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economic observer reporter zhong ang

this is an extremely rare shareholders' meeting among chinese listed companies.

colin electric(603050.sh)'s first extraordinary general meeting of shareholders in 2024 took longer than anyone expected - from 14:00 on august 30 to 2:30 in the morning of the next day, and then from 10:00 in the morning to 19:00 in the evening of the next day.

the reason why this shareholders' meeting has attracted so much attention from all walks of life is due to the battle for colin electric, the "leader in china's smart electrical industry," which was triggered at the beginning of this year.

colin electric was founded in 2000 and listed on the shanghai stock exchange a-share main board in 2017. it is a company integrating power product research and development, production, sales and services. its business involves more than ten series such as smart substation, smart distribution, smart electricity consumption, and new energy. in 2023, the company achieved operating income of 3.905 billion yuan, a year-on-year increase of 48.88%, and net profit attributable to the parent company was 299 million yuan, a year-on-year increase of 161.36%.

the competition was fought between two camps: one was foreign capital, qingdao hisense network energy co., ltd. (hereinafter referred to as "hisense network energy"); the other was a local state-owned enterprise, shijiazhuang state-owned capital investment and operation group (hereinafter referred to as "shijiazhuang state-owned capital investment and operation group"). both sides spent billions of dollars to increase their holdings, and the major shareholders changed hands several times, jointly staging a battle for equity in the capital market.

on august 30, the shareholders' meeting of kelin electric to elect the board of directors was the core battlefield of this battle. since neither of the two camps had an absolute advantage, in order to win more shareholder support, the "vote canvassing" lasted until the morning of august 30. whoever controls the board of directors will have the upper hand in the battle for kelin electric.

it was not until 17:00 on september 1 that colin electric finally released the long-awaited announcement...

long shareholder meeting

according to the previous announcement, this extraordinary general meeting of shareholders is scheduled to be held at 2:00 p.m. on august 30 in the middle-level conference room on the third floor of colin electric.

that afternoon, when the reporter arrived at the company's gate, he saw seven or eight uniformed security guards standing guard at the door. the company had added a shareholder identity verification procedure, and unregistered shareholders were not allowed to enter the company.

a small and medium-sized shareholder of colin electric told reporters that before they entered the middle-level meeting room on the third floor of colin electric, more than a dozen security personnel in black clothes conducted a second round of identity verification. the shareholder representatives of hisense network energy had several arguments with the security personnel when entering, which delayed the meeting for more than ten minutes before it officially started.

the atmosphere of this shareholders' meeting of colin electric seemed particularly tense. this was because the two major shareholder camps had been fighting over it for a long time, either openly or covertly, and the battle had now reached a white-hot stage.

as early as a year ago, in august 2023, zhang chengsuo, the actual controller and chairman of colin electric, had close contact with shijiazhuang guotou. in september of that year, the latter acquired 4.95% of the shares of the listed company through the secondary market and became the fourth largest shareholder.

but half a year later, on march 19, 2024, colin electric issued an announcement stating that from march 11, 2024 to march 15, 2024, hisense network energy purchased 4.97% of the listed company's shares through the shanghai stock exchange trading system by centralized bidding. the company also signed a "share transfer agreement" with li yanru, qu guowang, tian ye, zhang guoyu and other 7 people on march 15. the above 7 people will transfer their 5.10% shares of colin electric to hisense network energy. in a short period of time, hisense network energy held a total of 10.07% of colin electric's equity and 19.64% of the voting rights, becoming the largest voting shareholder.

soon after, shijiazhuang state investment also continued to increase its holdings - on march 25, 2024, it increased its holdings of kelin electric by 111,700 shares, reaching the 5% holding line, and then continued to increase its holdings to 11.6%. after that, shijiazhuang state investment and kelin electric's actual controller zhang chengsuo and several shareholders including qiu shiyong, dong caihong and wang yong signed a concerted action agreement, with a total shareholding ratio of 29.86%, surpassing hisense network energy.

in may this year, hisense network energy issued a tender offer for 20% of the company's total share capital. one month later, hisense network energy completed the tender offer, holding 34.94% of the listed company's shares and 9.57% of the voting rights, and a total of 44.51% of the voting rights, surpassing shijiazhuang guotou yifang again. including the initial investment and the tender offer, hisense has spent more than 2.4 billion yuan.

the two rivals spent billions of dollars and their shareholding ratios increased alternately, making the dispute over colin electric a focus of attention. in particular, colin electric sued three senior executives, li yanru (current vice chairman of colin electric), qu guowang (current general manager of colin electric), and song jianling (current deputy general manager and secretary of the board of directors), accusing song jianling of stamping the board of directors' seal on the relevant documents for li yanru and qu guowang's transfer of equity to hisense network without the review of the board of directors, and claiming 20 million yuan in compensation. this has added a local battlefield of legal litigation to the dispute over colin electric's controlling rights.

