HNA Group failed to fully disclose control of Virgin China stake

The acquisitive Chinese conglomerate HNA Group, which is under scrutiny globally over its opaque ownership structure, lodged five incomplete notices with the ASX that failed to properly disclose how its major stake in Virgin was controlled.
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HNA has told the ASX that five substantial holder notices lodged between June 2016 and October 2017 relating to its 19 per cent stake in Virgin failed to list entities that held a “relevant interest” in the airline.

Under n corporations law, investors that control more than 5 per cent of an ASX-listed company must notify the company and the ASX when they increase or decrease their holding.

This includes the disclosure of “relevant interest” – parties that can exercise influence over shares through ownership or other forms of control and power – that may be indirect or informal.

HNA’s disclosure to Virgin and the ASX, dated January 2, says it failed to include several relevant parties because of “an oversight”.

HNA said all its companies in the “chain of ownership down to the entity directly holding [Virgin] shares” were disclosed but “sister companies of those entities were incorrectly omitted as they do not directly or indirectly have an interest in those shares but instead are deemed to have a relevant interest under the Corporations Act”.

“HNA Group is committed to complying with its ongoing disclosure obligations in the n market”, HNA said.

HNA’s investment in Virgin was made through a Hong Kong listed entity called HNA Innovation Ventures, and its initial notice of interest lodged on June 2016 listed six other bodies that had a relevant interest in Virgin through a chain of ownership linking back to HNA Group and that two entities that own it.

By October last year the total number of parties with relevant interests had grown to 11, and the updated Janaury 2 register lists 15 parties with relevant interests.

The mea culpa comes as regulators and governments worldwide turn the screws on the group over its opaque and byzantine ownership.

New Zealand’s overseas investment agency last month blocked HNA’s proposed $NZ660 million ($603 million) purchase of ANZ’s UDC Finance business because it could not determine who would ultimately control the business.

And in November a Swiss regulator ruled it provided false information when it bought the airport services giant Gategroup.

HNA is suing New York-based Chinese fugitive Guo Wengui over his allegations that HNA has secret ties to a high-ranking Communist Party official.

In November HNA bought a refrigerated logistics business from ASX-listed car dealership Automotive Holdings Group for $400 million.

The group has made more than $US40 billion of acquisitions across the globe since the start of 2016.

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