Sinovac's Dividend Showdown: Navigating Legal Risks and Governance Battles

The ongoing shareholder conflict at Sinovac Biotech (NASDAQ: SVA) has reached a critical juncture, with recent court rulings and a looming proxy vote set to determine the company's path forward. At the heart of the battle is a fight over $55.00 per share in dividends—and whether shareholders will receive them. The current Board, backed by majority shareholder 1Globe Capital, faces legal and governance challenges from a Dissenting Investor Group (Advantech/Prime, Vivo Capital, and SAIF Partners) that has deployed “lawfare” tactics to block payouts. Investors must now decide whether to support the current leadership's push to distribute cash or risk further instability by backing the Dissenters.

The Legal Landscape: Current Board Gains Ground

Recent court decisions have largely favored the current Board, clearing hurdles to dividend distribution. On June 30, the U.S. District Court for the District of Massachusetts denied Vivo Capital's petition for relief related to shareholder votes, marking the fourth consecutive legal setback for the Dissenters. This ruling explicitly rejected attempts to interfere with the $55.00 per share dividend, which was approved by the Board and validated by the UK Privy Council in January 2025. The Privy Council had already declared the former board—an “Imposter Board”—unlawful, solidifying the current leadership's authority.

Further, the U.S. District Court of Massachusetts ruled on July 2 that 1Globe Capital and its founder, Dr. Chiang Li, must file amended Schedule 13D disclosures within five days to address past securities law violations. While this highlights lingering compliance risks, it also underscores the current Board's commitment to transparency, which could reassure investors.

The Proxy Battle: White vs. Gold

On July 8–9, shareholders will vote on a pivotal question: retain the current Board (via a “WHITE” proxy card) or elect SAIF Partners' slate (via “GOLD”). The Dissenters argue the current Board has failed to act in shareholders' interests, citing resignations of Privy Council-approved directors and a delayed NASDAQ relisting. However, proxy advisory firms Glass Lewis and ISS have recommended voting for the current Board, citing its alignment with the Privy Council's rulings and its focus on dividend distribution.

Voting White is critical to preserving the $55.00 dividend, which is now legally cleared for distribution. The Dissenters' alternative—electing their slate—could reignite legal battles, delay payouts, and further destabilize governance.

Dividend Distribution: Unlocking Value or Prolonging Stalemate?

The $55.00 dividend represents a long-awaited return of capital to shareholders. However, an additional $11.00 per share is contingent on canceling invalid “PIPE” shares issued by the former board in 2018. These shares, which diluted common shareholders, were the subject of a $1 billion payout to the Dissenters via a Sinovac subsidiary—a move the current Board calls “looting.”

The Dissenters oppose canceling the PIPE shares, demanding recognition of their claims. If they win the proxy vote, they could block the $11.00 dividend and prolong litigation, further depressing SVA's valuation. Conversely, a White vote victory would allow the Board to proceed with dividend payments and address governance gaps, potentially unlocking Sinovac's $10.3 billion in cash reserves.

Strategic Risks and Investment Implications

The Dissenting Investor Group's tactics raise significant risks:
1. Legal Costs: Prolonged litigation could drain resources, delaying NASDAQ relisting and dividend distributions.
2. Governance Uncertainty: A Gold vote victory might trigger leadership instability, with the Dissenters' focus on short-term gains (e.g., their $139 million investment into a Vivo Capital fund) over long-term value.
3. Shareholder Value: SVA's depressed stock price—trading at $6.47 despite holding $140+ per share in cash—suggests markets are pricing in governance risks. Resolving the proxy battle could catalyze a rebound.

Final Analysis: Vote White to Unlock Value

Investors should vote WHITE to support the current Board:
- Legal Clarity: The Privy Council and U.S. courts have repeatedly validated the Board's authority.
- Dividend Certainty: The $55.00 payout is now unstoppable; the $11.00 contingent dividend hinges on rejecting the Dissenters' claims.
- Long-Term Stability: A White vote reduces the risk of “lawfare” blocking capital returns and positions Sinovac to resume trading, potentially unlocking a share price north of $140.

The Dissenters' strategy—prioritizing legal challenges over dividend distribution—appears aimed at preserving their ill-gotten gains (e.g., the $1 billion from subsidiaries) rather than maximizing value for common shareholders.

Conclusion

Sinovac's future hinges on shareholder votes cast in the next two weeks. A White vote delivers dividend certainty, governance stability, and a path to unlocking the company's cash reserves. Investors who ignore this risk—by abstaining or voting Gold—may pay the price for years to come.

Recommendation: Vote WHITE to preserve dividend rights and catalyze Sinovac's comeback.