Dongfang Modern Agriculture Holding logo

DFM - Dongfang Modern Agriculture Holding News Story

A$0.83 0.0  0.0%

Last Trade - 07/06/19

Sector
Consumer Defensives
Size
Micro Cap
Market Cap £n/a
Enterprise Value £n/a
Revenue £130.5m
Position in Universe th / 1899

UPDATE 1-Australian bourse probing abrupt director exits at 2 Chinese agri firms

* Citrus grower Dongfang Modern Agriculture loses CEO &
directors
    * Directors and Co secretary of Bojun Agriculture also
depart

 (Recasts with Australian bourse comment)
    By Tom Westbrook and Paulina Duran
    SYDNEY, July 19 (Reuters) - The Australian bourse said on
Friday it is investigating the mass resignations of directors at
two Australia-listed Chinese agricultural companies, in one case
over a rumoured probe of criminal connections to its plantations
in China.
    One of the firms recently losing directors, citrus grower
Dongfang Modern Agriculture Holding Group Ltd  DFM.AX , told the
exchange late on Thursday the abrupt resignations in June of
almost the entire board was due to a rumoured criminal
investigation of its plantations.
    Dongfang had given no explanation when the resignations
occurred last month, which also included its CEO and company
secretary, but attributed them to the rumours in a letter
responding to the exchange's queries late on Thursday. The
letter added that the rumours were false.
    "There are similarities with the query letter sent to
another Chinese company recently," Australian Stock Exchange 
 ASX.AX  spokesman Matthew Gibbs said in a statement, adding
that Bojun Agriculture Holdings  BAH.AX , a manufacturer of
processed fruit products, was the second company being
investigated.
    The abrupt departures raise corporate governance questions
and cast a cloud over the practice of numerous Chinese companies
seeking listings in Australia in order to avoid regulatory
hurdles at home.
    In Dongfang's letter, its lawyers said the company believed
two directors quit after hearing rumours that officials in the
southeast China city of Ganzhou interviewed staff and were
investigating "criminal connections".    
    "These rumours were not true," said the letter, which was
published by the ASX.
    "Because the independent directors could not investigate
this rumour for themselves by visiting the plantations they
tendered their resignation due to the seriousness of the rumours
even though the rumours were false."
    Those resignations prompted two more directors to quit and
then the CEO, Chiu So, "resigned also because he was seeking
another career development", the letter said. The company
secretary then also quit.
    Shares in Dongfang, which listed at A$1.06 in 2015, were
suspended in June after the resignations left the company
without a sufficient number of directors. They last traded at
A$0.83, giving the firm a market capitalisation just below A$350
million ($250 million). 
    Bojun Agriculture told the exchange in a letter on Tuesday
two Australian directors and the company secretary had resigned
following the departure of its auditor in June last year. It
said the resignations had been over "miscommunication" between
directors.
    In their report, the auditors had said there was "a risk
that the Group has recorded fictitious expenses that do not
belong (to) the Group," the letter showed. 
    Bojun and Dongfang did not respond to emailed requests for
comment.
    Former Dongfang CEO So said by phone the rumours were wrong,
without elaborating.
    Bojun and Dongfang are among dozens of small Chinese firms
to list in Australia in recent years, lured by the prospect of a
simpler public offering process and less volatility than markets
at home.   
    Dongfang was among more than 40 Chinese firms that the ASX
wrote to in 2017 asking whether China's crackdown on capital
outflows presents them any difficulties.
    Dongfang said it was actively looking for replacement
directors.
($1 = 1.4140 Australian dollars)

 (Reporting by Tom Westbrook and Paulina Duran; Editing by
Muralikumar Anantharaman)
 ((tom.westbrook@thomsonreuters.com; +61466355340; Reuters
Messaging: tom.westbrook.thomsonreuters.com@reuters.net;
twitter.com/tswestbrook))
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