Ellipsiz board battle heats up
It’s far from the normal, but given the situation that some of the directors at TSX Venture- listed Ellipsiz Communications Ltd. felt they were in, extraordinary measures were required.
Four of the directors of the company — whose main business is providing services to the telecommunications industry in Taiwan and which listed in Canada as the result of a 2015 reverse transaction with NXA Inc. — have written to the regulators, specifically the TSX Venture and the Ontario Securities Commission.
The four provided “infor- mation regarding the conduct” of another director, Tat Lee (Michael) Koh, a former chairman and the company’s largest shareholder with a 43-per-cent stake.
In that 20- page letter, the four state that Koh “is not a suitable person to serve as a director of a company listed for trading on the TSX- V, and in particular Ellipsiz.” And the four — Chong Gin ( Sam) Tan, Grant Sawiak, Elliott Jacobson and Mark Korol — want the TSX- V “to inform Mr. Koh that he is unacceptable to serve as a director or officer of ECL, thereby prohibiting him from doing so.”
Sawiak, Jacobson and Korol were reappointed at the June, 2016, annual meeting. This week, all the directors, except Koh, met in Toronto.
Attached to the 20- page letter — sent in December — were hundreds of pages of supporting documentation including affidavits. Apart from a form reply, the directors have heard nothing. Sawiak and Jacobson have been directors for about 16 months, Korol was added last May.
The essence of that letter: the board made a mistake when Mr. Koh was put forward as a director at the time of the listing. “Based on the information now known to the board, we are seeking to ameliorate this error before further damage to the interests of the company, its shareholders and the capital markets can be done,” it said.
The letter was sent a few months after Koh requisitioned Ellipsiz’s board of directors to call a special meeting of shareholders. The idea was to reconstitute the board by removing Jacobson, Sawiak and Korol as directors, and replacing them with the three independent nominees. At the time, Koh said the board needed to be reconstituted “in order to ensure that the Company is put on a path to enhancing shareholder value.” Koh added he had “lost confidence” in the three.
But the three didn’t go quietly and didn’t call the meeting, so Koh called his own meeting and set Nov. 28 as the date. The company then ruled that plan was out of order.
“The Board concluded that Mr. Koh’s request for a shareholder meeting is for the primary purpose of enforcing a personal claim, or redressing a personal grievance against the corporation or its directors, officers or security holders, and therefore the Board, as is its right in these circumstances, refused the request to call a meeting of shareholders,” said a release from Ellipsiz.
A couple of days before the scheduled meeting the court intervened and denied Koh’s plans and agreed with the company’s view. Koh has since appealed that decision.
Reached in Singapore on Friday, Koh said he wants the three directors out of the company “because they are not giving us the right vision at the board level. They are not well- versed in technology,” he said. Koh added he also wants changes on the board of the company’s Taiwan subsidiary. “I don’t think they are the right directors.”
As for resolving the issue, Koh vowed to continue the fight. “I am still pursuing it,” he said. Koh said the disagreement between the board and the major shareholder, “doesn’t help the company at all.”
We were unable to reach officials at the TSX-V.