Court threats in China Flavors dispute
A row among the three brothers who founded and operate Hong Kong-listed China Flavors and Fragrances has intensified and could lead to legal action.
Chief executive Wang Mingfan has moved to oust his two elder brothers from key positions at a major subsidiary.
In a filing with the Hong Kong stock exchange yesterday, Wang said the board had approved two resolutions, on August 2 and September 3, to remove Wang Mingyou, his eldest brother, as a director of the group's subsidiary Shenzhen Boton and Wong Mingbun, another brother, as the unit's chairman.
The low-profile company was suspended from trading yesterday after the announcement, and the prospect of a legal battle could drag its share price down further once it restarts trading.
Its price plunged 16.7 per cent to HK$1 when the family dispute first came to light on July 31. It stemmed from a statement filed by Wang Mingfan with the exchange on July 16 that re-designated Wang Mingyou - then an executive director of China Flavors and Fragrances - as a non-executive director.
That filing states that Wang Mingyou had no disagreement with the board about the move. However, two weeks later, the company issued another notice, saying Wang Mingyou had sent a letter to the exchange denying that assertion and threatened to take legal action regarding his improper re-designation.
The letter said both Wang Mingyou and Wong Mingbun, also a director of the parent company, believed the re-designation was caused by their investigation into financial irregularities of the company and its subsidiaries - including Shenzhen Boton.
Wang Mingyou also accused his youngest brother, the chief executive, of exercising sole control over the accounts of Shenzhen Boton.
Wang Mingfan denied the allegation, claiming Wang Mingyou was released from his duties because he seized the financial chop of Shenzhen Boton and injured a staff member in doing so.
The two ousted brothers hold a combined 47.98 per cent stake in China Flavors and Fragrances' majority shareholder Creative China. Wang Mingfan holds 41.19 per cent, with the controlled by minority shareholders.