagement (as the case may be) of a grantee has or has not been terminated on one or more of the grounds specified in sub-paragraph (18)(vii) shall be conclusive and binding on a grantee;

(viii) the date of the commencement of the winding-up of the Company; and
(ix) the date on which the grantee commits a breach of sub-paragraph (8).

SUMMARY OF THE PRINCIPAL TERMS OF THE NEW SHARE OPTION SCHEME

APPENDIX

(19) ALTERATION OF THE SHARE OPTION SCHEME

The Board may from time to time at its absolute discretion waive or amend any terms of the New Share Option Scheme provided that the Board may not amend the following provisions without the prior sanction of the Company in general meeting with the Eligible Persons and their respective associates abstaining from voting:

(i) any of the provisions relating to the matters contained in Rule 23.03 of the GEM Listing Rules to the advantage of participants of this New Share Option Scheme;
(ii) any terms and conditions of the New Share Option Scheme which are of a material nature or any terms of the Options granted except where the alterations take effect automatically under the terms of this New Share Option Scheme; and
(iii) any provisions on the authority of the Board in relation to any alteration to the terms of this New Share Option Scheme.

The amended terms of the New Share Option Scheme or the Options must still comply with the relevant requirements of Chapter 23 of the GEM Listing Rules.

(20) CANCELLATION OF OPTIONS

Any cancellation of Options granted but not exercised shall require approval of members of the Company in general meeting, and the relevant grantees and their respective associates shall abstain from voting.

(21) TERMINATION OF THE SHARE OPTION SCHEME

The Company by an ordinary resolution in general meeting may at any time terminate the operation of the New Share Option Scheme and in such event no further Options will be offered but in all other respects the provisions of the New Share Option Scheme shall remain in full force and effect to the extent necessary to give effect to the exercise of any Options granted prior thereto or otherwise as may be required in accordance with the provisions of the New Share Option Scheme and Options granted prior to such termination shall continue to be valid and exercisable in accordance with this New Share Option Scheme.

(22) CONDITION OF THE SHARE OPTION SCHEME

The New Share Option Scheme shall take effect subject to and is conditional on:

(i) the passing of ordinary resolutions by members of the Company to approve and adopt the New Share Option Scheme, to authorise the directors of the Company to grant options to subscribe for Shares thereunder, and to approve termination of the existing share option scheme of the Company adopted pursuant to a resolution of the members of the Company passed on the EGM; and
(ii) the Stock Exchange granting approval of the listing of, and permission to deal in, the Shares to be issued upon the exercise of options to be granted under the New Share Option Scheme.

NOTICE OF EGM

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

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (“ EGM ”) of the shareholders of China Vanguard Group Limited (the “ Company ”) will be held at Room 2201, 22/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, on Thursday, 31 January 2013 at 11:00 a.m. for the purpose of considering and, if thought fit, passing with or without modifications, the following resolutions of the Company:

ORDINARY RESOLUTIONS

“1. THAT :

subject to and conditional upon the granting by the Listing Committee of the Stock Exchange of the listing of, and permission to deal in, the Consolidated Shares (as defined below) in issue or to be issued (the “ Share Consolidation ”):

a. with effect from the day immediately following the date on which this resolution is passed, being a day on which shares are traded on the Stock Exchange, every five (5) ordinary shares of a par value of HK$0.01 each in the issued and unissued share capital of the Company be consolidated into one (1) share of a par value of HK$0.05 (each a “ Consolidated Share ”), such Consolidated Shares shall rank pari passu in all respects with each other and have the rights and privileges and be subject to the restrictions in respect of ordinary shares contained in the articles of association of the Company (the “ Articles ”); and
b. the directors of the Company (the “ Directors ”) be and are generally authorised to do all such acts and things and execute all such documents, including under seal where applicable, as they consider necessary, desirable or expedient to give effect to the foregoing arrangements for the Share Consolidation.”
“2. THAT :

conditional upon The Stock Exchange of Hong Kong Limited granting approval of the listing of and permission to deal in the shares falling to be issued pursuant to the exercise of any options granted under the new share option scheme which is marked “A” now produced to the EGM and for the purpose of identification signed by the Chairman hereof (the “ New Share Option Scheme ”), the New Share Option Scheme be approved and adopted to be the

For identification purposes only

NOTICE OF EGM

share option scheme of the Company and that the Directors be authorised to grant options thereunder and to allot and issue shares pursuant to the New Share Option Scheme and take all such steps as may be necessary or desirable to implement such New Share Option Scheme.”

“3. THAT :
a. subject to paragraph (c) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue or otherwise deal with additional shares in the capital of the Company and to make or grant offers, agreements, options including warrants to subscribe for shares, and/or rights of exchange or conversion which might require the exercise of such powers be and is hereby generally and unconditionally approved;
b. the approval given in paragraph (a) above shall be in addition to any other authorisation given to the Directors and shall authorise the Directors during the Relevant Period (as hereinafter defined) to make or grant offers, agreements and/or options including warrants to subscribe for shares, which may require the exercise of such powers after the end of the Relevant Period;
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 during the Relevant Period (as hereinafter defined) pursuant to paragraph (a) above, otherwise than pursuant to (1) a Rights Issue (as hereinafter defined); or (2) on the exercise of any options granted under the share option scheme of the Company or any other option, scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries of shares or rights to acquire shares of the Company; or (3) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Articles in force from time to time; or (4) any issue of shares in the Company upon the exercise of rights of subscription or conversion under the terms of any exercisable convertible notes issued by the Company or any existing securities of the Company which carry rights to subscribe for or are convertible into shares of the Company, shall not exceed 20% of the aggregate nominal amount of share capital of the Company in issue as at the date of passing this resolution and the said approval shall be limited accordingly; and
d. for the purpose of this resolution:

