Li & Fung Limited

If you are in any doubt as to any aspect of this document, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold all your shares in Li & Fung Limited, you should at once hand this document to the purchaser or to the bank or stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this document, 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 document.

20 September 1999

1999

Latest time for lodging proxy forms for
   Special General Meeting................12:00 noon on Sunday, 10 October

Special General Meeting..................12:00 noon on Tuesday, 12 October

Effective date of Subdivision........................Wednesday, 13 October

Original counter for trading in board lots
   of 2,000 Shares closes..............10:00 a.m. on Wednesday, 13 October

Temporary counter for trading in board lots
   of 4,000 Subdivided Shares opens
   (in the form of existing
   share certificates).................10:00 a.m. on Wednesday, 13 October

First day for free exchange of existing
   share certificates for new share
   certificates for the Subdivided Shares............Wednesday, 13 October

Original counter for trading in the
   Subdivided Shares in board lots of 2,000
   Subdivided Shares opens (in the form
   of new share certificates)...........10:00 a.m. on Thursday, 28 October

Parallel trading in Subdivided Shares
   (in the form of new share certificates
   for Subdivided Shares and existing
   share certificates) begins...........10:00 a.m. on Thursday, 28 October

Temporary counter for trading in board
   lots of 4,000 Subdivided Shares
   (in the form of existing share
   certificates) closes.................4:00 p.m. on Thursday, 18 November

Parallel trading in Subdivided Shares
   (in the form of new share certificates
   for Subdivided Shares and existing
   share certificates) ends.............4:00 p.m. on Thursday, 18 November

Last day for free exchange of existing
   share certificates for new share
   certificates for the Subdivided Shares.............Tuesday, 23 November

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

"Special General Meeting"	the special general meeting of the Company to be held at Kublai Khan Room, 4th Floor, Mandarin Oriental, Hong Kong, 5 Connaught Road, Central, Hong Kong on 12 October 1999, notice of which is set out in this circular.
"CCASS"	the Central Clearing and Settlement System established and operated by Hongkong Clearing
"Company"	Li & Fung Limited
"Directors"	directors of the Company
"HK$"	Hong Kong dollars
"Hongkong Clearing"	Hong Kong Securities Clearing Company Limited
"Latest Practicable Date"	the latest practicable date prior to the printing of this circular
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock Exchange
"Registrars"	Abacus Share Registrars Limited at 10th Floor, Caroline Centre, 28 Yun Ping Road, Causeway Bay, Hong Kong (will move to 2401 Prince's Building, Central, Hong Kong with effect from 28 September 1999)
"Shareholders"	registered holders of the Shares
"Shares"	shares of HK$0.10 each
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Subdivided Shares"	the shares of par value HK$0.05 each in the share capital of the Company proposed to be created by the Subdivision
"Subdivision"	the proposed subdivision of each of the issued and unissued Shares into two Subdivided Shares

Directors:	Principal place of business:
Victor Fung Kwok King (Chairman)*	11th Floor, LiFung Tower
William Fung Kwok Lun (Managing Director)	888 Cheung Sha Wan Road
Henry Chan	Kowloon
Danny Lau Sai Wing	Hong Kong
Lau Butt Farn* Paul Edward Selway-Swift# Steven Murray Small* Allan Wong Chi Yun# Franklin Warren McFarlan#
* Non-executive Director	20 September 1999
# Independent Non-executive Director

To shareholders

Dear Sir or Madam,

INTRODUCTION

The purpose of this circular is to provide you with information regarding the proposal to approve the Subdivision of Shares at the Special General Meeting of the Company convened to be held on Tuesday, 12 October 1999. Set out in this circular is a notice of the Special General Meeting at which Shareholders will be requested to consider and if they think fit adopt the resolution relating to this proposal.

SUBDIVISION OF SHARES

The Directors proposed that each of the issued and unissued Shares will be subdivided into two Subdivided Shares on the effective date of the Subdivision (currently expected to be Wednesday, 13 October 1999). Based on 646,610,000 Shares which was in issue as at the Latest Practicable Date, a maximum of 1,293,220,000 Subdivided Shares will be issued pursuant to the Subdivision. The authorised share capital will remain unchanged at HK$80,000,000 after the Subdivision. The board lot size in the Company's share capital following the Subdivision will remain as 2,000, being in board lot of 2,000 Subdivided Shares. The Subdivision is conditional upon the passing at the Special General Meeting of the necessary resolution to subdivide the issued and unissued Shares in the Company and upon the Listing Committee of the Stock Exchange granting a listing of, and permission to deal in, the Subdivided Shares to be issued pursuant to the Subdivision.

The authorised share capital of the Company is presently HK$80,000,000 divided into 800,000,000 Shares of HK$0.10 each. The Directors considered that a lower nominal value for the Company's Shares and, in particular, where the board lot size for trading in the Company's share capital would remain unchanged, would create a more convenient and flexible structure, thereby enhancing the marketability of the Shares. An ordinary resolution will be proposed to approve the Subdivision at the Special General Meeting. Details of the Subdivision with information reasonably necessary to enable the Shareholders to make an informed decision as to whether to vote for or against the resolution are set out as below:-

(1) Trading Arrangement for the Subdivided Shares

The existing share certificates representing the Shares as subdivided will continue to be good evidence of legal title. Subject to the passing of the resolution at the Special General Meeting and the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Subdivided Shares:-

(a) Actions to be taken in respect of the existing share certificates

Shareholders are requested to lodge their existing share certificates in person with the Registrars at 2401 Prince's Building, Central, Hong Kong as soon as possible on or after 13 October 1999.

