UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
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the Registrant
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a Party other than the Registrant
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Check the
appropriate box:
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Preliminary Proxy
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Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy
Statement
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Definitive Additional
Materials
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Soliciting Material
Pursuant to §240.14a-12
Shengtai
Pharmaceutical, Inc.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
x
No
fee required.
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Fee computed on table
below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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which transaction applies:
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Per unit price or other
underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated
and state how it was
determined):
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Proposed maximum aggregate value
of transaction:
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Check box if any part of the fee
is offset as provided by Exchange Act Rule 0-11(a)(2) and identify
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Form, Schedule or Registration
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SHENGTAI
PHARMACEUTICAL, INC.
Notice
of Annual Meeting of Stockholders
To Be Held On October 26,
2010
The
Annual Meeting of Stockholders of Shengtai Pharmaceutical, Inc. (the “Company”)
will be held on October 26, 2010 (Tuesday) at 10 am local time at Changda Road
East, Changle, Shandong 262400, The People's Republic of China, for the
following purposes, as more fully described in the accompanying proxy
statement:
1.
To elect five directors to hold office until the 2011 Annual Meeting of
Stockholders and until their successors are elected and qualified.
2.
To authorize the Board of Directors to effect a reverse stock split of issued
and outstanding shares of our Common Stock at a 1 for 2 ratio and, if and when
the reverse stock split is effected, to reduce the number of our authorized
shares of Common Stock and Preferred Stock by the same reverse stock split ratio
and file any required amendment to our Amended and Restated Certificate of
Incorporation to effect the same.
3.
To approve the appointment of Kabani & Company, Inc. as the Company’s
independent auditors for the fiscal year ending June 30, 2011.
4.
To transact such other business as may properly come before the meeting or any
adjournments or postponements thereof.
Only
stockholders of record at the close of business on September 10, 2010 will be
entitled to notice of, and to vote at, such meeting or any adjournments or
postponements thereof.
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BY
ORDER OF THE BOARD OF DIRECTORS
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Qingtai
Liu
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Chairman
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Shandong,
People's Republic of China
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September
15, 2010
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YOUR
VOTE IS IMPORTANT!
WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE EXECUTE THE PROXY FOLLOWING THE
INSTRUCTIONS SET FORTH IN THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
MAILED TO YOU. THIS WILL ENSURE THE PRESENCE OF A QUORUM AT THE MEETING. IF YOU
ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO EVEN IF YOU HAVE
PREVIOUSLY EXECUTED THE PROXY.
SHENGTAI
PHARMACEUTICAL, INC.
Changda
Road East, Development District,
Changle
County, Shandong
The
People’s Republic of China
(86)
536 629 5802
PROXY
STATEMENT
2010 ANNUAL MEETING OF
STOCKHOLDERS
Shengtai Pharmaceutical, Inc., the
“Company”, is furnishing this proxy statement
and the enclosed proxy in connection
with the solicitation of proxies by the Board of Directors of the Company for
use at the Annual Meeting of Stockholders to be held on October 26, 2010
(Tuesday) at 10 am local time at Changda Road East, Changle, Shandong 262400,
The People's Republic of China, and at any adjournments thereof, the “Annual
Meeting”. These materials will be mailed to stockholders on or about September
16, 2010.
Important
Notice Regarding the Availability of Proxy Materials for the Stockholders
Meeting to be Held on October 26, 2010 — the Company’s Annual Report and this
Proxy Statement are available at
http://www.shengtaipharmaceutical.com/cgi/search-en.cgi?f=introduction_en_1_+company_en_1_&t=introduction_en_1_&title=Meeting%20of%20Stockholders
Only
holders of the Company’s Common Stock as of the close of business on September
10, 2010, the “Record Date”, are entitled to vote at the Annual Meeting.
Stockholders who hold shares of the Company in “street name” may vote at the
Annual Meeting only if they hold a valid proxy from their broker. As of the
Record Date, there were 19,169,805 shares of Common Stock
outstanding.
A majority of the outstanding shares of
Common Stock entitled to vote at the Annual Meeting must be present in person or
by proxy in order for there to be a quorum at the meeting. Stockholders of
record who are present at the meeting in person or by proxy and who abstain from
voting, including brokers holding customers’ shares of record who cause
abstentions to be recorded at the meeting, will be included in the number of
stockholders present at the meeting for purposes of determining whether a quorum
is present.
Each
stockholder of record is entitled to one vote at the Annual Meeting for each
share of Common Stock held by such stockholder on the Record Date. Stockholders
do not have cumulative voting rights. Stockholders may vote their shares by
executing the proxy following the instructions on the Notice of Internet
Availability of Proxy Materials mailed to the stockholders. All proxies received
by the Company, which are properly executed and have not been revoked, will be
voted in accordance with the instructions contained in the proxies. If paper
copies of the proxy materials are requested by a stockholder and a signed proxy
card is received which does not specify a vote or an abstention, the shares
represented by that proxy card will be voted for (i) the nominees to the Board
of Directors listed on the proxy card and in this proxy
statement, (ii) authorizing the Board of Directors to effect a
reverse stock split of issued and outstanding shares of our Common Stock at 1
for 2 ratio and, if and when the reverse stock split is effected, to reduce the
number of our authorized shares of Common Stock and Preferred Stock by the same
reverse stock split ratio and file any required amendment to our Amended and
Restated Certificate of Incorporation to effect the same, and (iii) approving
the appointment of Kabani & Company, Inc. as the Company’s independent
auditors for the fiscal year ending June 30, 2011. The Company is not aware, as
of the date hereof, of any matters to be voted upon at the Annual Meeting other
than those stated in this proxy statement and the accompanying Notice of Annual
Meeting of Stockholders. If any other matters are properly brought before the
Annual Meeting, the proxy gives discretionary authority to the persons named as
proxies to vote the shares represented by the proxy in their
discretion.
Under
Delaware law and the Company’s Amended and Restated Certificate of Incorporation
and Bylaws, if a quorum exists at the meeting, the affirmative vote of a
plurality of the votes cast at the meeting is required for the election of
directors. A properly executed proxy marked “Withhold authority” with respect to
the election of one or more directors will not be voted with respect to the
director or directors indicated, although it will be counted for purposes of
determining whether there is a quorum. For each other item, the affirmative vote
of the holders of a majority of the shares represented in person or by proxy and
entitled to vote on the item will be required for approval. A properly executed
proxy marked “Abstain” with respect to any such matter will not be voted,
although it will be counted for purposes of determining whether there is a
quorum. Accordingly, an abstention will have the effect of a negative
vote.
For
shares held in “street name” through a broker or other nominee, the broker or
nominee may not be permitted to exercise voting discretion with respect to some
of the matters to be acted upon. Thus, if stockholders do not give their broker
or nominee specific instructions, their shares may not be voted on those matters
and will not be counted in determining the number of shares necessary for
approval. Shares represented by such “broker non-votes” will, however, be
counted in determining whether there is a quorum.
A
stockholder of record may revoke a proxy at any time before it is voted at the
Annual Meeting by (a) following the instructions on the website hosting
proxy materials and voting as specified in the Notice of Internet Availability
or (b) if the proxy is executed in paper form, delivering another duly executed
proxy bearing a later date or (b) attending the Annual Meeting and voting
in person. Attendance at the Annual Meeting will not revoke a proxy unless the
stockholder actually votes in person at the meeting.
The proxy
is solicited by the Board of Directors of the Company. The Company will pay all
of the costs of soliciting proxies. In addition to solicitation by mail or
through internet, officers, directors and employees of the Company may solicit
proxies personally, or by telephone, without receiving additional compensation.