“ Relevant Period ” means the period from the passing of this resolution until whichever is the earliest of:

(1) the conclusion of the next annual general meeting of the Company;
(2) the expiration of the period within which the next annual general meeting of the Company is required by the Articles or the Companies Ordinance or any other applicable law of Hong Kong to be held; and

NOTICE OF EGM

(3) the revocation or variation of the authority given under this resolution by an ordinary resolution of the shareholders of the Company in a general meeting; and

“ Rights Issue ” means an offer of shares in the capital of the Company, or an 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 in the capital of the Company or any class thereof on the register of members on a fixed record date in proportion to their then holdings of such 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 any recognised regulatory body or any stock exchange in, any territory outside Hong Kong).”

For and on behalf of the Board of China Vanguard Group Limited 眾彩科技股份有限公司* Chan Siu Sarah Executive Director

Hong Kong, 15 January 2013

Registered Office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and principal place of business in Hong Kong: Room 2201, 22/F. Hopewell Centre 183 Queen’s Road East Wanchai, Hong Kong

Notes:

A member entitled to attend and vote at the extraordinary general meeting convened by the above notice is entitled to appoint one or, if he is a holder of more than one share, more proxies 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 present in person at the extraordinary 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.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney authorised in writing, or if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorised to sign the same.
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 Company’s branch share registrar in Hong Kong, Tricor Standard Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time for holding the extraordinary general meeting or any adjournment thereof. Completion and return of a form of proxy will not preclude a shareholder of the Company from attending in person and voting at the extraordinary general meeting or any adjournment thereof, should he/she/it so wish and in such event, the proxy shall be deemed to be revoked.
For identification purposes only

AI assistant

Sinopharm Tech Holdings Limited — Proxy Solicitation & Information Statement 2013

51300_rns_2013-01-14_0cc67fee-96f0-45a5-bae5-6d2e1db56984.pdf

(I) PROPOSED SHARE CONSOLIDATION;

Financial adviser to the Company

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

CHARACTERISTICS OF GEM

CONTENT

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

EXPECTED TIMETABLE

EXPECTED TIMETABLE

Event

INTRODUCTION

LETTER FROM THE BOARD

I. PROPOSED SHARE CONSOLIDATION

Conditions precedent to the Share Consolidation

Effect of the Share Consolidation

LETTER FROM THE BOARD

Board lot size

Reasons for the Share Consolidation

Free exchange of certificates for the Consolidated Shares and trading arrangement

Odd lots arrangements and matching services

LETTER FROM THE BOARD

Listing application

II. PROPOSED ADOPTION OF THE NEW SHARE OPTION SCHEME

LETTER FROM THE BOARD

III. REFRESHMENT OF GENERAL MANDATE

Background of the Refreshment of General Mandate

LETTER FROM THE BOARD

Reasons for the Refreshment of General Mandate

Equity fund raising activities in the past twelve months

Potential dilution to shareholding of the existing public Shareholders

LETTER FROM THE BOARD

LETTER FROM THE BOARD

General

EGM

LETTER FROM THE BOARD

RECOMMENDATION

RESPONSIBILITY STATEMENT

COMPETING INTERESTS

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

REFRESHMENT OF GENERAL MANDATE

REFRESHMENT OF GENERAL MANDATE

INTRODUCTION

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

(1) Background of the grant of Issue Mandate

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(2) Reasons for the grant of Issue Mandate

(3) Fund raising activities in the past twelve months

(4) Flexibility in financing

(5) Other financing alternatives

(6) Potential dilution to shareholding of the existing public Shareholders

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

(1) PURPOSE

(2) WHO MAY JOIN

(3) MAXIMUM NUMBER OF SHARES

(4) MAXIMUM NUMBER OF OPTIONS TO ANY ONE INDIVIDUAL

(5) PRICE OF SHARES

(6) GRANTING OPTIONS TO CONNECTED PERSONS

APPENDIX

(7) RESTRICTIONS ON THE TIMES OF GRANT OF OPTIONS

(8) RIGHTS ARE PERSONAL TO GRANTEE

(9) TIME OF EXERCISE OF OPTION AND DURATION OF THE SHARE OPTION SCHEME

(10) PERFORMANCE TARGET

APPENDIX

(11) RIGHTS ON CEASING EMPLOYMENT OR DEATH

(12) RIGHTS ON DISMISSAL

(13) RIGHTS ON TAKEOVER

APPENDIX

(14) RIGHTS ON WINDING-UP

(15) RIGHTS ON COMPROMISE OR ARRANGEMENT BETWEEN THE COMPANY AND ITS MEMBERS OR CREDITORS

(16) RANKING OF SHARES

APPENDIX

(17) EFFECT OF ALTERATIONS TO CAPITAL

(18) EXPIRY OF OPTION

Sinopharm Tech Holdings Limited Proxy Solicitation & Information Statement 2013