Bank of East Asia shareholders back board against activist investor Elliott

Bank of East Asia shareholders back board against activist investor Elliott

HONG KONG, April 8 (Reuters) - Bank of East Asia (BEA) shareholders passed all the resolutions proposed at its annual meeting on Friday, despite opposition from U.S. activist investor Elliott Management Corp, although one resolution had been withdrawn.

BEA is the last big family-run bank in Hong Kong, but its profitability lags its listed peers and in February Elliott, which has a stake of 7 percent, called for the bank to be put up for sale, accusing the board of mismanaging the business.

Last year the hedge fund firm had questioned the sale of new BEA shares to the core banking unit of Sumitomo Mitsui Financial Group Inc.

BEA's shares closed down 0.18 percent at HK$28 on Friday, valuing the bank at HK$75 billion ($9.7 billion).

While Elliott has not publicly said which resolutions it opposed at Friday's meeting it has been critical of the use of a general mandate that has allowed the bank to issue new shares to specific shareholders.

The ordinary resolution to renew that general mandate to allot, issue and deal with additional shares was passed on Friday with 69.5 percent of the votes in favour, down from the 72.5 percent approval rating given at last year's meeting.

Elliott's fight highlights the growing tension between minority shareholders in Asia pushing for better returns and transparency and local conglomerates used to running their publicly listed businesses with less scrutiny of corporate governance than is typical in the United States and Europe.

BEA's chairman, David Li, moved a motion to withdraw a special resolution to approve certain amendments to the articles of association, saying some shareholders had voiced different views. The motion, which was approved with 99.97 percent support, would not have any significant impact on the bank's business, BEA said in a statement after the meeting.

Eight directors up for re-election, including Li, had their three-year terms renewed by a wide margin of votes and KPMG was also re-appointed as company auditor. ($1 = 7.7587 Hong Kong dollars) (Reporting by Elzio Barreto and Denny Thomas; Editing by Edwina Gibbs, Greg Mahlich)

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