The Company, if requested, will also pay brokers, banks and other fiduciaries
who hold shares of Common Stock for beneficial owners for their reasonable
out-of-pocket expenses of forwarding these materials to
stockholders.
PROPOSAL
NO. 1 - ELECTION OF BOARD OF DIRECTORS
The name
and age of each member of the Board of Directors of the Company is set forth
below. The term of each director is scheduled to expire at the Annual
meeting.
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Name
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Age
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Position
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Qingtai Liu
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51
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Chairman
of the Board and Chief Executive Officer
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Yongqiang Wang
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41
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Director
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Yaojun
Liu
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34
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Director
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Winfred Lee
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50
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Director
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Fei
He
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42
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Director
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At the
Annual Meeting, the stockholders will vote on the election of Qingtai Liu,
Yongqiang Wang, Yaojun Liu, Winfred Lee and Fei He as directors to serve for a
one-year term until the annual meeting of stockholders in 2011 and until their
successors are elected and qualified.
NOMINEES
The
following individuals have been nominated for election to the Board of
Directors:
Qingtai
Liu graduated from the Electrical Engineering Faculty of the Shandong Technical
University with a Bachelor of Science degree in February 1982. He became the
workshop director and head of the production department of Changle Wireless
Device Factory until 1988, whereupon he assumed the position of Head of Science
and Technology at the Changle Power Factory. In 1990, Mr. Liu became the
Director of Weifang Fifth Pharmaceutical Plant. From January 1999 to the
present, he has been the Chairman and Chief Executive Officer of Weifang
Shengtai Pharmaceutical Co., Ltd. Under his leadership, the Company successfully
developed production techniques for glucose and medicinal coating products, and
has won Technology Innovation awards issued by the Chang Le County, Weifang City
and Shandong provincial government offices. The medicinal coating material
technology that Mr. Liu jointly developed with the Shandong University has
been certified by the Technology Development Bureau of the Shandong Province to
be of international standard. Over the years, Mr. Liu has been endorsed by the
Weifang City Government office as a Leading Technology Innovator and a
Distinguished Pharmaceutical Production Director. He also is the deputy to the
People’s Conference of both Weifang City and Changle County.
Yongqiang
Wang graduated with an Associates degree from the Shandong Economic and
Management Institute. Mr. Wang joined Weifang Shengtai in April 2006 as
Assistant to the Chief Executive Office with major responsibilities in
supervising the Finance Department. He assumed the position of Manager of
the Finance Department of Weifang Shengtai in February 2007. Before he
joined Weifang Shengtai, Mr. Wang was Finance Manager at Shandong Lehua Group
Co., Ltd from January 1996 to April 2006, and Finance Manager at Shandong
Hongxiang Food General Factory from January 1994 to December 1995.
Yaojun
Liu has been a partner at Global Law Office, a law firm based in Beijing, the
PRC since 2006. Between 2003 and 2006, Mr. Liu served as an attorney at Jingtian
& Gongcheng Law Firm, a law firm based in Beijing, the PRC. Before
practicing law, Mr. Liu was a senior project manager at the Investment Banking
Headquarters of Haitong Securities Co., Ltd. Mr. Liu graduated with a Master of
Economic Law from Renmin University, Beijing, China in 2001. He then graduated
with a LL.M. of Commercial Law from University of Sheffield, UK in 2003. Mr. Liu
is a Qualified Practice Lawyer and also a Certified Public Accountant in
China.
Winfred
Lee has been a Contract Administrator with Tenet Healthsystems for South Bay
Medical Center, North Hollywood Medical Center, Midway Hospital, Century City
Hospital, and Brotman Medical Center from 1997. Mr. Lee graduated with a
Bachelor of Science in Business Management from Brigham Young University, Provo,
Utah, in 1984. He then graduated with a Doctor of Medicine from the Medical
College of Wisconsin, Milwaukee, Wisconsin, in 1988 and a Doctor of
Jurisprudence from the J. Reuben Clark Law School at Brigham Young University,
Provo, Utah, in 1992. Mr. Lee is a member of the California Bar and the Phi
Delta Phi Legal Society.
Fei He
has been Director, Corporate Strategy and Acquisitions of DSM (China) Limited
since 2007. Between 2005 and 2007, Mr. He worked for A.T. Kearney in China and
led the strategic consultation for several merger and acquisition projects in
the hi-tech industries in China. Before going back to China, Mr. He was a
director of the WOLVERINE Venture Capital Fund in the United States between 2002
and 2005. Prior to that, Mr. He worked for Pfizer in the United States since
1998 in several positions as post-doctoral researcher, senior scientist and
business development manager. Mr. He graduated with a Bachelor of Science from
Beijing University, Beijing, China in 1990. He then graduated with a Ph. D. of
Chemistry from University of California, Davis in 1998. Mr. He also obtained a
Master of Business Administration from University of Michigan Ross School of
Business in 2004.
There are
no family relationships among any of the Company’s directors or executive
officers.
DIRECTOR
NOMINATION
Criteria
for Board Membership. In recommending candidates for appointment or
re-election to the Board, the nominating/corporate governance committee, the
“nominating/corporate governance committee”, considers the appropriate balance
of experience, skills and characteristics required of the Board of Directors. It
seeks to ensure that at least three directors are independent under the rules of
the Nasdaq Stock Market or NYSE Amex, as applicable, that members of the
Company’s audit committee meet the financial literacy and sophistication
requirements under the rules of the Nasdaq Stock Market or NYSE Amex, as
applicable, and at least one member of the Board qualifies as an “audit
committee financial expert” under the rules of the Securities and Exchange
Commission. Nominees for directors are recommended on the basis of their depth
and breadth of experience, integrity, ability to make independent analytical
inquiries, understanding of the Company’s business environment, and willingness
to devote adequate time to Board duties.
Stockholder Nominees. The
nominating/corporate governance committee will consider written proposals from
stockholders for nominees for director. Any such nominations should be submitted
to the nominating/corporate governance committee, c/o Mr. Winfred Lee, Chairman
of the nominating/corporate governance committee, and should include the
following information: (a) all information relating to such nominee that is
required to be disclosed pursuant to Regulation 14A under the Securities
Exchange Act of 1934, including such person’s written consent to being named in
the proxy statement as a nominee and to serving as a director if elected;
(b) the names and addresses of the stockholders making the nomination and
the number of shares of the Company’s Common Stock which are owned beneficially
and of record by such stockholders; and (c) appropriate biographical
information and a statement as to the qualification of the nominee, and should
be submitted in the time frame described in the Bylaws of the Company and under
the caption, “Stockholder Proposals for 2011 Annual Meeting”
below.
Process
for Identifying and Evaluating Nominees. The nominating/corporate governance
committee believes the Company is well-served by its current directors. In the
ordinary course, absent special circumstances or a material change in the
criteria for Board membership, the nominating/corporate governance committee
will re-nominate incumbent directors who continue to be qualified for Board
service and are willing to continue as directors. If an incumbent director is
not standing for re-election, or if a vacancy on the Board occurs between annual
stockholder meetings, the nominating/corporate governance committee will seek
out potential candidates for Board appointment who meet the criteria for
selection as a nominee and have the specific qualities or skills being sought.
