‘Chicken war’ meeting delayed

Court decision means Sovereign Foods, Country Bird shareholders wait

THE controversial Sovereign Foods shareholders’ meeting to have taken place at its Uitenhage headquarters yesterday was postponed, pending a decision by the Port Elizabeth High Court.

Judge Igna Stretch was expected to give a ruling on an urgent application to block a dissenting group of shareholders – holding an 11% stake in Sovereign – from voting on an issue affecting control of the poultry giant.

Reading out the ruling yesterday, Judge Nomathamsanqa Beshe ordered that discussions and matters to have been voted on at the meeting be put on hold. The matter was postponed to April 29.

A major bone of contention is whether the dissenting shareholders, most of them linked to rival company Country Bird, had a right to vote at the meeting.

The court action follows the indefinite suspension of the group’s ability to flex their muscle as shareholders after Sovereign’s board enforced an “aggressive interpretation” of their appraisal rights, which allow shareholders unhappy with a company’s plans to apply to be bought out at the “fair value” of their shares.

The Sovereign board says the dissenting block of shareholders gave up these rights when they applied for and were granted appraisal rights ahead of a January meeting and were thus barred from attending yesterday’s meeting.

The dissenters claim their appraisal rights have lapsed, as Sovereign has abandoned the January proposals.

The shareholders then applied to the court to have yesterday’s meeting postponed until their rights as shareholders are re-established.

The court’s decision in a month’s time will have farreaching implications for a section of the Companies Act that has needed clarifying.

It will also deal for the first time with the charge of “oppression of minorities” brought against a listed company in terms of the Companies Act of 2008.

The January 14 meeting was called to approve a proposal that would have introduced black economic empowerment shareholders and aligned them with an executive share scheme in a controlling 28% voting bloc.

The Sovereign board went to the Competition Tribunal over the matter last week, but lost the case.