LogFAQs > #941291911

From the LK IPO filing (emphasis added):

Based on the initial public offering price of US$17 per ADS, these Class B ordinary shares will constitute approximately 84.33% of our total issued and outstanding share capital and 98.18% of the aggregate voting power of our total issued and outstanding share capital immediately upon the completion of this offering

Class B shares are held by insiders. So basically, if you own the regular stock, you have effectively no voice in how the company is run. You can't vote out the board, even if 100% of shareholders who bought the stock agree. At this point, it's looking like we might not ever get honest financial information or dividends. I think the business could be worth $20/share but if the same management that has already committed fraud just never releases financials and never pays dividends, shareholders might never get a dime. Instead of paying dividends, they can just pay the insiders exorbitant "salaries" or give them "loans" and with their 98% voting power, it'll pass.

As long as they were going to remain US-listed they were going to need to maintain minimum standards but I wouldn't count on China to protect shareholders, especially when they know most of the people who bought the common stock are Americans.

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September 1, 2003; November 4, 2007; September 2, 2013
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