Vanke takeover lays bare the frailties of China’s corporate governance structure
Company managements ‘can tell lies without cost, and show no respect to the law or to minority shareholders’, says leading economics law expert
But it has also fully exposed just how far behind the country still is when it comes to corporate governance, compared with what are considered “modern” standards.
Vanke has long been considered one of China’s best managed firms, and chairman Wang Shi has often used his company as a showcase of modern enterprise.
However, throughout the fascinating 10-month conflict between its leading shareholders, Vanke’s senior management has consistently shown a lack of respect for investors and regulations, from arbitrary trading halts, to allowing its independent directors to post insider information on social media.
“Wang always said entrepreneurs should follow rules – but he himself has no respect for rules,” said Deng Feng, a professor of economic law at Peking University.
The country’s biggest home builder has been fending off a potential hostile takeover by Baoneng Group, a Shenzhen-based property-to-finance conglomerate, since late 2015.
The company first suspended trading in its shares on the Shenzhen Stock Exchange on December 18, for what it called “material asset restructuring”. But it wasn’t until March that it first revealed a deal that would make Shenzhen Metro – the city’s underground operator – its majority shareholder.