Dong Mingzhu will become the “de facto” Gree’s largest shareholder.
Editor’s note: This article is from WeChat public account “ Economic Observation Network ” (ID: eeojjgcw), author Zhou Dilun.
Introduction: The shares of listed companies represented / affected by Dong Mingzhu are as high as 14.65%! In other words, Dong Mingzhu will become the “de facto” Gree’s largest shareholder! Ms. Dong, you are the real big winner of this mixed reform of Gree Electric!
On the evening of December 2, Gree Electric’s mixed reform plan finally unveiled. Looking at this set of plans, we can find that Dong Mingzhu’s interests have been greatly reflected. It can even be said that Dong Mingzhu has achieved an “excess” victory.
According to the announcement, Gree Group signed a “share transfer agreement” with Zhuhai Mingjun Investment Partnership (Limited Partnership) on December 2, 2019, and transferred 902,359,632 Gree Electric shares it held to Zhuhai Mingjun, accounting for 15% of Gree’s total share capital.
At the same time, after being identified as the final assignee, Zhuhai Mingjun has negotiated with the management of Gree Electric Appliance and reached an agreement:
Before the signing of the “Share Transfer Agreement”, GZ Investment as the management entity of Gree Electric and Zhuhai Mingjun’s upper-level equity holders Zhuhai Gaofeng Equity Investment Management Co., Ltd., HH 2 Mansion Holdings (HK) Limited and Pearl Brilliance Investment Limited signed a “Cooperation Agreement” and agreed on relevant measures to maintain the stability of the management of listed companies in this transaction and specific plans for cooperation between management of listed companies.
So, how is the management interest of Gree Electric in Zhuhai Mingjun and its superstructure structured?
According to the announcement:
(1) Zhuhai Gaocheng, HH Mansion and Pearl Brilliance respectively transferred part of the equity of Zhuhai Yuxiu to the management entity Gezhen Investment at the paid-up parity price. The total transfer price was RMB 4,305,000. Zhuhai Yuxiu’s equity ratio changed. 38% in Zhuhai, HH Mansion 11%, Pearl Brilliance 10%, and management entities 41%;
(2) HH Mansion and Pearl Brilliance respectively transferred Zhuhai Xianying’s limited partner’s capital contribution shares to the management entity based on the paid-up parity.
The transfersAfter completion, the ratio of Zhuhai Xianying’s limited partnership contribution share held by HH Mansion, Pearl Brilliance and the management entity was 49:10:41. According to the cooperation agreement and Zhuhai Xianying partnership agreement, All management fees, remuneration for executive partnership affairs, and excess income (collectively referred to as “GP income”) are enjoyed and distributed by HH Mansion or its designated entity, Pearl Brilliance, and management entities in a ratio of 49:10:41.
And the management entity should ensure that the 8% of its total GP revenue enjoyed should be allocated to members and employees of listed company management who have made significant contributions to the listed company in an appropriate manner;
(3) As a limited partner, the management entity subscribed for Zhuhai Mingjun’s capital contribution of RMB 1,393,922,962, which accounted for approximately 6.3794% of Zhuhai Mingjun’s total subscribed capital contribution.
At the same time, the management entity signed a “Partnership Share Transfer Agreement” with Zhuhai Botao and Zhuhai Xianying, and Zhuhai Botao subscribed for the capital contribution of RMB 1,032,118,573 held by Zhuhai Mingjun (approximately Zhuhai Mingjun (4.7236% of the subscription amount) transferred to the management entity;
The shares to be transferred and all the rights and obligations attached to them in accordance with the Zhuhai Mingjun partnership agreement shall be transferred from Zhuhai Botao to the management entity on the transfer settlement date, and the management entity may start from the final delivery date of Zhuhai Mingjun Fund Payment and transfer settlement of the shares to be transferred within six months.
In other words, Gezhen Investment holds a 41% stake in Zhuhai Yuxiu with an investment of more than 4.3 million yuan; Gezhen Investment’s share of Zhuhai Xianying’s investment is also 41%, but the specific investment amount is unknown; Gezhen Investment With a subscription amount of approximately 1.394 billion yuan and a planned subscription amount of approximately 1.032 billion yuan, they will together account for approximately 11.1% of Zhuhai Mingjun’s total subscription capital.
Gezhen Investment’s performance is undoubtedly quite strong. So where is it sacred? According to the public information reported by the media recently, GZ Investment was established on September 26, 2019, with Dong Mingzhu and Wang Jingdong, Huang Hui, Zhuang Pei and Hu Wenfeng and other Gree Electric executives and distributors jointly investing. Dong Mingzhu is the actual controller of Gezhen Investment, with a stake of 95.2%.
Please also pay special attention to the governance structure of the transferee, Zhuhai Mingjun.
According to the announcement, Zhuhai Mingjun’s general partner and executive affairs partner are Zhuhai Xianying. According to the Zhuhai Mingjun partnership agreement, Zhuhai Xianying enjoys the exclusive and exclusive right to execute Zhuhai Mingjun affairs.
The general partner and executive affairs partner of Zhuhai Xianying is Zhuhai Yuxiu. According to the Zhuhai Xianying partnership agreement, the board of directors of Zhuhai Yuxiu is the final decision-making body of Zhuhai Xianying, which is of great significance to Zhuhai Mingjun and Zhuhai Xianying. Make decisions. Zhuhai Yuxiu is a Sino-foreign joint venture. According to relevant regulations and Zhuhai YuThe company’s articles of association, the board of directors of Zhuhai Yuxiu is its highest authority, and decides all major matters of Zhuhai Yuxiu.