Director candidates will be selected based on input from members of the Board,
senior management of the Company and, if the nominating/corporate governance
committee deems appropriate, a third-party search firm. The nominating/corporate
governance committee will evaluate each candidate's qualifications and check
relevant references; in addition, such candidates will be interviewed by at
least one member of the nominating/corporate governance committee. Candidates
meriting serious consideration will meet with all members of the Board. Based on
this input, the nominating/corporate governance committee will evaluate which of
the prospective candidates is qualified to serve as a director and whether the
committee should recommend to the Board that this candidate be appointed to fill
a current vacancy on the Board, or presented for the approval of the
stockholders, as appropriate.
The
Company has never received a proposal from a stockholder to nominate a director.
Although the nominating/corporate governance committee has not adopted a formal
policy with respect to stockholder nominees, the committee expects that the
evaluation process for a stockholder nominee would be similar to the process
outlined above.
Board Nominees for the 2010 Annual
Meeting.
The nominees listed in this proxy statement are the current five
directors standing for re-election.
BOARD
LEADERSHIP STRUCTURE
Our
Bylaws do not prohibit the Chairman of the Board from being the Chief Executive
Officer at the same time. Mr. Qingtai Liu is currently the Chairman of the
Board and the Chief Executive Officer of the Company. We believe that there are
a wide array of leadership structures that could apply to different business
models and that every company should be afforded the opportunity to determine
the ideal structure for its board leadership, which leadership structure may
change over time. Our leadership structure of a combined role of Chief Executive
Officer and Chairman of the Board has proven extremely effective for us
historically in the areas of Company’s performance and corporate governance,
among others. The Company does not have a lead independent director. The
Company, in consideration of the size of the Board and the presence of three
independent directors who constitute the majority of the Board, believes that it
is not necessary to appoint a lead independent director. The Board has
determined that its current structure is in the best interests of the Company
and its stockholders. We believe the independent nature of the Audit
Committee, the Compensation Committee and the Nominating Committee, also ensures
that the Board maintains a level of independent oversight of management that is
appropriate for the Company. The Board will review from time to time the
appropriateness of its leadership structure and implement any changes it may
deem necessary.
RISK
OVERSIGHT
The Board
has the ultimate oversight responsibility for the risk management process.
A fundamental part of risk management is not only understanding the risks the
Company faces and what steps management is taking to manage those risks, but
also understanding what level of risk is appropriate for the Company. In setting
the Company’s business strategy, the Board assesses the various risks being
mitigated by management and determines what constitutes an appropriate level of
risk for the Company. While the ultimate risk oversight rests with the
Board, various committees of the Board also have responsibility for risk
management, that is, the Audit Committee focuses on financial risk, including
internal controls, and receives financial risk assessment reports from
management. Risks related to the compensation programs are reviewed by the
Compensation Committee. The Board is advised by these committees of significant
risks and management’s response via periodic updates.
DIRECTOR
COMPENSATION
Our
current non-executive directors are compensated for all services they perform as
directors, including attendance at Board of Directors meetings and service as
members of committees of the Board of Directors to which they are appointed.
Executive officers are not compensated for services they perform as directors of
the Company. The details of such compensation are:
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annual
compensation of $15,000 to $30,000;
and
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we
may also grant the non-executive directors certain options to purchase our
shares, the amount and terms of which shall be determined by the Board of
Directors.
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The
non-executive directors are also reimbursed for all of their out-of-pocket
expenses in traveling to and attending meetings of the Board of Directors and
committees on which they would serve.
Based on
the number of the board of directors’ service years, workload and performance,
the Company decides on their pay. The management believes that the pay for the
members of the board of directors was appropriate as of June 30, 2010. The
compensation that directors received for serving on the Board of Directors for
fiscal year 2010 was as follows:
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Name
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Fees
earned or
paid in
cash
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Stock
Awards
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Options
Awards*
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Non-equity
incentive
plan
compensation
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Change in
pension value
and
nonqualified
deferred
compensation
earnings
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All other
compensation
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Total
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Changxin Li**
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$
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15,000
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-
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$
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$
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-
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$
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-
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$
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-
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$
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15,000
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Winfred
Lee
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$
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22,500
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-
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$
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$
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-
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$
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-
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$
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-
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$
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22,500
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Yaojun Liu
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$
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30,000
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-
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$
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$
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-
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$
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-
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$
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-
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$
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30,000
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Fei He
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$
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30,000
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-
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$
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$
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-
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$
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-
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$
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-
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$
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30,000
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Chris
W. Wang***
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$
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30,000
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-
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$
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$
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-
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$
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-
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$
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-
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$
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30,000
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* Other
than the cash payment based on the number of a director’s service years,
workload and performance, the Company granted 80,000 options each to independent
directors Yaojun Liu and Fei He in fiscal 2010, which will vest over three
years.
In
accordance with ASC Topic 220 (formerly SFAS No. 123R), the cost of the
above-mentioned stock options issued to directors was measured on the grant date
based on their fair value. The fair value is determined using the Black-Scholes
option pricing model and certain assumptions.
** Mr.
Changxin Li resigned from the board of directors of the Company with effect from
June 1, 2010.
***Mr.
Chris W. Wang resigned from the board of directors of the Company with effect
from October 31, 2009.
All other
directors did not receive compensation for their service on the Board of
Directors, except the first three independent directors mentioned
above.
BOARD
MEETINGS AND COMMITTEES
The
Company’s Board of Directors met 4 times during fiscal 2010. The audit committee
met 4 times, the compensation committee met 4 times and the nominating/corporate
governance committee met 4 times during fiscal 2010. Each member of the Board
attended 75% or more of the aggregate of (i) the total number of Board meetings
held during the period of such member’s service and (ii) the total number of
meetings of the Committees on which such member served, during the period of
such member’s service.
The Board
has determined that the following current directors are “independent” under
current Nasdaq rules: Yaojun Liu, Winfred Lee and Fei He.
The Board
of Directors has standing audit, compensation and nominating/corporate
governance committees.
The
Company’s audit committee charter, nominating/corporate governance committee
charter and compensation committee charter are available on the Company’s
website at the following website:
http://www.shengtaipharmaceutical.com/cgi/search-en.cgi?f=product_en+news_en1+introduction_en_1_+company_en_1_&t=introduction_en2_1_&title=Corporate%20Governance
.
Audit committee.
The audit
committee currently consists of Yaojun Liu
(Chairman),
Winfred Lee and Fei He. The Board has determined that all members of the audit
committee are independent directors under the rules of the Nasdaq Stock Market
and NYSE Amex, as applicable, and each of them is able to read and understand
fundamental financial statements. The Board has determined that Yaojun Liu
qualifies
as an “audit committee financial expert” as defined by the rules of the
Securities and Exchange Commission. The purpose of the audit committee is to
oversee the accounting and financial reporting processes of the Company and
audits of its financial statements. The responsibilities of the audit committee
include appointing and providing the compensation of the independent accountants
to conduct the annual audit of our accounts, reviewing the scope and results of
the independent audits, reviewing and evaluating internal accounting policies,
and approving all professional services to be provided to the Company by its
independent accountants. The audit committee operates under a written charter
that is made available on the website mentioned above.
Compensation committee.
The
compensation committee currently consists of Fei He (Chairman), Yaojun Liu
and
Winfred Lee. The Board has determined that all members of the compensation
committee are independent directors under the rules of the Nasdaq Stock Market
or NYSE Amex, as applicable. The compensation committee administers the
Company’s benefit plans, reviews and administers all compensation arrangements
for executive officers, and establishes and reviews general policies relating to
the compensation and benefits of our officers and employees. The compensation
committee operates under a written charter that is made available on the website
mentioned above.
Nominating/corporate
governance committee.
