2021 BRN Discussion, page-2519

Hi DB

In reverse order the last time shares were sold to pay the former CEO's tax as a matter of law two things make it irrelevant to the present question of insider training:

1. At the preceding AGM shareholders voted for the shares concerned to be placed in the hands of the trustee of the company not the CEO as he would have had to pay tax on these shares had it been his trustee for the purpose of selling such of those shares when the CEO's tax liability became known and then for the trustee to pay those proceeds of the sales to I believe the Internal Revenue Department in the USA. The CEO as a matter of law and fact never had control of those shares they were sold by the trustee of the company in accordance with the directions of the majority of the shareholders of the company.
2. As this action was approved at a public AGM the facts at 1. above were known by the entire market even if some were ignorant of the fact at the time it occurred. Hence my obsession with doing ones' own research and understanding what one is invested in as so many did not understand back then.

Then coming to the present position:

1. I am not opposed to the former CEO selling his shares to purchase his options. The law is clear that such a sale given what he is privy to will constitute insider trading. This need to sell to buy performance based options or pay tax or medical bills etc; is recognised by the ASX and they provide a procedure. The person wishing to sell the shares must notify the Board in writing setting out the reasons for wanting to sell shares even though at law it would constitute insider trading. The Board considers the request and its timing and must set out its reasons for agreeing or not to the sale in writing. If the Board agrees the sale can proceed but the ASX warns that not withstanding this approval by the Board this still remains insider trading and the person remains personally liable if there is a complaint but if they have acted properly after a review of the reason and the Boards approval they are unlikely to take action.
2. I am always aware particularly after what happened the first time that vast numbers do not even do a modicum of research and so I go out of my way to attempt to properly educate when misinformation is being spread which constantly happens where insider trading is concerned.
3. Presently with everything we have been told by the former CEO on the authority of the Board of Directors it would be impossible for the former CEO not to be totally and completely contaminated with information that is price sensitive and not made available to the market at large. Thus even if everything disclosed to date is a lie or has fallen over until it is fully disclosed to the market he cannot lawfully sell his shares otherwise than in accordance with the procedure set out at 1. above.
4. If he and the Board comply with the law then I am all for it as it will be a positive signal to the market.
5. The final point is why do people assume that the former CEO who was in retirement will need to sell his shares to fund his purchase of the options should that be what he does. How can anyone here know whether or not he has sufficient private resources to fund the purchase without selling. He had a very successful career and retired early. While I do not necessarily believe what I find on line there are some sights which state he is a person of considerable private wealth.

So time will tell what the former CEO intends to do but just because he has stepped down he is not exempt from the laws of the land and their is nothing about his life to date which suggests that he is a person who happily engages in criminal activity on a regular basis so I personally doubt that it is a hobby he has always planned to take up in retirement. It is my opinion that he is an honest man who will fully comply with the Australian law as it applies to insider trading and that those who presently sit on the Board of Brainchip are similarly honest and will also act appropriately.

My opinion only DYOR.