Sequoia has received a verdict from the Takeovers Panel regarding whether there was unethical practice afoot by shareholders.
The licensee contacted the Australian government organisation in May alleging unethical practice by a group of shareholders who were seeking to oust chief executive Garry Crole and director Kevin Pattison. Instead, they wanted to appoint InterPrac managing director, Brent Jones, and former Xplore Wealth chair Peter Brook to the board.
Sequoia’s application alleged the group failed to fully disclose the identity of those who are associated with them, the nature of their association, and the extent of their collective voting power in Sequoia. It also alleged they purchased additional Sequoia shares, resulting in increases in collective voting power above 20 per cent in Sequoia, under Section 606.
The relevant shares relate to 7,448,378 Sequoia shares (5.6 per cent of the share capital) which were acquired after 31 March 2024 by or on behalf of Glennon Capital Pty, Glennon Small Companies, Cojones Pty or Vonetta Pty.
As a result of the acquisition of the relevant shares, the combined voting power of the group of shareholders in Sequoia increased from approximately 22.20 per cent to approximately 27.84 per cent.
In a statement on 1 July, the panel made a declaration of unacceptable circumstances.
“The panel declares that the circumstances constitute unacceptable circumstances in relation to the affairs of Sequoia.”
This verdict was given as the panel felt the acquisition of control over voting shares in Sequoia had not taken place in an efficient, competitive and informed market, and the holders of shares in Sequoia and the market in general did not know the identity of persons who have acquired a substantial interest in Sequoia.
The shareholders also failed to give substantial holders notice fully disclosing their association, including their combined voting power in Sequoia, and failed to fully disclose the extent of their association in Sequoia.
Commenting on the decision, chief executive Garry Crole said the decision to contact the Takeovers Panel had been “expensive” and “caused business disruption” but the firm felt it was necessary in order to address breaches of the Corporations Act.
“Sequoia is very pleased the decision made by the independent panel was in favour of Sequoia and we feel that this confirms the company met its fiduciary duty to act in the best interests of all shareholders and take this matter to the panel.
“The takeover panel’s decision that such shareholders breached parts of the Corporations Act at a critical time for the business did show a complete disregard for other shareholders and the employees of the business.
“Whilst the notice called did cause business disruption at what should be a licensee business’ busiest period , the notice did allow the board to speak with many shareholders during this process which has proven to be very worthwhile exercise.
“We hope this decision ends the calls for change and the clarity the company gained in talking to shareholders , staff and advisers over the period of disruption becomes the focus and allows us to build a business that remains focussed on providing the advice market premium services to ensure each adviser and practise we provide a service to allows each to provide more Australians an ability to receive high quality affordable advice.”
Regarding the outcome of the relevant shareholders’ wishes, an extraordinary general meeting held on 5 June saw none of the resolutions passed.
The four votes were all defeated in a majority of between 62 per cent and 64 per cent. The vote to remove Crole as chief executive was defeated by 64.1 per cent.