If the relevant existing share certificates are lodged with the Registrars during business hours starting from 9:00 a.m. on 13 October 1999 to 4:00 p.m. on 23 November 1999, new share certificates for the Subdivided Shares will be issued to the Shareholders free of charge. Unless otherwise instructed, the new share certificates will be issued in board lots of 2,000 Subdivided Shares.

It is expected that new share certificates will be available for collection normally within a period of 10 business days after the date of submission of share certificates for existing Shares to the Registrars for exchange. If Shareholders are able to lodge their share certificates of existing Shares with the Registrars during normal business hours on 13 October 1999, new share certificates will be available for collection during normal business hours on 28 October 1999. Shareholders will be able to collect their new share certificates earlier than the time set out above upon payment of an additional fee to the Registrars.

Shareholders should note that unless the relevant existing share certificates are received by 4:00 p.m. on 23 November 1999, the usual charge of HK$2.50 (or any greater amount as the Stock Exchange may approve from time to time) will be made on the issue of each new share certificate for the Subdivided Shares.

New share certificates for Subdivided Shares will be pink in colour to distinguish them from the share certificates for existing Shares which are green in colour.

(b) Trading Arrangements

Currently, existing Shares are traded in board lots of 2,000 Shares.

(i) From 10:00 a.m. on 13 October 1999 (the first day of dealing following the date on which the resolution set out in the notice of the Special General Meeting is expected to be passed), the original counter for trading in the Shares in board lots of 2,000 Shares will be temporarily removed and a temporary counter will be established for trading in the Subdivided Shares in board lots of 4,000 Subdivided Shares. Share certificates for the Subdivided Shares in the form of existing share certificates can be traded only at the temporary counter.

(ii) With effect from 10:00 a.m. on 28 October 1999, the original counter will be re-opened for trading in board lots of 2,000 Subdivided Shares. Only new share certificates for the Subdivided Shares denominated in HK$0.05 nominal value can be traded at the original counter.

(iii) From 28 October 1999 to 18 November 1999, both days inclusive, parallel trading will be permitted at the two counters mentioned in paragraphs (i) and (ii) above.

(iv) The temporary counter for trading in board lots of 4,000 Subdivided Shares (in the form of existing share certificates) will be removed after the close of trading on 18 November 1999.

Shareholders should note that after 18 November 1999, trading will be in board lots of 2,000 Subdivided Shares only and the existing share certificates for the Shares will cease to be marketable and will not be acceptable for dealing purposes. However, such share certificates will continue to be good evidence of legal title and may be lodged with the Registrars in exchange for the new share certificates for the Subdivided Shares at any time.

The Subdivided Shares are not listed or dealt in, and no listing of or permission to deal in the Subdivided Shares is being, or is proposed to be sought, on any stock exchange other than the Stock Exchange. Dealings in the Subdivided Shares on the branch register of the Company in Hong Kong will be subject to Hong Kong stamp duty.

(2) Listing and Dealings

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

Subject to the granting of the listing of and permission to deal in the Subdivided Shares, the Subdivided Shares will be accepted as eligible securities by Hongkong Clearing for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Subdivided Shares or such other date as determined by Hongkong Clearing. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Settlement of transactions between members of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter.

SPECIAL GENERAL MEETING

The resolution is set out in full in the notice of Special General Meeting in this circular. Whether or not you intend to be present at the Special General Meeting, you are requested to complete the proxy form and return it to the principal place of business of the Company at the address stated above in accordance with the instructions printed thereon not less than 48 hours before the time fixed for holding the Special General Meeting. The Directors believe that the resolution set out in the notice of the Special General Meeting is in the best interests of the Company and its Shareholders as a whole and recommend you to vote in favour of such resolution at the Special General Meeting.

Yours faithfully,
Victor Fung Kwok King
Chairman

LI & FUNG LIMITED
(INCORPORATED IN BERMUDA WITH LIMITED LIABILITY)

NOTICE IS HEREBY GIVEN that the Special General Meeting of the Company will be held at Kublai Khan Room, 4th Floor, Mandarin Oriental, Hong Kong, 5 Connaught Road, Central, Hong Kong on 12 October 1999 at 12:00 noon for the purpose of considering and, if thought fit, passing the following resolution as an ordinary resolution:

"THAT subject to and conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of and permission to deal in the shares to be issued pursuant to the subdivision, each of the issued and unissued shares of HK$0.10 each of the Company be and is hereby subdivided into two shares of HK$0.05 each ("Subdivided Shares") with effect from 13 October 1999 and the directors of the Company be authorised to issue new share certificates in respect of the Subdivided Shares to holders of the existing shares pursuant to the subdivision."

By Order of the Board
Terry Wan Mei Chow
Company Secretary

Hong Kong, 20 September 1999

Notes:

(1) A member entitled to attend and vote at the above Meeting may appoint one or more proxies to attend and vote instead of him. A proxy need not be a member of the Company.

(2) In order to be valid, the instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the principal place of business of the Company at 11th Floor, LiFung Tower, 888 Cheung Sha Wan Road, Kowloon, Hong Kong not less than 48 hours before the time for holding the Meeting.

(3) An explanatory statement containing further details regarding the Resolution above will be sent to members together with this Notice.

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