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Valeant Pharmaceuticals announces shakeup on its board of directors

MONTREAL – Valeant Pharmaceuticals is shaking up its board of directors, with half of them not standing for re-election, the Quebec-based drugmaker announced Friday.

Among the seven of the 14 board members not seeking re-election are the company’s outgoing CEO, Michael Pearson, and former chief financial officer Howard Schiller. The board had previously requested Schiller tender his resignation as a director, but he refused.

In addition, five independent directors will not stand for re-election at the company’s annual meeting scheduled for June 14, when the board will be reduced to 11 members.

The company also announced three new independent director nominees.

“As we transition to new leadership, it is a natural time to welcome three independent nominees who bring important new perspective and expertise to the board,” Robert Power, the chairman of the nominating and corporate governance committee of the board, said in a statement.

The news came after the company announced it filed its restated financial statements for 2015 with the U.S. Securities and Exchange Commission. The pharmaceutical giant had received default notices from its debtholders due to the failure to file its form 10-K with the regulator.

Valeant (TSX:VRX) said Friday the filing of the document corrects the problem and it is in full compliance with its credit agreement.

Valeant missed a March deadline because of a need to restate how it reported about US$58 million of revenue from U.S. mail-order pharmacy Philidor Rx Services, an affiliated company that has since been shut down.

Once Canada’s most valuable company by stock market value, Valeant’s stock has plunged by nearly 90 per cent amid controversy on several fronts, including its relationship with Philidor and its increases to drug prices.

Pearson, Schiller and Bill Ackman — a new director whose hedge fund Pershing Square Capital Management is the second-largest shareholder in Valeant — expressed regret for hiking drug prices during a grilling Wednesday by a U.S. Senate committee.

In addition to Congressional probes over alleged drug-price gouging, it is under investigation by the U.S. Securities and Exchange Commission and U.S. Attorney’s offices in Massachusetts and New York.

The company also disclosed Friday it is under investigations by the North Carolina Department of Justice over three drugs under scrutiny from Congress and the State of New Jersey Department of Law and Public Safety over Philidor.

Quebec’s securities regulator, L’Autorite des marches financiers, has also requested documents about the internal committee it set up to review Philidor, its relationship with the company, Valeant’s accounting practices and other matters.