According to a Bloomberg article
It seems that someone, somehow, and somewhere proposed legislation in Hong Kong to amend the current laws and regulations to obscure the residential addresses and full identification numbers of company’s director. This legislation would also block this information an any and all historical filings. This was proposed back in November 2012, but it is just now seeing the light of day.
The various agencies and governmental departments are silent, as I expect them to be, and it would not be too much of a stretch for them to remain so, after all they know who butters their toast.
In the past this information has been used by member of the media and hedge funds to either show how the many and various off springs (Children, Grand Children and even Great Grand Children) of the “Immortals” have prospered and grown to become the uber rich of the Peoples Republic of China, or to show how various individual with less than sterling character are connected to various business with questionable reporting practices.
In both cases it has cause a great deal of embarrassment for these individuals as they have been asked to explain how they have achieved so much success. Additionally it has caused much embarrassment to various government officials, as they have had to explain how such a thing could have happen on their watch.
The parties involved, the Communist Party and the uber rich want the spotlight turned off, and they want it turned off quickly.
Corruption has been an ongoing and increasing issue in China, especially as the stakes have become greater. It has reached the point where it was even reported as a main topic of discussion at the recent 10-year party meetings. Part of the party faithful are so concern that this issue may be the one item that will end their control of the country, and they are bring pressure on the party leadership to address the issue before the issue address them.
For at some point, at some time, Horton will hear a Who, and then there will be some significant portion of the 1.6 Billion Chinese’s that will be pissed off enough to change the system. The Communist Party via the government should be able to keep a lid on this problem for a few years, but in the end I suspect that this will be one of the main issues that will tear the country apart, eventually the toothpaste will find the weak spot in the container.
Mean while all of this should give significant pause to any and all investors in China. Yes it is true that there is a potential for great profits to be made in this country. The question is does any body really believe that Mrs. McGillicutty of Sandusky Ohio, or for that matter Mrs. Feng Shui of Lijiang will make it. It will be made by individuals on the inside, and not by some Laowai. (For those more familiar with Japanese the term is Gaijin, or those familiar with German it is Ausländer)
There have been several instances where the accounting practices in some of their companies has at best been or is questionable, at worst criminal, and the shareholders, at least those unlucky enough not to get out early have been financially wiped out, strange the Directors of the companies never seem to be in this group. I guess the directors are a lucky lot.
With this proposed rule, now it will be even more difficult to track the various questionable players through their various companies.
It has been obvious that the Communist Party, and the Government of the Peoples Republic of China, would like to hide the problem, rather than deal with it in the light of day. Why else would they even entertain such a change to the registration of Company Directors?
So as they say Caveat emptor. Invest/Risk some money in China, but please do not bet the farm. Invest only what you can afford to lose. Take profits early and often.