“With limitations to foreign ownership in China, foreign activists’ focus on Chinese companies will remain on those listed in overseas jurisdictions with governance requirements they’re more familiar with.”
Geoff Serednesky, Managing Director
Country:
China
Average % of insider ownership:
Activism
Threat Level
To learn more about this country, please click on the tabs below
Shareholder activism in China remains uncommon for a host of reasons. Most of its public companies have a controlling shareholder, often remaining family-controlled, and many of its investors are individual retail investors, meaning that activism is neither a common or particularly effective practice in China. However, Chinese companies have faced a steady onslaught of short activist attacks which show no signs of slowing down.
When share ownership reaches three percent or more, shareholders gain the ability to add agenda items at general meetings. When share ownership reaches ten percent or more, investors gain the power to call general meetings.
While poison pills are permitted for Chinese companies, A Shares regulations make it difficult for companies to issue preference shares. Additionally, this strategy cannot be used without approval obtained in a shareholders’ meeting. Companies do, however, have the right to amend and enact their Articles to protect themselves against hostile acquisitions (e.g., setting the procedures for change in directors in order to ban the investor from obtaining managerial power of the company within a certain timeframe).
Pac-Man defense, whereby the target firm then tries to acquire the company that has made the hostile takeover attempt, is another common defense tactic for Chinese companies.
Top Campaigns by Type
1. Major Business Fraud
2. Removal of CEO or Other Board Member
3. Accounting Fraud
Campaigns By Year
Total
Campaigns
Notable Invested Activists
• Chindex Hong Kong Limited
• Tien-An Lo (Sino Century Universal Corporation)
• Chengdu Hua Sheng Group Industrial Co. Ltd.
Recent activism campaigns
| China Internet Nationwide Financial Services, Inc. | VS. |
Muddy Waters Research |
| Secoo Holding Limited | VS. |
Soapbox Research |
| Jumei International Holding | VS. |
Heng Ren Investments L.P. |
Total Active
Campaigns
Contact FTI Consulting
Capital Markets Research and Activist Engagement
Managing Director
+1 312 861 4721
Geoff.Serednesky@FTIConsulting.com
Senior Director
+852 3768 4545
James.Jarman@fticonsulting.com