TROUBLED cord-blood bank Cordlife Group on Sunday (Mar 24) said it will table seven ordinary resolutions listed in a requisition notice from substantial shareholder Nanjing Xinjiekou Department Store at its next general meeting.
However, it will not be tabling any resolutions in a second requisition notice from controlling shareholder TransGlobal Real Estate Group, after obtaining legal advice that TransGlobal is not a “member” of the company and therefore not entitled to put forward any resolutions.
Cordlife is at the centre of a shareholder dispute, after Phillip Securities – acting as a nominee for Nanjing Xinjiekou – and TransGlobal separately sent requisition letters to the company in a bid to remove directors from Cordlife’s board.
Phillip Securities’ Mar 14 notice on called for the removal of four directors – acting chairman Ho Choon Hou and independent directors Yeo Hwee Tiong, Titus Cheong and Joseph Wong – as well as the appointment of three individuals to the board – Teo Tong Kooi, Xu Tianhong and Cai Yong.
Meanwhile, the TransGlobal notice on Mar 18 sought to reject proposed resolutions in the Phillip Securities notice, as well as remove two non-independent, non-executive directors – Shally Chen, also known as Chen Xiaoling, and Zhai Lingyun.
In a bourse filing on Sunday, Cordlife confirmed that it had received the first requisition notice, and is commencing preparations to table the resolutions either at a specially convened extraordinary general meeting (EGM) or at the next annual general meeting (AGM).
The private cord-blood bank said that as Chen and Zhai are nominee directors of Nanjing Xinjiekou, they have recused themselves from all deliberations and decisions of the company related to the requisition notice.
Cordlife also disclosed that it had previously received two letters – on Feb 23 and Mar 22 – sent by SAC Capital on behalf of Nanjing Xinjiekou, stating that the substantial shareholder was reviewing its shareholding in Cordlife with the possibility of making an offer, either by itself or through related companies, for Cordlife’s shares that it does not already own.
As at Mar 22, Nanjing Xinjiekou was still reviewing the potential offer. The Shanghai-listed company has a 20.3 per cent stake in Cordlife as at Mar 20, 2023, according to the cord-blood bank’s annual report.
Cordlife added that upon receipt of the Feb 23 letter, it obtained legal advice that advised there was “no strict requirement to disclose the first letter” if there was no unusual trading of the company’s shares at the time, based on the rules of the Singapore Exchange Securities Trading.
The bourse filing included a copy of the requisition notice and a statement to shareholders from Nanjing Xinjiekou that set out the grounds for its proposed resolutions.
In particular, Nanjing Xinjiekou noted with “grave concern” that there was a “lack of oversight” from the management on the current crisis faced by the company. This was in reference to the six-month suspension Cordlife received from the Ministry of Health for its lapses in storing cord blood.
The China-based company added that suggestions from its nominee directors Zhai and Chen to appoint an external consultant to carry out an independent investigation, and to search for and appoint a chief executive with requisite qualifications, expertise and experience in the medical field, were not supported by the other directors of the company.
The board had appointed Yiu Pang Fai, a former TransGlobal unit executive director, as group chief executive, despite Chen and Zhai expressing their reservations.
“Given that our nominee directors have been unable to agree with the other directors on the handling of the crisis faced by the company and who should be the CEO to lead the company out of the crisis, it is now incumbent on us as shareholders and long-term investors to take action,” Nanjing Xinjiekou said.
Meanwhile, Cordlife said the second requisition notice from TransGlobal – which owns 27.9 per cent of Cordlife – was invalid, based on legal advice it obtained on the matter.
This is as TransGlobal is not a “member” of the company, as defined under the Companies Act, as at the date of the notice, Cordlife said, adding that the real estate group is not entitled to requisition an EGM or to circulate resolutions at the upcoming AGM.
“In view of the foregoing, the company will not be tabling any resolutions contained in the second requisition letter to shareholders, and the board will not be convening any EGM pursuant to the second requisition letter,” said Cordlife.
The board has informed TransGlobal representatives of its decision. A copy of the second requisition was attached in the bourse filing, which showed that the TransGlobal letter was sent by Yiu Ming Yiu, the brother of Yiu Pang Fai and a nominee director of TransGlobal.
The shareholder tussle comes amid the arrests of four directors – Ho, Yeo, Cheong, and non-independent, non-executive director Chow Wai Leong – and former group chief executive Tan Poh Lan by the Commercial Affairs Department (CAD).
The arrests were related to alleged breaches-of-disclosure obligations by Cordlife on the matter of irregular temperatures in a certain cryogenic storage tank, first disclosed by the group on Nov 30, 2023.
All five have been released on bail.
CAD and the Monetary Authority of Singapore also issued a notice on Mar 19 for another four Cordlife directors to attend an Apr 2 interview. The four, who are not based in Singapore, are Wong, Zhai, Chen and Yiu Ming Yiu.
Shares of Cordlife plunged 11.6 per cent or S$0.026 on Friday to close at S$0.199.
