One of Asia’s richest families has failed to take property company New World China Land private, with minority shareholders voting against the deal and exercising their power under privatisation laws of the Cayman Islands, where the company is domiciled.
New World Development, one of the leading large-scale developers in mainland China, offered HK$18.6 billion (€1.8 billion) to buy back the 31% of New World China Land that it did not already own.
While 99.8% of the shares by value voted in favour of the deal, only 34.1% of shareholders actually backed the deal, New World China Land revealed in a release issued following Monday’s meeting.
Under Cayman Islands law, shareholder votes are based on headcount rather than the value of their shares – a rule that aims to protect minority shareholders and is also used in Bermuda and the British Virgin Islands.
Hong Kong abandoned the “headcount test” (also known as the “majority in number” test) several years ago. Instead it now has the 10% objection test, which means if a tenth of votes oppose a proposed takeover or share buy-back the deal will not go through.
New World Development was founded in 1970 and is headed by Henry Cheng, who succeeded his father and company founder, Cheng Yu-Tung, in 2012.
In 2012 it saw its revenues increase 28% year-on-year to HK$24.5 billion.