As we predicted last October,
shareholder South China Industries has begun a proxy battle for control of
the board of shoe-maker Nority International, where the existing directors
had attempted to grant themselves a bumper round of options without South
China's approval. The showdown is set for tomorrow at a shareholders'
meeting. |
Showdown at Nority
10th January 2000
We told you in a previous article how
the executive directors of Nority had tried to grant themselves options over
almost 10% of the company (the limit under the option scheme) without the
approval of all the directors on the board, including the representative of
39.9% shareholder South China Industries, and how the option to the Chairman
covered 30% of the scheme, breaching the 25% limit in the listing rules.
As a consequence of these breaches, the grant of the options was
scrapped, and another board meeting was convened for 1-Nov-99 to consider a
request by South China to appoint 3 non-executive directors to the board.
At that meeting, the board declined South China's request, and
as we had predicted, South China reacted by filing a requisition for a
shareholders meeting to appoint their representatives to the board.
On 15-Dec-99, the resulting notice of Extraordinary General
Meeting was published, revealing that South China is proposing 8 new directors
be appointed. They already have one non-executive director out of the existing 8
seats, so this would take them to a majority of 9 out of 17. The showdown is set
for tomorrow, 11-Jan-00.
Not only do they want board control but they are also proposing
two resolutions in relation the option scheme. First, they want to amend the
scheme so that the grant of any options to executive directors will be subject
to shareholders' approval in general meeting. Secondly, they've asked for the
appointment of a committee of two non-executive directors (including one from
South China, Mr Daniel Hui Chuen Kin) "to conduct an enquiry into
the purported granting of share options to subscribe for shares in the Company
on September 8, 1999 and to submit a written report to the board within 30 days
of the appointment."
Too late to vote
Apart from the main players in this drama, most of the public
shareholding is held in the CCASS clearing system, and rather disappointingly,
they did not notify their investor participants in time to vote or to appoint
themselves as corporate representative of HKSCC Nominees Limited, the company
which holds all the shares for CCASS.
After the CCASS system closed on Friday 7-Jan-00, we received by
mail a CCASS statement dated the previous day, stating that the deadline (and
the only possible day) for voting via the CCASS system was 7-Jan-00. Either
CCASS did not receive the EGM circular from Nority in time, or somebody was
asleep at the wheel.
So unless you happen to hold your shares in the company in your
own name, you can forget voting at the meeting.
How will it go?
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%. So the board needs to find
another 8.9% if they are to defeat the resolutions. Watch this space!
© Webb-site.com, 2000
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