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Copyright 2005 The Financial Times Limited
Financial Times (London, England)

July 15, 2005 Friday
USA Edition 1

SECTION: COMPANIES ASIA-PACIFIC; Pg. 19

LENGTH: 356 words

HEADLINE: Lawyer starts Kelon campaign

BYLINE: By JUSTINE LAU

DATELINE: HONG KONG

BODY:


A lawyer is fighting to have himself elected to the board of scandal-plagued Guangdong Kelon Electrical as part of what he claims to be the first such corporate governance campaign of its type in China.

Shanghai-based Yan Yiming said he was seeking support from Kelon's minority shareholders for his own election as well as that of a Chinese accountant and a Hong Kong lawyer, to be the company's independent directors to investigate one of China's biggest home appliances makers.

"We want to use the power as independent directors to look into whether the company's loss last year was related to any misappropriation of funds," Mr Yan said in apress conference in Hong Kong yesterday.

He also urged Kelon's minority shareholders to fire six of the current directors, including chairman Gu Chujun, one of China's richest men.

Shareholder activism in China, although still minimal, has been growing in response to Beijing's recent plans to reform its stock market.

Mr Yan said yesterday he wanted to unite Kelon's shareholders as part of a campaign to promote rights for minority shareholders. "There are a lot of problems in listed companies in China. Majority shareholders have to learn to bear responsibilities for what they do."

Mr Yan's comments came as Hong Kong and Shenzhen-listed Kelon issued a profits warning late on Wednesday, saying it might incur "substantial losses" for the first half of this year as sales in May and June had dropped by half.

Kelon's shares have been suspended since June 16 after the company said it was being investigated by the China Securities Regulatory Commission, the country's financial watchdog, for alleged breaches of securities law, and that its auditor had quit.

Three independent directors also resigned last week, saying they were unable to perform their duties because Kelon had not been co-operative in supplying financial information.

Mr Yan said yesterday he aimed to get at least 10 per cent of Kelon's shareholders in Hong Kong and China - including institutional investors such as the local unit of HSBC and Standard Chartered - to support his action and call a shareholder meeting in a month.

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