The
nominating/corporate governance committee currently consists of Winfred Lee
(Chairman), Yaojun Liu and
Fei He, each of whom the Board has
determined is an independent director under the rules of the Nasdaq Stock Market
or NYSE Amex, as applicable. The nominating/corporate governance committee’s
responsibilities include recommending to the Board of Directors nominees for
possible election to the Board of Directors and providing oversight with respect
to corporate governance. The nominating/corporate governance committee operates
under a written charter that is made available on the website mentioned above
and was included in the Form-8K filed with the SEC on June 4,
2010.
At the
Annual Meeting, the stockholders will vote on the election of five directors to
serve for a one-year term until the 2011 annual meeting of stockholders and
until their successors are elected and qualified. The Board of Directors has
unanimously approved the nomination of Qingtai Liu, Yongqiang Wang, Yaojun Liu,
Winfred Lee and Fei He for election to the Board of Directors. The nominees have
indicated that they are willing and able to serve as directors. If any of these
individuals becomes unable or unwilling to serve, the accompanying proxy may be
voted for the election of such other person as shall be designated by the Board
of Directors. The Directors will be elected by a plurality of the votes cast, in
person or by proxy, at the Annual Meeting, assuming a quorum is present.
Stockholders do not have cumulative voting rights in the election of
directors.
The Board of Directors recommends a
vote “for”
the election
of Qingtai Liu, Yongqiang Wang, Yaojun Liu, Winfred Lee and Fei He as
directors.
Unless
otherwise instructed, it is the intention of the persons named in the proxy to
vote shares represented by properly executed proxy for the election of Qingtai
Liu, Yongqiang Wang, Yaojun Liu, Winfred Lee and Fei He.
PROPOSAL
NO. 2 - APPROVAL OF REVERSE STOCK SPLIT
General
Our
stockholders are being asked to act upon a proposal to approve an amendment to
our Amended and Restated Certificate of Incorporation to effect a reverse stock
split of all of the outstanding shares of Common Stock of the Company, at a
ratio of one-for-two ("Reverse Stock Split"), and to reduce the number of
authorized shares of our Common Stock and preferred stock (the “Reduction”). On
August 11, 2010, the Board of Directors approved the amendment to our Amended
and Restated Certificate of Incorporation, subject to obtaining stockholder
approval, to effect the Reverse Stock Split and the Reduction. The Board
of Directors has directed that this proposal to approve this amendment to our
Amended and Restated Certificate of Incorporation be submitted to our
stockholders for consideration and action.
The
percentage of Common Stock outstanding immediately following the Reverse Stock
Split held by each stockholder may be slightly adjusted from the percentage of
Common Stock outstanding held immediately prior to the Reverse Stock Split,
solely due to the adjustments that may result from the treatment of fractional
shares as described below.
The text
of the proposed amendment to the Company's Amended and Restated Certificate of
Incorporation (“Certificate of Amendment”) to effect the Reverse Stock Split and
the Reduction as described in this proposal is set forth in Annex A attached to
this Proxy Statement.
If the
Certificate of Amendment is approved by our stockholders, the Company will file
the Certificate of Amendment with the Delaware Secretary of State. The
amendment will become effective on the Effective Date (as defined in the
Certificate of Amendment).
Our Board
of Directors reserves the right to elect to abandon the Reverse Stock Split if
it determines, in its sole discretion, that the Reverse Stock Split is no longer
in the best interests of the Company and the stockholders.
If the
Reverse Stock Split is effected, we will also proportionately reduce the number
of authorized shares of our Common Stock and Preferred Stock. Accordingly, if
the Reverse Stock Split is approved, we will adopt amendments to Article IV of
our Amended and Restated Certificate of Incorporation to reduce the total number
of authorized shares of our Common Stock and Preferred Stock. As discussed
above, the text of the proposed amendments to Article IV is set out in the
Certificate of Amendment set forth in Annex A hereto. If our Board of Directors
abandons the Reverse Stock Split, it will also abandon the related reduction in
the number of authorized shares of Common Stock and Preferred
Stock.
Reasons
For Reverse Stock Split
The
primary reason for the Reverse Stock Split is to decrease the number of shares
of our Common Stock outstanding to achieve an increase in the per share market
price of the Company's Common Stock for the purpose of applying for listing of
our Common Stock on NYSE Amex Equities or a similar exchange.
In
addition, the Board believes that the decrease in the number of issued and
outstanding shares of Common Stock as a consequence of the Reverse Stock Split,
and the potential resultant increase in the price of the Common Stock, could
encourage interest in the Common Stock and possibly promote greater liquidity
for our stockholders, although such liquidity could be adversely affected by the
reduced number of shares outstanding after the Reverse Stock Split.
Although
reducing the number of outstanding shares of our Common Stock through the
Reverse Stock Split is intended, absent other factors, to increase the per share
market price of our Common Stock, other factors, such as our financial results,
market conditions and the market perception of our business, may adversely
affect the market price of our Common Stock. As a result, there can be no
assurance that the Reverse Stock Split, if completed, will result in the
intended benefits described above, that the market price of our Common Stock
will increase following the Reverse Stock Split or that the market price of our
Common Stock will not decrease in the future.
Moreover,
there can be no assurance that the market price of the Common Stock after the
Reverse Stock Split will adjust to reflect the conversion ratio (e.g., if the
market price is $0.03 before the Reverse Stock Split and the ratio is one
(1) new share for every two (2) shares outstanding, there can be no
assurance that the market price immediately after the Reverse Stock Split will
be $0.06 (2 x $0.03)), or that the market price following the Reverse Stock
Split will either exceed or remain in excess of the current market price.
Accordingly, the total market capitalization of our Common Stock after the
Reverse Stock Split may be lower than the total market capitalization before the
Reverse Stock Split.
Effects
of Reverse Stock Split on the Common Stock
If the
Reverse Stock Split is approved, at the Effective Date, each two (2) outstanding
shares of Common Stock will immediately and automatically be converted into one
(1) share of Common Stock based on the Reverse Stock Split ratio of 1 for 2
shares of Common Stock. Thus, for example, if a stockholder currently owns
100,000 shares of Common Stock, following the Reverse Stock Split, the
stockholder will own 50,000 shares of Common Stock - each share of Common
Stock will have immediately and automatically have been converted into one-half
of a share of Common Stock. Based on the 19,169,805 shares of Common Stock
outstanding as of the Record Date, the approximate number of shares of Common
Stock that would be outstanding following the Reverse Stock Split is
approximately 9,584,903 shares.
No
fractional shares of the Common Stock will be issued in connection with the
Reverse Stock Split. Each holder of Common Stock who would otherwise receive a
fractional share of Common Stock pursuant to the Reverse Stock Split will
receive one share of the Common Stock.
Because
the Reverse Stock Split will apply to all issued and outstanding shares of the
Common Stock and outstanding rights to purchase Common Stock, the Reverse Stock
Split will not alter the relative rights and preferences of existing
stockholders. If the Reverse Stock Split is approved, and the Board of Directors
determines to effect the Reverse Stock Split, some stockholders may consequently
own less than one hundred shares of Common Stock. A purchase or sale of less
than one hundred shares, known as an "odd lot" transaction, may result in
incrementally higher trading costs through certain brokers, particularly "full
service" brokers. Therefore, those stockholders who own less than one hundred
shares following the Reverse Stock Split may be required to pay higher
transaction costs should they then determine to sell their shares of Common
Stock.
