Thousands of investors holding bonds in Sinopec Maoming Refining & Chemical (SMRC) protested the company's decision to cancel its planned share listing, threatening legal action against the company. SMRC issued US$181.2 million in bonds which it said could be either converted into A-shares when the company listed or redeemed as bonds. In February 2004 SMRC's board canceled the planned listing, claiming that it did not fulfill a recent China Securities Regulatory Commission stipulation that connected transactions between controlling shareholders and their subsidiaries must not exceed 30% of a listing company's turnover. SMRC's procurement and sales agreements with Sinopec put it in violation of the requirement. Bondholders filed a letter of complaint with Hong Kong Exchanges and Clearing and were organizing via the Internet and preparing to take the matter to litigation for violation of contract.
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