Privy Council to consider the process for changing a Board of Directors at Shareholders’ Meetings

25 February, 2022

The Court of Appeal of the Eastern Caribbean Supreme Court yesterday granted conditional leave to appeal in the case of 1Globe Capital, LLC v. Sinovac Biotech Ltd. following a substantive judgment dated 9 December 2021 leading to a contested oral leave hearing by notice of motion.  The appeal to the Privy Council raises issues of general importance in company law including (i) the scope and nature of any statutory notice that should be provided to an incumbent board of directors as to any intended challenge to their re-appointment at a forthcoming general meeting, (ii) the process for amending motions during the course of a general meeting, (iii) the existence of any overarching principle requiring full and fair disclosure to shareholders prior to voting in general meeting – and the interplay of issues (i) to (iii) in the modern international digital shareholder context.

The underlying claim was brought by 1Globe as minority shareholder in the defendant/respondent company (Sinovac) pursuant to s.122 of the International Business Corporations Act, Cap.222.  Sinovac, a corporation registered in Antigua and Barbuda, carries on business in the People’s Republic of China manufacturing vaccination products, including CoronaVac which is reported to be the most widely used Covid-19 vaccine in the world.  1Globe seeks a declaration that the vote taken in favour of a new board of directors of Sinovac at its 2017 AGM held in Beijing on 6 February 2018 was valid and effective as a matter of Antiguan law, together with consequential relief relating to steps taken by the incumbent/disputed board of directors since such vote.  The trial took place physically in St. Lucia during December 2018.  An appeal was heard in Antigua in September 2019 leading to the judgment of the Court of Appeal in December 2021.

The process by which motions may be amended or ballots introduced ‘on the floor’ of a shareholder meeting was addressed by Eve J. in Betts & Co. Ltd. v. MacNaghten [1910] 1 Ch. 430 and this approach is accepted as the governing principle at common law in leading practitioner texts such as Shackleton on the Law and Practice of Meetings (14th ed. 2017) and Halsbury’s Laws of England Volume 15.  The trial judge distinguished and disapplied such principle in the context of modern international shareholding and digital communication involving online voting prior to the meeting, as well as by reference to the subjective motives/intentions and uncommunicated conduct of shareholders wishing to change the board of directors, as upheld and endorsed by the Court of Appeal.

Conditional leave to appeal to the Judicial Committee of the Privy Council was granted at a contested oral hearing lasting three hours on 24 February 2022.  Discretionary leave was granted pursuant to s.122(2)(a) of the Constitution of Antigua and Barbuda on the basis that such issues are of “great general or public importance” in the sphere of company law such that the Privy Council ought to consider them.  A ruling to this effect was delivered by the Chief Justice of the Eastern Caribbean Supreme Court, The Hon. Dame Janice M. Pereira, DBE.

An interim injunction remains in place pending the outcome of the appeal to the Privy Council, protecting 1Globe against dilution of its shareholding pursuant to a so-called ‘poison pill’ provision in a disputed rights plan adopted and extended by the incumbent/disputed board of Sinovac.

Stephen Houseman QC, appearing with local counsel, Lenworth Johnson of Johnson Gardiner, acts for the Claimant/Appellant (1Globe).