If you read the statement released by Rangers to the Stock Exchange this evening, you might be mistaken for thinking that the Board won the case and the Rebels lost! Have a look at the statement below and especially the sections in bold.
Further to the announcement on 4 October 2013 regarding the petition filed in the Scottish Courts (the “Petition”) by Paul Murray, Malcolm Murray, Ian Cormack, John Graham and Colin Howell being shareholders representing 0.71 per cent of the voting rights of the Company (the “Petitioners”), the Company confirms that the Petition was called in the Scottish courts to be heard today, Monday 24 October, 2013 by Lord Tyre.
The Petitioners sought an interim order to require the Company to circulate notices received from the Petitioners pursuant to section 338 of the Companies Act 2006 (the “Notices”) to shareholders putting forward resolutions for the appointment of Malcolm Murray, Paul Murray, Scott Murdoch and Alex Wilson as directors of the Company. The Petitioners also sought an interim order to require the Company not to hold its Annual General Meeting (“AGM”) until such time as the Notices have been circulated to shareholders.
The court has ruled that the AGM convened by the Company to be held on 24 October 2013 should not go ahead on this date in order for there to be sufficient time for the shareholder resolutions as proposed by the Petitioners in the form of the Notices to be circulated and considered by the shareholders of the Company.
The Petitioners’ submission and argument that the Company should simply have accepted the signed Notices at face value without any further enquiry was rejected by Lord Tyre.
The Board of Directors of the Company received clear and firm advice from its solicitors and senior and junior counsel that on the face of documents provided by the Petitioners the Notices had not been signed in a manner that was authorised and as a result the Directors were obliged to seek further clarification from those shareholders. Every effort was made to engage with the Petitioners on these issues however the Petitioners chose to resolve the matter in court. In Lord Tyre’s opinion, these irregularities did not invalidate the Notices.
Lord Tyre said that it was appropriate to refrain from circulating the signed Notices if there were reasons to justify this. Lord Tyre ruled that the categories of reason for not sending out resolutions were strictly limited and did not include cases where requests appeared not to have been signed by shareholders in a manner that was not authorised by corporate shareholders’ own rules.
Steps will now be taken by the Company to fix an alternative date for the AGM as soon as possible and for the business to be considered at the AGM to include the resolutions proposed in the Notices.
We will ignore the reference to Monday 24th October!
Let’s break that down. I have summarised some of what the statement says in quotes, with my thoughts on each part below.
“The judge rejected the Rebels’ argument that the Resolution should have been accepted” – but clearly he did not decide that the Resolution was invalid – if so, he would not have granted the interim interdict!
“The Board got clear advice from (a) its solicitors (b) junior counsel and (c) its QC that, on the face of it the Resolution might not have been validly signed” – and I am sure that the Rebels had equally strong advice that their Resolution was valid. Does that part of the statement look like an attempt to blame the lawyers? It seems that way to me!
“The Directors had no choice but to make these enquiries” – mmm. Would the Board have been criticised by other shareholders for putting the Resolution on the agenda? I suspect not. In any event, once the Resolution was on the agenda, it would have been difficult to remove it. The Directors could have accepted the Resolution. They chose not to do so in an effort to protect their own position.
“We tried to sort this out but those nasty Petitioners ignored us and went to court” – maybe because they were accused by the CEO of lodging an unauthenticated Resolution which was frivolous, vexatious and ineffective? Maybe because they were told that they were too late because the papers had “gone to the printers”?
“The judge ignored the irregularities” – at this stage of the case they were simply alleged irregularities and clearly not irregular enough for Lord Tyre to agree with the action taken by the Board!
“Lord Tyre decided to let the Rebels away with paperwork which was not in order, so how can we deal with that?” – I was not in court to hear the judge’s decision, but somehow I suspect that the above is called putting a gloss on what was decided.
The bottom line? The Rebels have won this battle – the PLC has been ordered to pay the expenses of the contested court application – the AGM is off and the Rebels will have their candidates up for a vote at the new meeting.
And the efforts by the Board to justify its position become ever more transparent and feeble.
Posted by Paul McConville