SHANGHAI, April 19, 2017 /PRNewswire/ -- Acorn
International, Inc. (NYSE: ATV) ("Acorn" or the
"Company") stated today that
the Company continues to focus on enhancing corporate governance
standards as it pursues damages claims against former
directors Andrew Y. Yan,
Gordon Xiaogang Wang, and Jing
Wang for misconduct by suing them in court.
Claims against Former Directors for
Misconduct
The Company is seeking to hold former directors of the Company
accountable for their actions, and to ensure that high
standards of corporate governance are maintained going forward.
Litigation proceedings (the "Claim") have been commenced
against three former directors of the Company, Andrew Y. Yan, Gordon
Xiaogang Wang, and Jing
Wang (the "Defendants"), and service of the Claim
has been effected on all three Defendants. All three
Defendants have now acknowledged service of the Claim and must file
and serve their defences by 21 April
2017.
As previously disclosed on December
1, 2016, and in the Company's February 14, 2016 6-k filing, the Company filed
the Claim in the Grand Court of the Cayman Islands, (the "Cayman Court"),
against the Defendants. The Claim arises out of the previously
disclosed dispute between two groups of the Company's shareholders
and actions taken by the Defendants while serving as directors.
Among other things, the dispute involved (i) the removal in
August 2014 of Mr. Robert W. Roche from his role as executive
chairman by the then board of directors (at the time comprised
of Mr. Robert W. Roche, Mr. William
Liang, the Defendants, and others), and, as a result, Mr.
Roche being precluded from involvement in the Company's day-to-day
operations and management; (ii) efforts by Mr. Roche (which were
rejected by the then board of directors) to call an
extraordinary general meeting of shareholders, ("EGM"), for
the purpose of removing certain of the Company's then directors;
(iii) a petition filed in the Cayman Islands in September 2014 by Acorn Composite
Corporation (a company wholly owned by Mr. Roche), seeking a
winding up of the Company (or other remedies); (iv) a
cross-petition filed by shareholders of the
Company (the "Minority Shareholders"), including
SB Asia Investment Fund II LP (a company ultimately controlled
by Andrew Y.
Yan) and supported by the Defendants, also
seeking a winding up of the Company (or other remedies); and (v)
four new directors being elected in December
2014 at the Company's annual general meeting, over Mr
Roche's objection.
In March 2015, the Cayman Court
found in favor of Acorn Composite Corporation, and made an order
dismissing the Minority Shareholders' cross-petition,
and, in lieu of making a winding-up order, granting Acorn Composite
Corporation certain of the alternative remedies it sought. The
order of the Cayman Court directed the Company to call an EGM for
the purpose of considering the following resolutions: (i) to remove
four then current directors from the board; (ii) to elect to the
board of directors three new individuals nominated by Mr. Roche;
(iii) to amend the Company's articles of association to allow
shareholders who together hold not less than 30% of the
Company's issued shares to convene an EGM; and (iv) preventing
the Company from pursuing a proposal which would have diluted the
shareholdings of its existing members. The EGM was held on
May 4, 2015, and each of the
resolutions passed. Following the EGM, the newly constituted board
elected Mr Roche as the Company's executive chairman and chief
executive officer.
The Cayman Court also found (among other things) that the
Defendants had "acted in bad faith and exercised their
powers, both in connection with Mr. Roche's removal from office and
in connection with the AGM [Annual General Meeting] and the related
refusal to convene an EGM, for an improper purpose." In
addition, the Cayman Court required the Minority
Shareholders to pay Acorn Composite Corporation's expenses in
connection with the cross-petition. The Cayman
Court indicated that "Mr Andy Yan has in fact played an important
role in the events giving rise to the presentation of [Acorn
Composite Corporation's] petition, but he attempted to distance
himself from certain important
decisions" and expressed the view that
"his evidence to the Court was carefully tailored to
meet the needs of the Minority
Shareholders' case and was not always
truthful."
The Claim alleges that the Defendants breached their fiduciary
duties and are responsible for alleged misconduct in and/or
mismanagement of Acorn's business resulting from, in addition to
other actions outlined in the Claim, the wrongful removal of Mr.
Roche as the Company's chief executive officer, exposing the
Company to breach of contract claims, refusing to pursue valuable
business opportunities and wrongful termination of certain
employees resulting in unnecessary severance costs. The relief
sought by the Company consists of (i) initial monetary damage
claims comprised of US dollar denominated damages of approximately
US$26,326,389.76, and Renminbi
denominated damages of approximately RMB
120,045,222, (ii) costs and (iii) such further or other
relief as the Cayman Court considers just.
About Acorn International, Inc.
Co-founded in 1998 by Executive Chairman Robert Roche, Acorn is a marketing and branding
company in China with a proven
track record of developing, promoting and selling a diverse
portfolio of proprietary-branded products, as well as
well-established and promising new products from third parties. Its
business is currently comprised of two main divisions, its direct
sales platforms and its nationwide distribution network. For more
information visit www.acorninternationalir.com.
Safe Harbor
Statement
This news release contains forward-looking statements. These
statements constitute "forward-looking" statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and as defined in the U.S. Private Securities Litigation
Reform Act of 1995. These forward-looking statements can be
identified by terminology such as "anticipates," "believes,"
"estimates," "expects," "future," "going forward," "intends,"
"outlook," "plans," "target," "will," and similar statements. Such
statements are based on management's current expectations and
current market and operating conditions, and relate to events that
involve known or unknown risks, uncertainties, and other factors,
all of which are difficult to predict and many of which are beyond
the Company's control, which may cause the Company's actual
results, performance, or achievements to differ materially from
those in the forward-looking statements. Further information
regarding these and other risks, uncertainties, or factors is
included in the Company's filings with the U.S. Securities and
Exchange Commission. The Company does not undertake any obligation
to update any forward-looking statement as a result of new
information, future events, or otherwise, except as required by
law.
Contact:
|
|
Acorn International,
Inc.
|
Compass Investor
Relations
|
Ms. Naomi
Deng
|
Ms. Elaine Ketchmere,
CFA
|
Phone+86-21-5151-2944
|
Phone:
+1-310-528-3031
|
Email:
dengqi@chinadrtv.com
|
Email:
Eketchmere@compass-ir.com
|
www.chinadrtv.com
|
www.compassinvestorrelations.com
|
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SOURCE Acorn International, Inc.