Vinaconex in civil war

Vinaconex had a rough start to 2019 as it has been rocked by disagreements among its major shareholders over its new chief executive, an issue that went as far as the People's Court of Dong Da district.


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Dao Ngoc Thanh, chairman of Vinaconex, speaking at the press conference. Source: vnexpress.vn


The extraordinary shareholders’ meeting to elect new members to the board of management and the board of supervisors of Vietnam Construction and Import-Export JSC (Vinaconex, code: VCG) took place on January 11, 2019 after changing the company’s shareholder structure.

Since an auction two months ago, there are three big shareholders owning more than 5 per cent of VCG stakes, including An Quy Hung (57.71 per cent), Star Invest (7.57 per cent), and newly-established Cuong Vu Real Estate Co., Ltd., which has just bought 21.3 per cent of VCG stakes from Viettel.

At the meeting, Vinaconex shareholders elected Dao Ngoc Thanh, general director of Viet Hung Urban Development and Investment JSC (Vihajico), the developer of the Ecopark urban area, representing An Quy Hung, as chairman of Vinaconex.

Afterwards, Star Invest and Cuong Vu Real Estate Co., Ltd. sent a petition to the Dong Da People’s Court including documents and evidence related to the election, askingit to stop the implementation of the resolution of the general shareholders’ meeting on January 11, 2019.

The Dong Da People’s Court on March 27 sent Decision No.01/2019/QD-BPKCTT and asked Vinaconex to pause executing the resolution. Accordingly, the seven new members to the Board of Management and five new members to the Board of Supervisors had to be suspended immediately.

On the following day Vinaconex issued Document No.0609/2019/CV-PC to report to the State Securities Commission (SSC), Hanoi Stock Exchange (HSX), and disclose information to shareholders.

A day later (March 29) Vinaconex also issued a complaint against the decision of the Dong Da People's Court.

Vinaconex claims that the immediate application of temporary emergency measures on March 27 negatively impacted production and the company’s business activities.

This, according to the complaint, caused direct damage to the legal interests and benefits of Vinaconex and caused serious economic losses, reducing the value of shares by about VND1.236 trillion ($53.74 million) on March 28 for all shareholders.

Next, Vinaconex claimed the two individuals and two organisations had insufficient legal standing to issue the request to cancel the resolution of the general shareholders’ meeting. Specifically, at the deadline of registration to finalise the list of shareholders present at the meeting (December 26), Cuong Vu Real Estate was not a shareholder of Vinaconex.

Moreover, as of March 25, 2019, both Cuong Vu and Star Invest did not hold VCG shares for a continuous period of six months (Cuong Vu and Star Invest become shareholders on December 27, 2018 and December 24, 2018).

Regarding Than The Ha and Nguyen Quang Trung, who sent the complaint to the court based on the authorisation of former shareholder Viettel, Vinaconex argued that Viettel only authorised them to attend, vote, and exercise the rights and obligations of shareholders at the meeting, but did not authorise them to submit complaints.

On April 1, Vinaconex organised a press conference to provide information to shareholders about the decision of the Dong Da People's Court.

Dao Ngoc Thanh, chairman of Vinaconex, affirmed that the general shareholders' meeting two months ago was legal as it complied with the company charter's tenets on calling an extraordinary shareholders' meeting.

"Vinaconex needs to organise an extraordinary general shareholders’ meeting to transfer the management and administration of the enterprise from state shareholders to the new shareholders winning the auction," said Thanh. The meeting was convened at the request of the old BoD, with the participation of two old shareholders, including Viettel and State Capital Investment Corporation (SCIC), according to Vnexpress.vn.

Splendora is an investment project to build a high-class urban area combining centres and commercial offices in the west of Hanoi, along Thang Long Boulevard. With a total area of 245 hectares, the project is divided into five phases and has been implemented since 2008. According to the initial plan, the project has 6,440 apartments and 1,311 villas, as well as adjacent houses with a total initial capital of more than $2 billion. After completing the first phase in 2013, due to a disagreement between the two partners and a disadvantageous market, the project had stalled for nearly five years and had just restarted a small area at the end of 2017.

However, in response to Vinaconex, the court expressed its belief that suspending the execution of the resolution until the final decision of the court was in accordance with the law and was necessary to protect the rights of the applicants and shareholders of Vinaconex, as well as to avoid negative consequences that could cause damage to Vinaconex and shareholders.

Based on this, the court once again determined that the immediate application of temporary emergency measures on March 27 and the suspension of the execution of the resolution on the election of seven members to the BoD and five members to the BoS had a legal basis. Since then, in a document on April 2 to answer Vinaconex, the People's Court of Dong Da district has dismissed the complaint of this enterprise.

One of the issues drawing the attention of shareholders and participants was the reason that caused the disagreement among shareholders, even though 99.9 per cent of the BoD approved the election of the new leader. According to Vinaconex’s representative, shareholders sent a petition to the court related to Phu Long Real Estate Company, which owns 50 per cent of the capital in An Khanh JVC and is also the investor of the Splendora project (Bac An Khanh, Hanoi). Vinaconex currently holds 50 per cent of the capital in this project.

Views also differ on project development. Specifically, Splendora proposed digging lakes around the villas, while Vinaconex wants to carry out the old plan.

VIR

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