With the VCAT trial recommencing in 2 weeks, should there be a similar outcome to the 2011 trial where the CEO lost his liquor licence, the current CEO may need to depart PPN. In that event rejecting the Rem Report at the November AGM may be totally pointless. Lets see what happens with VCAT.
One of the problems with a single shareholder controlling 80% of a company is that the Courts have always recognised that companies operate on the principle of majority rule. However there is a big difference between legitimate majority decisions and minority shareholder oppression by a board stacked with "subservient" directors.
After listening to the new PPN directors, Messrs Pitliangos & Callanan at the recent AGM, I am fairly confident that they are not "subservient" directors and will act in the best interests of ALL shareholders. However, to date it doesn't appear that they have made the hard decisions.
OPPRESSIVE CONDUCT OF AFFAIRS [Minority Shareholder oppression]
In the "Starr" case, Justice Young the NSW Supreme Court said: "..... a number of incidents, which of themselves may be relatively trivial, when added together and superadded to significant incidents, may add up to a picture of oppression. So too the conduct of directors. While the use of legitimate tactics by directors to increase their chances of having their views accepted by the board is not unusual, when such tactics are employed on a sufficiently large number of occasions, or when the minority is virtually deprived of their statutory right to participate in meetings, the grounds for oppression are established...."
In the "Brooks & Co" case, the majority shareholding MD surrounded himself with "subservient directors and, through the payment of extravagant bonuses, disguised the fact that the company was highly profitable. This resulted in a depressed stock exchange price of the company's shares. The Court found that there was minority shareholder oppression and refused to accept the MD's offer to buy out the minority shareholders at current market price on the grounds that the price was one that the MD's own actions had forced down. The Judge ordered that the company be wound up.
I hope the new directors can give PPN a new direction without the need for the minority shareholders to ask the Courts to press the PPN destruct button.
PPN Price at posting:
23.0¢ Sentiment: None Disclosure: Held
