(SI Newswire) BOSTON, Massachusetts -- A Delaware judge denied a China Automotive Systems Inc. (NASDAQ: CAAS) bid to dismiss a breach of fiduciary duty lawsuit brought by U.S. fund manager Heng Ren in the Court of Chancery.
In January the Boston-based shareholder sued China Automotive and its Board of Directors claiming that its Chairman, Hanlin Chen, and its board failed to properly disclose a 200% raise in cash compensation for the Directors evaluating Chairman Chen’s bid to buy out shareholders and take China Automotive private.
In his July 17 order the Delaware judge, Vice Chancellor J. Travis Laster, stated, “The complaint alleges systematic governance failures and a pattern of false disclosures designed to conceal them. In this context it is reasonably conceivable that the plaintiffs could obtain damages or another remedy for the alleged misstatements in the (Securities and Exchange Commission filing).”
The shareholders also claimed the China Automotive board breached its fiduciary duty by misrepresenting in a proxy statement for its 2018 annual meeting the credentials of a Director standing for re-election.
China Automotive’s subsequent SEC filing that reported the results of the annual meeting also understated the number of votes cast against the incumbent Directors and auditor, according to the shareholder claim. On May 24 China Automotive replaced two of the directors re-elected on December 5, 2018.
China Automotive has until July 30 to answer the complaint.
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