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Governance in Brief – January 5, 2023

Posted on January 5, 2023

January 5, 2023 | Editor: Martin Wennerström

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U.S.-listed Chinese companies drop Hong Kong listing plans

Several U.S.-listed Chinese companies, including Pinduoduo and Full Truck Alliance, have reportedly dropped plans to list their shares on the Hong Kong exchange. The decision came after the U.S. Public Company Accounting Oversight Board (“PCAOB”) announced that it had secured full access to investigate China-based audit firms, and that it had already reviewed eight audits conducted by Chinese KPMG and PwC affiliates. Chinese authorities had previously opposed any such disclosure, citing national security concerns. The news lessens the threat of a potential delisting of more than 100 Chinese companies from U.S. exchanges, which would have been due to these companies’ noncompliance with legislation requiring U.S. regulators to inspect the audits of foreign U.S.-listed firms. Faced with the prospect of a U.S. delisting, these companies had considered Hong Kong as an alternate listing venue.

Yahoo (1) | Yahoo (2) | WSJ | CNN (1) | CNN (2) | PCAOB | The Information | China Briefing


Lufthansa cancels retroactive executive compensation

Lufthansa’s supervisory board has denied the payment of previously announced multimillion euro bonuses to its executives for FY2021 and FY2022. This aboutface follows signaling of opposition from the German government on the basis that such retroactive payments would violate the EUR 9 billion rescue package that it offered the airline to help it navigate the effects of the pandemic. According to the airline, the performance targets for the long-term incentives will now be reimplemented as the company has been stabilized. Germany took a 20% stake in Lufthansa in 2020 but managed to completely offload its stake in the company in September 2022.

Euronews | Reuters | Simple Flying



JIP fails to secure financing for Toshiba buyout by end-2022

Private equity firm Japan Industrial Partners (“JIP”) did not manage to secure the required USD 10.6 billion financing from lenders to take Toshiba private by the end of last year. In October, Toshiba named a JIP-led consortium as the preferred bidder for the acquisition process, but the private equity firm was unable to provide commitment letters from banks by the agreed November 7 deadline. The talks between JIP and the banks will nevertheless continue this year and are likely to include a potential transfer of bank executives to Toshiba following an acquisition, as well as other governance-related matters.

Economic Times | Japan Times | Reuters



Meta agrees to USD 725 million settlement in privacy lawsuit

Meta Platforms has agreed to pay USD 725 million to settle a class-action lawsuit alleging that its social media platform Facebook illegally shared user data with third parties, including Cambridge Analytica. Up to 280 million Facebook users will be eligible to receive payments as part of the agreement. This is not the first time Meta agrees to settlements over misuse of user data. In 2019, the company agreed to pay a USD 5 billion fine to resolve a probe into its privacy practices and USD 100 million to settle allegations that it misled investors about the risks posed by user data misuse.



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