09.08.10 01:58 Age: 9 yrs
Gome Sues Former Chairman Huang Guangyu
On August 8th 2010, Gome Electrical Appliances Holdings Ltd (“Gome”) started legal proceedings against Huang Guangyu in the High Court of Hong Kong. The claim is focused on a buyback by Gome of its own shares planned by Huang. Gome said Huang breached the trust as a shareholder and did harm to the company.
According to Gome, Huang and his wholly-owned company Shine Group Limited transferred their shares to Huang’s family in 2008, which take 5.66% of Gome’s capital and worth HK$2.39 billion. Between January 23rd and February 5th, Gome bought back 129.8 million shares at the expense of HK$2.237 billion. As early as August 2009, the Hong Kong's Securities and Futures Commission had opened investigation on whether Huang diverted money from a Gome share buyback to repay a personal loan. An official said that caused Gome and its shareholders to lose HK$1.6 billion. Huang's wife, Du Juan, is under investigation and their assets there have been frozen by Hong Kong authorities.
Huang was the founder and former chairman of Gome and he built it into China's biggest appliance retailer, which was estimated in 2008 to be worth $6.3 billion. In May, he was sentenced by the Second Intermediate Court of Beijing to 14 years in prison for insider dealing, bribery and other crimes.
Junbo Hao, Senior Attorney of Lehman, Lee & Xu, said, “Cases concerning senior managers’ breaches of trust are generally civil actions rather than criminal prosecutions.” He added, “The Company Law requires senior managers, for example the directors, to bear the obligations of fidelity and diligence to the company. Relevant disputes could be such that the senior managers operate another company with the information and clients form the original company, and the like.”
Lehman, Lee & Xu is a prominent Chinese corporate law firm and trademark and patent agency with offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau, and Mongolia. The firm has also been recognized as one of the top full service as well as intellectual property firms in China by several international magazines. The law firm is managed by Mr. Edward Lehman, a leading expert on corporate law with 20 years of practice experience in Mainland China.
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