Convoy Global Holdings, one of Hong Kong’s largest pension advisers, saw a dramatic twist in its boardroom tussle when a breakaway caucus of shareholders voted in six directors nominated by the second-largest shareholder to challenge the incumbent board.
The rebels, led by former Secretary for Financial Services and the Treasury, Frederick Ma Si-hang, said they are backed by shareholders with a combined 53.53 per cent of Convoy’s voting rights. He led a walkout by scores of investors from Convoy’s head office in Wan Chai just 20 minutes into a shareholders’ meeting hosted by the current board on Thursday evening.
They moved to the nearby Empire Hotel, where they hosted their own self-proclaimed shareholders’ meeting and passed the agenda proposed by the second-largest shareholder, Kwok Hiu-kwan, which aims to remake the board, adding Ma, Kwok himself and four others as directors to replace the current board.
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But even Ma cannot be sure about the legality of the vote.
“We will work with the legal experts on the next step forward. The message is clear as it showed over 50 per cent of shareholders want to remove the current board of directors,” Ma said in a media briefing after the Empire Hotel vote. “We want to see the government and regulator help improve the corporate governance of the company.”
Ma said they decided to leave the original shareholders’ meeting because they were not allowed to ask questions, while the host decided not to count Kwok’s votes or those of some other stakeholders. Kwok owns 29.91 of the company.
“It is really unfair as all shareholders should be able to exercise their voting right but the company article of Convoy allows its chairman the power not to count any votes, ” Ma said, referring to a legal document setting out a company’s operating rules.
The shareholders who followed Ma to the Empire Hotel meeting claimed to have a combined 7.996 billion shares in Convoy, a 53.53 per cent stake – enough to vote to support Ma and his supporters in overhauling the Convoy board.
A Convoy spokesman declined to comment when asked about the rebels shareholders’ meeting.
If Convoy ignores the Empire Hotel vote, it will mean the largest financial adviser to Hong Kong’s mandatory pension scheme will remain under the control of its largest shareholder. That is the family of Richard Tsai Ming-hsing of Taiwan‘s Fubon Financial Holding, which owns a 29.98 per cent stake and supports the current 16 directors.
It would be the second failed attempt by Kwok, son of the founder of Shenzhen-based developer Kaisa Group Holdings, who holds a 29.91 per cent stake, to take control of the board, after his votes were not counted in 2017.
“Convoy has no evidence to support its claim that Mr Kwok’s shares have a problem,” said Tam Lai-ling, one of the candidates nominated by Kwok. “Mr Kwok has confirmed no regulators are investigating his stakes at Convoy.
“He has spent money to buy the shares from the market and the company should not ban him from voting.”
Hong Kong lawmaker Paul Tse, who is helping a group of about 40 minority shareholders with a combined 4.9 per cent stake in Convoy, was among those who followed Ma to the Empire Hotel meeting.
“Many small shareholders want to see an overhaul of the board to safeguard their interests,” Tse said.
Convoy has not issued any financial statements for three years and is appealing against the May 2020 decision by the Hong Kong stock exchange to expel its stock from the bourse.
“A lack of transparency is a key corporate governance problem of the company,” Ma said.
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