Mega investor Shen Zhao Wu leaves board, exits shareholding

Mega investor Shen Zhao Wu leaves board, exits shareholding

By Paul McBeth

July 13 (BusinessDesk) - Mega's biggest shareholder, Shen Zhao Wu, has left the board of the file storage and encryption firm and transferred his stake to a Beijing-based Chinese national just days after a constitution re-write made it easier to go public, while Auckland businessman William Yan increased his influence over the company after an entity linked to his wife took a small shareholding.

Shen, a donor to the National Party through his Contue Jinwan Enterprise Group, ceased being a director of Mega on July 8 after sitting on the software developer's board for just over a year, according to documents lodged with the Companies Office. Two days later, his near 26 percent stake in the company transferred to Beijing-based Li Zhi Min, who is now Mega's biggest shareholder. Shen increased his stake in Mega in a share issue amounting to 6.7 percent of the company in February.

Mega also added a new shareholder to its register on July 10, with LY Investment No 1 taking a 1.9 percent stake. LY Investment's sole director is Wei You, the wife of William Yan, whose assets were frozen as part of a joint New Zealand and Chinese police investigation into an alleged money laundering ring. Yan's existing 16 percent stake in Mega, via TEY Trustee Ltd, is subject to the freeze, and he has denied the allegations levelled against him.

LY Investment acquired the stake from Cloud Innovations, an entity whose sole director and shareholder is Filipino actress Asia Agcaoili, the wife of Bram van der Kolk, Mega's chief programmer.

Mega filed a new constitution to the Companies Office on July 6, adding specific provisions for listing the company, and stating that the "board shall take all reasonable steps to prepare the company for listing on a recognised stock exchange" while setting share sale restrictions for a maximum 12 months from the date of joining a bourse unless the board determined otherwise.

In May, the Auckland-based company aborted plans to list on the NZX via shell company TRS Investments after a series of delays in gaining approvals. The transaction would have seen TRS acquire Mega for $210 million by issuing 700 million shares at 30 cents apiece to Mega shareholders once a share consolidation was completed. Mega shareholders would then have owned 99 percent of TRS, which would have changed its name to Mega.

Mega was launched by internet entrepreneur Kim Dotcom in 2013 to replace his Megaupload empire, which was frozen after his high profile arrest in Auckland at the behest of the US federal government in early 2012. He has since stepped back from the firm to fight his extradition and last year bankrolled the election campaign for the Internet Party, which failed to gain seats in Parliament at last year's general election.

Earlier this year, PayPal stopped processing payments for Mega after NetNames, a US group with funding from the Motion Pictures Association of America, claimed it was among companies whose services were not legitimate or legally compliant.

Mega rebutted the claims with a legal opinion by international law firm Olswang, which found no evidence that: the bulk files stored by Mega infringe on copyright holders; the firm's target audience is different from typical 'cyberlocker' users as its services wouldn't benefit them; that the platform isn't attractive for mass distribution; and that its business model is different from 'cyberlockers'.

(BusinessDesk)

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