Lawrence Fletcher subsequently expressed an interest in purchasing a further 500,000 Kerifresh shares. Meanwhile, Alan Thompson had received informal advice that there may have been a breach of the Code in respect of the Anbran transactions, and that he should sell down such number of shares that would reduce his and Anbran’s combined shareholding to less than 20%, being approximately 160,000 shares. Through Hamish McHardy, Lawrence Fletcher became aware that Alan Thompson was seeking to sell down and agreed to purchase 165,000 of Alan Thompson’s shares. Grove Darlow then sent out a letter to shareholders offering to purchase 335,000 shares (being the balance between the 500,000 shares sought by Lawrence Fletcher and the 165,000 shares available from Alan Thompson). Neither acquisition was completed because Lawrence Fletcher and Alan Thompson were restrained by the Panel from acquiring and disposing of Kerifresh shares, as a result the Panel’s consideration of a complaint made by Turners and Growers Limited.
Fletcher and McHardys considered associates
The Panel considered that Lawrence Fletcher, Hamish
McHardy and Jonathan McHardy were associates under rules
4(1)(a) and 4(1)(d) of the Code.
“In-Concert” association - Rule 4(1)(a)
The Panel found that those persons were acting “in concert”
in relation to Lawrence Fletcher’s intended acquisitions and
were associates under rule 4(1)(a). Referring to Bateman
v Newhaven Park Stud Ltd (2004) 49 ACSR 597 and the
authorities cited in that case, the Panel stated:
- The essence of the concept of acting in concert involves knowing conduct the result of communication between the parties and not simply simultaneous actions occurring spontaneously. It involves at least an understanding between the parties as to a common purpose or object.
- In relation to the acquisition and intended acquisition of voting rights in Kerifresh by Lawrence Fletcher the Panel finds as follows:
- Lawrence Fletcher, Hamish McHardy and Jonathan McHardy had an understanding between them that their purpose was to get Lawrence Fletcher to become the holder or controller of an increased percentage of voting rights in Kerifresh by initially acquiring 10,000 shares in Kerifresh and by subsequently increasing his holding to up to 500,000 Kerifresh shares through his offer to shareholders;
- There was knowing conduct arising from the frequent communications between Lawrence Fletcher, Hamish McHardy and Jonathan McHardy as to Lawrence Fletcher’s intention to become the holder or controller of an increased percentage of voting rights in Kerifresh by acquiring shares in Kerifresh and by increasing his holding to up to 500,000 Kerifresh shares through his offer to shareholders;
- There was a consensual adoption of a common understanding between Lawrence Fletcher, Hamish McHardy and Jonathan McHardy that Lawrence Fletcher was to become the holder or controller of an increased percentage of voting rights in Kerifresh by acquiring shares in Kerifresh and by increasing his holding to up to 500,000 Kerifresh shares through his offer to shareholders;
- There was mutual contemporaneous engagement, as evidenced by the many emails sent between or copied to each of them, in respect of Lawrence Fletcher becoming the holder or controller of an increased percentage of voting rights in Kerifresh by acquiring shares in Kerifresh and by increasing his holding to up to 500,000 Kerifresh shares through his offer to shareholders;
- The email correspondence sent between or copied to each of them clearly indicates that the actions of Lawrence Fletcher, Hamish McHardy and Jonathan McHardy in relation to Lawrence Fletcher’s becoming the holder or controller of an increased percentage of voting rights in Kerifresh by acquiring shares in Kerifresh and by increasing his holding to up to 500,000 Kerifresh shares through his offer to shareholders were not simply spontaneous and independent actions on the part of each one of them;
- The Panel considers that the thinking and actions of Lawrence Fletcher, Hamish McHardy and Jonathan McHardy intercepted in relation to Lawrence Fletcher becoming the holder or controller of an increased percentage of voting rights in Kerifresh by acquiring shares in Kerifresh and by increasing his holding to up to 500,000 Kerifresh shares through his offer to shareholders.