The Western Cape High Court has put the cat among the pigeons at Quantum Foods Holdings, a JSE-listed agribusiness that has its roots in the old Pioneer Foods.
Quantum has lately been accorded many more column inches of discussion than are usually reserved for a small-cap company — but for all the wrong reasons.
An acrimonious tussle among several groups of significant shareholders for control of Quantum eventually led to nonexecutive director and legal eagle Tanya Golden being coerced into resigning — not for dereliction of duty, but for doing her job and making doubly sure minority shareholder rights were not being trampled on.
Consequently, the court had to mull the important question of whether a director of a publicly listed company can be removed by the majority of the directors “in the absence of informing that director of his or her intended removal and without affording that director the opportunity to make representations in respect of this decision, as well as in the absence of providing the director with access to a written notice of the intended removal”.
Golden was effectively nudged out of the boardroom by her fellow directors in May after she posed some prickly questions about the company’s legal standing in relation to the scheduling of a shareholders’ meeting that would have called for the resignation of certain Quantum directors. Significant shareholder Braemar seemed well within its rights to call for a special meeting of shareholders earlier this year. But the demand was deemed not legally compliant.
The Quantum board also made a bit of stink about Golden wanting to peruse the shareholder register, which seems a most reasonable request and an action open to all shareholders.
There is still nary a sign of a Sens announcement detailing developments or announcing Golden’s reinstatement
Thankfully, the court’s answer to the question posed at the outset is a resounding “no” — which should please all minority shareholders pinning their hopes on nonexecutives providing the necessary checks and balances in the boardroom.
The court declared that Quantum’s decision to summarily remove Golden from the board was “unfair, prejudicial and oppressive”, as well as “invalid, unlawful and void”.
The bottom line is that Quantum was ordered to reinstate Golden to serve out her term as a nonexecutive director and was instructed to issue a Sens announcement within five days of the court order.
Judgment was delivered on November 7, and there is still nary a sign of a Sens announcement detailing developments or announcing Golden’s reinstatement.
It seems Quantum intends playing hardball, which is disappointing — and perhaps worrying.
One has to remember that certain nonexecutives, namely André Hanekom and Gary Vaughan-Smith, who backed a call for Golden’s resignation, are significant shareholders in Quantum. It’s not difficult to spin a thread that Golden was voted off the board to stymie efforts by other shareholders to schedule a meeting that would have called for the removal of these directors.
Were the directors in self-preservation mode when they elbowed Golding off the board, knowing full well she wanted to ensure that other shareholders were given a fair chance to air grievances?
There might even be a dash of undue haste, in that Golden — long before she dragged the matter to court — was already replaced on the Quantum board by Pioneer Foods stalwart Piet Burger. A most convenient stopgap. It surely can’t be long before directors look at a delisting to take Quantum out of the public eye.
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