On 13 August 2021, the Board of Block Energy plc (the “Company”) issued a Notice of requisitioned General Meeting to shareholders, including a statement by the Board regarding its position on the requirement for a forensic investigation into the actions of the Company. The following statement is published by a group of concerned shareholders (the “Concerned Shareholders”), representing approximately 20% of the shares in the Company. The focus of the Concerned Shareholders is solely to improve the Company’s share price and build shareholder value.
The Concerned Shareholders have proposed this resolution as they believe it is in the Company’s best interests and not to cause unnecessary nuisance or cost. To ensure other shareholders are not forced to commit more funds and to ensure there is no financial impact on the Company to give fellow shareholders comfort, the Concerned Shareholders are willing to meet the full costs of the investigation.
The Concerned Shareholders are willing to discuss the range of potential independent firms that would be suitable for appointment and the scope of the forensic investigation that would be undertaken. The Concerned Shareholder’s letter to the Board on 10 August 2021 sought engagement on these matters, however, the Board has failed to provide any response.
Notwithstanding, the Concerned Shareholders propose that the scope of any forensic investigation be focused initially on the following areas of primary concern:
Put simply, if the Company has nothing to hide, is confident that it has met the required standards of corporate governance, and is not going to suffer any financial loss as a result, why would the Company not agree to the request?
It is in all stakeholders’ interests that the Company be given a clean bill of health or, if uncovered, any material issues are rectified as soon as possible to allow the Company to reach its full potential for the benefit of everyone involved. Again, the Concerned Shareholders hold no other motives.
The purpose of the resolution is to examine significant long-standing issues that the Board have failed to address, which have contributed to the chronic underperformance of the Company’s share price and have led to the departure of two of its non-executive directors (in short order) with a third non-executive director supporting the removal of the Chairman. These issues include:
Further details of these issues can be found here: https://blockenergysupport.group/.
For the purpose of carrying out an independent forensic investigation, the Concerned Shareholders indicated in the Requisition Notice that they believe the Board should retain one of the following firms: Deloitte, PwC, Ernst & Young and/or KPMG. However, in order to ensure that costs are managed and that the identity of the investigator is suitable given the circumstances, the Concerned Shareholders would be willing to work with the Company to agree an alternative third party to carry out the forensic investigation.
The purpose of such forensic investigation is to determine if the transactions or arrangements entered into by the Company and the policies and systems adopted by the Board were carried out or implemented in the best interests of the Company and to the benefit of its shareholders or otherwise.
In response to the concerns raised by the Company on the cost of the investigation and its claim that the proposed resolution was vexatious, the Concerned Shareholders contacted the Company’s legal counsel on 10 August 2021, offering the opportunity to discuss the range of the potential independent firms to be appointed and the proposed scope of the forensic investigation with the Company. The Company’s claim that the proposed resolution was “vexatious” claiming that “nothing changed between 2 July 2021” (when the first requisition was submitted). In fact, two of the three non-executive directors resigned shortly after that date and the third publicly stated that he backed the resolutions to remove the Chairman – a collapse in the corporate governance of the Company. To claim that “nothing changed” is extraordinary and reflects the Board’s attitude that there is “nothing to see here” without offering any adequate answers to shareholders’ legitimate questions.
Despite stating publicly that the Company would engage with shareholders on issues, the Company has made no attempt to engage with the Concerned Shareholders nor did it respond to the 10 August letter.
The priority of the Concerned Shareholders is to ensure the future success of the Company and provide transparency in order that the existing Chairman and executive management team do not repeat past mistakes. It is for this reason the Concerned Shareholders have requested that the independent forensic investigator provides a written report detailing its findings. The Board shall promptly make available to all of the Company’s shareholders an un-redacted copy of the independent forensic investigator’s report.
The Company has encouraged shareholders to vote against the resolution because:
To address these points, the Concerned Shareholders make the following comments:
Standards – The forensic investigation is required as the Board has failed to engage with questions raised by the Concerned Shareholders and to address the collapse in corporate governance of the Company following no non-executive directors supporting the Chairman, a highly irregular circumstance and a situation concerning for shareholders. The Company seeks to apply the QCA Code, which provides that: “In the absence of high-quality communication, existing or potential shareholders may conclude that a company’s board is not fully committed to safeguarding their interests”. This situation has arisen because of the Board’s failure to provide high-quality communication to shareholders in line with the QCA Code.
Cost and Scope – The Concerned Shareholders have proposed this resolution as they believe it is in the best interests of the Company and not to cause unnecessary nuisance or cost. To ensure other shareholders are not forced to commit more funds and give fellow shareholders comfort, the Concerned Shareholders are willing to meet the full costs of the investigation. This commitment will be subject to agreement between the Concerned Shareholders and the Company regarding the appointment of a mutually acceptable independent firm to undertake the proposed investigation to a pre-defined scope of work. The Concerned Shareholders have no desire to see Company funds depleted as has been suggested. If nothing adverse is uncovered by the investigation, this would be a positive result for the Company. If adverse findings are uncovered, the Company can remedy those issues and put in place appropriate measures to prevent them from reoccurring – again a positive result for the Company.
Supervision – The Concerned Shareholders propose that appropriate supervision procedures will be established to allow both parties to monitor the progress and any initial findings of the investigation that may indicate that the scope of the work should be increased or decreased. A structure should be put in place to ensure that management time is not adversely diverted from ongoing operations.
By addressing these points, the Concerned Shareholders believe that fellow shareholders should VOTE FOR the resolution.
The Company committed following the last general meeting to engage with all shareholders on their views and concerns going forward. Completing this investigation will help address those concerns.
The Concerned Shareholders have set up a website at www.blockenergysupport.group with additional information.