Pavy also asked for answer to a couple of questions:
"...... Is the Administrator compelled to break the service contract and given the absence of a third director what happens at the end of the Administration?..... "
SERVICE CONTRACT
The original 2003 prospectus,refers to Service Agreement on Page 59 as follows:
11.1.3 Service Agreements: According to the terms of the Directors' respective service agreements with the Company, each Director is entitled to be paid remuneration of $100 per annum or, subject to regulatory requirements, an amount otherwise agreed between the relevant parties. The respective service agreements contain an express provision allowing for an increase in remuneration if the activities of the Company significantly expand and/or diversify in the future.
The service agreement with Trimble's company Metropolis City Promotions Pty Ltd [MCP] is described on Page 13 of PPN's 2012 Annual Report as follows:
Employment Contracts of Directors and Executives:
The Company and Metropolis City Promotions Pty Ltd entered into a service agreement for the provision of the services of Mr John D. Trimble to act as the company' executive chairman, CEO and secretary at an all inclusive annual fee of $450,000 (2011: $450,000). The contract contains no termination clauses. The annual fee includes the provision of fully serviced office facilities and clerical support staff.
ASIC's website says that directors of companies in voluntary administration or liquidation lose control of the company. As the administrator is now in control of PPN, I would assume that both directors are no longer on the PPN payroll and that the MCP service contract has been terminated. However, only the administrator would know this.
If PPN goes from voluntary administration into a deed of company arrangement, the powers of the directors depend on the deed’s terms. When the deed is completed, the directors regain full control unless the deed provides for the company to go into liquidation on completion.
It is hard to speculate what might happen should PPN not have three directors if it comes out of administration. As Michael Trimble found out last year with his first appointment to the board suddenly terminated, you need prior approval from the liquor licence police at VCGLR for a third director.
Another 'black swan' event could occur if the corporate watchdog took action against directors should the administrator find evidence of 'improper conduct'.
Pavy says in the final paragraph: "...... Have we gone that far whereby not just individuals but entire organisations have become that brazen that, they have no concern to even cover their own tracks when they are clearly attempting something that, is at the very least highly questionable......."
The cases listed on the ASIC Media Centre website give some indication of what can happen should directors, accountants or liquidators be caught doing anything dodgy. http://asic.gov.au/about-asic/media-centre/
ASIC's Media Centre, 15-111 on 15 May 2015, reports a case where a judge found that a liquidator: "...... failed to exercise the degree of care and diligence required of him as an officer of the company, failed to exercise his powers and discharge his duties in good faith and in the best interests of the company, and engaged in litigation to gain an advantage for himself to the detriment of the company..."
PPN Price at posting:
20.0¢ Sentiment: None Disclosure: Held