Effects
of Reverse Stock Split on Warrants and Stock Options
The
number of shares of Common Stock subject to outstanding warrants and stock
options issued by the Company will be reduced by the same ratio as the reduction
in the outstanding shares of Common Stock resulting from the Reverse Stock
Split. The number of shares of underlying stock warrants and stock options
will be reduced by a factor of 2. Under the terms of the warrants and
stock options, and assuming, a 1-for-2 Reverse Stock Split, the number of shares
covered by each outstanding warrant and stock option will be reduced to one-half
of the number currently covered and the exercise price will be increased by
twice the current exercise price.
Effectiveness
of the Reverse Stock Split
The
Reverse Stock Split, if approved by the Company's stockholders and implemented
by the Board of Directors, will become effective upon the filing with the
Delaware Secretary of State of the Certificate of Amendment in the form
substantially the same as attached to this Proxy Statement as Annex A. The
exact timing of the filing of such Certificate of Amendment will be determined
by the Board of Directors based upon its evaluation as to when such action will
be most advantageous to the Company and its stockholders, and the Board of
Directors reserves the right, notwithstanding stockholder approval and without
further action by the stockholders, to elect not to proceed with the Reverse
Stock Split if, at any time prior to filing the Certificate of Amendment, the
Board of Directors, in its sole discretion, determines that it is no longer in
the best interests of the Company and its stockholders.
Effect
on Legal Ability to Pay Dividends
The Board
has not declared, nor does it have any plans to declare in the foreseeable
future, any distributions of cash, dividends or other property, and we are not
in arrears on any dividends. Therefore, we do not believe that the Reverse
Stock Split will have any effect with respect to future distributions, if any,
to our stockholders.
Treatment
of Fractional Shares; Exchange of Stock Certificates
The
Company will not issue fractional shares in connection with the Reverse Stock
Split. Instead, each holder of Common Stock who would otherwise have been
entitled to a fraction of a share will be entitled to receive one (1) share of
Common Stock as of the Effective Date.
If the
Reverse Stock Split is effected, our Common Stock will have new Committee on
Uniform Securities Identification Procedures (CUSIP) numbers, which is a number
used to identify our equity securities, and stock certificates with the older
CUSIP numbers will need to be exchanged for stock certificates with the new
CUSIP numbers by following the procedures described below.
Beneficial
Holders of Shares of Common Stock (i.e. stockholders who hold in street
name)
Upon the
Reverse Stock Split, we intend to treat shares of Common Stock held by
stockholders through a bank, broker, custodian or other nominee, in the same
manner as registered stockholders whose shares of Common Stock are registered in
their names. Banks, brokers, custodians or other nominees will be instructed to
effect the Reverse Stock Split for their beneficial holders holding our shares
of Common Stock in street name. However, these banks, brokers, custodians or
other nominees may have different procedures than registered stockholders for
processing the Reverse Stock Split. If a stockholder holds our shares of Common
Stock with a bank, broker, custodian or other nominee and has any questions in
this regard, stockholders are encouraged to contact their bank, broker,
custodian or other nominee.
Registered
“Book-Entry” Holders of Shares of Common Stock (i.e. stockholders that are
registered on the transfer agent’s books and records but do not hold stock
certificates)
Certain
of our registered holders of shares of Common Stock may hold some or all of
their shares of Common Stock electronically in book-entry form with the transfer
agent. These stockholders do not have stock certificates evidencing their
ownership of the shares of Common Stock. They are, however, provided with a
statement reflecting the number of shares of Common Stock registered in their
accounts.
If a
stockholder holds registered shares of Common Stock in book-entry form with the
transfer agent, they will be sent a transmittal letter by our transfer agent
after the Reverse Stock Split is effected.
Holders
of Certificated Shares of Common Stock
Stockholders
holding our shares of Common Stock in certificated form will be sent a
transmittal letter by the transfer agent after the Reverse Stock Split is
effected. The letter of transmittal will contain instructions on how a
stockholder should surrender his, her or its certificate(s) representing our
shares of Common Stock (the Old Certificates) to the transfer agent in exchange
for certificates representing the appropriate number of whole shares of
post-Reverse Stock Split shares of Common Stock (the New Certificates). No New
Certificates will be issued to a stockholder until such stockholder has
surrendered all Old Certificates, together with a properly completed and
executed letter of transmittal, to the transfer agent. No stockholder will be
required to pay a transfer or other fee to exchange his, her or its Old
Certificates. Stockholders will then receive a New Certificate(s) representing
the number of shares of Common Stock that they are entitled as a result of the
Reverse Stock Split. Until surrendered, we will deem outstanding Old
Certificates held by stockholders to be cancelled and only to represent the
number whole shares of post- Reverse Stock Split shares of Common Stock to which
these stockholders are entitled. Any Old Certificates submitted for exchange,
whether because of a sale, transfer or other disposition of stock, will
automatically be exchanged for New Certificates. If an Old Certificate has a
restrictive legend on the back of the Old Certificate, the New Certificate will
be issued with the same restrictive legends that are on the back of the Old
Certificate.
Certain
Federal Income Tax Consequences
The
following discussion of the material federal income tax consequences of the
Reverse Stock Split is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury regulations promulgated thereunder, judicial decisions,
and current administrative rulings and practices, all as in effect on the date
hereof, and any or all of which could be repealed, overruled or modified at any
time, possibly with retroactive effect. No ruling from the Internal Revenue
Service (the "IRS") with respect to the matters discussed herein has been
requested, and there is no assurance that the IRS would agree with the
conclusions set forth in this discussion.
This
discussion may not address certain federal income tax consequences that may be
relevant to particular stockholders in light of their personal circumstances
(such as holders who do not hold their shares of Common Stock as capital assets
within the meaning of Section 1221 of the Code, who are subject to the
alternative minimum tax provisions of the Code, who hold their shares as a hedge
or as part of a hedging, straddle, conversion or other risk reduction
transaction, who are dealers in securities, banks, insurance companies, foreign
individuals and entities, financial institutions or tax-exempt organizations, or
who acquired their shares in connection with stock option or stock purchase
plans or in other compensatory transactions). This discussion also does not
address any tax consequences under state, local or foreign laws.
Stockholders
are urged to consult their tax advisors as to the particular federal, state,
local or foreign tax consequences to them of the Reverse Stock
Split.
Except as
discussed below, a stockholder generally will not recognize a gain or loss by
reason of such stockholder's receipt of new shares of Common Stock pursuant to
the Reverse Stock Split solely in exchange for shares of Common Stock held by
such stockholder immediately prior to the Reverse Stock Split. A stockholder's
aggregate tax basis in the shares of Common Stock received pursuant to the
Reverse Stock Split (including any fractional interest) will equal the
stockholder's aggregate basis in the Common Stock exchanged therefore and will
be allocated among the shares of Common Stock received in the Reverse Stock
Split on a pro-rata basis. Stockholders who have used the specific
identification method to identify their basis in the shares of Common Stock held
immediately prior to the Reverse Stock Split should consult their own tax
advisers to determine their basis in the shares of Common Stock received in
exchange therefore in the Reverse Stock Split. A stockholder's holding period in
the shares of Common Stock received pursuant to the Reverse Stock Split will
include the stockholder's holding period in the shares of Common Stock
surrendered in exchange therefore provided the shares of Common Stock
surrendered are held as capital assets at the time of the Reverse Stock Split. A
stockholder who would otherwise be entitled to a fractional share as a result of
the Reverse Stock Split, will/will not recognize a gain or loss on the receipt
of one share issued pursuant to the Reverse Stock Split.
At the
Annual Meeting, the stockholders will be asked to vote on the approval of an
amendment to our Amended and Restated Certificate of Incorporation to effect a
reverse stock split of all of the outstanding shares of Common Stock of the
Company, at a ratio of one-for-two, and to reduce the number of authorized
shares of our Common Stock and preferred stock on the same reverse stock split
ratio.
