Economy

Gome shareholders reject move to oust chairman

(Xinhua)
Updated: 2010-09-28 19:45

HONG KONG - China's largest home appliance retailer GOME unveiled results of special shareholders' general meeting in Hong Kong on Tuesday evening, which showed that nearly 52 percent of shareholders voted against the motion to remove current GOME Chairman Chen Xiao.

Secretary of GOME Board, Hu Jiabiao, said about 6.52 billion votes, or over 48 percent of total votes, were in favor of No. 5 resolution, while more than 7 billion votes, or nearly 52 percent of total votes, were against the resolution.

Related readings:  Shareholders of Gome to decide fate of chairman  Huang calls for shareholders' support to control Gome  Gome spat stirs up challenges  Huang battles hard for control of Gome

No. 5 resolution was proposed by Huang Guangyu, the jailed founder of GOME and the company's largest single shareholder, to remove Chen Xiao in a months-long power struggle.

Chen, 51, was appointed as GOME Chairman on January 16, 2009 shortly after being appointed as Acting Chairman on November 27 of 2008, after former GOME Chairman Huang was detained by Beijing police in suspect of illegal business dealings, insider trading and corporate bribery.

Huang, however, won in another important motion about an earlier general mandate permitting Chen-led director board to issue more shares, up to 20 percent at most. Some 7.42 billion votes, or nearly 55 percent, were in favor of it while the other 45 percent were against it.

The resolution, No. 4, was also raised by Huang, who, along his wife Du Juan, currently held 32.47 GOME stake. Huang opposed any major move to issue more GOME shares since such deal might dilute his stake in GOME, which could erode Huang's controlling capability in GOME. The Huangs feared that they might lose their right to veto important company proposals if more GOME shares be issued.

No. 4 resolution was the only motion, raised by Huang, which gained majority of support in the voting at the special general meeting held earlier in the day.

The other three motions raised by Huang were about removal of Sun Yiding from his duties as GOME Executive Director, nomination of Huang's younger sister Huang Yanhong as Executive Director, and nomination of Huang's confidant Zou Xiaochun as Executive Director.

While the three motions raised by Chen had all won approval, in which Chen nominated three persons as non-executive Director of GOME.

Chen, who has about 1.25 percent of GOME's shares, and Huang have been struggling to control the company since Huang was detained and jailed.

Huang was arrested by Beijing police in late 2008 in suspect of illegal business dealings, insider trading and corporate bribery. In May this year, he was sentenced to 14 years in prison.

Huang had built GOME into China's biggest appliance retailer and was listed by the Hurun Report as China's richest man in 2004, 2005 and 2008.

Huang and Chen-led board had been openly at odds with each other since May this year.

In a dramatic development of the power struggle, Chen-led GOME board filed a writ of summons against Huang at HK's High Court last month, for Huang's alleged breach of fiduciary duties in early 2008 as a former board director.

The battle for corporate control has triggered heated discussions in China. Some experts justify Chen's taking over as a sign of progress in China's corporate system, while most Internet users and some businessmen say Chen betrayed his boss to steal the company. ?

However, analysts said that, since neither Huang nor Chen could assure the 50 percent of the shareholder base plus one vote needed to claim victory, it would remain a puzzle until the result of the vote announced.

Shares of GOME, closing at 2.49 HK dollars on Tuesday in Hong Kong, have dropped about 20 percent this year. (1 US dollar equals 7.759 HK dollars)