Posting of Circular

24 June 2014

Pacific Alliance China Land Limited

(the "Company")

Proposed changes to investment policy and introduction of mechanisms to return capital

1. Introduction

The Company has today published a circular to Shareholders providing notice of a forthcoming extraordinary general meeting to be held on 25 July 2014.

In light of the 2015 Continuation Vote, the Board commissioned an extensive shareholder consultation earlier this year. Following that consultation process it is proposed that the Company cease making new investments and focus instead on realising existing investments, maximising the IRR from its portfolio and returning realisation proceeds to Shareholders. The Company will continue to develop and, if incrementally profitable and in the best interests of Shareholders, invest additional funds to complete existing investments. Finally, the Company will utilise its RMB cash assets in China and subject to exchange control restrictions, to make low risk short-term investments pending repatriation as US Dollars.

In order to maximise the IRR for the benefit of Shareholders, the proposed changes to the investment policy have been designed to allow the Investment Manager an element of discretion in realising the investment portfolio so as to achieve an optimal combination of price and speed in relation to the orderly realisation of the Company's investments.

In conjunction with the proposed changes to the investment policy, certain changes to the Articles are also being proposed. Details of these proposed changes are set out in this document and will be put to Shareholders at the EGM.

The Board has convened the EGM at which three resolutions will be proposed. In summary, the Resolutions seek:

1. Shareholder approval to amend the Company's investment policy to restrict new investment solely to support existing investments, to protect, preserve or enhance such investments, including to complete development projects, to utilise the Company's RMB cash assets in China and, subject to exchange control restrictions, to make low risk short-term investments and to focus future investment management efforts on the realisation of the Company's portfolio and the return of net realisation proceeds to Shareholders;

2. Shareholder approval of changes to the Articles that seek to facilitate the orderly realisation of the Company's portfolio and to provide mechanisms for returning net realisation proceeds to Shareholders by converting the issued Shares into redeemable ordinary shares and to allow the Company to perform compulsory redemptions of shares as a mechanism for returning net realisation proceeds to Shareholders; and

3. Shareholder approval to convert all issued Shares into redeemable ordinary shares.

Resolution 1 is classified as an ordinary resolution requiring majority Shareholder approval of Shareholders present and voting. Resolutions 2 and 3 are classified as special resolutions, requiring a Shareholder approval threshold of 66.67% of Shareholders present and voting. In addition, Resolution 2 is conditional on Resolution 1 being passed to become effective, and Resolution 3 is conditional on Resolutions 1 and 2 being passed to become effective.

Shareholders holding 77,599,166 Shares representing 59.47% of the total voting rights have informed the Company they intend to vote in favour of the Resolutions.

2. Investment Policy Changes

The Board is proposing to amend the Company's investment policy to restrict new investment solely:

a. to support existing investments, for the purpose of protecting, preserving or enhancing such investments, including to complete development projects; and

b. to utilise the Company's RMB cash assets currently in China and subject to exchange control restrictions, for low risk short-term investments;

and to focus future investment management efforts on the realisation of the Company's portfolio and the return of net realisation proceeds to Shareholders. As a result, the Company's distribution policy in effect since February 2011 will be superseded because distributions will no longer be limited to 50% of the Company's net realised profit from realised investments and principal will be returned instead of being available for reinvestment.

The Company's investment portfolio includes direct property holdings; land; private and listed companies as detailed in the Company's quarterly newsletter. As such the Manager anticipates that the majority of the Company's investments will be realised within two years from July 2014, and the realisation of the Company's remaining investments within three to five years.

3. Proposed changes to the Articles and conversion of issued Shares

The Board is proposing to amend the Articles to facilitate the orderly realisation of the Company's investment portfolio and provide mechanisms for returning the net realisation proceeds to Shareholders.

The proposed amendments are designed to convert the Company's existing Shares into redeemable ordinary shares and to create a mechanism under the Articles to allow the compulsory redemption of ordinary shares by the Company as an efficient method of returning net realisation proceeds to Shareholders. Any compulsory redemption will be subject to the pricing parameters specified under the Articles which require the price per share be no less than net asset value per Share.