The Board of Directors recommends a
vote “for”
the approval
of an amendment to our Amended and Restated
Certificate of Incorporation to
effect a reverse stock split of all of the outstanding shares of Common Stock of
the Company, at a ratio of one-for-two and to reduce the number of authorized
shares of our Common Stock and preferred stock on the same reverse stock split
ratio.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the
twelve months ended June 30, 2010, none of our executive officers had a
relationship that would constitute an interlocking relationship with executive
officers or directors of another entity or insider participation in compensation
decisions.
COMMUNICATIONS
WITH DIRECTORS
Stockholders interested in
communicating directly with our Directors may send an e-mail to the Chairman of
the Company’s audit committee, Mr. Yaojun Liu,
at larryliu@globallawoffice.com.cn. Mr.
Liu will review all such correspondence and will regularly forward to the Board
of Directors copies of all such correspondence that deals with the functions of
the Board or committees thereof or that he otherwise determines requires their
attention. Directors may at any time review all of the correspondence received
that is addressed to members of the Board of Directors and request copies of
such correspondence. Concerns relating to accounting, internal controls or
auditing matters will immediately be brought to the attention of the Audit
Committee and handled in accordance with procedures established by the Audit
Committee with respect to such matters.
The
Company has a policy of encouraging all directors to attend the annual
stockholder meetings. This will be the first Annual Meeting since the Company's
current management took office in May, 2007.
CODE
OF CONDUCT AND ETHICS
The
Company has adopted a code of conduct and ethics that applies to all directors,
officers and employees, including its principal executive officer, principal
financial officer and controller. This code of conduct and ethics is made
available on the Company’s website at the following website
address:
http://www.shengtaipharmaceutical.com/cgi/search-en.cgi?f=product_en+news_en1+introduction_en_1_+company_en_1_&t=introduction_en2_1_&title=Corporate%20Governance
SECURITY
OWNERSHIP OF DIRECTORS AND
OFFICERS
AND CERTAIN BENEFICIAL OWNERS
The
following table sets forth certain information known to the Company with respect
to the beneficial ownership of our voting securities by (i) any person or group
owning more than 5% of any class of voting securities, (ii) each director, (iii)
our chief executive officer, chief financial officer and the Company’s top three
most highly compensated officers and (iv) all executive officers and directors
as a group as of June 30, 2010.
|
Name and Address of Beneficial Owner
|
|
Title of Class
|
|
|
Amount and Nature of
Beneficial Ownership
|
|
|
Percent of Class
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qingtai
Liu (1)
|
|
|
|
|
|
|
|
|
|
|
Chief
Executive Officer and Chairman of the Board
|
|
|
|
|
|
|
|
|
|
|
Hi-Tech
Industrial Park of Changle County,
Shandong
Province, PRC 262400
|
|
Common Stock
|
|
|
|
7,766,325
|
(2)
|
|
|
38.49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yiru
Shi (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
former
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
Hi-Tech
Industrial Park of Changle County,
Shandong
Province, PRC 262400
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hu
Ye (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hi-Tech
Industrial Park of Changle County,
Shandong
Province, PRC 262400
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yongqiang
Wang (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former
Chief Financial Officer and director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hi-Tech
Industrial Park of Changle County,
Shandong
Province, PRC 262400
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris
W. Wang (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
former
director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hi-Tech
Industrial Park of Changle County,
Shandong
Province, PRC 262400
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yaojun
Liu (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hi-Tech
Industrial Park of Changle County,
Shandong
Province, PRC 262400
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changxin
Li (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
former
director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hi-Tech
Industrial Park of Changle County,
Shandong
Province, PRC 262400
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Fei
He (1)
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
Hi-Tech
Industrial Park of Changle County,
Shandong
Province, PRC 262400
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pope
Investments LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5150
Poplar Avenue, Suite 805, Memphis,
TN
38137
|
|
Common Stock
|
|
|
|
2,650,000
|
|
|
|
13.82
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Directors and Executive Officers (8 persons)
|
|
Common Stock
|
|
|
|
7,766,325
|
|
|
|
38.49
|
%
|
(1)
Messrs. Qingtai Liu and Yongqiang Wang were appointed directors of the Company
on May 15, 2007. Messrs. Changxin Li and Winfred Lee were appointed directors of
the Company on June 22, 2007. Mr. Chris W. Wang was appointed director of the
Company on June 22, 2007 and resigned from the board with effect from October
31, 2009. Ms. Yiru Shi was appointed as our Chief Financial Officer
in May 2008 and resigned in November 2009. Mr. Yongqiang Wang was appointed as
our Chief Financial Officer in November 2009 and resigned in March 2010. Mr. Ye
was appointed as our Chief Financial Officer in March 2010. Mr. Changxin Li
resigned from the board with effect from June 1, 2010. Mr. Yaojun Liu
and Mr. Fei He were appointed directors of the Company on June 1,
2010.
(2)
Includes 776,600 shares beneficially owned by Mr. Liu’s wife and major
child.
(3) Based
on 19,169,805 shares of Common Stock issued and outstanding on June 30, 2010. In
addition, in determining the percentage of Common Stock owned by a person on
June 30, 2010, (a) the numerator is the number of shares of the class
beneficially owned by such person and includes shares which the beneficial owner
may acquire within 60 days upon conversion or exercise of a derivative security,
and (b) the denominator is the sum of (i) the shares of that class outstanding
on June 30, 2010, and (ii) the total number of shares that the beneficial owner
may acquire upon conversion or exercise of a derivative security within such 60
day period. Unless otherwise stated, each beneficial owner has sole power to
vote and dispose of the shares.
On
January 4, 2008, the Company adopted the Shengtai Pharmaceutical, Inc. 2007
Stock Incentive Plan, the “Stock Incentive Plan”. On May 14, 2008, the Company
granted 500,000 stock options and 160,000 non-qualified stock options pursuant
to the Stock Incentive Plan. All options have an exercise price of $3.34, which
was the closing price on the date of grant, and expire five years after the date
of grant. All options vest over a period of three years from the date of grant.
There were no option exercises or stock vested in fiscal
2010.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
In 2003,
Weifang Shengtai “Weifang Shengtai”, entered into a joint venture partnership
with Weifang City Investment Company and Changle Century Sun Paper Industry Co.,
Ltd, "Changle Paper", and formed Changle Shengshi Redian Co., Ltd, "Changle
Shengshi". Changle Shengshi's principal activity is to produce and
sell electricity and steam to Weifang Shengtai and Changle Paper for the use of
their own production. Weifang Shengtai owns 20% of Changle Shengtai as of March
31, 2010 after ownership change and new investments, and accounts for the
investment under the equity method of accounting. As of March 31,
2010, $6,035,188 is reported as investment in Changle Shengshi on the
balance sheet, which includes equity investment and earnings on equity
investment.
Related
Party Transactions
As an
investor and stockholder of Changle Shengshi, Weifang Shengtai enjoys a
preferential discount of 19.7% off the market price of electricity supplied by
the plant to Weifang Shengtai. The intercompany profits were eliminated on the
Company’s financial statements.
Weifang
Shengtai had a total of $437,112, and $714,776 of accounts payable and accrued
liabilities to Changle Shengshi at June 30, 2009, and 2008, respectively. The
utilities expenses amounted to $8,612,090, and $9,851,833, for the years ending
June 30, 2009, and 2008, respectively.
