Reports misconstrue importance of debenture system to our school
Your articles ('Call to act on 'crazy' school place race,' June 17) and ('Parents pay HK$1m for place in primary class,' June 10) on the issuance of Corporate Nomination Rights (debentures) have misconstrued their significance to the Chinese International School (CIS).
Debentures have always been important to any new independent school in raising capital for building works. However, their quantity is limited and do not in any way guarantee admission to CIS.
CIS has only issued debentures to help fund the costs of new buildings. They have only helped to fund those costs because it has always been of far greater importance to the school to control the overall debentures quantum, specifically to ensure that the general public is the mainstream source of students for CIS.
In the school, only 11 per cent of students hold a debenture, the vast majority hold a Personal Nomination Right, a refundable HK$75,000 deposit.
The transfer of debentures must be approved by CIS and is only allowed to take place when the transferee is a major corporation that will utilise this within their human resources department as part of the package needed to attract talented executives. We do not, however, have any involvement in the actual transfer pricing and have no means to determine if any artificial sum has been reported by the parties to the school. It also bears mentioning that CIS receives as a transfer fee a fixed percentage based on the debenture's face value only.
Notwithstanding those points, the board has always been concerned about the trading of our debentures. There are complex ethical issues involved in the forced redemption of them as CIS is indebted to those corporations that have made its facilities possible for the greater good of all students.
Nevertheless, given the alleged heightened abuse of the debentures, we are studying a system by which the school will call back a given debenture one year prior to that student's graduation. If the company concerned has a verifiable employee to nominate, then we will reissue the debenture to it at no cost.
This would end trading in the debentures and would be fair to all parties.
Geoffrey Mansfield, board chairman,
Chinese International School