Cue rebels' votes unfairly disallowed, panel rules

Friday 11th May 2001

By Nick Stride

Cue Energy's dissident shareholders this week won a major victory but the company's fate remains with the High Court.

The Stock Exchange's market surveillance panel has ruled Cue should not have disallowed votes cast at a special meeting on March 30 by 70 shareholders seeking to sack the board.

Around 101 million votes cast in favour of sacking chairman Michael Tilley and director Leon Musca and appointing a new board were disallowed by Mr Tilley on two grounds.

The first, Cue argued, was that the dissident shareholders - led by Browse Petroleum, Todd Energy, and Anzoil - were "defaulters" because they acted as a "concert party."

Cue also alleged proxies used by the three companies, who requisitioned the meeting, were not "bona fide."

It argued Browse, Todd, and Anzoil were defaulters because their voting at the annual and special meetings and their requisitioning of the special meeting amounted to a "transfer" as defined in the exchange's listing rules and Cue's constitution.

The other shareholders whose votes were disallowed were defaulters because they appeared to be linked with the requisitioning shareholders by virtue of common voting and common proxy appointments.

The panel - made up of Sir Ian McKay, Tim McGuinness, and Paul Oldfield - said the definition of a transfer in the listing rules refers to any agreement, arrangement or understanding under which votes may be exercised by someone other than the registered holder, or with other persons acting in concert.

It said it could find no evidence of any such agreements.

While there was no doubt the requisitioning shareholders shared a common view Cue's board should be removed, and requisitioned a meeting and solicited proxies for that purpose, "there is no evidence they surrendered their freedom to vote as they saw fit when the meeting was held."

Cue's insistence the shareholders were acting "in concert" was not in itself a breach of the notice and pause rules, the panel ruled.

"It is entirely common for major shareholders in a company to discuss their views as to the direction of the company and the makeup of the board."

"It is not unusual for them to come together to requisition a meeting of shareholders. It is also not unusual for major shareholders to solicit proxies from other shareholders in support of their views."

Holding those activities to be a breach of the notice and pause rules would be "entirely impracticable" and "a major restriction on the fundamental right of shareholders to determine the direction of the company."

The panel also ruled the fact proxies may have been actively solicited doesn't mean, as Cue alleged, they are not bona fide proxies.

While the requisitioning shareholders distributed pre-completed proxy forms voting in their favour, the shareholders who received them still had the blank forms sent out by the company.

Or they could have used the pre-completed forms but amended them.

The panel could see no difference between signing and returning a pre-completed proxy form and first completing, and then signing and returning a proxy form.

Cue also cited listing rule 4.7.5, which says the ruling of the chairman of a shareholders' meeting on who is or is not entitled to vote "shall, for the purposes of proceedings of that meeting, be conclusive."

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