Convoy’s board swells to 16 directors as boardroom manoeuvres continue in shareholders’ jostle for control

Enoch Yiu
·4-min read

Convoy Global Holdings ushered in the new year the same way it closed the old one, with yet another boardroom manoeuvre as two shareholders with razor thin difference in stakes between them jostled for control of one of Hong Kong’s largest financial service providers.

The company, controlled by the family of Richard Tsai Ming-hsing of Taiwan’s Fubon Financial Holding, appointed three new directors on January 1 – adding to the two named in November – to expand Convoy’s board to 16 directors, according to a filing to the Hong Kong stock exchange.

The enlarged board would strengthen the hand of the Tsai family, which owns 29.98 per cent stake, against an attempt by Kwok Hui-kwan – with 29.91 per cent shareholding – to seize control of the company, one of the financial advisers for Hong Kong’s mandatory pension fund. A shareholders’ meeting is scheduled on January 7 – adjourned since November 26 over a dispute in the voting process – to vote on Kwok’s resolution to replace Convoy’s previous 11-member board with his nominees, including former Hong Kong minister Fred Ma Si-hang.

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“There is a deadlock as the two major shareholders own almost the same number of shares, with no majority control,” said Tom Chan Pak-lam, chairman of the Hong Kong Institute of Securities Dealers. “As such, the boardroom tussle of Convoy will be likely to drag on.”

Former Convoy director Roy Cho Kwai-chee walks out of the District Court in Wan Chai after his acquittal in November 2020. Photo: Nora Tam
Former Convoy director Roy Cho Kwai-chee walks out of the District Court in Wan Chai after his acquittal in November 2020. Photo: Nora Tam

Fubon’s press relations unit in Hong Kong, and Convoy’s executives in Hong Kong declined to comment on the new board appointments on Monday, while a call to Tsai in Taipei was not picked up. Kwok, the son of the founder of the Shenzhen-based developer Kaisa Group, is seeking to appoint himself and five others including Ma to Convoy’s board.

At stake is a group that counts more than 100,000 customers in fund and wealth management products. Yet, much of the value, HK$25 billion at its peak, has been destroyed since Convoy became synonymous with Hong Kong’s biggest corporate scandal in the so-called Engima Network of companies. Trading of its shares was suspended in December 2017 after market regulators and corruption busters probed into its financial affairs, snaring more than 4,000 shareholders in its web.

Frederick Ma Si-hang, former government official and one of the six board candidates nominated by Kwok Hiu-kwan. Photo: Xiaomei Chen
Frederick Ma Si-hang, former government official and one of the six board candidates nominated by Kwok Hiu-kwan. Photo: Xiaomei Chen

Several civil lawsuits were also filed by shareholders and former executives over multiple allegations of fraud, involving an estimated HK$4 billion (US$520 million) of transactions, according to company and court filings.

That probe ended up with three people – former Convoy executives Roy Cho Kwai-chee, Christie Chan Lai-yee and Byron Tan Ye-kai – being prosecuted, and acquitted on November 30 by a District Court in Hong Kong for lack of evidence. The Independent Commission Against Corruption (ICAC) said it is appealing against the decision.

The five new additions to Convoy’s board since November appointed by the Tsai camp included Lee Jin-yi, formerly senior China officer at JPMorgan Chase, who also served as chief executive of Fubon Bank’s Hong Kong unit. Another member is Kelvin Chung kwok-wai, a managing director of a Convoy unit and a former banker at HSBC, Bank of China and DBS Group.

“Are they telling shareholders that these five new directors have more experience and credibility than [the nominee] Abraham Shek and me?” said Ma, one of Hong Kong’s most prominent civil servants, in response to a query by South China Morning Post.

“Beyond the court ruling, there are other corporate governance issues that emerged in the Convoy cases over the past three years and it’s worth the Securities and Futures Commission (SFC) to take action,” he said during an earlier interview. “Having seen the saga of Convoy, I’m very frustrated” with the situation, he added.

Convoy and the SFC declined to comment on Ma’s remarks.

Former government stalwart may join Convoy in new attempt at board revamp

Convoy, which said it would release its financial statement by the end of January after three years of lapses, is appealing against the May 2020 decision by the Hong Kong stock exchange to expel its stock from the bourse.

Hong Kong lawmaker Paul Tse is helping a group of about 40 minority shareholders of Convoy, with a combined 4.9 per cent stake. The group, which is backing a boardroom overhaul, wants the SFC to safeguard their interests, according to Tse.

“For a listed company which has failed to issue financial statements for a considerable period, and which the stock exchange has even decided to delist, the SFC should take appropriate action to protect investors,” said Chan of the Institute of Securities Dealers.

This article Convoy’s board swells to 16 directors as boardroom manoeuvres continue in shareholders’ jostle for control first appeared on South China Morning Post

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