Given the situation our Company’s Management and Board have placed shareholders in, the number of shareholders who have expressed potentially great losses as a result and a few shareholders bringing up the topic of a Class Action, I thought I would offer a few opinions of my own.
I have held shares in LNGL for between 5 and 6 years and during that time I have invested nearly $300K in this Company, including my most recent purchase following the DOE announcement on 16th September 2019.
The information following is only my opinion. I am not qualified in Law, however I taught Law and Ethics to Small Business Classes in Tertiary Education for several years before taking up buying and selling shares.
A Class Action law suit determines liability of a company to pay compensation to the Plaintiffs / Claimants (usually requiring about 20) for a Breach of Duty which causes loss (intentionally or otherwise) to the plaintiffs. The principals involved include the following:
1) Duty of Care Duty of Care is the legal obligation to ensure no loss or harm comes as a result of a business conducting an activity. It refers to the standard expected of the professional conducting the activity / business to prevent foreseeable loss or harm to others. Due Diligence is the Management of Duty of Care.
2a) Breach of Duty Liability results from failure / breach to uphold that legal duty.
2b) Types of Breaches (Intentional / Negligence) The primary difference between an intentional breach and negligence is that an intentional breach occurs when someone acts on purpose, while negligence happens when someone isn't careful enough.
2bi) Intentional Breaches - (Misrepresentation) Liability can be established on the basis of intention, negligence and strict liability. Generally, to prove a prima facie case of intentional misrepresentation, the plaintiffs must prove that: The defendant made a material misrepresentation. There are three main types of misrepresentation, fraudulent, negligent, and innocent. Proving misrepresentation? A misrepresentation must be false, and you need to prove to a court that the statement is false.
2bii) Negligence Negligence is failure to uphold the expected duty of care (Due Diligence) and includes:
Conduct (A duty of care was owed; and the standard of care was breached)
Cause (May be Actual / Proximate and was reasonably foreseeable)
Damages / Loss (May be Financial, or other)
In a Class Action, the following questions can be asked: Under Duty of Care (Due Diligence) Can you determine a Duty of Care was owed? - Corporate Governance, Ethical Standards and Codes of Conduct referenced in ‘Acts’ determine moral and legal obligations, and must be complied with by a business including the responsibility to protect the interests of shareholders. Under Breach of Duty of Care What is the level of the expected standard? - The highest level of integrity Was the standard expected breached? - Was the highest level of integrity upheld? Was the breach intentional or otherwise (negligent) in nature?
Cause Was the cause foreseeable? Was speculation of success biased over risks? Failure to adhere ASX Listing Rules? Define Bias; Speculation; Misinformation; Misleading Conduct; Misrepresentation Determine Level of Experience; Knowledge; Stakeholder’s Interests; Diligence; Integrity Were market disclosures to shareholders biased toward speculation of success over risk?
Damage / Loss What is the sum of the financial losses? Did this occur following? Breaches of ASX Listing Rules or of any of the following? Bias; Speculation; Misinformation; Misleading or Deceptive Conduct; Misrepresentation
LNGL’s Corporate Governance Policy states the following
Under: Principle 1 The Board acts on behalf of shareholders; to whom they are accountable; including ensuring ethical standards of behaviour adopted and complied with.
Under: Principle 2 – Structure the Board to add value The Board is charged with the responsibility of protecting the interests of LNGL’s shareholders including: Duty of care, skill and diligence; Duty of loyalty and conflicts of interest; Market Disclosure Policy; Corporate Governance Policy; Director Code of Conduct and Code of Conduct Policies
Under: Principle 3 – A listed entity should act ethically and responsibly The standard of ethical behaviour required of directors is set out in the Director Code of Conduct. The Code requires all directors to uphold the highest levels of integrity, conducting their business. The Code of Conduct includes a process to report conflicts of interest and other material breaches.
Under: Principle 5 – Make timely and balanced disclosure LNGL’s corporate governance policies include a Market Disclosure Policy, which details LNGL’s commitment to ensuring compliance with market disclosure obligations. The Board reviews copies of all material market announcements prior to release to the ASX....
Under: Principle 6 – Respect the rights of security holders LNGL places significant importance on effective communication with shareholders and is committed to keeping them informed of all major developments that affect LNGL. The Market Disclosure Policy highlights the communication approach taken by LNGL. Information is disseminated to shareholders and other stakeholders via methods reflecting current corporation communication practices and compliance with exchange rules.
Questions of Due Diligence, Breaches, Causes, Damage and Corporate Governance
Did LNGL’s market disclosures speculate on projections of successful outcomes including signing offtake contracts, beginning construction and achieving a Financial Investment Decision?
Did LNGL’s risk management policies take appropriate actions to protect shareholders from unmaterialised market forecasts and abrupt fluctuations, volatility, and steep decreases in share price valuations as a result of 1)
Have losses resulted from market disclosures speculating that LNGL is on the verge of signing binding agreements, reaching Financial Investment Decision (FID), and beginning construction in a contracted period of time?
Was there a Breach of ASX Listing Rule 3.1?
As HC members are aware, I have previously provided substantiable information related to Market Disclosures and ASX Listing Rules and have further information to provide.
I would say a few things at this stage. Shareholders who consider this may not receive any compensation, however this would hold LNGL accountable for what has transpired. There are a number of firms that operate on a ‘no win, no fee’ basis and often any compensation goes to the firm.
LNGL’s Takeover Proposal states the offer is subject LNG9 receiving acceptances in respect of at least 90% of ordinary shares. The top 20 shareholders only hold 65% of the company’s shares.
At the current burn rate, LNGL’s existing available liquidity is insufficient to sustain operations beyond the current quarter based on existing funds, or beyond the third quarter of 2020 inclusive of the bridge financing facility. It is questionable that they have liquidity to the end of the Quarter when they have to pay employee, contracted and other associated costs
I understand there are different views in regard to this matter. My own view is I’m prepared to lose my current share value at this pathetic low-ball price for the satisfaction of knowing there could be action and a record of what has transpired under the current Management and BOD of this Company.
I have tried to provide the above information within HC’s TOU, so I hope HC will allow this information to be passed on unmoderated. I have lost over $60K (which I realise is less than others here!) on shares I sold, which I actually consider as very lucky because I couldn’t imagine what losses I would have if I didn’t sell on the way down.
What I would ask is that maybe HC members could refrain from posting excessive posts on this thread as it clutters up further information being passed on.
LNG Price at posting:
14.3¢ Sentiment: Buy Disclosure: Held
