Boardroom shenanigans and capital structuring changes are headline news for large companies, but the impact can be even more drastic for small-caps. Radical shifts in strategy require big calls to be made and in cases where there is disagreement, that can lead to drama.
Directors must act in the interests of all their stakeholders and if the owners of a company’s shares aren’t happy and have a significant slice of the equity, they have recourse to action. The extraordinary general meeting (EGM) can be the high-noon showdown between management and activist shareholders.
July saw a number of EGMs although perhaps the most caustic was averted when a truce of sorts was reached between Hurricane Energy (HUR) and 25 per cent shareholder Crystal Amber Fund. The activist fund was appalled by an offer management made to bondholders that would have left the lenders owning 95 per cent of the company.