Liu was managing director from July 2002 to January last year when he was removed, after it was revealed that he and former executive president Huang Yong had been detained since mid-December 2010 by police in Shenzhen on suspected 'embezzlement of the assets of an organisation in which they have duties'.

Liu, who has Hong Kong permanent residency, was released on bail in November last year and has since been living in Shenzhen.

On July 25, China Gas said the Shenzhen People's Procuratorate had decided not to prosecute Liu or Huang on the alleged embezzlement of the assets of China Gas in relation to a project in Xiaogan, Hubei province, due to a lack of evidence. Five days later, China Gas said its board came to a unanimous decision at a meeting to appoint Liu as a non-executive director from August 17.

'This appointment reflects the board's strong preference to re-engage Mr Liu in the company at the earliest possible opportunity and is a step towards appointing him as an executive director once regulatory and procedural requirements have been met,' China Gas said at the time.

According to a person familiar with the situation, Hong Kong's securities watchdog, the Securities and Futures Commission, as well as China Gas shareholders now have to approve his service agreement before he can be reappointed an executive director.

While there was insufficient time to get all these done for investors to approve his appointment at China Gas' annual shareholders' meeting on August 16, his reappointment was expected to happen soon after that at a separate shareholders' meeting, the person said.

Liu played a founding role in establishing China Gas, when he teamed with Hai Xia Finance Holdings, an arm of the mainland's Taiwan Affairs Office, in 2002 to set up the company. He then played the main role in expanding the firm's network of exclusive city-gas distribution projects, which grew from nothing to 160 cities in the past decade, the biggest on the mainland.

He also played a key role in introducing strategic shareholders including China Petroleum & Chemical (Sinopec), the nation's second-largest oil and gas producer; state-owned Oman Oil, a joint-venture partner with China Gas on liquefied petroleum gas distribution; gas distribution major Gail of India; the Asian Development Bank; and South Korean conglomerate SK Group.

According to a person who has worked with him since 2005, Liu is a 'hands-on' leader who is 'very passionate about the vast potential of the natural gas business in China'. This is despite the unrelated training of the 49-year-old mathematics graduate from the Hebei University of Education. He was also reported by some Hong Kong Chinese-language newspapers to be a philanthropist, having joined his 20-year-old daughter in donating HK$2 million towards the post-earthquake relief effort in Sichuan province in 2008. This was on top of several million dollars donated by China Gas, Liu was quoted as saying.

While Liu's return is almost a certainty, it is less clear if the battle among China Gas shareholders will now end.

A US$2.2 billion takeover bid from a consortium formed by rival ENN Energy and Sinopec is looking increasingly unlikely to succeed. ENN is seeking instant operating growth as large-scale acquisition opportunities are hard to come by, while Sinopec is looking to expand its gas distribution channel.

Their bid price of HK$3.50 a share is much lower than those paid by fellow suitors, mostly between HK$3.70 and HK$4.10, to raise their stakes in China Gas since the consortium made the bid in December last year. Those building their stakes include Beijing Enterprises Group, the state-owned parent of listed Beijing Enterprises; an alliance between London-listed Fortune Oil and Liu himself; and companies under SK Group.

Beijing Enterprises Group has steadily raised its stake to 20.3 per cent and become the largest shareholder after buying a combined 12.65 per cent stake owned by two Oman government-controlled firms at HK$4.10 per share in May.

Beijing Enterprises Group's intention is unclear, with its management only saying its stake build-up in China Gas is a long-term investment. The group has a big exclusive gas distribution operation in the Beijing municipality through its listed unit and could instantly expand its network nationwide if it takes over China Gas.

Beijing Enterprises is a business partner of PetroChina, the nation's largest oil and gas producer, in building and operating gas pipelines linking Beijing and gas fields in northern China.

Fortune Oil and Liu had raised their combined stake in China Gas to 16 per cent by Tuesday this week. If Liu's 235 million options are converted to shares, their combined stake could rise to 20.3 per cent, matching that of Beijing Enterprises Group. Liu's options are convertible to shares at 71 cents to HK$2.10 each, with deadlines for conversion ranging from January 2014 to August 2019.

SK has a stake of about 13.09 per cent. The combined stake of SK, Fortune Oil, Liu and Beijing Enterprises Group amounts to 51.7 per cent, making it impossible for the ENN-Sinopec consortium to gain the 50 per cent approval it needs from China Gas shareholders for its takeover bid at the current price to succeed. Both ENN and Sinopec's chairmen have publicly indicated a reluctance to raise their bid in the past few months.

Fortune Oil chief financial officer Bill Mok Kwai-piu said the gas distributor and gas resources developer saw its investment in China Gas as a long-term one and would seek business co-operation opportunities with China Gas.

Liu could not be reached for comment.