Companies

Gome agrees to appoint Huang's representatives to board

(Agencies)
Updated: 2010-11-11 09:49

China's second-biggest electronics retailer Gome Electrical Appliances Holdings Ltd said it agreed to appoint founder Huang Guangyu's representatives to the board, according to a filing with the Hong Kong stock exchange yesterday evening.

Gome reached the agreement to appoint Zou Xiaochun, Huang's corporate lawyer, as executive director and Huang Yanhong, Huang's sister, as non-executive director, for three-year terms, with Shinning Crown Holdings Ltd, a company controlled by Huang. The board will expand to 13 directors from 11, the filing said. The agreement is subject to a shareholders' vote.

Huang is serving a 14-year prison sentence, he and current Chairman Chen Xiao have been fighting for Gome's controlling right, and the agreement may settle the dispute. [Special: Shareholders' vote sets up Gome for more battles] Huang owns about 32.5 percent of Gome's shares, the Gome brand and about 400 stores, and can cut their ties to the chain, creating a competitor.

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"In the event that the founding shareholders obtain appropriate board representation, they have no current intention to terminate any of the existing intra-group agreements between the listed and unlisted parts of the Gome group, and will continue to comply with their terms," Shinning Crown Holdings Ltd said in an e-mailed press release, according to a Bloomberg report.

Gome's shareholders in September rejected Huang's effort to appoint Zou and Huang's sister to the board in a special board meeting, Huang also failed to oust Chen in the meeting. In August, Huang said he would end the private company's agreements with Gome if shareholders didn't back him.

Suning Appliance Co, China's largest home-appliance retailer and Gome's biggest rival, had 1,075 stores as of June 30, compared with 740 for Gome. Huang wants Gome to open stores at a quicker pace and acquire brands, Zou said on Sept 11.

"Pursuant to the terms of the memorandum of understanding, both parties have committed to cooperate in all respects to implement actions and initiatives to build a stronger and more profitable company," the Bloomberg report cited Gome's filing as saying.