An ambitious financial planning co-operative has hit a snag, with directors wrangling over control of the group.
Three directors have left the board of Consolidated Financial Services in recent months after disagreements surfaced over the structure of the group.
James Doogue resigned from the board in February while Kevin Bailey and Ian Maxey were voted off the board shortly after. David Craig and Ken Russell remain on the board and have since appointed John Randall as a director.
However, those involved say negotiations are under way to quell the risk of further dissension.
CFS was formed in May 1997 as a co-operative of financial planning groups established to give smaller dealer groups more financial muscle in the marketplace. More than 20 financial planning groups have joined CFS which was expected to be listed on the Australian Stock Exchange by the end of last year.
Grumblings emerged after the listing process stalled and questions have since been raised over the structure of the group.
The group is divided into two tiers of shareholders; ordinary and preference. The three ordinary shareholders, David Craig, Ken Russell and Ian Maxey, have veto powers over any decision made by preference shareholders, most of whom consist of the dealer groups at CFS.
According to former director James Doogue, there was a motion moved by preference shareholders to convert their status to ordinary shareholders to give them greater say in the running of the group. The motion failed to win the full support of shareholders.
A number of shareholders disputed the conduct of the vote at the time.
Doogue says he resigned his directorship in protest at the leadership direction of the group.
“Possibly through naivete, there was always a belief that if targets were not achieved, the preferential shareholders could vote to change their shares to ordinary shares,” Doogue says.
Several financial advisers involved in CFS contacted by Money Management would not offer a comment, except to say that negotiations were under way to resolve the issue. Chairman David Craig would also not comment.
Doogue says several preference shareholders have formally requested an extraordinary shareholders’ meeting to resolve the issue.
