Following this exchange I did some moreresearch and looking at...

Following this exchange I did some moreresearch and looking at the Hong Kong Stock Exchange Listing Rules and the HongKong Takeover Code (both easily found on Google as PDFs).

These are difficult for a non-legal person likeme to follow, but a “controlling shareholder” is anyone with at least 30% ofthe shareholdings. Sincere View has a holding of about 24%. If they reach the 30% threshold then that would trigger a “mandatory general offer” (clause 1 ‑01 of the Listing Rules (page 1-5) under definition “controlling shareholder”). Here I am assuming that the group is considered as a single entity rather than several separate shareholders. So these two large entities may not want to get above 30%?

· “SincereView” group: 33.68m (24.2%)

· “Allied”group: 31.88m (23.0%)

· “Ting”group: 6.86m (4.9%)

The HK Takeover Code is also pretty clear that anysingle entity with 30% of the share ownership must make a “mandatory general offer”,clause 26. We already have the conditions for such a mandatory general offer ifthe Allied Group and the Sincere View group ally themselves together becausethey already have 47% of the voting power! Now I am really worried. Why hasn’t it happened ready? Maybe they don’t have the cash? Maybe they can’t all agree? Maybe they’re biding their time?

Note that the Takeover Code (Clause 1.3) does nothave the force of law. The rules are framed as far as possible in non-technicallanguage and should not be interpreted as if they are statutes. The Codesrepresent a consensus of opinion of those who participate in Hong Kong’sfinancial markets… It is the Listing Rules that are important.

Note also clause 13.34 of the Listing Rules concerning“a genuine open market in the securities of an issuer”. Given that Sun Hung Kai is associated with 82m shares (59%), I’d say that clause 13.34 is quite relevant too. Given that Sincere View and Allied are both under the Sun Hung Kai “umbrella” as can be seen from the CCASS holdings, this confuses the issue somewhat. I am out of my depth here. Would SHK be voting as a single entity or do the shareholders within this block vote separately?

If anyone can shed more light on this in viewof the above, please let us know.

Good luck to all

Phil

Current share price HK$2.20 (about A$0.39)