Who controls JHDP ?
This article aims to stop the fear created amongst readers that CPECC is in control and may not declare the much needed dividend to the minority shareholder, JAKS. Is the fear real ?
I will not go into great detail otherwise it defeats the purpose of this article which is to explain Jaks' position in this joint venture using layman term for the benefit of those with lesser knowledge. Those who are interested to know more can always refer to the circular announced by Jaks on 28 August 2015.
Structure of the Joint Venture
Salient terms of the RCPS
JPP was incorporated in Hong Kong on 8 November 2010
JHDP is a special purpose company incorporated in Vietnam on 30 June 2011
Discussions;
CPECC can only convert the RCPS into voting shares 3 years after commercial operation of the power plant to gain 70% control of JPP. For now, CPECC and Jaks have equal control over JHDP.
CPECC has 3 out of 5 board members in JPP, but Jaks has 3 out of 5 board members at JHDP for the first 3 years after the power plant commenced operation. A balanced board control and no one has an upper hand for 3 years.
But why everyone said CPECC has 70% ownership ? This only happens after 3 years of operation. Currently, CPECC's extra 20% net interest given by RCPS is only restricted to sharing of profit but not control. RCPS only gives rise to economic interest but not controlling interest as it has no voting rights.
Conclusions
CPECC and Jaks have equal control over the power plant now.
CPECC controls 70% of JHDP 3 years after operation.
CPECC gets 70% share of profit immediately after operation.
I hope it is all clear now.
Thank you for reading
https://klse.i3investor.com/blogs/Jaks%20resources/2020-05-02-story-h1506852583-Jaks_Resources_Who_controls_JHDP.jsp
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