HONG KONG - Hong Kong-listed Chinese electronics retailer Gome Electrical Appliances said it filed a writ of summons against former chairman Huang Guangyu at HK's High Court on Thursday for Huang's alleged breach of fiduciary duties in early 2008 as a former board director.
Huang Guangyu [File photo] In a filing to the Hong Kong stock exchange, the Beijing-based company said the board of directors had decided to institute legal proceedings against Huang and to "seek compensation in connection with, among other things, his alleged breach of fiduciary duties as a director of the Company relating to the repurchases of the Company's own shares in or about January and February 2008, and breach of trust".
Gome said it would make a further announcement on any material developments in respect of these legal proceedings against Huang.Also in the statement, Gome said it had received a letter from Shinning Crown Holdings Inc., a company wholly-owned by Huang, which owns an undisclosed stake in Gome.
In the letter, Shinning Crown proposed five resolutions, including removal of Chen Xiao from his duties as Gome's Executive Director and Chairman, removal of Sun Yiding from his duties as Executive Director and nomination of Huang Yanhong as Executive Director.
Huang Yanhong is reportedly one of Huang Guangyu's sisters.
"Shinning Crown alleged that the Company (Gome)'s performance has deteriorated in the last year due to improper management by the Board, as led by Chen Xiao, and as such, Shinning Crown is proposing to remove Chen Xiao and Sun Yiding from their current positions on the Board," said Gome's statement.
The statement said Gome's board met on Thursday and provided an initial response to the letter.
Gome's board was "unanimous in its belief" that the proposals put forward in the letter were "unwarranted and driven by the interests of just one shareholder", and the board had confidence in the current management team, it said.
According to the statement, the arrest and later conviction of Huang for various economic crimes caused a great deal of uncertainty for Gome, and inevitably has had a significant adverse effect on its activities, particularly the ability to access capital.
Huang was arrested by Beijing police in late 2008 in suspect of illegal business dealings, insider trading and corporate bribery. Chen Xiao, aged 51, had been appointed as Acting Chairman on November 27 of 2008, right after Huang's arrest.
Gome said Chen and his board had helped restored the company's financial stability and operational strength.
Accordingly, Gome's board was strongly opposed to the removal of Chen and Sun from their current positions, which it considered to be unmerited and potentially again seriously disruptive to the stability and development of Gome's business, Gome said.
Gome also said the candidates put forward by Shinning Crown to stand as executive directors didn't have the same depth of industry experience and recognized leadership as Chen and Sun.
Chen has been Gome Chairman since January 16, 2009.
Huang Guangyu was sentenced to 14 years in prison in May this year in Beijing after being convicted of illegal business dealings, insider trading and corporate bribery.
At the Beijing No. 2 Intermediate People's Court, Huang was also fined 600 million yuan ($88.5 million) and received an order for the seizure of 200 million yuan worth of assets.
Huang Guangyu 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.
