All is not well in the Nority
boardroom. Following our last article, it emerged that 39.9% shareholder
South China had not been told about the directors new share options and
were not exactly happy. Now the options are scrapped and they are seeking to have new
directors appointed to the board. Are we about to see a proxy battle? |
Foot-loose at Nority
28th October 1999
In an article on Webb-site.com on
10-Oct-99 we told you how the executive directors of Nority International Group had granted
themselves options over 10% of the company, exhausting the share option scheme
in one swoop. We noted that the disclosure under the Securities (Disclosure of Interests) Ordinance printed
on 6-Oct-99 did not contain information on the exercise period or date of grant.
It now appears that the options were granted by way of letters
as long ago as 8-Sep-99 and that the Executive Directors accepted them on
30-Sep-99. 30% of these options were granted to Mr. Feng Shen Chuan, the
Chairman, breaching the 25% limit in the Stock Exchange listing
rules. The options were exercisable from Apr-2000.
Not only did Mr. Feng's options break the rules, but also no
board meeting was held to approve the grant of the options. Companies are
normally allowed to do things by "written resolution of the board" but
only if all directors (including the non-executive directors) sign the
resolution. In an announcement dated 23-Oct-99, the executive directors admitted
that this had not been done "due to an oversight on their part".
This "oversight" meant that South China Industries,
the 39.9% shareholder (through their wholly-owned subsidiary Micon Ltd), were not
aware of the grant on 8-Sep-99. When they found out, they evidently were not
amused. They filed a high court writ disputing the validity of the options but
did not serve it pending a board meeting on 25-Oct-99. At that meeting, the
board concluded that the options were not validly granted, and even if they
were, all the grantees withdrew their acceptances of the options.
That's not the end of the story. The board resolved to convene
another meeting by next Monday, 1-Nov-99, to consider a request made by
Micon (100% owned by South China Industries) for the appointment of additional
non-executive directors to the board.
Clearly South China, with only one director on the board of
Nority, has not been able to exercise the degree of control it might expect from
being the largest single shareholder. If the executive directors do not agree to appoint new South China
representatives to the board, then we may be about to see a proxy battle for control of
Nority.
After Mr. Feng's summer purchases
of the stock, he owns 26.5% of Nority, while his fellow executive directors own
4.5%, making 31.0% against South China's 39.9%. That's close enough for the
other shareholders to determine the outcome. Watch this space!
© Webb-site.com, 1999
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