LakeShore Biopharma Provides Update on Ongoing Criminal Investigation Involving Former Chairman in China

Core Viewpoint - LakeShore Biopharma is facing significant challenges due to criminal investigations into former chairman Yi Zhang, who is accused of misappropriating corporate assets and mismanagement, leading to financial losses and harm to shareholders [1][2]. Investigation Details - The Shenyang Municipal Public Security Bureau has initiated criminal investigations against Yi Zhang for misappropriating corporate assets and mismanagement, resulting in substantial financial losses over the past several years [2]. Corrective Actions - The company removed Yi Zhang from all executive positions by March 2024, leading to improved financial and operational performance, including securing the second position in China's Rabies vaccine market and reaffirming full-year financial guidance through Fiscal Year 2025 [3]. Recent Developments - Despite his dismissal, Yi Zhang forged contracts and falsified debts, leading to asset freezes of the company's subsidiary, causing operational challenges [4]. Company Actions - The new management secured additional financing to maintain business continuity and challenged Yi Zhang's claims at the Kaifeng Arbitration Commission, expressing confidence that these claims will be dismissed [5]. Company Stance on Illegal Activities - LakeShore Biopharma is committed to opposing Yi Zhang's unlawful actions and has reported these activities to local authorities to protect shareholder interests [6]. Legal Proceedings - The company is considering legal action against Yi Zhang to seek compensation for damages inflicted upon the company and its shareholders [8]. Bureau Updates - The Bureau has gathered sufficient evidence against Yi Zhang, who has absconded from China, and is initiating procedures for an international arrest warrant while assisting the company with the ongoing arbitration matter [7].