The latest attempt by individuals connected with Kaisa Group Holdings to force loyalists onto the board of Hong Kong asset manager Convoy Global Holdings was frustrated this past week at a set of board meetings that saw a slate of directors linked to the mainland real estate firm fail to win appointment despite disruptions by intruders.
During Wednesday’s meetings at Trust Tower in Wan Chai, the chair of the meeting disqualified the voting rights of Convoy’s second-largest shareholder, Kaisa co-president Kwok Hiu-kwan, and two other investors said to be affiliated with the family that controls the Shenzhen developer.
In the subsequent vote to restructure the board, Kwok’s appointment as a director was vetoed with 73.6 percent of shareholders voting against the son of Kaisa founder Kwok Ying Shing in a poll during the first meeting.
In a filing with the Hong Kong stock exchange, Convoy chairman Johnny Chen said the company “encountered physical and violent disturbances both outside and within the meeting venue”.
At one point, 18 intruders tried to violently break into the venue and violently assaulted Convoy employees and personnel maintaining the order of the meetings, causing bodily injuries, Chen said. The police subsequently arrived and made arrests of the intruders, he said. Local press accounts indicated that at least some of the intruders were part of Hong Kong’s notorious 14K triad.
AGM in Doubt
All 14 directors on the Convoy board, including Chen and chief executive Ng Wing-fai, were retained in Wednesday’s vote, while a slate of seven directors proposed by the Kaisa-linked faction, including Kwok and local politicians Abraham Shek and Frederick Ma, were voted down.
The vote was confirmed at Thursday’s annual general meeting, even as representatives of the Kaisa faction announced that the high court had granted an injunction to suspend the AGM because Convoy is under investigation by the Financial Reporting Council, according to a report in The Standard.
Convoy announced to the stock exchange early Monday morning that the company chairman in presiding over the AGM had successfully confirmed the directors as designated in the EGM, despite a proxy for former Kaisa director and current Convoy shareholder Chen Peixiong having brandished what he claimed to be a signed copy of the injunction on his phone.
In a statement signed by meeting chairman Lee Jin Yi, the company said that it had not been served with any injunction at the time. In its Monday morning statement, Convoy indicated that through its solicitors it had received a sealed copy at around 5.41pm of the injunction delaying the AGM until 26 March. “The Company is currently taking legal advice on the matter and will update the Shareholders of the Company as and when it is appropriate,” the statement said.
Trading of shares in Convoy has been frozen since December 2017, due to fraud allegations against former director Cho Kwai-chee.
Kwok previously failed to wrest control of Convoy at an extraordinary general meeting last November that was halted after just 10 minutes.
In a statement to the Hong Kong Exchange, Convoy notified the public that the November meeting had adjourned after a proxy for Kwok “physically approached the directors’ bench and also acted in a threatening and intimidating manner”.
Kwok, who was named a co-president of Kaisa a few weeks before the November meeting, has been tussling for control of Convoy since buying his 29.91 percent stake in the company in 2017 from shareholders said to be connected with an elaborate fraud scheme. That financial plot was allegedly masterminded by Convoy director Cho, as detailed in a report by Hong Kong finance activist David Webb on the “Enigma Network” earlier in 2017.
Kaisa Group has kept busy with court fights this year, with officials affiliated with the Shenzhen developer losing a battle with US activist shareholder IsZo Capital earlier this month over control of NYSE-listed commercial developer Nam Tai Property.
In the Convoy case, the Kwoks are taking on the Tsai family of Taiwan’s Fubon Insurance, who currently hold 29.98 percent of Convoy, with the company’s shareholding and management with the two clans feuding over Hong Kong’s largest local financial advisory firm since late 2017.
Webb’s Enigma report had uncovered a network of cross-shareholdings and fraudulent transactions that Cho and other directors of the company are said to have used to bilk investors of HK$89 million ($12 million). Hong Kong’s Department of Justice in December filed an appeal after Cho and two other former Convoy directors were acquitted of fraud charges last year due to lack of evidence.