new board, new structure

in the capital market, the competition for controlling listed companies is about the amount of equity, and the core battlefield has always been the competition for seats on the board of directors. in order to seek control, hisense network formally requested the listed company's board of directors to convene an extraordinary shareholders' meeting to start the election process for the board of directors and the board of supervisors.

the articles of association of colin electric stipulate that the number of directors is 7. among them, hisense network energy nominated 5 director candidates, namely non-independent director candidates chen weiqiang, shi wenbo and wu xiangsong; independent director candidates liu huan and zhong gengshen. shijiazhuang state investment also nominated 5 director candidates, namely non-independent director candidates mi yong, wang yong and li qian, and independent director candidates wang fanlin and chen jiangtao.

according to the announcement of colin electric, the company will select 4 out of 6 non-independent directors and 3 out of 4 independent directors. faced with the situation of selecting 7 out of 10, neither of the two camps has an absolute advantage. in order to win more support from shareholders, the "vote canvassing" continued until the morning of august 30.

some small and medium-sized shareholders received a text message a few days ago saying, "the candidates nominated by hisense.com have rich professional experience and capabilities in business management, technology research and development, domestic and foreign market development, financial management, etc. in the fields of b2b and b2g industries, power electronics, artificial intelligence, etc., and are capable of promoting the listed company from a regional power electronics leader to a global power electronics leader. since the voting for this election of directors, supervisors and senior managers adopts the cumulative voting system, your support for the above candidates as a small and medium-sized shareholder will be crucial to the future development of colin electric." some shareholders also received a text message on the morning of august 30, the day of voting, saying, "dear shareholders of colin electric, your support is crucial to us. we sincerely look forward to your support for shiguotou's nominees by voting today from 9:15 to 15:00."

according to the established agenda, after the shareholders' meeting began, shareholders and shareholder representatives voted on various proposals, counted votes, and monitored votes. what was beyond everyone's expectations was that the shareholders' meeting, which usually ended in half a day, lasted until the evening of the next day.

a small and medium-sized shareholder who attended the meeting said that because of the competition between the two major shareholders, each link was carried out very cautiously, and shareholders kept making suggestions and requests during the period. the focus of the dispute on the scene appeared in the voting stage. the non-independent director voting rights publicly solicited by hisense network were two candidates, chen weiqiang and shi wenbo, but the witnessing lawyer believed that the authorization scope of some shareholders was to vote for the three candidates chen weiqiang, shi wenbo, and wu xiangsong, and some of the votes authorized by hisense network did not match the authorization scope. hisense network believes that there is no conflict between the authorization scope and the actual voting, but if the witnessing lawyer does not sign, the meeting cannot issue a final resolution.

a representative from hisense network energy who attended the conference also confirmed this statement.

on august 30, the shareholders' meeting of colin electric was in a stalemate for a while, and the meeting host had to announce a temporary adjournment at 2:30 a.m. the next day. the shareholders' meeting continued at 10 a.m. on august 31.

in the legal opinion issued by beijing deheng law firm, it was mentioned that qingdao hisense's voting opinion on the first resolution of this shareholders' meeting was inconsistent with the voting opinions disclosed in the "announcement on the public solicitation of voting rights of shareholder qingdao hisense network energy co., ltd." and the "report on the public solicitation of voting rights of shareholder qingdao hisense network energy co., ltd."

the firm's lawyers believe that if the authorized shareholders do not raise any objections to them, it will not affect the validity of qingdao hisense's exercise of voting rights on behalf of the authorized shareholders, and the validity of such voting opinions will ultimately not affect the election results involved in the relevant proposals.

after guidance from relevant departments, the long colin electric shareholders' meeting came to an end at 19:00 on the evening of august 31.

at 17:00 on september 1, colin electric finally released the "announcement of the resolution of colin electric's first extraordinary general meeting of shareholders in 2024" and the "announcement on the completion of the election of the board of directors and the board of supervisors".

according to the announcement, the number of shareholders and proxies attending the shareholders' meeting was 899, and the number of voting shares held by the shareholders attending the meeting accounted for 90.0458% of the total number of voting shares of the company. according to the voting results, the members of the company's fifth board of directors are non-independent directors: mi yong, wang yong, chen weiqiang, shi wenbo; independent directors: wang fanlin, liu huan, zhong gengshen. in the new board of directors, hisense network energy and shijiazhuang guotou hold 4:3 seats.

at this moment, a new pattern has emerged in the much-watched colin electric dispute.

a staff member of shijiazhuang state investment said that the election of the board of directors shall be subject to the announcement. the company has no information to give. hisense network energy said: "hisense network energy will work together with all parties to jointly seek the development of the listed company, take the maximization of the interests of all shareholders as the greatest attitude and greatest motivation, and work together to make colin electric bigger and stronger. the new board of directors of colin electric and the subsequent management will continue to enhance the value of the listed company, share the fruits of development with investors, and continuously enhance investors' sense of gain. at the same time, we will also maintain the stability of the listed company's workforce, strengthen the construction of incentive mechanisms, insist on the close connection between employee benefits and performance, and continuously improve employee benefits."