Sinovac's Proxy Battle: A Crossroads for Governance and Shareholder Value

Sinovac Biotech Ltd. (NASDAQ: SVA), the Chinese vaccine manufacturer behind the widely used CoronaVac, finds itself at a pivotal juncture. A proxy battle between activist investor SAIF Partners and the current board dominated by 1Globe and Orbimed has crystallized into a high-stakes showdown over corporate governance and shareholder value. The outcome of the July 8 Special Meeting will determine whether Sinovac can unlock its $10.3 billion cash reserves, resume trading, and restore investor confidence—or remain mired in mismanagement and legal disputes.

A Board in Crisis: Governance Failures and Legal Woes

The current board, which controls 54% of Sinovac's voting rights despite owning only 13.3% of shares, has drawn sharp criticism for its handling of the company. Key failures include:
- Dividend Neglect: No dividends paid to common shareholders since 2018, despite generating $2.3 billion in profits from its operating subsidiary, Sinovac Life Sciences (SLS).
- Legal Abuses: The 1Globe/Orbimed faction has been implicated in multiple scandals, including forged documents to seize control of Sinovac Hong Kong in 2018, SEC violations for undisclosed beneficial ownership in 2020, and embezzlement convictions of its CEO Li Pengfei in 2024.
- Governance Collapse: The board operated without an auditor since April 2025 after Grant Thornton resigned over "sham transactions," leaving financial reporting in disarray.

The Privy Council of the UK, the final arbiter of Antiguan law, dealt a decisive blow in January 2025 by invalidating the board's legitimacy, citing illegal share purchases via a $86 million PIPE transaction. This ruling now underpins SAIF's push to replace the board.

SAIF's Playbook: Dividends, Transparency, and Trading Resumption

SAIF Partners, a $4 billion private equity firm, is leveraging its 15% stake to install a reformed board of 10 nominees, including Sinovac's founder WeiDong Yin. Their objectives are clear and urgent:
1. Immediate Dividend Payout: Pay the $55 per share dividend approved by the former board but withheld due to legal disputes. This alone represents a 793% premium over Sinovac's current $6.47 trading price.
2. Audit and Compliance: Hire an independent auditor to restore NASDAQ compliance and pave the way for resuming trading, halted since 2019.
3. Strategic Realignment: Use surplus cash for shareholder-friendly actions like buybacks or new vaccines, while resolving legal disputes that have drained value.

The stakes are amplified by the current board's last-minute gambit: announcing a $138.73 per share dividend on June 24, 2025. Critics, including SAIF, argue this is a desperate bid to retain control. The proposed dividend lacks audited financial backing and risks diverting funds needed for operations.

Sinovac's shares have languished at $6.47 since trading halted in 2019, far below its cash-rich balance sheet. NASDAQ delisting looms if the company fails to submit a compliance plan by July 15, 2025.

The July 8 Vote: A Binary Choice for Shareholders

The Special Meeting presents a stark choice:
- Vote FOR SAIF's GOLD Proxy: Back reforms to pay dividends, restore trading, and end self-dealing.
- Vote FOR the CURRENT BOARD (WHITE Proxy): Risk continued governance failures, potential delisting, and the reinstatement of a board with a history of fraud.

SAIF's case is compelling. The $55 dividend is backed by audited financials from the pre-2018 era and requires no board approval to execute. In contrast, the current board's $138.73 promise relies on unproven earnings and lacks independent oversight.

Risks and Investment Implications

While SAIF's vision offers clear upside, risks remain:
- Legal Gridlock: The dissident group (Advantech/Prime and Vivo Capital) may prolong disputes even after a SAIF victory.
- Regulatory Hurdles: NASDAQ relisting demands timely audits and financial transparency.
- Geopolitical Pressure: Sinovac's ties to China's state-backed entities could invite U.S. sanctions if the dissident group, with its state links, regains control.

For investors, the calculus is straightforward:
- Buy SVA shares if SAIF wins: The stock could surge to reflect its $140 per share intrinsic value, driven by dividend payouts and resumed trading.
- Avoid or short SVA if the current board prevails: Delisting risks and governance rot would likely destroy remaining value.

Conclusion: A Defining Moment for Shareholder Democracy

Sinovac's proxy battle is more than a corporate squabble—it's a test of whether shareholder democracy can prevail in an opaque market. With $10.3 billion in cash sitting idle and a critical vote looming, the path forward is clear: a SAIF-led board offers the best chance to return capital, restore credibility, and realize the company's potential. Shareholders who vote the GOLD Proxy are not just backing a dividend—they're voting for accountability in an industry where it's long been missing.

Investors should heed this call: Sinovac's value is waiting to be unlocked—provided governance finally gets fixed.