Financial regulation

Shareholder fires back at ‘rude’ chairman in boardroom battle at troubled Hong Kong firm Convoy

Second-largest shareholder Kwok Hiu-kwan attacks chairman’s decision to invalidate his voting rights as he seeks to remove its management

PUBLISHED : Sunday, 31 December, 2017, 4:52pm
UPDATED : Sunday, 31 December, 2017, 11:07pm

The boardroom battle at Convoy Global Holdings, the troubled financial advisory firm at the centre of the biggest corruption investigation in Hong Kong in decades, has escalated after its second-largest shareholder accused the company’s chairman of riding roughshod over shareholders’ rights.

Businessman Kwok Hiu-kwan, who owns 4.47 billion shares of Convoy or a 29.91 per cent stake, attacked a decision at a shareholders’ meeting on Friday by Convoy’s chairman, Johnny Chen Chi-wang, to invalidate Kwok’s shares in a vote on Kwok’s motion to remove six existing directors and appoint three he nominated.

The motion was defeated with 60 per cent against, according to Convoy, which confirmed it did not count Kwok’s votes.

Convoy thwarts shareholder’s coup attempt, leaving management intact for clean up

Kwok said in a statement on Sunday that if his votes had been counted at the meeting, then his proposed resolution would have been passed with about 63 per cent in favour.

“This shows that besides my votes, most other shareholders are voting on my side to support removing certain existing directors and appointing some new ones to maintain the stability of the company,” Kwok said in the statement.

“The chairman’s decision to declare my votes as invalid is thus acting against the interests of other shareholders. I would insist that my voting rights and the interests of other shareholders be safeguarded,” Kwok said. The chairman’s decision “has rudely taken away my voting rights,” Kwok said.

Chen, who is backed by Convoy’s largest shareholder, the Tsai family – who own Taiwan’s Fubon Financial Holdings and have a 29.98 per cent stake in Convoy, ruled that Kwok’s votes were invalid at the shareholders’ meeting because two writs had been filed at the Hong Kong High Court, with one seeking to invalidate those shares.

Another resolution that aimed at strengthen the existing management also passed at the Friday meeting without Kwok’s shares being counted in.

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Chen, who was appointed chairman in mid December with five other new directors, is aiming to clean up the company after several executives, including former chairman Quincy Wong Lee-man, were arrested and dismissed amid the investigation, which is being jointly handled by the city’s anti-graft agency and securities regulator.

Chen and his management team, comprised of veteran accountants and insurance executives, are looking to rescue the reputation of Convoy, which is the largest financial adviser in Hong Kong with 100,000 clients, including the Mandatory Provident Fund, the city’s pension scheme.

Earlier this month the new management filed two writs at the Hong Kong High Court. One was seeking to invalidate Kwok’s shares and also made claims against 24 people and four companies over stealing company assets, while the other alleged former chairman Wong and others misused the company’s brand to steal business from the company.