China Vanke files lawsuit to invalidate ownership rights of majority shareholder Baoneng

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China Vanke chairman Wang Shi. Photo: Handout

Published: 9:43pm, 7 Feb 2017Updated: 11:19pm, 7 Feb 2017

China Vanke, which has been embroiled in a high-profile corporate power struggle for more than a year, filed a lawsuit to invalidate the shares held by its largest shareholder Baoneng Group.

Vanke alleges that insurance conglomerate Baoneng violated securities laws while it accumulated a 25.4 per cent holding in Vanke because it borrowed funds through shadow banks without proper disclosure.

In a lawsuit filed with the Shenzhen Luohu District People’s Court, the country’s second largest property developer asked the court to deem Baoneng’s share purchases “invalid” and to limit Baoneng’s shareholder rights, including voting rights, until the latter “corrects” its actions.

Vanke, controlled by celebrity chairman Wang Shi, first raised the shadow loan accusations late last year, but the real estate firm hasn’t made any official announcement on the legal case, which was only publicly revealed by mainland Chinese media this week.

A Vanke spokesperson said the case is pending and the court has not yet scheduled a hearing. Baoneng’s spokesman could not be reached for comment.

However, some of China’s legal professionals believe Vanke won’t win the suit .

Deng Feng, Peking University’s professor of economics law, told the South China Morning Post that it would be “impossible” to cancel Baoneng’s shareholding.