Bank of East Asia

Bank of East Asia, Elliott Management legal dispute returns to court

PUBLISHED : Thursday, 05 January, 2017, 7:35pm
UPDATED : Thursday, 05 January, 2017, 10:34pm

The latest stage in the legal dispute between Bank of East Asia and activist hedge fund Elliott Management took place on Thursday as representatives of the three parties, Elliott, BEA’s directors, and the bank itself appeared before Mr Justice Jonathan Harris in a case management conference.

The proceedings relate to attempts by Elliott to obtain an order from the court stating that BEA’s placement of new shares to the Japanese Sumitomo Mitsui Banking Corporation and Spanish Caixa Bank were “passed for an improper purpose.”

If this is successful, the court would order BEA to release the two shareholders from agreements restricting them from reducing or increasing their stakes in the bank without the bank’s approval.

SMBC holds an 18.87 per cent stake in the bank, Caixa a 17.18 per cent stake, and Elliott owns a 6.84 per cent stake, according to Reuters data.

At Thursday’s case management conference at the High Court, the court heard discussion of procedures around whether Elliott could publish certain court documents from Bank of East Asia and its directors online, and whether parts of Elliot’s petition should be “struck out”.

These matters will come to court before Mr Justice Harris in either May or July of this year, the court heard.

The next public stage in the process is a further case management hearing scheduled for April.

Bank of East Asia is the largest independently run bank listed in Hong Kong, and the 18 BEA directors named in the court case include the bank’s chairman David Li Kwok-Po, his sons, the bank’s deputy chief executives Adrian David Li Man-kiu and Brian David Li Man-bun and other Li family members, as well as Richard Li Tzar-Kai, chairman of PCCW, and Peter Lee Ka-Kit, vice chairman of Henderson Land.

In February 2016, Elliott, the hedge fund run by American Paul Singer, called for BEA to put itself up for sale. It then launched the unfair prejudice petition on 18 July last year. At that time, BEA issued a statement which said “BEA and its directors strongly oppose the petition.”

The Li family, SMBC and Caixa’s combined holdings are approximately 45 per cent of BEA at present, according to Reuters data.