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Pacific Current Group Limited (ASX:PAC)

Announcement posted by Advocate Strategic Investments Pty Ltd 26 Sep 2016

Member directed nominees told they cannot stand for election as directors at PAC's 2016 annual general meeting
Obfuscation or Ignorance? Either Way, Pacific Current Breaches ASX Listing Rule 

Constructivist equity investment manager Advocate Strategic Investments (ASI) has been told by ASI’s investee company Pacific Current Group Limited (PAC),  the former Treasury Group Limited, that its nomination of two of its officers, and an independent but associated third party, for election to the board of directors cannot stand, as the three nominated after the cut-off time expired.

The irony in this situation is that ASI is engaging with Pacific Current Limited on strategies to redress the steep market discount at which the company’s shares are trading, and one of those strategies is to improve the company’s poor governance and transparency.

Even such a simple matter as shareholders nominating for election to the board of directors of the company of which they are part-owners has become yet another example of Pacific Current’s now habitual lack of transparency. 

Pacific Current has demonstrated that it is willing to breach Australian Securities Exchange (ASX) listing rules to disenfranchise shareholders who have had the temerity to question the performance of the company.

The other possible conclusion – that it is ignorant of ASX listing rules – is an even less welcome thought.

In any case, ASI is seeking an adequate response from Pacific Current to its queries regarding the effective disenfranchisement of non-insider shareholders that results from its actions, which continue an unwelcome trend of secrecy and back-dated decision-making.

If no adequate response is received by 10:15 AM AEST on Tuesday 27 September 2016, ASI reserves the right to notify James Gerraty, Manager, Issues, ASX, of a clear breach of ASX listing rules, and issue formal complaint against Pacific Current to ASX.

The background

On Thursday 22 September 2016 the nominations and consents for the following persons to be directors of Pacific Current were lodged with the company:

Michael Brendan de Tocqueville, chief investment officer, ASI

Kenneth John Stout, chairman and non-executive director of ASI, chartered accountant and chartered secretary

Mark William Folpp, executive adviser and head of investments and portfolio construction at PKF Wealth

In Pacific Current’s constitution, it states that a person who is not a retiring director is ineligible for election as a director of the company unless a signed ‘consent to nomination’ is lodged with the company at least 30 business days before the annual general meeting (AGM) of the company.

This means that for Pacific Current, the closing date for nominations of directors is 30 business days before the AGM of the company. 

On Monday 26 September 2016 Pacific Current announced to the ASX that its 2016 AGM would be held on Thursday 27 October 2016.

In other words, Pacific Current notified its shareholders and the ASX of the general meeting after the closing date for director nominations. 

The effect of this announcement is that no person who is not a retiring director can nominate as a director of PAC. 

ASI believes that the timing of this announcement suggests that the PAC board is actively trying to prevent non-board members from nominating.

Pacific Current appears not to know that ASX Listing Rule 3.13.1 exists, and specifically states:

If directors may be elected at a meeting of security holders, the entity must tell ASX the date of the meeting at least 5 business days before the close of nominations.

This rule is designed to ensure that listed companies give outsiders, sufficient time after a meeting is announced to ASX, to nominate for election as a director. 

As things stand Pacific Current is in clear breach of this listing rule.

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About ASI

ASI is a Melbourne-based independent investment management firm that provides institutional and sophisticated investor clients with customised alternative investment strategies. The firm’s senior investment team uses its unique, company-specific, value-oriented investment approach, with a strong focus on equity special events and credit opportunities. ASI’s approach is focused on the preservation of capital through extensive and rigorous investment analysis on a position and portfolio basis. ASI is the manager and adviser to the Advocate Partners "Constructivist Investment Strategy". Shareholder Constructivism is about advocating an owner’s perspective in relation to how a public company is governed and operated, in order to build the conditions necessary for its equity value to appreciate.

Disclaimer

This Press Release has been prepared by Advocate Strategic Investments Pty Ltd ABN 77 101 691 598 AFSL 224560 (ASI) for the information of shareholders. This release has been prepared from information available to ASI on the date of release and from publicly available sources. ASI has not verified this information and no responsibility is accepted for the accuracy, currency or completeness of this information. This release must not be taken to be financial product advice in respect of shares in the Company.

Advocate Strategic Investments Pty Ltd
ABN: 77 101 691 598 - AFSL 224560 

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Melbourne, VIC 3000 
Australia 

e: info@advocatesi.com.au 
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