Convoy thwarts shareholder’s coup attempt, leaving management intact for clean up
Backed by the largest shareholder, Convoy’s interim chairman invalidated the votes of the second-biggest shareholder to thwart his coup attempt.
The management team at Convoy Global Holdings, the troubled financial advisory firm at the centre of a joint investigation by Hong Kong’s anti-graft agency and securities regulator, has averted a showdown with a major shareholder who’s out to dismiss them.
Kwok Hiu-kwan, the second-largest Convoy stakeowner with 29.91 per cent of the company, had called for a shareholders’ meeting on the final trading day of 2017, intending to dismiss a management team led by chairman Johnny Chen Chi-wang, who’s trying to clean up after several executives were arrested and dismissed for investigations. Kwok wanted to install five of his own nominees.
Backed by an even larger shareholder - the Tsai family of Taiwan’s Fubon Financial Holdings, with 29.98 per cent stake - Chen drove Kwok’s representative away after two hours behind closed doors at a rented meeting venue at the Hutchison House building in Hong Kong.
Acting in his capacity as chairman, Chen ruled that Kwok’s votes were invalid at the shareholders’ meeting, because two writs had been filed at the Hong Kong High Court to invalidate those shares.
“After discussing with our lawyers, I decided to use my power to rule out all votes related to the writ,” Chen said after the meeting. “If the High Court declares the shares valid, and the shareholder would still like to call for a meeting, I’ll be happy to make the arrangement.”
Kwok was absent from the meeting. His representative, declining to disclose his name, said Chen’s ruling was “unacceptable because the Hong Kong court has not delivered its verdict on the writs. What the chairman did was very rude and uncivilised.”
In an emailed statement after the shareholders’ meeting, Kwok said he will continue to pursue the matter “according to law.”
“Convoy needs to appoint new directors with enough experience to help build an effective internal control system, so that it can restore normal operations and resume trading in accordance with a collaboration with the regulators,” Kwok said in his statement.
Harsh words aside, the failed coup attempt leaves Chen’s management team intact to steer Convoy through the city’s biggest investigation into stock market malpractice in decades. At stake are billions of dollars of assets that Convoy claims have been siphoned off by company insiders.
Ex-chairman Quincy Wong Lee-man and former chief executive Mark Mak Kwong-yiu used Convoy Investment Services - unrelated to the group - to “misrepresent to the general public” and “systematically divert customers and business opportunities” to the private unit under their control, according to a December 22 writ filed with the High Court.
Another entity called Gransing Securities diverted HK$45.5 million (US$5.8 million) in fees from two of Convoy’s bond sales in 2014 and 2015 to the unit controlled by the two former executives, according to the writ.
At the heart of the dispute is the struggle for control and clean-up in one of the city’s largest financial advisory firms, with as many as 100,000 customers including the Mandatory Provident Fund (MPF). At stake is the regulatory oversight in Asia’s third-largest capital market, as the city prepares to overhaul and relax the city’s listing rules to attract technology companies and start-ups to raise capital.
Trading in Convoy’s shares was halted pending the outcome of the shareholders’ meeting. The stock fell 7.2 per cent to 16.7 HK cents on December 7.