The Hong Kong and China Gas Company Limited AGM 2003

Company:	The Hong Kong and China Gas Company Limited (HKCG)
Stock code:	0003
Date of meeting:	29-Apr-03
Time of meeting:	12:00
Advice date:	21-Apr-03 (VOTE NOW - sorry this is late!)
Notice of Meeting:	Click here
Voting method:	Webb-site.com will require a poll, all proxies will be counted

Note to journalists:
We have up to 4 proxy seats available inside this AGM. Please contact us if you want one.

Item	Description	Vote
1	Adopt the accounts	FOR
2	Declare a final dividend	FOR
3.1	Re-elect Lee Hon Chiu	FOR
3.2	Re-elect David Li Kwok Po	AGAINST
4	Re-appoint PriceWaterhouseCoopers	FOR
5	Approve each Director's fee at HK$130k p.a. and twice that for the Chairman	FOR
6.1	Mandate the Directors to issue additional shares and repurchase shares	AGAINST
6.2	Extend the issue mandate granted by 6.1 to include repurchased shares	AGAINST

Reasons AGAINST

Item 3(b)

David Li Kwok Po (Mr Li), aged 63, is proposed for re-election as an independent non-executive director (INED) of HKCG. He is Chairman and Chief Executive of The Bank of East Asia, Ltd (BEA, 0023) which is listed by HKCG in its annual report as one of its two Principal Bankers. Mr Li's bank therefore derives an interest spread from its loans to, or deposits from, HKCG, and possibly other banking fees as well. The commercial relationship represents a potential conflict of interest for Mr Li, and we cannot regard him as independent of HKCG. Certain other listed companies in the Henderson group which controls HKCG also list BEA as Principal Bankers.

We cited the same conflicts in opposing the re-election of Lee Shau Kee, Chairman of HKCG and its controlling shareholder, when he was up for re-election as an independent director of BEA. The cross-directorships of Mr Lee and Mr Li represent a further conflict of interest. Mr Li is also an INED of Henderson Cyber Ltd.

Items 6.1 and 6.2

Webb-site.com urges all investors to vote against the general issue mandate for all listed companies, for the reasons explained in Project Vampire. Item 6.1 and 6.2 contain that mandate, so vote against them. The non-pre-emptive issue mandate allows management to choose who the shareowners are by allotment of shares. This corrupts the governance mechanism. Shareowners should govern management, not the other way around.

We normally vote in favour of a mandate for share repurchases, because these are only permitted on-market and therefore the risk of abuse is much lower, as the company cannot choose who it purchases from but must accept shares sold by any shareholder in the market. However, HKCG has chosen to combine the new issue mandate with the share repurchase mandate as item 6.1, and so we must oppose the entire mandate. This practice of combining resolutions for different purposes to try and push them through "en bloc" is unacceptable. They should have proposed the mandates separately, and until they do, we must oppose the combined resolution.

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Voting recommendations

Reasons AGAINST

Item 3(b)

Items 6.1 and 6.2