The
Company loaned money to Changle Shengshi and entered into a loan contract as
follows:
|
|
|
June 30, 2009
|
|
|
June 30, 2008
|
|
|
Due
on September 14, 2009, unsecured, 7.6% interest rate per
annum
|
|
$
|
439,500
|
|
|
$
|
437,700
|
|
|
Total
|
|
$
|
439,500
|
|
|
$
|
437,700
|
|
SECTION 16(a) BENEFICIAL
OWNERSHIP COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s
executive officers and directors and persons who own more than 10% of a
registered class of the Company’s equity securities to file with the Securities
and Exchange Commission initial statements of beneficial ownership, reports of
changes in ownership and annual reports concerning their ownership of Common
Stock and other of the Company’s equity securities, on Forms 3, 4 and 5,
respectively. Executive officers, directors and greater than 10% stockholders
are required by Commission regulations to furnish the Company with copies of all
Section 16(a) reports they file. To the best of the Company’s knowledge, based
solely upon a review of the Forms 3, 4 and 5 filed, no officer, director or 10%
beneficial stockholder failed to file on a timely basis any reports required by
Section 16(a).
EXECUTIVE
COMPENSATION
The
total compensation paid to our executive leadership team is based on their
workload, performance and experience. The following is a summary of the
compensation we paid for each of the two years ended June 30, 2009 and 2008,
respectively, (i) to the person who acted as our principal executive officer
during our fiscal year ended June 30, 2010 and (ii) to a former employee who
received compensation in excess of $100,000 for one of these years. None of our
other executive officers received compensation in excess of $100,000 for any of
these two years.
|
Name and
Principal
Position
|
|
Year
|
|
Salary($)
|
|
|
Bonus($)
|
|
|
Stock
Awards($)
|
|
|
Option
Awards($)
|
|
|
Non Equity
Incentive Plan Compensation
($)
|
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($ )
|
|
|
All Other
Compensation ($)
|
|
|
Total ($)
|
|
|
Qingtai
Liu (1)
|
|
2009
|
|
|
120,000
|
]
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
120,000
|
|
|
|
|
2008
|
|
|
133714
|
|
|
|
—
|
|
|
|
—
|
|
|
|
96,253
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
229,967
|
|
|
Hu
Ye (2)
|
|
2009
|
|
|
——
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
_____
|
|
|
|
|
2008
|
|
|
——
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
_____
|
|
|
Yongqiang
Wang (3)
|
|
2009
|
|
|
32,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
_____
|
|
|
|
|
2008
|
|
|
——
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
_____
|
|
|
Yiru
Shi (4)
|
|
2009
|
|
|
108,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
108,000
|
|
|
|
|
2008
|
|
|
22,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,500
|
|
|
(1)
|
Chairman
and Chief Executive Officer (Principal Executive
Officer).
|
|
(2)
|
Mr.
Ye joined us as our Chief Financial Officer in March
2010.
|
|
(3)
|
Mr.
Wang was appointed as our Chief Financial Officer in November 2009 and
resigned in March 2010.
|
|
(4)
|
Ms.
Shi joined us as our Chief Financial Officer in May 2008 and resigned in
November 2009.
|
Outstanding
Equity Awards at Fiscal Year-End:
Not
Applicable.
REPORT
OF THE AUDIT COMMITTEE
Under the
guidance of a written charter adopted by the Board of Directors, the purpose of
the Audit Committee is to oversee the accounting and financial reporting
processes of the Company and audits of its financial statements. The
responsibilities of the Audit Committee include appointing and providing for the
compensation of the independent accountants. Each of the members of the Audit
Committee meets the independence requirements of Nasdaq and NYSE Amex, as
applicable.
Management
has primary responsibility for the system of internal controls and the financial
reporting process. The independent accountants have the responsibility to
express an opinion on the financial statements based on an audit conducted in
accordance with generally accepted auditing standards.
In this
context and in connection with the audited financial statements contained in the
Company’s Annual Report on Form 10-K for 2009, the Audit
Committee:
|
·
|
reviewed and discussed the
audited financial statements as of and for the fiscal year ended June 30,
2009 with the Company’s management and the independent
accountants;
|
|
·
|
discussed with Moore Stephens
Wurth Frazer and Torbet, LLP, the Company’s independent auditors, the
matters required to be discussed by Statement of Auditing Standards
No. 61, Communication with Audit Committees, as amended by Statement
of Auditing Standards No. 90, Audit Committee
Communications;
|
|
·
|
reviewed the written disclosures
and the letter from Moore Stephens Wurth Frazer and Torbet, LLP required
by the Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, discussed with the auditors their
independence, and concluded that the non-audit services performed by Moore
Stephens Wurth Frazer and Torbet, LLP are compatible with maintaining
their independence;
|
|
·
|
based on the foregoing reviews
and discussions, recommended to the Board of Directors that the audited
financial statements be included in the Company’s 2009 Annual Report on
Form 10-K for the fiscal year ended June 30, 2009 filed with the
Securities and Exchange Commission;
and
|
|
·
|
instructed the independent
auditors that the Audit Committee expects to be advised if there are any
subjects that require special
attention.
|
|
AUDIT
COMMITTEE
|
|
|
|
Chris.W.Wang, Changxin Li
and Winfred Lee
|
Audit
Committee’s Pre-Approval Policy
During
fiscal years ended June 30, 2010 and 2009, the Audit Committee of the Board of
Directors adopted policies and procedures for the pre-approval of all audit and
non-audit services to be provided by the Company’s independent auditor and for
the prohibition of certain services from being provided by the independent
auditor. The Company may not engage the Company’s independent auditor to render
any audit or non-audit service unless the service is approved in advance by the
Audit Committee or the engagement to render the service is entered into pursuant
to the Audit Committee’s pre-approval policies and procedures. On an annual
basis, the Audit Committee may pre-approve services that are expected to be
provided to the Company by the independent auditor during the fiscal year. At
the time such pre-approval is granted, the Audit Committee specifies the
pre-approved services and establishes a monetary limit with respect to each
particular pre-approved service, which limit may not be exceeded without
obtaining further pre-approval under the policy. For any pre-approval, the Audit
Committee considers whether such services are consistent with the rules of the
Securities and Exchange Commission on auditor independence.
Principal
Accountant Fees and Services
Aggregate
fees billed by our principal accountants, Moore Stephens Wurth Frazer and
Torbet, LLP, for audit services related to the fiscal years 2009 and 2008, and
for other professional services billed in the fiscal years 2009 and 2008, were
as follows:
|
|
|
Fiscal 2009
|
|
|
Fiscal 2008
|
|
|
Audit
Fees (1)
|
|
$
|
202,150
|
|
|
$
|
|
|
|
Audit-Related
Fees
|
|
|
—
|
|
|
|
|
|
|
Tax
Fees (2)
|
|
|
8,000
|
|
|
|
|
|
|
All
Other Fees
|
|
|
—
|
|
|
|
|
|
|
Total
|
|
$
|
210,150
|
|
|
$
|
|
|
|
(1)
|
Comprised
the audit of the Company's annual financial statements and reviews of the
Company's quarterly financial statements, as well as consents related to
and reviews of other documents filed with the Securities and Exchange
Commission.
|
|
(2)
|
Comprised
preparation of all federal and state corporate income tax returns for the
Company and its subsidiaries.
|
PROPOSAL
NO. 3 - APPROVAL OF INDEPENDENT AUDITORS
At the
Annual Meeting, the stockholders will be asked to approve the appointment of
Kabani & Company, Inc. as the Company’s independent auditors for the fiscal
year ending June 30, 2011. Representatives of Kabani & Company, Inc. are
expected to be present at the Annual Meeting and will have the opportunity to
make statements if they desire to do so. Such representatives are also expected
to be available to respond to appropriate questions.
