The BPH AGM nominates Charles Maling to be re-appointed and in...

The BPH AGM nominates Charles Maling to be re-appointed and in the Governance Statement that he was independent.

As outlined below, this is not the case and has not been for some time.

In the Corporate Governance statement, the section titled Directors’ Independence states, “when determining independence, a director must be a non-executive and the board should consider whether the director:

· “Is a substantial shareholder of the company or an officer of, or otherwise associated directly with, a substantial shareholder of the company”.

Charles Maling is also a director of Grandbridge (ASX: GBA) which is a substantial shareholder of BPH Energy via itself (0.91% as per 2019 BPH full year accounts) and its 100% owned subsidiary Grandbridge Securities (4.68% as per the 2019 BPH full year accounts).

· “Has a material contractual relationship with the company or a controlled entity other than as a director of the group”

Charles Maling is also a director of Grandbridge (ASX:GBA) which has a material contract with BPH Energy to provide “administration, service and management” as nominated in both the GBA and BPH annual reports

· “is free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with the directors’ independent exercise of their judgement”

Charles Maling is also a director of Grandbridge (ASX:GBA). BPH Energy has a material contract with GBA to provide “administration, service and management” and GBA is reliant on this income to remain solvent. GBA is under significant financial pressure and has been suspended from the ASX for this reason for over 2 years. BPH entered into a “debt offset” with GBA in June 2017 and in doing so created a significant loan between the related companies. GBA provided BPH Energy with various guarantees confirming this loan would not be called on that were published in the BPH half year and full year accounts, however these loans were continued to be paid by BPH, which raises questions as to whether Maling acted in the best interests of BPH (or was it in the best interests of GBA). Repayment of this loan has continued with the most recent payment being made in July 2019 despite the settlement of all legal between BPH/GBA and MMR cases including the original BPH debt to MMR that required the debt transfer from GBA to offset it. BPH has now also incurred legal expenses in defending the claim for the MMR debt. BPH would have been better off paying the MMR debt as it has now paid both the legal fees as well as the entire debt transfer amount (which was actually more than the MMR debt). As part of the BPH/GBA/MMR settlement, the directors of BPH (including Breeze and Maling who are also both directors of GBA) failed to negotiate a settlement of the remaining debt between BPH and GBA even though the debt with MMR was voided and therefore raises the question as to whether they did act in the best interests of BPH.

The above indicates that Charles Maling is:

a) An officer of a substantial shareholder of the company

b) Has a material contractual relationship with the company

c) Not free from any business relationship which could materially interfere with his independent exercise of his judgement

And therefore is not an Independent Director in accordance with the checklist published in the BPH Corporate Governance Statement that BPH says it has complied with.

Resolution 1 of the BPH Energy Notice of Annual General Meeting uploaded to the ASX platform on 31/10/19, seeks to allow Mr Charles Maling to retire and be re-elected as a director. The AGM notice further states in section 2.3 of the Explanatory Statement that, “Mr Maling has no interests, position, association or relationship that might influence, or reasonably be perceived to influence, in a material respect his capacity to bring an independent judgement to bear on issues before the board and to act in the best interest of the entity and its security holders generally” and “If elected the board considers Mr Maling to be an independent director”.

As per the above, according to the BPH Corporate governance statement, Mr Maling is not an independent director and therefore the statements in the AGM notice do not appear to be accurate.