There are a few reasons why I do not like the actions of the shareholders requesting the removal of Paul Cholakos.I am wondering if this move will ultimately backfire on them.I have set out my thoughts below and would be interested in the views of others.
By way of background, my understanding is as follows:
·TheChairman, Peter Graham, is not considered to be an independent director (referannual report).
·PeterGraham does not directly hold or control any shares (refer ASX notice forinitial directors interest filed on 4 May 2020).
·PeterGraham has said in recent shareholder briefings that he come to the board ofCAP at the request of some shareholders.I think he said it was shareholders that he had introduced to CAP.
·PaulCholakos is a long serving director of CAP.He is the only current director of CAP that is considered to be an independent director.
·ASXCorporate Governance Principles and Recommendations states that “A majority ofthe board of a listed entity should be independent directors” (Recommendation2.4) and “The chair of the board of a listed entity should be an independentdirector” (Recommendation 2.5)
CAP is not currently in compliance with ASX recommendations with respectto the composition of the board in that the majority of directors are not independentand the chairman is not independent.
Now, a group of shareholders are trying to remove the only independentdirector on the board of CAP.If this is done, there will be NO Independent Directors on the board of CAP.
This is something that I am not comfortable with.
I am even more uncomfortable with this because there has been no explanationas to why.Perhaps the explanation will come. But at the moment, I am very concerned with this action.
I can’t help but wonder if the shareholders that have requested theremoval of Paul Cholakos are the same group of directors that asked PeterGraham to join the board?If so, why would they want to do this?What do they know that we do not know?Are they being provided with information that is not available to other shareholders?
If it comes out that the group of shareholders wanting to remove Paul Cholakosare the same group of shareholders that put Peter Graham on the board, thiscould cause shareholders to turn on Peter Graham and seek his removal.If that is the case, this move could backfire on the requisitioning shareholders and Peter Graham could be removed from the board instead.
My thoughts and questions only.Interested in what others have to say.
