FAW listing said to be out of reach for some years

A staff member works on an assembling line in FAW's Qingdao plant, Shandong province, May 5, 2016. [Photo/Xinhua]

State-owned auto giant FAW Group Corporation is very unlikely to reach its goal of whole-group listing in the foreseeable future, an anonymous source told China Daily on Tuesday.

"It is not only unlikely in three years, but also impossible for FAW to make the group-listing happen even in five years," said an official from FAW group, who asked to remain anonymous as the matter is highly confidential and sensitive.

As a parent company, FAW has dozens of branches and sub-companies. More importantly, the divided opinions on the listing issue between FAW's joint ventures such as Volkswagen and Toyota, as well as management changes, are the main challenges, the source said.

Xu Ping, chairman of FAW, will retire in two years. And the group's general manager is also reported to be leaving his post soon, so they will not be in charge of the group in three years, which is the postponed deadline for the group's whole-business listing.

FAW Group declared an irrevocable commitment on Aug 8, 2011 to settling the horizontal competition between its subsidiaries FAW Car Co Ltd, Tianjin FAW Xiali Automobile Co Ltd, and itself.

Rules for listed companies forbid a controlling shareholder from engaging in any business that directly or indirectly competes with its listed subsidiaries in order to prevent a conflict of interest and moral hazard.

In 2010, FAW Group promised to carry out an asset restructuring plan and seek a whole-group listing within five years to resolve the issue of non-competition.

But the auto group failed to fulfill its commitment, which has prompted protests from smaller and public shareholders.

Liu Junhai, a professor of civil and commercial law at Renmin University of China, said that FAW Group's failure to fulfill its promise has breached its contract with public shareholders and it should resolve the issue as soon as possible.

On June 3, FAW Group announced its inability to fulfill the commitment and postponed its listing for another three years. The default instantly incurred a boycott by small and medium-sized investors and caused great losses to them.

At the FAW Group shareholders meeting on June 27, a proposal to postpone the listing failed to win sufficient backing.

Zhong Xin contributed to this story.