Hollysys Automation Technologies Ltd. (NASDAQ: HOLI) (“Hollysys” or the “Company”) refers to a press release issued on March 14, 2021 (the “Press Release”) concerning a purported “preliminary victory” by Shao Baiqing (“Mr. Shao”) and Ace Lead Profits Limited (“Ace Lead”) against the Company before the Commercial Division of the Eastern Caribbean Supreme Court, Territory of the British Virgin Islands (the “Court”).
The Company notes that the Press Release contains multiple misleading statements in relation to the Court process, which the Company feels compelled to clarify.
The Press Release states that the Company “was forced to concede that it should be restrained” from relying on certain amendments to the Memorandum and Articles of Association (the “M&A”) made on January 7, 2021 (the “Amendments”), and that the Amendments were “unlawful” and were made for “improper purpose[s]”. The Press Release also describes the order of the Court as a “major step towards final vindication for the Claimants and all other shareholders of the Company“.
These statements are highly misleading. The fact is that the Court has yet to adjudicate on the validity of the claim brought by Mr. Shao and Ace Lead and the legality of the Amendments. Until the final disposition of the lawsuit, the Company has voluntarily undertaken, among other things, that it will not take or fail to take any action pursuant to any of the Amendments. Mr. Shao and Ace Lead have also undertaken, among other things, not to whether by themselves, their agents, associates or affiliates or otherwise howsoever, give notice to requisition a meeting of the members of the Company for the purpose of making any amendments to the M&A of the Company. These mutual undertakings have been given by the Company, Mr. Shao and Ace Lead in order to preserve the status quo pending the Court’s adjudication on the substance of the dispute, and the Company’s undertakings are conditional and strictly without prejudice to its position as to the legality and propriety of the Amendments. As such, the terms of the Order described in the Press Release, which has since been issued by the Court on March 10, 2021, represents an agreement between the parties pending the Court’s final determination of the matter, and not a “vindication” of the Mr. Shao and Ace Lead’s position by the Court.
The Company has also requested that the trial of the lawsuit should take place on an expedited basis in July 2021 such that this matter can be resolved quickly and in the interest of the Company and its shareholders. Pending the Court’s full and final resolution of this matter, the Company wishes to refrain from commenting on Mr. Shao and Ace Lead’s characterization of the Amendments.
The Company shall make further announcements as and when it receives further material information which should be disclosed in the interest of the investors and shareholders of the Company. The Board is committed to acting in the best interests of the Company and all its shareholders.