Yadea Group Holdings Ltd. — Proxy Solicitation & Information Statement 2003

Nov 26, 2003

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, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Chaoda Modern Agriculture (Holdings) Limited, you should at once hand this circular to the purchaser or other transferee or to the bank or stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

CHAODA MODERN AGRICULTURE (HOLDINGS) LIMITED 超大現代農業（控股）有限公司

(Incorporated in the Cayman Islands with limited liability)

PROPOSAL FOR BONUS ISSUE OF SHARES

A letter from the board of Chaoda Modern Agriculture (Holdings) Limited is set out on pages 3 to 7 of this circular. A notice convening the annual general meeting of Chaoda Modern Agriculture (Holdings) Limited to be held at Salon IV, Grand Hyatt Hong Kong, 1 Harbour Road, Hong Kong on Friday, 19th December, 2003 at 10:30 a.m. was set out on pages 77 to 80 of the Annual Report.

Whether or not you are able to attend the Annual General Meeting, you are requested to complete and return the form of proxy enclosed with the Annual Report in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time fixed for holding the said meeting or any adjourned meeting thereof. Completion and return of the form of proxy shall not preclude you from attending and voting at the Annual General Meeting or any adjourned meeting should you so desire.

26th November, 2003

CONTENTS

	Page
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Bonus Issue of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

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EXPECTED TIMETABLE

Latest day for dealing in Shares

cum entitlement to the Bonus Issue . . . . . . . . . . . . . . . . (Wednesday), 10th December, 2003

Latest time for lodging transfers for

entitlement to the Bonus Issue . . . . . . . . . . . . . . . 4:00 p.m. (Friday), 12th December, 2003

Closure of register of members (both days inclusive)

from . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Monday), 15th December, 2003 to . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Friday), 19th December, 2003

Latest time for lodging forms of proxy for

the Annual General Meeting . . . . . . . . . . . . . 10:30 a.m. (Wednesday), 17th December, 2003

Record date for determination of entitlement

to the Bonus Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Friday), 19th December, 2003

Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . 10:30 a.m. (Friday), 19th December, 2003

Expected date of despatch of certificates

for Bonus Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . on or before (Friday), 30th January, 2004

First day of dealing in the Bonus Shares . . . . . . . . . . . . . . . . . . . (Monday), 2nd February, 2004

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DEFINITIONS

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

“Annual General Meeting”	the annual general meeting of the Company to be held on
	Friday, 19th December, 2003 at 10:30 a.m., notice of which
	was set out on pages 77 to 80 of the Annual Report;
“Annual Report”	the annual report of the Company for the year ended 30th
	June, 2003;
“Bonus Issue”	the proposed conditional bonus issue of Bonus Shares to the
	Shareholders whose names appear on the register of members
	of the Company at the close of business on the Record Date on
	the basis of one Bonus Share for every twenty existing Shares
	held on that day as described herein;
“Bonus Share(s)”	new Share(s) to be issued by way of Bonus Issue by the
	Company as described herein;
“Company”	Chaoda Modern Agriculture (Holdings) Limited, a company
	incorporated in the Cayman Islands with limited liability, the
	shares of which are listed on the Stock Exchange;
“Directors”	the directors of the Company;
“Final Dividend”	the final dividend of HK3.49 cents per Share recommended by
	the board of Directors in respect of the year ended 30th June,
	2003;
“Group”	the Company and its subsidiaries;
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China;
“Latest Practicable Date”	26th November, 2003, being the latest practicable date prior to
	the printing of this circular for ascertaining certain information
	contained herein;
“Overseas Shareholders”	holders of Shares whose addresses as shown in the register of
	members of the Company at the close of business on the Record
	Date are outside Hong Kong;

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DEFINITIONS

“Record Date”	Friday, 19th December, 2003, being the date for determination
	of entitlement to the Bonus Issue;
“Shareholder(s)”	holders of Shares;
“Shares”	ordinary shares of HK$0.10 each in the issued share capital of
	the Company;
“Share Option Scheme”	the share option scheme of the Company adopted on 19th June,
	2002;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited; and
“HK$” and “HK cents”	Hong Kong dollars and Hong Kong cents respectively, the
	lawful currency of Hong Kong.

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LETTER FROM THE BOARD

CHAODA MODERN AGRICULTURE (HOLDINGS) LIMITED 超大現代農業（控股）有限公司

(Incorporated in the Cayman Islands with limited liability)

Executive Directors: Kwok Ho (Chairman) Ip Chi Ming Chiu Na Lai Lee Yan Chan Hong Wong Hip Ying Fong Jao

Independent Non-Executive Directors: Fung Chi Kin Tam Ching Ho Lin Shun Quan

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

Principal Office in Hong Kong: Room 2705, 27th Floor China Resources Building 26 Harbour Road Wanchai, Hong Kong

26th November, 2003

To the Shareholders and, for information only, holders of outstanding options granted

Dear Sir or Madam,

PROPOSAL FOR BONUS ISSUE OF SHARES

1. INTRODUCTION

It was announced on 21st October, 2003 in conjunction with the announcement of the audited consolidated results of the Group for the year ended 30th June, 2003 that an issue of new Shares by the Company by way of Bonus Issue would be proposed to the Shareholders at the Annual General Meeting to be held on 19th December, 2003. It was also announced on that day that the Directors recommended the payment of the final dividend of HK3.49 cents per Share for the year ended 30th June, 2003.

The purpose of this circular is to provide you with information relating to the Bonus Issue.

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LETTER FROM THE BOARD

2. BONUS ISSUE OF SHARES

Introduction

The Directors propose that the Bonus Issue will be made on the basis of one new Share, credited as fully paid, for every 20 existing issued Shares held by the Shareholders whose names appear on the register of members of the Company on the Record Date. The Bonus Shares will rank pari passu in all respects with the Shares in issue on the date of allotment of the Bonus Shares except to the extent that the holders of the Bonus Shares will not be entitled to participate in the Final Dividend.

