M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Monday, February 22, 2010

PCCW Highlights Corporate Voting Problems

Here's a case out of Hong Kong that is highlighting some of the real problems associated with corporate voting.  If you think Florida is bad (apologies to Florida), then you haven't been paying attention to the deficiencies associated with corporate voting.  In the PCCW case, controlling shareholder Richard Li unsuccessfully attempted a $2.1 billion buyout of the public shareholders.  From Forbes:
Bloomberg reports that the company's offices were searched by police earlier this month, along with those of Fortis Insurance Co. (Asia), a local insurer that was once controlled by Li through his Pacific Century Regional Developments (PCRD).

Hong Kong's Securities and Futures Commission won a court ruling in April, 2009 to block Li’s bid after the regulator alleged that hundreds of people, including Fortis Asia agents, were given shares in the phone carrier to boost support for the deal.

Li, the son of Hong Kong's richest man, Li Ka-shing and a billionaire in his own right with a fortune we estimate at $1.1 billion, has not been implicated in any wrongdoing.
Although minority shareholders were vocally opposed to the transaction, it succeeded at the ballot box.  It's all still a little fizzy what was going on here.  The Hong Kong police have since raided Mr. Li's home apparently and sealed up the ballot boxes.  At this point, there is no indication that Mr. Li violated any laws.   It's an odd situation.  It's hard to imagine the police intervening in a US corporate election, but there you have it.   

While we're on the subject, Marcel Kahan and Ed Rock have a paper, The Hanging Chads of Corporate Voting, that appeared in the Georgetown Law Review a couple of years ago that's worth reading again.

-bjmq

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