Shareholder Activism

I'm of the view that there's an almost 100% chance of a class action against SRX, its Board and CEO. Violating full disclosure requirements is just too simple a case to be made, and the value of the company and its professional indemnity insurance is significant enough so as to attract law firms and litigation funders.

What won't happen is the Board and CEO issuing a mea culpa, making an effort at restitution by returning all performance-based and equity-based remuneration, organising an orderly transition and resigning.

Instead, we're going to hear about the stellar job done in the past, GW's tax obligation fantasy, the impossibility of knowing that the dose sales growth rate was just 25-50% of that predicted until the last two weeks of the half-year, the importance of a steady hand in times of turbulence, blah, blah ...

Irrespective of whether the case is ever proven (they always get settled prior to a court hearing, usually for the value of the insurance) it will prove a huge distraction for the Board, CEO and staff.

- GW may be worried that he faces criminal charges along with his shredded reputation.

- The Board will be worried and will likely spend more of our money on lawyers trying to defend its actions.

- Staff (some of whom would have sold shares prior to the disclosure, having access to the same information as GW) will be worried about the likely scrutiny of transactions and insider trading implications.

- Other Staff who have been loyal to GW over many years, will feel betrayed and dismayed by the actions of their leader, and will rightly be unsettled by an uncertain future at the company (ie, who might their next boss be, what chance of ever getting share allocations in the future etc ..)

It all adds up to a massive distraction and will jeopardise the performance of the company even if upcoming trial results are positive. It therefore makes sense to have a new Board and new Management Team in place prior to the May 2017 (estimated) trial results.

I'm very interested to hear the views of other shareholders in relation to bringing these issues to a head as soon as possible, thereby improving the chance of starting with a clean slate when the trial results are published. Can we garner enough votes to call an EGM and spill the Board (for example)?

Also keen to hear from any shareholders who have been in touch with a Board member re: the events of the past week.

$4.