A stockholder who held 17.3 percent of a Chinese pork producer’s outstanding stock can still be viewed as a controlling stockholder because he possessed “both latent and active control” over the company, the Delaware Court of Chancery has ruled.
The court issued the opinion when it allowed shareholders of meat processing company Zhongpin Inc. to move forward with their claims against the company, its directors, and its chairman of the board and CEO, Xianfu Zhu. Zhongpin’s shareholders alleged Zhu improperly influenced the other board members to accept his $502 million offer for the company in a going-private transaction. The shareholders claimed in In re Zhongpin Stockholders Litigation that the transaction undervalued the company.
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