could pay off by helping thwart billionaire property developer Li Ka-shing from attempting a takeover of subsidiary Hongkong Land.

Speculation over Mr. Li's motives was sparked this week when he announced that he had purchased a three percent stake in Hongkong Land and a three percent stake in Jardine Matheson Holdings. Hongkong Land is Hong Kong's biggest landlord, and one of the five pieces of the Jardine empire.

Mr. Li, who made an unsuccessful raid on Hongkong Land in 1988, was forced to disclose his stake due to a Bermuda law requiring investors to disclose shareholdings after they accumulate three percent of a company. The law also requires Mr. Li to disclose every one percent interest he buys from now on, helping Jardine keep track of his intentions.

By comparison Hong Kong rules require disclosure when the ten percent mark is met. Bermuda takeover law also gives full voting rights to every shareholder in a company. According to the Financial Times this would give strength to Jardine's complex crossholding structure.

The Bermuda code would "give voting rights to Jardine Strategic Holdings, the group's lynchpin, even though it comes under the same management (as Jardine Matheson),'' the Financial Times states. "This would not be allowed under other jurisdictions.'' Jardine Strategic Holdings, set up after Mr. Li's first attempt at a takeover, owns 32 percent of Hongkong Land and about 38 percent of Jardine Matheson. In turn, Jardine Matheson owns 57 percent of Jardine Strategic.

"Finally, the code takes a tough line on on associates, defined as any subsidiary which is 20 percent or more held by another,'' the Financial Times states in another article. "For this reason, Mr. Li's two companies, Cheung Kong Holdings and its 49.9 percent-owned Hutchison Whampoa, were not able to accumulate stakes of three percent each. Analysts say this is one of the most effective defences, as it prevents other companies in the Li stable from joining forces.'' So far Jardine's management has played down the takeover speculation and commented that it views Mr. Li's investment as a recognition of "good value'' in the two companies.

Li's takeover bid could be thwarted Other media commentators have speculated that Mr. Li's investment might be a move towards better relations between China and the Jardine group. Jardine delisted from Hong Kong in 1995 and relisted in Singapore. The company also became incorporated in Bermuda, a move which caused a rift with China as it prepared to take over Hong Kong.

The South China Morning Post yesterday viewed Mr. Li's "two-pronged attack'' on Jardines as a vote of confidence in the future of Hong Kong, according to an editorial. The newspaper also commented that Mr. Li had the power to make a successful bid for Hongkong Land if he finds local partners to join him.

"Although Jardines has taken several defensive measures, including a complex system of inter-related shareholdings, and their controversial move to Bermuda, where they can take advantage of a custom-written takeover code, this can only slow rather than stop any hostile move,'' the editorial stated.