Dec. 14 (NBD) -- An individual shareholder of a subsidiary of Sunsea Telecommunications Co., Ltd. (Sunsea), a Chinese telecom company listed on the Shenzhen Stock Exchange, reported to Chinese regulatory authorities that the company transferred his shares without his consent and he hadn't received any money for the share transfer.

Sunsea is principally engaged in research, development, manufacture and distribution of communication products. The company produces and operates communication equipment, outdoor devices and related integration business, as well as product engineering services.

The subsidiary, Sunsea Telecommunications Service, Co., Ltd (Sunsea Service), is the core assets of Sunsea Telecommunications, contributing about 70 percent of the parent company's total net profit, according the affiliate's financial report for 2016.

The real-name informer, Chen Xu, is the legal representative of Wuhan-based Jiaruide Telecommunications which held a 0.7757 percent stake in Sunsea Service, according to an announcement made by Sunsea Telecommunications in June.

However, Sunsea Telecommunications' another announcement released one month later shows Chen Xu has been removed from the shareholder list.

Chen Xu reported to the China Securities Regulatory Commission and the Shenzhen Stock Exchange, claiming that Sunsea disclosed false information and infringed his legal property rights (stock rights).

Chen Xu told NBD that he suspected that Sunsea fabricated the results of stockholders' meeting held in June.

It's evident that the bone of the contention lies in the legalization and standardization of this important shareholders' meeting.

With this regard, NBD conducted thorough interview with the two sides of the argument.

Photo/VCG

Doubtful Point 1: How many shareholders appeared at the meeting?

Chen Xu said to NBD that he was the only one who appeared at the meeting room, other than Sunsea's securities affairs representative Fang Lingling.

He thought at the time that he was exclusively invited to negotiate about the price of stock transfer.

But the resolution of the shareholders' meeting (resolution) which Chen presented to NBD showed that 11 shareholders were expected to attend the meeting and 10 actually appeared, which didn't correspond with Chen's version.

When asked about the contradiction, Fang Lingling told NBD that shareholders can vote via the Internet, which is as valid as voting at the scene.

A senior lawyer in the securities industry explained to NBD that by "actually appeared", it should refer to shareholders who showed up at the meeting room in person. 

Doubtful Point 2: How many shareholders cast the votes?

The resolution stated that the votes were cast by shareholders at the scene, which goes inconsistent with what Fang Lingling's statement.

Several shareholder who were listed in the resolution as "actually appeared" at the meeting said to NBD that they hadn't either been in Shenzhen where the meeting was held or authorized any representative there.

Fang Lingling on Dec. 8 told NBD that the company kept in file the sign-in sheet, the voting record and the meeting minute.

Yet Fang hadn't presented such evidences to NBD upon request.

Doubtful Point 3: Whether the resolution of the shareholders' meeting holds true?

The only proposal to be considered in the shareholders' meeting was to revise the 7th article of the articles of incorporation.

According to the proposal, after the revision, the number of Sunsea Service's shareholders was cut to 3 from 11, and Sunsea's stake in Sunsea Service increased to 95.7745 percent from the previous 68.0944 percent.

Other small shareholders including Chen Xu were removed.

The resolution showed that Chen Xu was the only one to vote against the proposal.

Email: gaohan@nbd.com.cn