08 January 2019
Latham & Watkins has successfully protected Sinovac Biotech’s Board of Directors from the actions of Dissident Shareholders including 1Globe Capital LLC (“1Globe”), a US medical biotechnology research organization. The claim by 1Globe against Sinovac, a China-based biopharmaceutical company listed on NASDAQ and incorporated in Antigua, arose out of Sinovac’s Annual General Meeting (AGM) held in February 2018 in Beijing.
During the AGM, the Dissident Shareholders proposed a new alternative slate of directors without any prior notice to the company or other shareholders, which they then purported to vote in, claiming a majority of the votes cast. Sinovac subsequently, having taken advice from lawyers, announced that the incumbent board of directors had been properly elected, and the alternative slate had not.
In the months following, 1Globe brought a claim in the Antigua High Court alleging that the alternative slate had been properly elected. In addition, the Dissident Shareholders and their affiliates made several attempts to take control of the company – including conducting raids on the company premises, hijacking the company website, and disrupting production.
Following a three-day trial at the beginning of December, on 19 December 2018, the Antigua High Court upheld Sinovac’s position that the alternative slate of directors had not properly been voted into office and the incumbent directors remain in control of the company.
The Court found that there had been a secret plan to take control of the company, known to 1Globe, the execution of which had left the other shareholders in the dark and thus deprived of the opportunity to make an informed decision. The Court held that 1Globe’s actions had not complied with a minimum standard of basic fairness to which the shareholders as a whole were entitled, and so refused 1Globe the relief it sought.
The court also affirmed that a Rights Agreement (or ‘poison pill’ agreement) which Sinovac adopted in 2016 is valid under Antigua law. This is believed to be the first time an Antigua court has had to consider this question.
In addition to the Antigua proceedings, lawsuits were filed in Massachusetts, Delaware, Hong Kong, and Beijing.
London partner Stuart Alford QC and counsel Jumana Rahman secured the trial victory for Sinovac in the Antigua proceedings, together with local counsel Dentons Delany. New York partner Eric Leon, and Washington, D.C. partner Christian Word continue to defend Sinovac in the Massachusetts and Delaware courts, and Hong Kong partner Ing Loong Yang represents Sinovac’s interests in the Hong Kong proceedings. Chicago partner Chris Drewry and Hong Kong counsel Zheng Wang lead the corporate team.