A boardroom battle that erupted last month at Hong Kong-based, Hong Kong Stock Exchange-listed Convoy Global Holdings has continued to rage over the New Year weekend, when, according to the South China Morning Post, “its second-largest shareholder accused the company’s chairman of riding roughshod over shareholders’ rights”.
Kwok Hiu-kwan, described as a businessman who owns 4.47 billion shares of Convoy, or a 29.91% stake in the advisory firm, issued a statement on Sunday criticising a decision made by the company’s chairman, Johnny Chen Chi-wang, two days earlier, at a shareholders’ meeting, “to invalidate Kwok’s shares in a vote on Kwok’s motion to remove six existing directors and appoint three he nominated”, the SCMP reported.
Kwok’s motion had been defeated with 60% of the votes against, the SCMP said, adding that Convoy had confirmed to it that it hadn’t counted Kwok’s votes.
In his statement on Sunday, Kwok maintained that if his votes had been counted, his proposed resolution would have been passed “with about 63 per cent in favour”, the SCMP said.
“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, according to the SCMP report.
The shareholders’ meeting had been called by Kwok, who had been seeking to oust eight of the Convoy directors.
According to the SCMP, Kwok’s effort faced opposition from “an even larger shareholder” than him – the Tsai family of Taiwan’s Fubon Financial Holdings, which has a 29.98% stake.
The news of the vote was the latest development in a saga that, as reported, was kicked off in early December, when two senior Convoy executives were among three representatives of companies listed on the Hong Kong Stock Exchange arrested in an ongoing clampdown on corruption in the Special Administrative Region of China, as part of a joint operation by the Securities and Futures Commission and Hong Kong’s Independent Commission Against Corruption.
According to the SCMP – one of several Hong Kong publications covering the story – a “struggle for control and clean-up” of “one of the city’s largest financial advisory firms” lies at the heart of the Convoy saga. It is estimated that Convoy has as many as 100,000 customers, including the Mandatory Provident Fund.
In another development, the SCMP reported on 27 December that Convoy had “filed a second lawsuit in a week against two company insiders, ratcheting up a series of legal actions to recover billions of dollars of [allegedly] stolen assets”.
In its report, the SCMP said a December 22 writ filed with the High Court had alleged that Convoy’s ex-chairman Quincy Wong Lee-man, and former chief executive Mark Mak Kwong-yiu, had used Convoy Investment Services – “unrelated to the [Convoy Global Holdings] group” – to “misrepresent to the general public” and “systematically divert customers and business opportunities” to the private unit under their control.
Neither Wong nor Mak could immediately be reached to comment.
As reported, Convoy announced on 18 December that it planned to spend some HK$300m (US$38.4m, £28.8m ) “on hiring and bonuses to boost morale” among its staff in the wake of the recent arrests of the members of its staff, which thus far total three.
Convoy’s president and executive director, Ng Wing-fai, was reported to have told an audience of journalists that the company was preparing to spend HK$300m (US$38.4m) “to more than double its team of financial advisers next year, pay a bonus to retain staff and expand its business”.
Convoy, which mainly looks after local Hong Kong residents, has, like many advisory firms in Hong Kong, been under some pressure over the past two years as a result of regulatory changes that have transformed the advisory market.
Last November it announced that it was acquiring a £24m stake in the UK-based Nutmeg investment platform, as part of its efforts to revamp its business model to suit its changing market.
To see a “who’s who” of key individuals in the Convoy Global saga, published on the SCMP website on 29 December, click here.
To see a timeline of recent events at Convoy Global, also on the SCMP website, click here.