The board of directors of Zhuhai Yuxiu consists of 3 members, of which Zhuhai Gaocheng and HH Mansion have the right to appoint 1 director, Pearl Brilliance has the right to appoint 1 director, and the management entity Gezhen Investment has the right to appoint 1 director .
Moreover, except for the matters that are explicitly stipulated in the Zhuhai Yuxiu Company’s Articles of Association and the Zhuhai Yinying Limited Partnership Agreement that require the unanimous approval of the three directors of the Zhuhai Yuxiu Board of Directors, the resolution of the Zhuhai Yuxiu Board of Directors shall at any time be made by one-third More than two (including the number of members) voted in favor of deliberation.
Obviously, in Zhuhai Mingjun’s governance structure, the real core of power is Zhuhai Yuxiu’s board of directors. The three directors of the board of directors can be described as the “Big Three.” Among these “Big Three”, Dong Mingzhu will always be one of them.
According to the cooperation agreement and Zhuhai Yuxiu’s articles of association, Zhuhai Yuxiu made the following decisions when considering the following matters involving listed company Gree Electric:
(1) If Zhuhai Mingjun is entitled to nominate more than three director candidates (including three) in accordance with the company’s articles of association, Zhuhai Mingjun shall nominate three director candidates. This should include a director candidate proposed by Zhuhai Gaocheng, a director candidate proposed by Pearl Brilliance, a director candidate proposed by a management entity, and at least two of the director candidates should be maintained as management Person recognized by the second-level entity;
(2) The board of directors of Zhuhai Yuxiu shall pass the board resolutions unconditionally and urge Zhuhai Mingjun to perform director nomination rights and shareholder voting rights in listed companies in order to promote director candidates nominated in accordance with the foregoing to become directors of listed companies; p>
(3) The candidates elected by Zhuhai Mingjun in accordance with the Zhuhai Yuxiu Board of Directors nominate directors to listed companies and fulfill shareholders’ voting rights, and in the case of listed companies adopting a cumulative voting system to elect listed company directors, Unless otherwise agreed by all the directors of the Zhuhai Yuxiu Board, Zhuhai Mingjun shall equally distribute its voting rights among the director candidates elected by the Zhuhai Yuxiu Board of Directors and vote in favour.
It is particularly noteworthy that among the three director candidates nominated by Zhuhai Mingjun, “at least two of them” must be approved by the management entity. This is undoubtedly a key clause, which fully guarantees the interests of Gree’s management headed by Dong Mingzhu.
This mixed reform plan claims that this share transfer will result in the listed company having no controlling shareholder and actual controller. The reason is:
Before this equity change, the controlling shareholder of the listed company was Gree Group, and the actual controller was Zhuhai State-owned Assets Supervision and Administration Commission;
After this change in equity, the top three shareholders of listed companies except Shenzhen-Hong Kong Stock Connect (Land-Share Connect) are Zhu Zhu respectively.Haiming Jun (holding 15.00%), Hebei Haihai Guarantee Investment Co., Ltd. (holding 8.91%), Gree Group (holding 3.22%), the shareholding structure of listed companies is relatively scattered, and Zhuhai Mingjun is the largest shareholder of listed companies , And the gap between the shareholding ratio of the second largest shareholder is only 6.09%, and there is no concerted action, voting right entrustment, and shareholding arrangements between Zhuhai Mingjun and other shareholders of the listed company;
No single shareholder holds more than 50% of the shares of a listed company, and no single shareholder can actually control more than 30% of the voting rights of a listed company’s shares. The share of the voting power of a listed company that can actually be controlled by any shareholder of a listed company cannot affect the shareholders of the listed company The resolution of the conference has a significant impact;
Any shareholder can not control the major operating decisions of the listed company and cannot decide the election of more than half of the members of the board of directors of the listed company based on the voting rights of the listed company that it can actually control.
In addition, according to the articles of association of listed companies, the board of directors of listed companies has 9 directors. According to the cooperation agreement and Zhuhai Yuxiu’s articles of association, if Zhuhai Mingjun has the right to nominate three or more director candidates (including three) in accordance with the company’s articles of association, Zhuhai Mingjun shall nominate three director candidates.
So after this transaction, Zhuhai Mingjun has the right to nominate three directors, which cannot reach more than one-half of the number of Gree Electric’s board of directors. Given that no shareholder or investor can actually control the voting rights of the listed company’s shares to determine the selection of more than half of the members of the board of directors of a listed company, no shareholder or investor can control the board of directors of a listed company.
So, “Combined with the equity structure of the listed company and the arrangement of board seats after the change of equity, the listed company will have no controlling shareholder and actual controller after the completion of this transaction.”
Judging from the future structure of Gree’s board of directors, this conclusion seems to be fine.
But let’s look at it from another angle: after Zhuhai Mingjun transferred 15% of Gree Electric, because the core of power behind it is the “Big Three”, as one of the “Big Three”, Dong Mingzhu is in Zhuhai Yuxiu’s board seat corresponds to 5% of Gree Electric;
Considering the 8.91% stake in Gree Electric held by Gree Electrical Appliances Consortium He Beijing Haiguarantee, and in the usual sense, the market also believes that Jinghai Guaranty is the party acting in concert with Dong Mingzhu;
Considering the 0.74% Gree Electric shares held by Dong Mingzhu personally.
The share of the listed company represented / affected by Dong Mingzhu is as high as 14.65%!
In other words, Dong Mingzhu will become the “de facto” Gree’s largest shareholder!
Ms. Dong, you are the real winner of this mixed change of Gree Electric!