Balzers, October 28, 2019
With his threat of resignation, Meyer Burger's CEO violates the duties of care and loyalty
Prof. Dr. iur., Peter V. Kunz, Managing Director of the Institute for Business Law and Dean of the Faculty of Law of the University of Bern, has written a legal opinion on the conduct of the top management of Meyer Burger Technology Ltd ("Meyer Burger") and Sentis Capital PCC ("Sentis") and the candidate of the shareholder group around Sentis. The expert opinion provides answers to four legal questions.
The most important findings by Prof. Dr. iur., Peter V. Kunz: The threat of resignation by the CEO of Meyer Burger is contrary to the interests of the company and constitutes a breach of the duty of care and loyalty under labour law. The Board of Directors should have intervened against the public "threat of resignation". In addition, it should not have used it as an argument against the election of Mark Kerekes.
On the other hand, according to Prof. Kunz, despite differences of opinion between Sentis /Mark Kerekes and Meyer Burger, there are no conflicts of interest in the legal sense.
Is the "threat of resignation" of the current CEO of MB legally permissible?
Can a "resignation" take place at short notice, possibly even without notice?
Answers Prof. Kunz: In the specific case, the CEO should not have made a public "threat of resignation" because such a threat was or is contrary to the interests of the company and constitutes a violation of the duties of care and loyalty under labor law. Hans Brändle has only, but at least, the right to terminate his employment contract ordinarily, but not without notice.
What is it like - from the perspective of corporate governance - to judge that the BoD is de facto dependent on the CEO and exploits the "threat of resignation" in connection with the EGM?
From the point of view of corporate governance, what can be said about the BoD's motion not to elect Marc Kerekes?
Answers Prof. Kunz: The BoD is "superior" to the CEO, i.e. for reasons of corporate governance there must be no dependence on the CEO; in this specific case the BoD should have intervened against the public "threat of resignation", which should not be used as an argument against the election of M. Kerekes. The "reservations" against his candidacy appear to be pretexts without any legal basis.
Is there a conflict of interest between Sentis and Meyer Burger in the specific case?
Would such a conflict of interest - if it existed - have an impact on Sentis's voting rights at the extraordinary general meeting?
Are due diligence and fiduciary duties to be observed by Sentis?
Answers Prof. Kunz: There are no apparent conflicts of interest between Meyer Burger and Sentis (for example, are there no competitive relationships); there may be different views between Sentis and Meyer Burger but these would not constitute conflicts of interest in the legal sense. And there is agreement on corporate strategy anyway. However, even in the case of conflicts of interest, Sentis would not have to comply with duties of care and fiduciary duties.
Does Mr. Kerekes have a legally relevant conflict of interest because he is personally a shareholder of Meyer Burger?
Does he have a conflict of interest as delegated member of the Board of Directors of Sentis?
Would a conflict of interest - if any - exclude his eligibility for election to the Board of Directors of Meyer Burger?
Answers Prof. Kunz: In the case of Marc Kerekes, there would be no conflict of interest in the event of a Board election, neither in his position as (small) shareholder of Meyer Burger nor in the function as delegated Board member for Sentis - and thus as dependent Board member - of Meyer Burger. Even a conflict of interest would not rule out eligibility for election but would merely suggest measures for the activities of the Board of Directors (e.g. no participation in decision-making in case of a conflict).
According to the legal opinion of Prof. Peter V. Kunz, the arguments put forward by Meyer Burger against the election of Mark Kerekes as shareholder representative are without substance. From a legal point of view, there is nothing against the candidate of the shareholder group around Sentis.
Link to full legal opinion
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About Sentis Capital
Sentis Capital PCC, Balzers, is a subsidiary of Elbogross SA and is responsible for the treasury management and capital market investment of the entire group. Elbogross SA is a holding company based in Switzerland and wholly owned by Petr Kondrashev, resident in Lower Austria. The divisions of Elbogross SA originate from a former industrial conglomerate in the mineral fertilizer sector. Today, the focus of its activities is on corporate investments and real estate.