The shareholder vote on PCCW Ltd. Chairman Richard Li’s buyout bid for Hong Kong’s biggest phone company didn’t reflect shareholder interests, the city’s appellate court said today in its written ruling on the case.

“There was a clear manipulation of the vote,” Judges Anthony Rogers, Johnson Lam and Aarif Barma said in a 74-page ruling explaining their decision on April 22, when they unanimously blocked the HK$15.93 billion ($2.06 billion) takeover. The judges accepted a challenge to the deal by the Securities and Futures Commission, Hong Kong’s markets regulator.

More than 800 people registered as PCCW shareholders shortly before a Feb. 4 vote on the buyout plan after some investors divided their holdings and distributed them to agents at Fortis Insurance (Asia) Co., a company previously owned by Li, according to the regulator.

The joint-buyout offer by Li, 42, and China United Network Communications Group Corp., was supported by more than 1400 PCCW shareholders at the ballot in February, compared with more than 800 against. Adoption of the plan required a majority of the investors participating in the vote, in addition to 75 percent of the shares represented.

The appeal court decision overturned an April 6 ruling by High Court Judge Susan Kwan, who cleared the deal on grounds that share splitting was legal in Hong Kong.

Kwan’s decision failed to clarify rules governing share splitting in Hong Kong, Martin Wheatley, chief executive officer of the commission, said on April 6.

Li, a son of Cheung Kong (Holdings) Ltd. Chairman Li Ka- shing, said on April 23 he may take two weeks to study the written judgment before deciding whether to appeal the decision.

The case is PCCW Ltd et al and Securities and Futures Commission, CACV85/2009, Hong Kong Court of Appeal.

Source:Bloomberg