4. Return of Capital

The Board expects to return net realisation proceeds to Shareholders as the orderly realisation of the Company's investment portfolio progresses. The Board anticipates the Company will use a number of mechanisms for making such distributions, depending on the circumstances at the time including the amounts to be returned; the Share price discount relative to the net asset value; secondary market liquidity and the size of the remaining portfolio. As part of any Share buyback or tender offer the Board may consider making available a matching facility to give those Shareholders, who wish to do so, the opportunity to increase their holding in the Company by matching off repurchased Shares against such orders.

4.1. Share Buybacks

Following the Shareholder consultation process earlier this year, the Board anticipates initially using substantial secondary market share buybacks as the main method of distributing net realisation proceeds to Shareholders, taking into account the Share price discount relative to the net asset value and secondary market liquidity. Such Share buybacks will be announced in advance and will be open to all Shareholders, and will be conducted by the Company's broker Edmond de Rothschild Securities (UK) Limited.

4.2. Redemptions and/or Tender Offers

The Board may also invite Shareholders to redeem all or part of their Shares on terms set by the Board at the time, or also declare mandatory redemptions so that all Shareholders will have part of their Shareholding redeemed on prescribed terms and at a price equal to net asset value per Share. The Board expects to use redemptions or tender offers when it believes it is inappropriate to conduct an on-market Share buyback.

4.3. Dividends

The Board may also consider declaring a dividend as an alternative means of distributing net realisation proceeds. The Board is aware, however, that the receipt of dividends may not be an attractive means of receiving distributions for certain Shareholders. Accordingly, dividends are unlikely to be the main method the Board uses to distribute the net realisation proceeds.

5. Risk Factors

5.1. Investment Policy Changes

Even if Shareholders approve the proposed changes to the Company's investment policy, there can be no certainty that the Investment Manager will be able to realise the Company's investment portfolio at the current valuations or at valuations which the Company would find attractive, nor can there be any assurance as to the timing of realisations.

Changes to the legal, regulatory or tax environment in China may impact the Company's ability to maximise the realisation of the Company's investment portfolio.

5.2. Changes to the Company's Articles

Even if Shareholders approve the proposed changes to the Articles there can be no certainty that minority Shareholders will be fully protected from Shareholders seeking a rapid realisation of the Company's investment portfolio, or a change in the alignment of interests between the Investment Manager and all Shareholders.

6. Extraordinary General Meeting

The Resolutions will be proposed at the EGM to be held at the Four Seasons Hotel Macau, Cotai Strip, Estrada da Baia de N. Senhora da Esperanca, S/N Taipa, Macau at 2:00 p.m. (Macau time)on 25 July 2014.

7. Recommendation

The Directors consider the Resolutions proposed at the EGM to be in the best interests of the Company and Shareholders as a whole.

The Directors unanimously recommend Shareholders vote in favour of the Resolutions proposed at the EGM.

Shareholders holding 77,599,166 Shares representing 59.47% of the total voting rights have informed the Company they intend to vote in favour of the Resolutions. This includes the Directors who intend to vote in favour of the Resolutions in respect of their aggregate shareholdings of 1,817,400 Shares, representing 1.39% of the Company's total voting rights.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement through a Regulatory Information Service.

A copy of the Circular is available from the Company's website, www.pacl-fund.com

For further information, please contact:

DEFINITIONS

In this announcement the words and expressions listed below have the meanings set out opposite them, except where the context otherwise requires:

About Pacific Alliance China Land Limited

Pacific Alliance China Land Limited ("PACL") (AIM: PACL) is a closed-end investment company with net assets of US$296.60 million as at 30 April 2014. PACL was admitted to trading on the AIM Market of the London Stock Exchange in November 2007. PACL is focused on investing in a portfolio of existing properties, new developments, distressed projects and real estate companies in Greater China.

For more information about PACL, please visit: www.pacl-fund.com 

Pacific Alliance China Land Limited is a member of PAG (formerly known as Pacific Alliance Group), the Asian alternative investment fund management group. Founded in 2002, PAG is now one of the region's largest Asia-focused alternative investment managers, with funds under management across Private Equity, Real Estate and Absolute Return strategies.

PAG has a presence across Asia with over 340 staff working in the region.

For more information about PAG, please visit: www.pagasia.com