New World China Land share fall after shareholders scuttle buyout proposal

Shares in New World China Land plunged 16.93 per cent yesterday after shareholders vetoed the privatisation offer proposed by its parent firm, New World Development.

The stock resumed trading yesterday and finished the day at a three-month low of HK$5.30, down from HK$6.38 last Friday, after hitting a low of HK$5 in the morning. In contrast, shares of New World Development fell just 1.12 per cent to close at HK$8.80 yesterday.

New World Development, which owns 69.1 per cent of New World China Land, failed to gain shareholder support at a meeting on Monday after 494 investors voted against the buyout proposal, 255 in favour of it. The 494 investors represented only a 0.16 per cent interest in the company.

Henry Cheng Kar-shun, the chairman of both firms, said at yesterday's results announcement for Chow Tai Fook Jewellery Group that he was surprised by the result.

"Since our company is domiciled in the Cayman Islands, we still have to follow the headcount rule (which gives each shareholder an equal vote, irrespective of the size of their shareholding)," he said. "The rule is not reasonable. Even if most shareholders support the buyout proposal, it still could not win approval under the rule."

He said the rule should be cancelled.