Showdown at Nority
10 January 2000
We told you in a previous article how the executive directors of Nority had tried to grant themselves options over almost 10% of the company (the limit under the option scheme) without the approval of all the directors on the board, including the representative of 39.9% shareholder South China Industries, and how the option to the Chairman covered 30% of the scheme, breaching the 25% limit in the listing rules.
As a consequence of these breaches, the grant of the options was scrapped, and another board meeting was convened for 1-Nov-99 to consider a request by South China to appoint 3 non-executive directors to the board.
At that meeting, the board declined South China's request, and as we had predicted, South China reacted by filing a requisition for a shareholders meeting to appoint their representatives to the board.
On 15-Dec-99, the resulting notice of Extraordinary General Meeting was published, revealing that South China is proposing 8 new directors be appointed. They already have one non-executive director out of the existing 8 seats, so this would take them to a majority of 9 out of 17. The showdown is set for tomorrow, 11-Jan-00.
Not only do they want board control but they are also proposing two resolutions in relation the option scheme. First, they want to amend the scheme so that the grant of any options to executive directors will be subject to shareholders' approval in general meeting. Secondly, they've asked for the appointment of a committee of two non-executive directors (including one from South China, Mr Daniel Hui Chuen Kin) "to conduct an enquiry into the purported granting of share options to subscribe for shares in the Company on September 8, 1999 and to submit a written report to the board within 30 days of the appointment."
Too late to vote
Apart from the main players in this drama, most of the public shareholding is held in the CCASS clearing system, and rather disappointingly, they did not notify their investor participants in time to vote or to appoint themselves as corporate representative of HKSCC Nominees Limited, the company which holds all the shares for CCASS.
After the CCASS system closed on Friday 7-Jan-00, we received by mail a CCASS statement dated the previous day, stating that the deadline (and the only possible day) for voting via the CCASS system was 7-Jan-00. Either CCASS did not receive the EGM circular from Nority in time, or somebody was asleep at the wheel.
So unless you happen to hold your shares in the company in your own name, you can forget voting at the meeting.
How will it go?
After Mr. Feng's summer purchases of the stock, he owns 26.5% of Nority, while his fellow executive directors own 4.5%, making 31.0% against South China's 39.9%. So the board needs to find another 8.9% if they are to defeat the resolutions. Watch this space!
© Webb-site.com, 2000
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