Wang Shi, chairman of China Vanke Co, at a World Water Day Forum in Guangzhou, capital of Guangdong province. [Photo provided to China Daily]

Giant developer to hear proposal from Baoneng Group to sack all directors

China Vanke Co Ltd, the country's biggest residential developer, said it will hold a board meeting to discuss dismissal issues after its shareholder Baoneng Group called for ousting of all 12 of Vanke's directors, including chairman Wang Shi.

Baoneng's move, the country's most high-profile corporate power struggle, has "put pressure" on the operation of the company, Yu Liang, president of Vanke, said at a shareholder meeting on Monday.

"Some of our signed projects face the risk of termination. Customers have shown increasing anxiety, and the company's credit rating is facing adjustment. Our partners may also adjust the corresponding provisions," Yu said.

Shares of Vanke fell 3.83 percent on Monday, and it closed at HK$16.06 ($2.07) in Hong Kong trading, the lowest in four months.

Shenzhen Jushenghua Co Ltd and Foresea Life Insurance Co Ltd, units of Vanke's current largest shareholder Baoneng Group, on Sunday called for the firing of the board, as well as for an extraordinary general meeting. The two shareholders together hold 24.29 percent of Vanke's total issued share capital.

The plan came after Vanke's management announced a $6.9 billion deal with white knight Shenzhen Metro Group earlier this month to dilute the holdings of Baoneng and State-owned China Resources (Holdings) Co. Vanke plans to buy assets from State-owned Shenzhen Metro Group Co Ltd, and use the assets in return to diversify its property projects. It plans to issue new shares to Shenzhen Metro, and potentially make it the largest shareholder.

Baoneng and China Resources oppose the transaction, and said Vanke's board isn't representing shareholders' interests in a balanced way.

Besides, the proposal said Chairman Wang studied abroad in the United States and the United Kingdom from 2011 to 2014 and had been out of work for a long time, but still got cash rewards of more than 50 million yuan ($7.58 million) from Vanke, which harmed the interests of the company and investors, according to the proposal.

Wang said at the shareholders' meeting on Monday: "No matter whether I went climbing mountains or studied abroad, I participated in many negotiations of Vanke in New York and Seattle."

"As the chairman, my responsibility is to supervise and prevent potential deviations in the company's strategic decisions," Wang said, adding that whether he "stays or leaves" is not important as the company maintaining its culture.

Liu Junhai, a professor of civil and commercial law at Renmin University of China, said: "This is a benchmarking case; it will become a significant milestone, and indicate that listed Chinese companies are becoming more modernized in management."

"Shareholders have the right to elect board members who they trust, and whoever takes the position, it's his or her responsibility to maintain the corporate culture of Vanke and its sustainable growth."