|NEW BOARD IN CHARGE |
By VERNE BURNETT and KEINO SWAMBER Wednesday, August 20 2014
The might of shareholders forced the board of Trinidad Cement Ltd (TCL) to quit, paving the way for the immediate installation of new directors.
This followed a two-day legal battle by TCL to stop the shareholders’ action.
A majority of shareholders unanimously voted in a new board at a Special Compulsory Meeting of Shareholders held at the Radisson Hotel, Wrightson Road, Port-of-Spain.
The meeting was called by shareholder Kamal Ali after the directors refused a requisition for the meeting delivered on June 24, 2014. That requisition was backed by shareholders controlling 54.7 percent of the company’s shares. However, by the time yesterday afternoon’s meeting was convened, the organisers said they had the support of shareholders representing more than 70 percent of the company’s shares.
A major part of the business of the meeting was the removal of six directors — chairman Andy Bhajan, Dr Rollin Bertrand, TCL chief executive officer who had a seat on the board, Bevon Francis, Carlos David Hee Houng, Leonard Nurse and Brian William Young.
However, as the meeting began it was announced that the directors had resigned following the loss of their appeal against Monday’s High Court ruling allowing the Special Compulsory Shareholders meeting to go ahead.
That left the meeting with only one item of business — to elect seven new directors to replace the outgoing board. The shareholders voted unanimously to elect as directors businessman Wilfred Espinet; retired public servant and former permanent secretary, Allison Lewis; Jamaican businessman Christopher Dehring; attorney Michael Hamel-Smith; engineer Francisco Aguilera; another engineer, Carlos Alberto Palero and businessman Nigel Edwards.
Attorney Stuart Young, one of the members of the legal team which represented the shareholders at yesterday’s Appeal Court action, declined to comment on the fate of Bertrand who, in addition to being a director, is TCL’s chief executive officer. He said Bertrand’s future in the group would be in the hands of the new board of directors.
Young said another issue to be dealt with by the directors would be the amount of litigation in the court system involving TCL as well as the “huge legal bills which have been piling up.” While he was unable to say what the total bill would be, he said, including yesterday’s action, there have been four orders for costs involving shareholders of the company and the board would have to seek legal advice on how to deal with those matters.
Minority shareholder activist, Peter Permell, called it a landmark victory for corporate governance. “This is a victory for the minority shareholders,” he said, adding, “I think people forget that although you had some big players in this, Republic Bank, Unit Trust, the National Insurance Board and so on, at the end of the day they were all minority shareholders, Nobody held more than 50 percent. And apart from that when I listened to the chairman, he said that persons either present or voting by proxy represented more than 70 percent of the shareholding. That is a significant number. So I don’t think anybody could come and say that this meeting was illegal or the decisions taken here were not representative of the will of the majority of the shareholders. I think the minority shareholders have spoken and they have spoken loudly and this is now an opportunity for us to wipe the slate and move forward on a very positive note.”
He said his only concern was that given the difficulties which the shareholders had faced in the last few years there would be unrealistic expectations of the new directors.
“Now I think what we need to do is to temper those expectations so that they don’t get set up, meaning that people then attack them because they are not producing the kind of results that they expect within the short space of time. So they have to be very careful in that regard.”
Hours before the 5 pm meeting, three judges of the Court of Appeal unanimously dismissed a last minute attempt by the TCL board to stop it.
It was a virtual race against the clock as the judgment was delivered just about two hours before the start of the meeting.
In dismissing the appeal filed by attorneys Dr Claude Denbow, Donna Denbow and Darrell Allahar, Justices of Appeal Rajendra Narine, Gregory Smith and Maureen Rajnauth-Lee said they found no merit in any of the arguments advanced to them.
On Monday, High Court judge Justice Nadia Kangaloo dismissed an application, by the TCL board members, for an injunction to stop the meeting from proceeding pending an appeal. They argued that the holding of the meeting would undermine an injunction previously granted by Justice David Harris in a pending matter.
The injunction, granted in July last year, restrained TCL from holding its annual general meeting until a High Court judge determined whether the rights of a group of 11 shareholders were prejudiced by the company’s board when it refused to include their nominees for the board of directors on the proxy. It was suggested to Kangaloo that the scope and purpose of Harris’ injunction were to preserve the positions of the incumbent directors pending the hearing and determination of the pending matter. In her 16-page judgement, Kangaloo said she was of the view that the requisitioning of yesterday’s Special Compulsory Meeting was against “a completely different factual background” than what is being argued in the pending proceedings.
Denbow, in his appeal against Kangaloo’s judgement, said yesterday that Kangaloo erred in her judgement in several areas including failing to find that the holding of a meeting called by a majority of shareholders could be challenged on the grounds of illegitimate or improper purposes. He asked the court to consider that Kangaloo misdirected herself and erred in law in holding that there were no serious issued to be tried.
Narine, speaking on behalf of the panel yesterday, said Denbow failed to demonstrate that Kangaloo was wrong in her decision.
Lead attorney for the shareholders, Alvin Fitzpatrick SC, sought to have the court order that Bertand, Bhajan, Hee Houng, Nurse and Young, in their private capacities, bear the cost of the failed appeal as they were the ones who voted in favour of initiating the process. Francis had abstained from voting. Fitzpatrick said to order TCL to pay would be unfair to the shareholders who would have found themselves in a position where the company is incurring cost to challenge the shareholders.
Denbow objected to this saying there is no legal authority to support Fitzpatrick’s application. The court agreed and ordered TCL to pay prescribed costs fit for senior and junior counsel. Also appearing with Fitzpatrick were attorneys Stuart Young, Jitanjali Gopeesingh and Jason Mootoo.