Wilson Neill directors on late filing charges

By DANIEL RIORDAN

Wilson Neill Corp went into damage control yesterday after the Companies Office charged four of its directors, past and present, with almost 60 breaches of the Companies Act over share issues used to fund its acquisitions and reward directors.

Named in the charges are chairman Trevor Mason, director Diane Giles and former directors Malcolm Johnson and Paul Hyslop, who resigned last year. Mr Hyslop left after being implicated in an insider trading scandal involving Fletcher Challenge Paper shares.

If convicted, the four could face fines totalling almost $600,000.

The 59 charges have been filed with the District Court in Dunedin, where the company is registered, but the directors had yet to be issued with summons at press time yesterday evening.

The action is being taken under Section 47 of the Companies Act, and relates to the late filing of documents detailing the issue of more than 200 million shares between November 1999 and June 2000.

On Tuesday, shareholders will be asked to approve a further issue of 250 million shares at 6c each to pay for the $16.7 million cash-and-scrip acquisition of Auckland company IT Media.

Wilson Neill's directors yesterday issued a short statement through the company's lawyers saying court documents had yet to be served and until that happened, a more detailed statement would not be forthcoming.

However, the company said the Companies Office had reviewed filings related to only six transactions last year, most of which had been approved by shareholders.

"The core of the review was that the Directors' Certificates were filed with the Companies Office later than the statutory 10 days allowed. Some of these transactions were for the purposes of debt repayment and the Directors' Certificates stated that the shares were issued for cash.

"The directors genuinely believed that the repayment was the equivalent of a cash transaction."

Wilson Neill general manager Phil Vosper told the Business Herald the charges relate to late notification of the share issues and not the validity of their issue. The late notifications had been largely due to illnesses suffered last year by Mr Mason, said Mr Vosper.

The Companies Office believes it has a strong case against the directors. The action is being mounted by the office's enforcement unit in Auckland. Although no one from the unit was available for comment, a source close to the investigation said the unit mounted court action only in the most serious of cases and it believed the case against the directors was clear cut.



Outspoken Wilson Neill shareholder Ian Andrews, who has been battling directors for better corporate governance, said the company should cancel Tuesday's meeting. Even without the legal action against directors, too little information was being provided to shareholders ahead of the vote on IT Media's acquisition.

He said claims by the company that Mr Mason's illness was the reason for the late filings were a smokescreen. Late filings had taken place throughout the company's history, right up to last week when the new constitution was filed five months late.

Other directors should have been capable of meeting the company's legal requirements at times when Mr Mason was incapacitated, he said.

"These are very disturbing allegations. Shareholders may be asked to endorse actions that turn out to be illegal."

About 12 share issues took place in the period under review by the Companies Office, including the issue of 14 million shares to former director Colin Herbert. Approval to issue these 0.5c shares, as payment for consultancy services, was given in April 1999 when the shares were trading at 1.1c each. But they were not issued until February 17, last year, when they were trading at 12c.

Also under investigation are share issues made to cornerstone shareholder, the Ellis Family Trust, as loan settlements, share issues made as part of the purchase of Parnell restaurant Iguacu, and issues related to the company's purchase of wireless internet provider Radionet.

Mr Vosper said he expected the IT Media acquisition to be approved on Tuesday.

Wilson Neill shares, which trade on the stock exchange's secondary market, closed yesterday at 3.8c, their lowest level in a year and well off their 20c highs.