The clarification comes after Qianjin seeks to withhold approval for the bank's listing, pending a final ruling The Supreme People's Court is not ruling on who owns shares in China Minsheng Banking Corp, but is only trying to decide who will control the proceeds of a 1999 share auction, according to the bank. Minsheng, which hopes to become the first mainland lender to list in Hong Kong, told the South China Morning Post that the court was adjudicating a dispute between two lower courts over the proceeds of a 1999 auction of 60 million Minsheng shares, which were originally held by founding shareholder Shenzhen Qianjin Science and Technology Development. The auction of the shares, then amounting to a 4.3 per cent stake in the bank, had been ordered by Beijing's No2 Intermediate People's Court at the request of Minsheng, which wanted to recoup 50 million yuan in unpaid loans the bank had made to Qianjin. The shares were sold to Orient Group, now Minsheng's second-largest shareholder. A Dongguan court, however, has also laid claim to the proceeds, having frozen the shares before the Beijing court's auction in the course of a criminal investigation into illegal public fund-raising activities by Qianjin chairman Qiu Yingxin and the local branch of China Construction Bank. Should the Supreme People's Court rule in favour of the Dongguan court, the auction proceeds would be used to pay off Qianjin's other creditors rather than Minsheng. A Minsheng spokesman confirmed the 85.5 million yuan in proceeds from the auction remained frozen by the Supreme People's Court. 'The Supreme People's Court is merely trying to figure out how to allocate the auction proceeds between the Dongguan court and Beijing's No2 Intermediate People's Court,' the spokesman said. The bank's first public comment on the proceedings comes after Qianjin appealed to the Hong Kong stock exchange in April to withhold approval for Minsheng's US$1 billion float until a final court ruling is handed down. In a letter to the stock exchange, Qianjin wrote that a senior state security official had instructed the Supreme People's Court to 'rectify the situation', with the implication that the original cases might be reviewed. 'Without the case's resolution, so many issues would be left unsettled ... including whether our company remains a shareholder, how many shares Orient Group should own and whether the size of its current holdings is legal,' Qianjin wrote. The Minsheng spokesman insisted, however, that China's highest court was not entertaining claims relating to the validity of the share auction. The sale of shares to Orient Group, controlled by Minsheng vice-chairman Zhang Hongwei, 'was completely legal' and was not a matter of dispute, the spokesman said. Mr Qiu, however, has been trying to invalidate the auction, on the grounds that it violated mainland law under which the same assets cannot be frozen by courts simultaneously. He also alleged that Minsheng officials forged his signature on a company document during preparations for its 2000 listing in Shanghai, arguing that he was in police custody at the time and therefore unable to sign any papers. Minsheng has confirmed the forgery of documents to speed up the domestic listing - an embarrassing admission that contributed to the delay of its Hong Kong listing, previously expected in the first half of this year. Combined with bonus shares issued since the auction, Qianjin's holdings would have increased to 157.4 million shares by now. That would be equivalent to 62.3 per cent of Orient Group's 6.97 per cent stake in the bank by the end of last year. The Minsheng spokesman was reluctant to speculate on whether Qianjin's complaint would further delay its Hong Kong initial public offering. 'That's something you will have to ask the Hong Kong stock exchange,' he said. 'The investigation will certainly take time and we will have to explain our position.'