Naibu Global Intl Co
Report by the NEDs on actions taken in 2015
RNS Number : 1636J
Naibu Global International Co PLC
15 December 2015
15 December 2015
Naibu Global International Company plc ("Naibu")
("Naibu" or the "Company")
Report by the NEDs on actions taken in 2015
Set out below is a summary of the actions which the non executive directors ("NEDs") of Naibu have taken during the course of 2015 since the listing of the company was cancelled.
Appointment of Chinese lawyers
The NEDs have appointed FangDa Partners ("FangDa"), a Chinese law firm based in Shenzhen, to advise them.
What has happened to the Naibu business?
FangDa have visited the Naibu factory and spoken to the watchman, who confirmed what a visual inspection told them: that the factory has been shut down and no manufacturing is taking place. They were told that all the employees had been fired. So far as the NEDs are able to determine, all trading appears to have ceased.
Communication with Lin Huoyan
The NEDs have made numerous attempts to contact Lin Huoyan ("Lin") during the year, via mobile phone and email and through intermediaries. Unfortunately, he has refused to speak directly with the NEDs. Since May 2015 we have attempted to institute contact through a PRC based intermediary who has managed to have a couple of short conversations with him. The intermediary made clear that the NEDs were interested in talking to him to see if a solution could be found to the issues that had arisen. However Lin declined to progress the discussions as he said (a) the foreign directors were trying to "trap" him and (b) because he could see no solution to offer the "foreign directors" which they were likely to accept.
Where is Lin and what has he been doing?
FangDa have tried several times to serve Lin personally at his home address with legal proceedings. However, Lin has moved his residential address, and has not given the NEDs his new address, so FangDa have been unable to serve these papers on him to date. The NEDs do not know for sure if Lin is still in the PRC as he holds a Philippine passport. However, they do believe he is unlikely to have left the country given his extensive family contacts in Fuzhou. The NEDs are aware that a number of creditors have taken out proceedings against Lin personally relating to both Naibu and other business ventures he has been involved in.
The corporate structure of the Naibu group and what legal steps the NEDs have taken
Naibu, the company that was formerly traded on AIM, is a Jersey company. Naibu owns 100% of Naibu (H.K.) International Investments Limited ("Naibu HK"), which in turn owns 100% of Naibu (China) Co. Limited ("Naibu China"). The NEDs have removed Lin and his two colleagues from the board of Naibu HK, and appointed themselves in their places. Having gained control of the board of Naibu HK, the NEDs have taken steps to take control of the board of Naibu China by removing Lin and his colleagues from the board, and appointing themselves as directors. This apparently straightforward process has however taken a very long time, and significant expense, due to the cumbersome nature of legal proceedings in the PRC. The NEDs are unable to make their appointment to the board on Naibu China effective until the relevant shareholder resolutions can be filed with the relevant company registry in China, and the filings will only be accepted if the papers have been stamped with the Naibu chop. Lin holds the chop and unsurprisingly will not give it to the NEDs. Lin has moved his residential address, and will not reveal his new address, so it has not been possible to serve proceedings on him in person. The NEDs believe he has done this to avoid his creditors as well as themselves. The NEDs are currently going through a process of serving legal proceedings on him by an approved process of advertising in the press. They have been advised that the service of notice takes 3 months, and then the proceedings could take a further 3 months, at the end of which the they should get hold of the Naibu chop, and therefore control of Naibu China. The NEDs are also asking the court to require that Lin gives them the company's books and records so they can establish what has been going on in the company. This will take a similar timeframe through the courts. Until these legal proceedings runs their course, the NEDs do not have access to the accounting books and records of Naibu China and are unable to determine what assets still remain in the company.
Involvement of the FCO and the British Embassy in Beijing
Lin has effectively taken control of the business and assets of Naibu. He has, to date, refused to provide the NEDs, and thus shareholders, with any information whatsoever. He has, refused to engage in a dialogue with the NEDs or to provide them with any explanation of what has happened to the business. Indeed he has expressly said he will not do so. He has proved adept at avoiding the consequences of his actions, given the slow and cumbersome nature of legal proceedings in the PRC. Subject to the availability of funding, the NEDs intend to continue with the legal actions taken to establish control of Naibu China, and then to take steps to recover assets for shareholders, but it is proving to be a very slow and drawn out process. They cannot at this stage predict what recoveries, if any, there will be.
In addition to the legal steps being taken, the NEDs have sought to enlist help through diplomatic channels. They have had some contact earlier in the year with the Chinese Embassy in London, who offered to help by making contact with Lin. However, so far as the NEDs are aware to date no contact has yet been made. The NEDs have also been in a dialogue with the British Embassy in Beijing, and with their help, intend to approach the Governor of Fujian to seek his assistance. He may, for example, be able to help speed up the legal proceedings which the NEDs are embarked upon. It is also the case that if it becomes apparent that any criminal acts have been committed, then it will be for the Fujian authorities to take appropriate legal action.
The NEDs will provide a further update to shareholders when substantive progress has been made both in legal proceedings and through the diplomatic initiatives being pursued.