Dear Members of the Board of China Motor Bus Company, Limited (“CMB”),
Questions regarding undisclosed related-party transactions with respect to Ngan House between Madam Ngan and CMB
You have not answered any of our questions from our previous letters to you regarding the following potential related-party transactions:
- The occupancy of Kwan Mui Company Limited, a private company fully owned by the Ngan family, at CMB’s headquarters in Chai Wan; and
- The occupancy of Ngan & Co, Madam Ngan’s law firm, at Unit D, 24/F, United Center, a property owned by CMB.
We may have possibly uncovered certain issues regarding related-party transactions relating to CMB which we would like to bring to your attention.
7th Floor of Ngan House
The building “Ngan House (顏氏大廈)” is located at 210 Des Voeux Road Central, Sheung Wan. Given its proximity to Sheung Wan MTR station, the building is probably extremely valuable.
In December 2017, we found out, from a security guard at Ngan House, that the tenant on the 7th floor of Ngan House (the “7th Floor”) had moved out, and that the owner of 7th Floor was looking for a new tenant.
On December 27, 2017, the security guard showed us around the 7th Floor, which was indeed vacant:
The land register of the 7th Floor reveals that the owner is none other than Madam Ngan:
Is a member of CMB staff managing Madam Ngan’s personal asset?
The security guard at Ngan House gave us the contact of a certain Mr. David Chen (“Mr. Chen”), whose phone number is +852 9343 04XX. The security guard told us that Mr. Chen is in charge of all arrangements with respect to the tenancy of Ngan House.
We called Mr. Chen and identified ourselves as an interested tenant for the 7th Floor. During a nine-minute phone conversation, we discussed with Mr. Chen the tenancy arrangements in great detail, such as the rental rate, tenancy term, upfront deposit and logistics of signing the rental agreement.
We asked Mr. Chen if he worked for CMB, to which he replied in the affirmative.
Questions regarding a possible related-party transaction
We ask the Board to answer the following questions urgently:
- Is Mr. Chen indeed an employee of CMB?
- Other than managing the tenancy of Ngan House, what else does Mr. Chen do for Madam Ngan (and other members of her family)?
- We note that the entire Ngan House is owned by members of the Ngan family.
- If Mr. Chen is indeed an employee of CMB, does Madam Ngan pay CMB any fees for Mr. Chen’s service? How much does she pay?
- Is the amount of fees on normal commercial terms or better?
- Have the independent directors reviewed the amount of fees?
Kindly contact me at +852 9835 4836 any time at your convenience. Again, we earnestly request you for an opportunity to meet.
Argyle Street Management Limited