Vanke board calls meeting over Baoneng ouster bid

Major developer to hear proposal from investor to sack all 12 directors

China Vanke Co Ltd, the country's biggest residential property developer, has said it will hold a board meeting to discuss a proposal by shareholder Baoneng Group to oust all 12 its directors, including chairman Wang Shi.

Baoneng's move is being seen as China's most high-profile corporate power struggle and has "put pressure" on operations, Yu Liang, president of Vanke, told a shareholder meeting on June 27.

"Some of our signed projects face the risk of termination," Yu said. "Customers have shown increasing anxiety, and the company's credit rating is facing pressure. Our partners may also adjust the corresponding provisions."

Shares of Vanke fell 3.83 percent on June 27, closing at HK$16.06 ($2.07; 1.87 euros) in Hong Kong trading, the lowest level in four months.

Shenzhen Jushenghua Co Ltd and Foresea Life Insurance Co Ltd, units of Vanke's largest shareholder, Baoneng Group, called on June 19 for the firing of the board as well as for an extraordinary general meeting. The two units together hold 24.29 percent of Vanke's issued share capital.

The plan came after Vanke's management announced a $6.9 billion deal with Shenzhen Metro Group this month to dilute the holdings of Baoneng and state-owned China Resources (Holdings) Co.

Vanke plans to buy assets from state-owned Shenzhen Metro Group Co Ltd and use the assets to diversify its property projects, as well as issue new shares to Shenzhen Metro and potentially make it the largest shareholder.

Baoneng and China Resources oppose the transaction and have accused the Vanke board of failing to represent shareholders' interests in a balanced way.

The ousting proposal claims chairman Wang studied abroad in the United States and Britain from 2011 to 2014 and so had not been working for some time, but yet still received cash rewards of more than 50 million yuan ($7.52 million; 6.82 million euros) from Vanke, which harmed the interests of the company and its investors.

"No matter whether I went climbing mountains or studied abroad, I participated in many negotiations for Vanke in New York and Seattle," Wang said at the shareholders' meeting.

"As chairman, my responsibility is to supervise and prevent potential deviations in the company's strategic decisions," he said, adding that whether he "stays or leaves" is not as important as the company maintaining its culture.

Liu Junhai, a professor of civil and commercial law at Renmin University of China, says: "This is a benchmark case. It will become a significant milestone and indicates that listed Chinese companies are becoming more modernized in management.

"Shareholders have the right to elect board members who they trust, and whoever takes the position, it's his or her responsibility to maintain the corporate culture of Vanke and its sustainable growth."

road, I participated in many negotiations for Vanke in New York and Seattle," Wang said at the shareholders' meeting.

"As chairman, my responsibility is to supervise and prevent potential deviations in the company's strategic decisions," he said, adding that whether he "stays or leaves" is not as important as the company maintaining its culture.

Liu Junhai, a professor of civil and commercial law at Renmin University of China, says: "This is a benchmarking case. It will become a significant milestone and indicates that listed Chinese companies are becoming more modernized in management.

"Shareholders have the right to elect board members who they trust, and whoever takes the position, it's his or her responsibility to maintain the corporate culture of Vanke and its sustainable growth."

zhuwenqian@chinadaily.com.cn

(China Daily Africa Weekly 07/02/2016 page25)