Vivo Capital has initiated a series of legal actions in response to what it describes as reckless decisions by Sinovac Biotech's (SVA, Financial) current Board of Directors, led by activist investor 1Globe Capital LLC and its affiliates. This move comes after the Judicial Committee of the Privy Council in London retrospectively installed four board members nominated by 1Globe in early 2018.
Vivo alleges that since assuming control, the new board members have prioritized 1Globe's interests, undermining long-term investors and damaging shareholder value. The disputed actions include resisting calls for a shareholder meeting and board election, proposing vague reviews of past corporate actions, and potentially annulling 16% of Sinovac stock held since 2018 by investors like Vivo. Additionally, Vivo claims its board representative has been sidelined from company matters.
The consequence of these governance issues was underscored by the resignation of Sinovac's independent auditor, Grant Thornton Zhitong Certified Public Accountants LLP, citing an inability to rely on prior board resolutions. This exacerbates Sinovac's challenges, as it has been unable to find a new auditor. Consequently, the company faces difficulties meeting U.S. securities regulations and risks losing its NASDAQ status, where Sinovac's stock has not traded since 2019.
In response, Vivo has filed lawsuits in multiple jurisdictions. These include a case in the Antigua and Barbuda High Court challenging the legitimacy of the 1Globe-affiliated directors' actions, a fiduciary duty breach lawsuit in New York, and a federal case in Massachusetts demanding compliance with U.S. securities laws and transparency from 1Globe.
Vivo is calling on fellow Sinovac shareholders to unite against the current board's actions while urging 1Globe to engage in constructive dialogue to address these issues. The goal is to realign the company's focus on its missions and benefit all shareholders.
