Important Update on Chaoda Modern Agriculture

By Rob Marstrand January 3, 2012

I promised to keep a close eye on Chinese vegetable producer Chaoda Modern Agriculture (Holdings) Ltd. (HK:682) / (PINK:CMGHF).

I know many of you are keen to know as soon as possible what is going on with this stock. So I’ve decided to send you a special update on the matter.

On December 2, I reported that Chaoda had scheduled an annual general meeting for December 30. This should have given shareholders the opportunity to review the company’s financial statements.

But Chaoda failed to produce the financial statements on time. And it postponed their release to an unspecified date.

All that we got at the December 30 meeting was a series of votes to reelect four directors of the company. And some votes on directors’ remuneration.

Shareholders registered protest votes against all four of these directors. Three directors survived. But there was a majority vote cast against one. He will now leave the board.

Fifty-seven percent of shareholders voted against approving the remuneration of the directors.

On January 3, Chaoda announced that the company secretary and legal counsel, Ms. Yeung Pik Cheung, had resigned. She will be replaced by the internal promotion of Ms. Chong Suet Ming, who joined the company in 2008 as the finance manager.

The following statement was the only explanation provided by management:

Ms. Yeung has confirmed that there is no disagreement with the Board and she is not aware of any matter which should be brought to the attention of the shareholders of the Company and The Stock Exchange of Hong Kong Limited in relation to this matter.

The ongoing lack of financial statements is deeply unsatisfactory. Communication from the company about the delayed financial statements has been extremely poor. And the change of company secretary is suspicious, given its timing.

In short, management continues to severely test our patience. But we are stuck in a holding pattern with this stock.

I will update you on progress, as soon as we get some.

Until Friday.

Rob Marstrand

Rob Marstrand

Chief Investment Strategist
Bonner & Partners Family Office