Buyer consortium calls Hollysys’ statements ‘misleading and alarming’

Buyer consortium led by Recco Control Technology and Dazheng Group issued a statement regarding Hollysys Automation Technologies’ update on its ongoing sale process and the shareholder request for a special meeting. Members of the consortium also include TFI Asset Management Limited, and Great Wall Capital Co., Ltd, who have entered into a memorandum of strategic cooperation with Recco Control Technology and Dazheng Group in connection with the proposed acquisition of Hollysys. Hollysys’ statement on October 30, 2023, suggested that more than 30% of registered shareholders, as of the demand record date previously set by the board of Hollysys, have validly submitted a request for a special meeting. Despite the valid request from shareholders representing significant ownership in the Company, Hollysys has to date refused to call a special meeting. The Hong Kong action referred to in Hollysys’ statement, which is founded on unproven allegations, has been brought by a group of senior employees of Hollysys Group Companies, Dr Changli Wang, the CEO, Chief Strategy Officer and a director of Hollysys, and Plus View Investments Limited against Ace Lead Investments Limited, a registered shareholder of Hollysys and Mr. Shao Baiqing seek an injunction preventing the board of Hollysys acting on the request for a special meeting served by Ace Lead Investments Limited. Despite having suggested in their October 30 statement that more than 30% of registered shareholders have requested for a special meeting, the board of Hollysys has now indicated, conveniently after the Company’s own founder and senior management had brought an action in a Hong Kong court, to injunct the special meeting. It will only consider whether or not to call a special meeting after November 21, 2023, when the application is scheduled to be heard, and the Court has made its determination of that action. There is no certainty when the Court’s determination will be delivered and no account is taken of the possibility of an appeal by the unsuccessful party which could significantly delay the final determination of the application. It is impossible to predict when, if ever, the board of Hollysys will consider the request for a special meeting. This is prejudicing the rights and interests of all the shareholders who have requested the special meeting who hold more than 30% of the Company. Under British Virgin Islands law, the Hong Kong action is irrelevant to the obligations of the board of Hollysys to properly consider, in a timely manner, convening the special meeting which more than 30% of the shareholders requested as long ago as August 24, 2023. In light of the totality of the circumstances, the Board’s declaration that it will not act on the special meeting until a foreign court in Hong Kong has made final determination in a lawsuit brought by the Company’s own senior management amounts to nothing more than a concerted effort to frustrate the shareholders’ legitimate exercise of their fundamental right to have a special meeting convened. The right of shareholders to meet is fundamental and unqualified. The consortium calls on the board of Hollysys to respect the rights of its shareholders and convene the special meeting immediately. There is no legitimate reason for further delay by the Board.