Management defends murky circumstances of underage shareholders

PUBLISHED : Tuesday, 23 October, 2007, 12:00am
UPDATED : Tuesday, 23 October, 2007, 12:00am

Bank of Beijing claims that it has done nothing wrong in having dozens of shareholders under the age of 18 - including a 10-year-old - on its investor registry.

Of the 84 underage shareholders, 67 people acquired the stock when the bank was created following the merger of co-operative credit unions in 1996, while another 15 (including one from the previous restructuring) invested during a capital injection in 2004, according to a public notice from the bank. The other three people received their shares from family inheritance or bestowal.

'Under the relevant laws, regulations or other directives, there is no ban or restriction for people below the age of 18 holding shares,' the bank said earlier this month.

But with strict limits imposed on individuals investing in financial institutions, the notice did not explain how the children were qualified to obtain the shares in the first place.

A People's Bank of China regulation stipulates that new shareholders from capital injections and the beneficiaries of shares transfers involving city commercial banks should be restricted to staff members.

The bank conceded some people had bought shares during the capital injection using the name of their children to save the trouble of later bestowing the shares on their offspring.

One parent of an underage shareholder told the Southern Metropolis she bought the shares as a future investment for her child, without expecting the bank to go public. 'The idea was simple. [I] just wanted to invest for the future of my child,' the mother said.

Among other shareholders listed by the bank's prospectus, both Wang Shoudie (shareholder number 245) and Wang Yehua (number 246) hold 201,512 shares each. The consecutive numbers indicate they are shareholders from the same credit union involved in the restructuring to create Bank of Beijing.

According to the identity card numbers in the prospectus, Wang Yehua was born on January 24, 1995, only a month after the bank's restructuring began.

There is evidence that a Wang Shoudie was deputy director of Gucheng credit union during the 1995 restructuring programme. Attempts to contact Mr Wang were not successful and it has not been confirmed he is related to Wang Yehua.

But given that the rules disallow new shareholders after restructuring begins, it is hard to understand how Wang Yehua could be qualified to invest and own shares.