Articles: Headcount test

HK Judge misreads HK company law
HK Court of First Instance, 9-Oct-2020
Justice Linda Chan rejects the Allied Props (0056) privatisation, partly because of the voting headcount. Neither she nor Senior Counsel William Wong, leading 2 more barristers, realise that the headcount on privatisations was scrapped years ago. She also dislikes that part of the payout was coming from Allied Properties itself, and there would be no such dividend if the scheme was rejected. The offer was at a 66% discount to NAV but was 99% approved as minority shareholders again threw in the towel, which says something about the state of corporate governance in HK.
Belle on employee purchases
Company announcement, 7-Jul-2017
Comment: if Belle is not involved in the purchase of shares by 300 employees, all or most of whom promptly withdrew their shares from CCASS to become registered shareholders, then how does it know that they all paid either $6.09 or $6.10 on 2 trading days? Although Belle has 111,700 employees, most of them are on the mainland and unable to buy shares directly in HK. Only 0.8% of staff were outside the mainland at the time of the IPO in 2007. So it seems that a significant portion of HK staff bought shares just for the 20-cent gain per share (before expenses) that the privatisation would provide.
Dorsett Hospitality (2266) CCASS voting data
Company announcement, 16-Oct-2015
This follows a complaint from Webb-site that the CCASS voting data was omitted from the original voting results announcement. We can now see that if the CCASS Participants who were not separately represented had been counted separately then they would have added 24 and 11 to the number of holders voting for and against, so the scheme would still be approved. Subtracting the corporate representatives of HKSCCN, we see that the other registered shareholders were 28 in favour and 28 against - a tie!
Dorsett Hospitality privatisation headcount just passes
Company announcement, 29-Sep-2015
The headcount was 42:39, a narrow margin. The announcement fails to disclose the numbers of CCASS Participants and their shares voted in each direction, although the offer document said they would disclose this to the Grand Court of the Cayman Islands.
New World China (0917) privatisation fails on headcount testDomiciles of HK-listed companies
Company announcement, 16-Jun-2014
Holders of 0.13% of the float, but a majority of voters, vetoed the scheme. This again illustrates the need for the Cayman Islands and Bermuda, where 75% of HK-listed companies are incorporated, to follow HK by scrapping the headcount test and enacting the 10% objection rule from the HK Takeover Code which allows one tenth of the independent shares to veto an offer. Still, the offer was at a 32.5% discount to NAV, so it's hard to feel sorry for New World Development.
Glorious update
A response from HKSCC indicates that Glorious Property (0845) has some explaining to do: the Grand Court did indeed want to see the CCASS Participant figures. We also show that the 61 registered holders who voted against could not have held more than 0.89% of the shares which voted, and HKSCCN held at least 99.11%. The Grand Court should decide whether the scheme proceeds. (22-Jan-2014)
Glorious failure in the Cayman Islands
We look at the curious circumstances behind the failed privatisation of Glorious Property (0845) and call on the Cayman Islands and Bermuda, where 75% of HK-listed companies are incorporated, to follow HK in abolishing the headcount test. (19-Jan-2014)
Re Ltd
Cayman Islands Grand Court, 1-Jun-2012
Govt proposes to abolish headcount and put 10% objection rule into law for privatisations
HK Government, 29-May-2012
Success! This is what Webb-site proposed in our submission to LegCo on 12-Mar-2012. Now the Government and SFC have come around to this position, having earlier proposed to keep the headcount rule. We can now call off our "Project Decapitate", assuming the law is passed.
Re Ltd
Cayman Islands Grand Court, 1-May-2012
Decapitate the headcount
We make the case for abolition of the archaic and anarchic headcount rule in Schemes of Arrangement, which was brought into focus when we reported evidence of a vote-rigging scheme in the proposed PCCW privatisation in 2009. For once, the tycoons agree with us, but the Government seems afraid to take the lead. (12-Mar-2012)
Re Little Sheep Group Ltd
Cayman Islands Grand Court, 20-Jan-2012
Re PCCW Ltd proposed scheme of arrangement for privatisation
HK Court of Appeal, 11-May-2009
PCCW - Grounds of Appeal
In our view the judgment in the Court of First Instance on PCCW's scheme of arrangement and the alleged vote-rigging provides ample grounds for appeal. We look at the ruling in detail and where the SFC may be taking this case on Thursday at the Court of Appeal. (13-Apr-2009)
Vote-rigging plan for PCCW meeting has discovered compelling evidence of an attempt to rig the shareholder vote in the proposed privatisation of PCCW Ltd, involving hundreds of new holders of one board lot each, many of whose names match insurance agents of Fortis Asia, a former fellow subsidiary of PCCW. (1-Feb-2009)
Schemes & Votes
The proposed takeover of C&W HKT by PCCW is being done by Scheme of Arrangement rather than General Offer. While this tactic accelerates the path to 100% ownership (and access to HKT's cash) the legal framework leaves the deal open to a decision by minority shareholders in the final vote. If you are an HKT shareholder, find out how to make your vote count! (29-May-2000)

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