China Automotive Systems, Inc. (NASDAQ:CAAS) Files An 8-K Other Events

China Automotive Systems, Inc. (NASDAQ:CAAS) Files An 8-K Other Events
Item 8.01 Other Events

On November 23, 2020, the Court of Chancery of the State of Delaware granted a scheduling order (the “Scheduling Order”), which, among other things, scheduled the settlement hearing (the “Settlement Hearing”) for the action described below for February 5, 2021, at 11:00 a.m. EST at the Court of Chancery of the State of Delaware, Leonard L. Williams Justice Center, 500 N. King St., Wilmington, DE 19801.

The Scheduling Order provided detailed information concerning the notice of settlement and the Settlement Hearing. to the Scheduling Order, any objections to the settlement must be filed in writing with the Register in Chancery and served copies of such objection on Plaintiffs’ counsel and Defendants’ counsel such that they are received no later than ten (10) calendar days prior to the Settlement Hearing. Attached hereto as Exhibit 99.1 and incorporated herein by reference is the Notice of Pendency and Proposed Settlement of Stockholder Derivative Action, Settlement Hearing, and Right to Appear, which explains how Company stockholders and settlement class members will be affected by the settlement.

The Scheduling Order relates to a stipulation and agreement of settlement and release (the “Settlement Agreement”) entered into on November 5, 2020 by and among (i) plaintiffs Heng Ren Silk Road Investments LLC, Heng Ren Investments Limited Partnership and CIP (Change in Progress), L.P. (collectively, “Plaintiffs”), (ii) nominal defendant China Automotive Systems, Inc. (the “Company”), and (iii) individually named defendants Hanlin Chen, Qizhou Wu, Arthur Wong, Guangxun Xu, and Robert Tung (collectively, “Defendants”), resolving a verified stockholder derivative complaint in the action under the caption Heng Ren Silk Road Investments, LLC, et al., v. Hanlin Chen, et al., C.A. No. 2019-0010-JTL (the “Action”) in the Court of Chancery of the State of Delaware (the “Court”) derivatively on behalf of the Company against Defendants alleging, among other things, that Defendants had breached their fiduciary duties to the Company by awarding themselves excessive compensation and by making inadequate, false and misleading disclosures to stockholders regarding director compensation.

Under the terms of the Settlement Agreement, the parties have agreed that: (i) a payment of $55,998 will be made to the Company; (ii) twice a year, each year, the Company will make its chief executive officer and/or chief financial officer available in person or by videoconference or telephonic conferences as determined by the Company at its discretion to meet with stockholders and prospective investors and answer questions while the Company will continue its regular telephonic conferences with stockholders following its quarterly filings with the Securities and Exchange Commission; (iii) the Company will arrange for its Henglong USA office in Detroit to host stockholders for each annual meeting of stockholders where the main items are the election of new directors and ratification of the appointment of auditors, with members of the board and, if practicable, the full board, and the management joining remotely; and (iv) the Company or its insurance carrier will reimburse Plaintiffs’ reasonable legal fees and expenses, and will not oppose Plaintiffs’ counsel’s request for a reasonable award of attorneys’ fees in the amount of $100,000, as applied to and to be approved by the Court. In the event the parties are unable to agree to a reasonable amount of attorneys’ fees, and Plaintiffs’ counsel’s petition for an award of attorneys’ fees is contested, the other terms of the Settlement Agreement shall continue in full force and effect.

The parties agreed that the Settlement and the above stipulation shall in no event be construed as, or deemed to be, evidence of a concession or admission by Defendants as to any of the claims asserted in the action. The claims asserted in the Action are disputed and Defendants, collectively and individually, deny any liability whatsoever to the Plaintiffs for the claims asserted in the action.

(d)       Exhibits

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About China Automotive Systems, Inc. (NASDAQ:CAAS)

China Automotive Systems, Inc., (China Automotive) is a holding company. The Company, through its subsidiary, Great Genesis Holdings Limited (Genesis), owns interests in over eight Sino-joint ventures and over five subsidiaries in the People’s Republic of China (PRC), which manufacture power steering systems and/or related products for various segments of the automobile industry. Genesis also owns interests in a Brazil-based trading company, which engages mainly in the import and sales of automotive parts in Brazil. Henglong USA Corporation (HLUSA), which is a subsidiary of the Company, engages in marketing of automotive parts in North America, and provides after sales service and research and development support. The Company’s geographical segments include the United States, China and other foreign countries. One of its subsidiaries, Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., focuses on power steering parts for light duty vehicles.

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