Pulse shareholders shoot down share increase
Shareholders of Pulse Investments shot down plans to increase the modelling and entertainment company's share capital at Tuesday's annual general meeting.
They demanded that the board "come up with a comprehensive plan" on the direction of the company.
Although as principal shareholder with a super-majority stake, Chairman Kingsely Cooper's vote could have carried the resolution, he said he agreed to pull it in light of the strong objection and to respect the views of minority owners.
Pulse had asked shareholders to consider a resolution to increase the authorised share capital of the company from 336,835,181 shares of no par value to 450,000,000 shares of no par value, which would have an additional 113,164,819 shares.
But pressed by shareholders to explain precisely why they should allow this move, Cooper was unable to satisfy the concerns.
"I get the impression that money is required to put up those studios, but you (have come) across as if you don't know what you are going to do with it," said shareholder Dennis Martin.
"We don't have a lot of space in terms of authorised share capital, if we wanted to go further in the future, in terms of raising funds and increasing our issue of share," Cooper sought to explain.
"Why would anybody be looking to increase share capital with the possibility of a future issue, weren't it for the fact that they might well be going to the market."
Cooper added that the company would also need funding for the ongoing real estate projects.
The businessman and founder of the model agency said the board had taken no immediate decision to do any fundraising but wanted the additional inventory of shares to raise capital when the need arises.
The shareholders also took issue with the phrasing of the resolution, noting it did not specify whether the increase will facilitate a stock split of the "issuing of shares to somebody."
The objective, Cooper explained, was to avoid having to call another meeting to ask shareholders to vote on the share increase.
"Having authorised the increase, we also allow the directors to proceed with issuing new shares subject to the decision of the board. We are asking your authorisation to make that decision in the future," said Cooper.
However, the shareholders were unrelenting.
Financial analyst John Jackson noted his concerns about what he described as the "management and directorship" of the company.
"Nowhere in the addendum did anybody say 'let us go to the AGM with a plan to say this is the amount of money we intend to raise, this is the reason why we want to increase the share capital and set the time frame that is in mind," Jackson said.
Cooper was forced to request a 10-minute recess to confer with the company's directors. The board later agreed to pull the resolution.
On January 1, 2016, Cooper gave up the role of Pulse's CEO to daughter Safia Cooper, but remains chairman of the company.