SINGAPORE - Nanjing Xinjiekou Department Store is seeking the support of Cordlife shareholders to remove four directors from the board of the cord-blood bank, ahead of the group’s annual general meeting (AGM) on May 14.

On May 9, Cordlife’s China-headquartered substantial shareholder urged shareholders to attend and vote decisively at the AGM, on the grounds that corporate governance failures had “eroded customer trust and shareholder value”.

This follows Nanjing Xinjiekou’s move to table resolutions to remove Cordlife’s acting chairman Ho Choon-Hou and independent directors Yeo Hwee Tiong, Titus Cheong and Joseph Wong. To replace them, it is seeking to appoint three individuals to the board – Teo Tong Kooi, Xu Tianhong and Cai Yong.

Nanjing Xinjiekou holds around 20.3 per cent of Cordlife, according to Cordlife’s 2023 annual report. Together with its affiliate, China Stem Cells (East) Company, it holds 30.2 per cent.

Nanjing Xinjiekou’s representative on Cordlife’s board, Chen Xiaoling, said: “Recent events have left us deeply disappointed with how things are run at Cordlife, especially at the board level. They have compelled us to take urgent actions to stabilise the company and restore customer trust and investor confidence.”

Seven of Cordlife’s 22 tanks storing cord blood belonging to its clients have been exposed to temperatures above acceptable limits since November 2020, putting them at high risk of being damaged. The lapses were uncovered by the Ministry of Health, which has suspended the company from collecting or processing new cord blood for six months.

On May 9, Nanjing Xinjiekou said that the four directors it is seeking to remove were reportedly “quick to distance themselves” from Cordlife, instead of stepping up to address the lapses. It also charged that the current board had failed to act impartially.

It further noted that controlling shareholder TransGlobal Real Estate Group, which has a 27.9 per cent stake in Cordlife, had requisitioned an extraordinary general meeting of its own “to oppose our resolutions”.

Nanjing Xinjiekou said: “To date, it is not known who leaked the material information to TransGlobal during this period, and their reasons for doing so.”

Nanjing Xinjiekou also questioned the suitability of Cordlife’s newly appointed chief executive officer Ivan Yiu, noting that the 34-year-old former fund manager had no experience in cord-blood banking, but was backed by Ho and other members of the board.

The substantial shareholder said: “We are no longer assured that Cordlife is being run by a professional team capable of making independent decisions in the interests of and for the benefit of Cordlife as a whole.”

Nanjing Xinjiekou also said it was “perplexed” by Cordlife’s proposal to raise $8.1 million through a private placement “when Cordlife’s share price was near an all-time low”. It is seeking an injunction to stop this private placement.

Nanjing Xinjiekou promised that the new board will adopt measures to restore confidence in the company, and ensure better corporate governance. It hopes to commence a global search for a new chief executive officer and appoint additional directors, including a medical practitioner and a lawyer based in Singapore, “to guide the management in rectifying lapses”.

Nanjing Xinjiekou will also transfer experienced staff from its various offices in China, the US and Hong Kong, if necessary, to Cordlife to improve operations and capture new opportunities, it said.

In an open letter to shareholders, it said that the new board will implement a “full crisis management plan” immediately upon handover. This could include hiring technical specialists and experts to enhance staff training and supervision of Cordlife’s operations. It may also entail assisting clients who wish to transfer their cord blood units to another cord-blood bank, subject to and taking into consideration the Ministry of Health’s requirements and directives.

Nanjing Xinjiekou said: “We are committed to do what is within our power to salvage Cordlife. We believe that, with your continuous support and belief in Cordlife’s potential, we will rehabilitate Cordlife and emerge stronger from the darkest chapter in its history.” THE BUSINESS TIMES