The
Board of Directors recommends a vote “for” the ratification of the appointment
of Kabani & Company, Inc. as the Company’s independent auditors for the
fiscal year ending June 30, 2011.
SELECTED
FINANCIAL DATA
The SEC
allows us to “incorporate by reference” the information we file with it, which
means that we can disclose important information to you by referring you to
those documents. The information incorporated by reference is considered to be
part of this proxy statement, and information that we file later with the SEC
will automatically update and supersede previously filed information, including
information contained in this document. We incorporate by reference the
following sections of our Annual Report on Form 10-K for the fiscal year ended
June 30, 2009, which we filed with the SEC on September 29, 2009 (the “
Form 10-K
”), which includes
the information required by Item 13(a) of Schedule 14A: “ Management’s
Discussion and Analysis ,” “ Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ,” “ Quantitative and Qualitative
Disclosures About Market Risk ,” “ Consolidated Financial Statements ” and “
Notes to Consolidated Financial Statements ” of the Form 10-K and we incorporate
by reference information required by Item 13(a) of Schedule 14A in documents
subsequently filed (but not documents that are furnished, unless expressly
incorporated by reference in such furnished document) by the Company with the
SEC on or after the date of this document and before the Proxy
deadline.
The
Company’s 2009 Annual Report, including the Form 10-K (with exhibits), is being
provided to shareholders with this Notice of 2009 Annual General Meeting of
Stockholders and Proxy Statement. The Company’s Form 10-K is also (and
subsequently filed documents incorporated herein by reference will be) available
on the website of the SEC at www.sec.gov.
OTHER MATTERS
As of the
time of preparation of this proxy statement, neither the Board of Directors nor
management intends to bring before the meeting any business other than the
matters referred to in the Notice of Annual Meeting and this proxy statement. If
any other business should properly come before the meeting, or any adjournment
thereof, the persons named in the proxy will vote on such matters according to
their best judgment.
STOCKHOLDER
PROPOSALS FOR 2011 ANNUAL MEETING
Under the
rules of the Securities and Exchange Commission, stockholders who wish to submit
proposals for inclusion in the proxy statement of the Board of Directors for the
2011 Annual Meeting of Stockholders must submit such proposals so as to be
received by the Company at Changda Road East, Development District, Changle
County, Shandong, the People’s Republic of China, on or before May 12,
2011.
|
By
Order of the Board of Directors
|
|
|
|
Qingtai
Liu
Chairman
|
|
|
|
Shandong,
People's Republic of China
|
|
September
15, 2010
|
YOUR
VOTE IS IMPORTANT!
WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE EXECUTE THE PROXY FOLLOWING THE
INSTRUCTIONS SET FORTH IN THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
MAILED TO YOU. THIS WILL ENSURE THE PRESENCE OF A QUORUM AT THE MEETING. IF YOU
ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO EVEN IF YOU HAVE
PREVIOUSLY EXECUTED THE PROXY.
ANNEX
A
CERTIFICATE
OF AMENDMENT TO
AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION OF SHENGTAI PHARMACEUTICAL,
INC.
Shengtai
Pharmaceutical, Inc. (the “
Corporation
”), a corporation
organized under and by virtue of the General Corporation Law of the State of
Delaware (the “
DGCL
”),
DOES HEREBY CERTIFY that:
|
1.
|
The
name of the Corporation is: Shengtai Pharmaceutical,
Inc.
|
|
2.
|
The
amended and restated Certificate of Incorporation of the Corporation (the
“
Certificate
of Incorporation
”) was filed with the Secretary of State of the
State of Delaware
on
. The
amendments effected by this Certificate of Amendment (the “
Amendments
”)
are as follows:
|
(i) Article
IV of the Certificate of Incorporation is hereby amended and restated by
deleting paragraphs A, B and C in their entirety and replacing them with the
following paragraphs:
“A. The
Company is authorized to issue two classes of stock to be designated,
respectively, "Common Stock" and "Preferred Stock." The total number of shares
which the Company is authorized to issue is fifty-two million five hundred
thousand (52,500,000) shares, fifty million (50,000,000) shares of which shall
be Common Stock (the "Common Stock") and two million five hundred thousand
(2,500,000) shares of which shall be Preferred Stock (the "Preferred Stock").
The Preferred Stock shall have a par value of one-tenth of one cent ($0.001) per
share and the Common Stock shall have a par value of one-tenth of one cent
($0.001) per share.
B. The
number of authorized shares of Common Stock may be increased or decreased (but
not below the number of shares of Common Stock then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Company
(voting together as a single class on an as-if-converted basis).
C. Five
hundred thousand (500,000) of the authorized shares of Preferred Stock are
hereby designated "Series A Preferred Stock" (the "Series
Preferred").
D. The
two million (2,000,000) shares of Preferred Stock other than the Series A
Preferred Stock may be issued from time to time in one or more series. The board
of directors of the Company (the "Board of Directors") is hereby expressly
authorized to provide for the issue of all of any of the remaining unissued and
undesignated shares of the Preferred Stock in one or more series, and to fix the
number of shares and to determine or alter for each such series, such voting
powers, full or limited, or no voting powers, and such designation, preferences,
and relative, participating, optional, or other rights and such qualifications,
limitations, or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors providing for the
issuance of such shares and as may be permitted by the Delaware General
Corporation Law. The Board of Directors is also expressly authorized to increase
or decrease the number of shares of any series subsequent to the issuance of
shares of that series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be decreased in
accordance with the foregoing sentence, the shares constituting such decrease
shall resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.”
(ii) Article
IV of the Certificate of Incorporation is hereby amended by inserting the
following at the end of paragraph D so that the issued shares of the
Corporation’s Common Stock on the date hereof shall be converted into a smaller
number of shares of Common Stock in the ratio of one new share for each two old
shares immediately upon the filing of this Certificate of
Amendment.
“Reverse
Stock Split. Upon the filing and effectiveness (the "
Effective Time
") pursuant to
the Delaware General Corporation Law of this Certificate of Amendment to the
Amended and Restated Certificate of Incorporation of the Corporation, each two
(2) shares of the Common Stock issued and outstanding immediately prior to the
Effective Time shall, automatically and without any action on the part of the
respective holders thereof, be combined and converted into one (1) share of the
Common Stock (the "
Reverse
Stock Split
"). With respect to fractional shares, each holder of the
Common Stock who would otherwise have been entitled to a fraction of a share as
a result of the Reverse Stock Split will be entitled to receive one (1) share of
the Common Stock. Stockholders holding shares of the Common Stock in
book-entry form will be provided by the transfer agent of the Company a
statement reflecting the number of shares of the Common Stock registered in
their account following the Reverse Stock Split. Stockholders holding
shares of the Common Stock in certificated form shall be provided by the
transfer agent of the Company with instructions as to the surrender of the
stockholders’ old certificates in exchange for new certificates representing the
number of shares of the Common Stock following the Reverse Stock
Split.”
|
3.
|
The
Amendments herein certified have been duly adopted in accordance with the
provisions of Section 242 of the
DGCL.
|
|
4.
|
This
Certificate of Amendment shall be effective upon the filing hereof in the
Office of the Secretary of State of the State of
Delaware.
|
IN
WITNESS WHEREOF, the undersigned executed this Certificate of Amendment on
this
day
of .
|
Shengtai
Pharmaceutical, Inc.
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
Title:
|
Shengtai Pharmaceutical (GM) (USOTC:SGTI)
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