On the assumptions that all outstanding options granted under the Share Option Scheme carrying the rights to subscribe for up to an aggregate of 127,100,000 Shares are exercised in full on or before the Record Date and that no further Shares are allotted and issued on or before the Record Date and based on 1,933,162,000 Shares in issue as at the Latest Practicable Date, there will be 2,060,262,000 Shares in issue on the Record Date. Accordingly, the total maximum number of Bonus Shares to be issued under the Bonus Issue may amount to 103,013,100 Shares.

Conditions of the Bonus Issue

The Bonus Issue is conditional upon:

• (a) the passing of an ordinary resolution by the Shareholders at the Annual General Meeting to approve the Bonus Issue; and

• (b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Shares to be issued and allotted pursuant to the Bonus Issue.

Reasons for the Bonus Issue

The Directors believe that the Bonus Issue will enhance the liquidity of the Shares in the market and the Bonus Issue will also provide the Shareholders with an opportunity to obtain further equity participation in the Company.

Fractions of Bonus Shares

Fractional entitlements to the Bonus Shares will not be allotted by the Company. Bonus Shares representing fractional entitlement will be aggregated and sold for the benefit of the Company.

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LETTER FROM THE BOARD

Overseas Shareholders

The Directors will consider to seek advice from overseas counsel on the applicable procedural requirements for extending the Bonus Issue to Shareholders with overseas registered addresses in selected countries. Countries will be selected based on (a) the relative level of shareholding held by Shareholders whose registered addresses are in those countries, and (b) the cost and time involved in seeking advice.

Overseas Shareholders affected by either of the following will not be allotted the Bonus Shares:

• (a) if the law of jurisdiction at which their registered address is located prohibits the Company from allotting the Bonus Shares to them, or requires the Company to comply with any requirements (such as the filing of any registration statement or prospectus) which the Directors consider to be onerous; or

• (b) if the Directors consider that the costs and/or time in seeking the necessary legal advice exceed the benefit of allotting the Bonus Shares to the Shareholder concerned (such as where the cost is too high relative to the level of their holding of Shares held by Shareholders registered in a particular jurisdiction).

Overseas Shareholders affected by any of the above will not be allotted the Bonus Shares. Instead, the Bonus Shares otherwise falling to be allotted to them will be sold in the market as soon as practicable after dealings in the Bonus Shares commence and the net proceeds of sale will be paid to the Shareholders affected. Where, however, the amount of the net proceeds payable to any particular Shareholder is less than HK$50, the net proceeds will be paid to the Company instead for its own benefit and will not be paid to the Shareholder affected.

Adjustment to exercise price and/or number of outstanding options

As at the Latest Practicable Date, there are outstanding options granted under the Share Option Scheme carrying the rights to subscribe for up to an aggregate of 127,100,000 Shares. The exercise price of these outstanding options is in the range from HK$1.13 to HK$1.66 per Share.

In accordance with the rules of the Share Option Scheme and in respect of the Bonus Issue, the number of Shares comprised in any option granted under the scheme which remain unexercised prior to the Record Date and/or the exercise price per Share thereunder may, subject to certain conditions, be adjusted in such manner as the board of Directors may deem appropriate, provided that (in the case of adjustment to the number of Shares comprised in each outstanding option) the grantee shall have the same proportion of the equity capital of the Company as that to which he was entitled

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LETTER FROM THE BOARD

before such adjustments, and that no such adjustments shall be made if the effect of which would enable a Share to be issued at less than its nominal value. Notice of any adjustment, where appropriate, will be given by the Company to the option holder(s) in accordance with the terms of the Share Option Scheme.

Closure of the register of members

The register of members will be closed from Monday, 15th December, 2003 to Friday, 19th December, 2003, both days inclusive, during which period no transfer of Shares will be registered. In order to qualify for the Final Dividend and the Bonus Issue, all transfer documents accompanied by the relevant share certificates must be lodged with the Company’s Share Registrar in Hong Kong, namely Abacus Share Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not later than 4:00 p.m. on Friday, 12th December, 2003.

Application for listing and trading arrangements

Application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Bonus Shares. No part of the issued share capital of the Company is listed or dealt in on any other exchange and no such listing or permission to deal is being or is proposed to be sought.

The Bonus Shares will be traded in board lots of 2,000 shares each. Share certificates for the Bonus Shares are expected to be despatched to the Shareholders by post on or before 30th January, 2004, at their own risk. Where any Bonus Shares are to be issued in the joint names of two or more persons, the certificate(s) for the Bonus Shares will be posted to the Shareholder whose name appears first in the register of members of the Company.

Dealings in the Bonus Shares are expected to commence on Monday, 2nd February, 2004 and will be subjected to Hong Kong stamp duty.

Taxation

Shareholders are recommended to consult their professional adviser if they are in any doubts as to the taxation implications of any purchase, holding or disposal of or dealing in the Bonus Shares and receipt of any dividend. It is emphasised that none of the Company, the Directors or any other parties involved in the Bonus Issue accepts responsibility for any tax effects or liabilities of the Shareholders resulting from the purchase, holding or disposal of or dealing in the Bonus Shares and receipt of any dividend.

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LETTER FROM THE BOARD

3. RECOMMENDATION

The Directors consider that the Bonus Issue is in the best interest of the Company and the Shareholders. Accordingly, the Directors recommend Shareholders to vote in favour of the relevant resolution(s) to be proposed at the Annual General Meeting.

Yours faithfully, For and on behalf of the Board

Kwok Ho Chairman

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