HUGHES, JR., Derivatively ) on Behalf of Nominal Defendant KANDI ) TECHNOLOGIES GROUP, INC., ) ) Plaintiff, ) ) V
EFiled: Apr 27 2020 09:00AM EDT Transaction ID 65600595 Case No. 2019-0112-JTL IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE WILLIAM HUGHES, JR., Derivatively ) on Behalf of Nominal Defendant KANDI ) TECHNOLOGIES GROUP, INC., ) ) Plaintiff, ) ) v. ) C.A. No. 2019-0112-JTL ) XIAOMING HU, XIAOYING ZHU, ) CHENG WANG, BING MEI, JERRY ) LEWIN, HENRY YU, LIMING CHEN, ) ) Defendants, ) ) and ) ) KANDI TECHNOLOGIES GROUP, ) INC., ) ) Nominal Defendant. ) MEMORANDUM OPINION Date Submitted: February 6, 2020 Date Decided: April 27, 2020 Michael Van Gorder, FARUQI & FARUQI LLP, Wilmington, Delaware; Demet Basar, Veronica Bosco, WOLF HALDENSTEIN ADLER FREEMAN & HERZ LLP, New York, New York; Daniel B. Rehns, Kathryn A. Hettler, HACH ROSE SCHIRRIPA CHEVERIE LLP, New York, New York; Counsel for Plaintiff. Stamatios Stamoulis, STAMOULIS & WEINBLATT, LLC, Wilmington, Delaware; Richard J.L. Lomuscio, RIKER, DANZIG, SCHERER, HYLAND & PERRETTI LLP, New York, New York; Counsel for Defendants Xioaming Hu, Xiaoying Zhu, Cheng Wang, Bing Mei, Jerry Lewin, Henry Yu, and Liming Chen. LASTER, V.C. Kandi Technologies Group, Inc. (the “Company”) is a publicly traded Delaware corporation based in China. The Company has struggled persistently with its financial reporting and internal controls, encountering particular difficulties with related-party transactions. The complaint describes problems dating back to 2010. In March 2014, the Company publicly announced the existence of material weaknesses in its financial reporting and oversight system, including a lack of oversight by the Audit Committee and a lack of internal controls for related-party transactions. The Company pledged to remediate these problems. Instead, in March 2017, the Company disclosed that its preceding three years of financial statements needed to be restated.
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