The unexpected requisition notice: the company secretary’s point of view

A month in the life of Chezi Hanford, Senior Company Secretarial Manager at Ocorian, after receiving an unexpected requisition notice for one of the listed companies that she provides company secretarial services to, calling for the removal of current directors and the appointment of new ones.

A very unexpected requisition notice

It’s not every day that a requisition notice is received, but I recently received one that demanded the removal of all but one current director, and the appointment of two new directors chosen by the ‘requisitionists’.  

My initial reaction? Clear my schedule - a flurry of board and committee meetings were on the horizon. However, my second, and more important, thought was about governance. Ensuring good governance is the cornerstone of a company secretary's role, and it's precisely what our boards rely on us to deliver.

What does a Company Secretary do when they receive a requisition notice?

My mind immediately went into CoSec mode and I immediately launched into action:

1. Alerting stakeholders: I notified the board, legal advisors, PR firm, brokers, and the investment manager.
2. Arrange an urgent board meeting: I secured availabilities for an immediate board meeting.
3. Streamline my workload: I cleared my schedule and briefed my manager, delegating tasks to colleagues if needed to ensure my other clients were supported.
4. A knowledge refresh: I refreshed my understanding of company law, the company's articles, and relevant regulations: listing rules, disclosure and transparency rules (DTR), the Takeover Code, and Market Abuse Regulations.
5. Scrutinise the situation: I reviewed the company's share register and the requisitionists' public announcement, fact-checking its contents before the upcoming board meeting.

Within seconds, a mental whirlwind of questions and actions ensued: "Is this insider information? Do we need an insider list? Have I missed anything else?”

Navigating conflicting interests

The requisition notice itself surprised the board, but the level of detail contained within the accompanying announcement by the requisitionists caused even greater astonishment. The board found many of the claims in the announcement to be unfounded.

This surprise led to a difference of opinion between the board and the investment manager on how to respond. Both the chairman and the investment manager approached me with separate strategies, thoughts, and demands.

In such situations, my priority is clear: ensure the company maintains good standing, complies with all applicable rules and regulations, and that the directors uphold good governance practices in the best interests of all shareholders.

While the board might not have agreed with everything the requisitionists put forward, their combined voting power – exceeding 25% of issued shares – was a significant factor. The board couldn't simply ignore their concerns.

A pressure cooker: The next 21 days

The initial board meeting was intense, but it was merely the opening act of a whirlwind few months. The board decided on daily meetings until a response was sent to the requisitionists. We faced a tight deadline: 21 days to call an Extraordinary General Meeting (EGM), which then had to be held within 28 days of the EGM notice's release.

This translated to a daunting schedule: at least 21 board meetings in the coming weeks, and that was before factoring in the mountains of minutes I'd need to write. Beyond the meetings, a flurry of additional tasks awaited: verifying the requisition notice's legal compliance, assessing the independence of the proposed new directors under the UK Corporate Governance Code and preparing an immediate response announcement, which of course required gathering feedback from all parties involved.

Not just a company secretary, but a trusted advisor and confidante

Over the next 21 days, I became an unwavering support system for all the directors, especially the chairman. This was his first encounter with such a situation, and he relied heavily on me, the Company Secretary, for guidance, support, and reassurance. Our jobs as Company Secretaries transcends mere legal and compliance expertise; we are trusted advisors, pillars of support, and the reassuring shoulder our directors lean on during challenging times.

The build up to the EGM

The following 21 days were a whirlwind of activity. I orchestrated meetings, facilitated communication between advisors and the board, and ensured all necessary agreements and engagement letters were signed.

My days were filled with meticulous tasks:  reviewing company records to ensure everything was in order, responding to information requests from the requisitionists, drafting all the necessary documentation for the EGM, and constantly referencing the company law, listing rules, the company's articles, and corporate governance codes to guarantee everything adhered to the highest standards.

Finalising the EGM circular proved particularly challenging. Negotiating revisions and securing approvals pushed deadlines, resulting in several late nights. However, a Company Secretary's job doesn't end with document approval. The next step was submitting the documents to the Regulatory News Service (RNS) and the National Storage Mechanism (NSM).

Releasing the EGM notice brought a wave of relief. I envisioned a couple of weeks to finalise meeting minutes, action points, and update corporate records.

Proxy voting brings new challenges

The initial flurry of board meetings subsided... for a while. Then, the proxy voting reports started arriving. I downloaded and analysed them twicea day, and it became clear very quickly that the vote on director changes would be extremely close.

This triggered a return to daily board meetings, with the immediate appointment of a proxy solicitation firm a top priority.

My attention also shifted to the legalities of appointing potentially non-independent, non-executive directors and removing current ones. I drafted all necessary appointment documentation, including consent to act letters. I obtained CVs, bios, and certified due diligence reports from the prospective new directors, along with their directorship lists, conflict of interest statements, and induction packs.

The proxy reports also revealed another layer of complexity: the requisitionists planned to have third-party representatives attend the EGM in person.

Preparing for every outcome

As the EGM date drew nearer, I began drafting various versions of the EGM: announcements, statements regarding significant votes against resolutions, statutory filings, and a script for the chairman.

It was agreed that we should have three versions of a results announcement, ‘a win, lose and draw’ scenario.  Extensive back-and-forth negotiations were necessary to finalise the wording of each announcement with all involved parties. An additional layer of complexity arose: if new directors were appointed, they would have the right to review and comment on the announcement, but only after their official appointment.

Meeting logistics

Beyond the legalities, the EGM's logistics demanded attention. We required three separate meeting rooms: one for the EGM itself, another for waiting shareholders and third-party representatives (located discreetly apart from the EGM room), and a final breakout room for the Registrar (also known as the Scrutineer) to count votes undisturbed.

To ensure a smooth arrival process, I briefed receptionists on attendees, their roles, and their designated rooms. Name badges, of course, were another essential detail.

The big day finally arrives

The long-awaited EGM day arrived. A tension filled the air as everyone waited nervously outside the boardroom. Unsubmitted votes and the possibility of last-minute shareholder arrivals added to the anxiety.

All votes were cast via a poll, requiring meticulous counting, recounting, and verification.

The outcome? A "draw" by our pre-determined definition: only one director would be removed, while one of the proposed new directors would be appointed.

With prepared announcements in hand – detailing the "draw" results and the changes to director roles – I secured approval from the newly formed board. These announcements needed to reach the stock exchange before the market closed.

What’s next?

After the drama of the EGM, the work did not stop there. Statutory filings, new director induction training, and, of course, mountains of minutes required my attention -that thing that everyone thinks is our only job!

Epilogue: Eight months later

The company was placed into voluntary liquidation by its shareholders 8 months after the EGM was held – the requisitionists’ goal had been achieved, and the new director had helped them achieve it.
 

About Ocorian Company Secretarial Services

Our team of chartered company secretaries are professionally qualified and located in key jurisdictions to provide a tailored, local service.

With share prices across the listed sector trading at some of the highest discounts seen, the possibility of a listed fund receiving a requisition notice can increase.

With deep knowledge of both listed and private funds, our experienced company secretaries help manage and comply with your fund’s legal and regulatory obligations, whilst ensuring the highest levels of governance.

Contact us for further information.
 

Company Secretarial careers with Ocorian

For more information on joining our Corporate Secretarial Team, please visit the Ocorian careers website.