Small investor ruffles feathers at Sovereign

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Albie Cilliers has applied to intervene in the High Court action launched last week by a bloc of Sovereign shareholders who want a shareholder meeting scheduled for Tuesday to be set aside.

Cilliers, who is the archetypal small investor that the JSE and the Companies Intellectual Property Commission claim to champion, said that he had been forced to do battle on his own account to counter what he deems to be abuse by the Sovereign board.

Cilliers is among dissenting shareholders, representing 11% of Sovereign’s voting rights, who at a meeting on 14 January to decide on a proposal to buy back 10% of the poultry producer’s shares at R8.50 each, invoked a law introduced in 2008, which required Sovereign to offer other minority shareholders the same deal.

However, faced with a potential bill for paying out the 11% dissenters and the proposed 10% buyback, Sovereign’s board decided to abandon the proposal. The resolutions passed by 85% of shares voted at the meeting have since been set aside.

Sovereign’s board then scheduled a new shareholders’ meeting for Tuesday in which slightly revised resolutions are to be tabled, but this time, the dissenting minorities are to be barred from voting.

Cilliers said that the Sovereign board’s refusal to allow him to vote at the crucial meeting was an abuse of a fundamental shareholder right.

He is seeking either to be paid out a fair value for his shares, or to be allowed to vote at a postponed shareholders’ meeting.

Cilliers is looking for relief from oppressive action by the Sovereign board in terms of section 163 of the Companies Act (2008).

It will be the first "oppressive action" case against a listed company taken under the jurisdiction of the 2008 act.

Cilliers said he had been trapped in a form of legal limbo since the Sovereign shareholders’ meeting on 14 January.

Sovereign has accused the dissenting shareholders of being aligned to Country Bird.

On Tuesday, Sovereign attempted to persuade the Competition Tribunal to block the Country Bird-aligned shareholders from voting at Tuesday’s meeting on the grounds that this could give Country Bird some control over the outcome of the meeting.

Sovereign’s legal actions suggest there is the suspicion that Country Bird has an agreement with one of the company’s major institutional shareholders — notwithstanding the Sovereign board’s claim of having the support of 70% of the shareholders.

Country Bird CEO Kevin James said the application to the tribunal was "patently contrived", and that there was no way his less than 10% stake in Sovereign could affect the outcome of the meeting, unless no more than 46% of the shareholders were to attend.

"The abuse of the Competition Act to prevent shareholders — minority shareholders at that — from exercising their voting rights cannot be tolerated," James explained.