Market baffled as three Sinoma directors resign
The resignation of three independent non-executive directors and a supervisor at China National Materials (Sinoma), the state-owned cement and cement equipment conglomerate, has mystified the market.
The disclosure in an announcement to the Hong Kong stock exchange yesterday was described as 'very odd' by one lawyer.
The firm said Yang Yuzhong, Zhang Lailiang and Zhang Qiusheng would resign as independent non-executive directors, pending shareholders' approval at an extraordinary general meeting, and Wang Baoguo resigned as supervisor on Tuesday.
Sinoma appeared to have scored an own goal, when it said all four resigned 'due to their intention to pursue their other personal goals'.
Strangely, the personal goals of the three directors seemed to converge on Sinoma's state-owned parent, Sinoma Group, while the supervisor's 'personal goal' appears to be remaining in Sinoma.
Sinoma board secretary Su Kui told the South China Morning Post that the three directors would be appointed 'external directors' of Sinoma Group, which is under the State-owned Assets Supervision and Administration Commission.
Sinoma Group is the world's largest cement equipment and engineering provider and a leading non-metal materials producer.
An external director at a state-run enterprise essentially serves the same function as an independent director.
The extraordinary general meeting would take place 'very soon', within 45 days, Su said.
After resigning as supervisor, Wang had been reappointed a vice-president of Sinoma, he said, adding: 'These changes are normal and routine.'
However, one senior corporate lawyer said the resignations sounded 'very odd. All three independent non-executive directors going to the parent - why was it not announced? That would be a better explanation than saying 'personal goals''.
The three directors account for 75 per cent of Sinoma's independent non-executive directors.
Four people - Tong Anyan, Shi Chungui, Lu Zhengfei and Wang Shimin - were nominated independent non-executive directors, pending shareholders' approval at the meeting, which would expand the pool of independent non-executive directors to five.
Li Xinhua was nominated an executive director of Sinoma, pending shareholders' approval. His term would last until the end of the current board session in July 2010, Sinoma said yesterday.
On Tuesday, Li replaced Liu Yansheng as the president of Sinoma Science and Technology, a Shenzhen-listed high-technology material unit. Liu resigned a few days ago because of work changes, Sinoma said.
The three outgoing directors had extensive experience with mainland government or state-owned bodies, Sinoma's 2008 annual report said.
Yang was the chairman of Avic 1 Commercial Aircraft from 2002 to 2006, and is a consultant to China Aviation Industry Corp. He is also an independent non-executive director of China South Locomotive & Rolling Stock Corp, a Hong Kong and Shanghai-listed state-owned rolling stock maker, and a member of the scientific planning committee of China Development Bank.
Zhang Lailiang was a director-general in the Ministry of Metallurgy from 1991 to 2000 and a vice-chairman of Xinxing Iron Pipes Group from 2002 to 2007. Zhang Qiusheng is an external director of China Chengtong Group, a conglomerate under the State Council, and an academic at Beijing Jiatong University.