“More cases of unexplained volatility, particularly with smaller stocks, and questions around transparency have led to increased scrutiny from the SFC and the prospect of listing reforms at the world’s highest volume IPO destination. HKEX and its regulator have signalled that they intend to shift more say to investors, which points to the prospect of more activism in the medium-long term. We are already starting to see institutional funds seeking to maintain their fiduciary duties on a more regular basis.”
Paul Marriott, Senior Managing Director
Country:
Hong Kong
Average % of insider ownership:
Activism
Threat Level
To learn more about this country, please click on the tabs below
Similar to China, retail investors make up a significant portion of Hong Kong’s investor base (39% in 2015). Additionally, most companies are still held within families and close relatives, limiting outsider’s opportunities to influence decision making. Shareholder activism is still in its infancy when compared to the U.S. However, regulators’ increased scrutiny on companies in an effort to move closer towards best practices in governance and transparency comes in parallel to a rising number of shareholder activism cases.
Shareholders (and investors with short positions) reaching or exceeding the 5% threshold must disclose their voting rights to the listed company and Hong Kong Stock Exchange within three business days.
Poison pills require shareholders’ consent to amend senior executives’ remuneration or issue shares according to a pre-existing employee share plan. The Securities and Futures Commission provides exemptions to some ‘frustrating actions’ including issuing and redeeming shares, granting rights to subscribe for shares, selling or acquiring an asset of a material amount, entering into contracts outside of the ordinary course of business.
Top Campaigns by Type
1. Removal of CEO or other Board member
2. Gain Board Representation
3. Accounting Fraud
Campaigns By Year
Total
Campaigns
Notable Invested Activists
• Indus Capital Partners
• Elliott Management
• China New Way Investment
Recent activism campaigns
| L & A International Holdings Limited | VS. |
Ge Qingfu, Li Quan and Liu Longcheng |
| The Grande Holdings Limited | VS. |
Sino Bright Enterprises and McVitie Capital |
| Trevor Strutt and Zhongguo Sun | VS. |
Yingde Gases Group Company Ltd. |
Total Active
Campaigns
Contact FTI Consulting
Capital Markets Research and Activist Engagement
Managing Director
+1 312 861 4721
Geoff.Serednesky@FTIConsulting.com
Senior Managing Director
+852-3768 4537
Cara.Obrien@fticonsulting.com