Smiles Inclusive shareholders vote former chairman and founder off the board
Written on the 23 May 2019 by Business News Australia
The shareholders of Gold Coast-based dental company Smiles Inclusive (ASX: SIL) have had their say in the future of the company's board.
Founder and former CEO Mike Timoney (pictured) and ex-chairman David Herlihy have been removed by shareholders at the company's extraordinary general meeting held Wednesday afternoon.
Over 64 per cent of votes cast on the resolutions were in favour of removing the founder of the dental company Mike Timoney, who is currently facing legal action from Smiles Inclusive.
David Herlihy, the company's ex-chairman, will also be removed with over 65 per cent of shareholders calling for his ousting.
The two do not appear to be backing down quietly though. According to a spokesperson for the two removed directors they intend to challenge the results of the vote.
"We intend to challenge the published results of today's Smiles' EGM through the courts or a second EGM, due to major discrepancies in the numbers,'' says a spokesperson for the two.
"The renegades have refused to provide our legal firm access to the proxies for a proper count and we intend to challenge them on this issue."
Over 900 shareholders voted on the resolutions yesterday, representing around 89 per cent of the company's total share capital.
Two other directors of Smiles Inclusive have survived the board spill, with 56 per cent of votes cast in favour of keeping Tracy Penn as a director, and 57 per cent supporting David Usasz remaining on the board.
"Shareholders have today decided who should guide the company as directors during the next phase, and to support the current management team led by CEO, Tony McCormack," says Usasz.
Paediatric dentist John Camacho failed in his bid to be appointed to the board, with 54 per cent of shareholders voting against his application.
The removal of founder Timoney and ex-chairman Herlihy comes as the two are being sued by Smiles Inclusive.
The action follows the substantial completion of an interim investigation into the conduct of the ousted former CEO and Herlihy.
The latter claims he resigned in late March protesting "ongoing abuse of good governance by the renegade directors".
Smiles Inclusive's leadership have had a tough time getting a hold of Timoney to discuss issues of importance, including details around a mobile dental clinic joint venture that has effectively collapsed.
The group said it had written to Timoney to express its concerns about a number of specific matters and request a meeting with him on almost three days' notice.
"Mr Timoney's lawyers responded saying that in light of the seriousness of the allegations they considered that it was unreasonable and inappropriate to require Mr Timoney to attend a meeting with this amount of notice," the company said in April.
"Accordingly, the company has today commenced proceedings in the Supreme Court of Queensland in relation to unlawful payments and transactions procured by Mr Timoney.
"Mr David Herlihy, who was Chair of the Board during all relevant periods, has also been named as a defendant for his role approving the payments and transactions."
The company is seeking to recover losses from Timoney and his related parties, as well as Herlihy.
Court documents claim Timoney appropriated funds totalling $79,878 for his own alleged benefit between January 2017 and December 2018, predominantly for travel which Smiles Inclusive claims was for personal reasons, along with other transactions this year.
Another defendant is Pink Diamond, an events management company whose sole director was Timoney's son James until February last year, followed by Timoney's wife Ildi Sanda Redak. This company allegedly invoiced Smiles Inclusive almost $200,000 for different events which Smiles alleges included mark-ups.
In a written response given to Business News Australia, Timoney described the proceedings as "another attempt to avoid the ballot box", implying the board seeks to avoid holding a shareholder vote to remove certain directors.
Shares in the Gold Coast-based company have plummeted over the past 12 months since listing on the ASX, with massive cuts to profit forecasts and a statutory loss of at least $500,000 expected this financial year.
This compares to the IPO prospectus' pro forma NPAT forecast of $5.8 million for FY18, and claims in August that NPAT would be at least $6 million in the current financial year.
Australian Aged Dental Care, which trades as Australian Mobile Dental Care and is one of Smiles Inclusive's partners in the Smiles OnSite joint venture, plans to pursue damages against the company over alleged profit loss to the tune of around $20 million.
The disgruntled partner has also lodged proceedings against Smiles Inclusive with the Fair Work Commission over jobs that were lost following the joint venture.
Business News Australia
Author: Business News Australia