CNOOC shareholders have approved a proposal to allow the mainland oil and gas producer to deposit 6.8 billion yuan at a finance unit controlled by its parent.
In an extraordinary meeting held yesterday, 92.27 per cent of voted shares supported the controversial proposal, which grants management discretion to deposit funds into accounts at CNOOC Finance for the next three years.
CNOOC Finance is majority controlled by the parent company, with the remaining equity held by CNOOC and its sister firms.
The proposal had drawn criticism from corporate governance activists, who said such deposits could expose CNOOC to unknown risks at the unlisted connected firms, but CNOOC management countered that such risks were low given the financial strength of its parent.
The shareholder vote comes as Hong Kong Exchanges and Clearing (HKEx) is looking into CNOOC's past deposits with CNOOC Finance, which were made without shareholder approval and not disclosed until after the fact.
A shareholders' circular issued by CNOOC on the proposal said that since 2002 it had deposited up to 6.6 billion yuan with CNOOC Finance. As a percentage of CNOOC's net assets, this far exceeded the 3 per cent requiring mandatory disclosure and shareholder approval.
CNOOC management has denied the deposits breached listing rules, but did not explain why it had determined that the rules did not apply.
