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Ethiaxe PDF
Download brochure
Ethiaxe PDF
Ethiaxe helps to turn small shareholders into partners and assets for the company.
Minority shareholders often feel powerless, ill-informed and do not always know their rights, even though they are part of the company, since they have decided to invest in it. Minority shareholders who feel fully involved in the company will want to stay there, invest more, with a long-term view, and will attract other investors.
Ethiaxe supports and works alongside minority shareholders, particularly in:
The exercise of their powers and control rights which are legally granted to minority shareholders.
The supervision and representation of minority shareholders in the event of a sale of shares or the exercise of pre-emption rights.
For decisions that can only be taken with the agreement of the minority shareholders.
To possibly obtain the right to appoint members of the Board of Directors representing the minority.
The evaluation of the performance of the Board of Directors.
The support and organisation of the transfer of minority stakes in unlisted companies: to a fair price based on objective elements, thus creating a major advantage in making the investment more liquid.
Specifically, for listed companies, Ethiaxe:
Represents and accompanies minority shareholders at shareholders meetings, in a constantly constructive attitude.
Establishes a positive dialogue with the Board and management.
Defends minority groups and helps enforce their rights.
Negotiates public or private transactions on behalf of the minority.
Alain has been holding shares of his former employer WATINS for over 10 years. He believes in
the long-term potential of his investment to the point that he decided to allocate the bulk of his
retirement savings in WATINS shares.
A dozen years later, the competitor INSRAM took over the majority of WATINS shares and became its
reference shareholder.
Over the next 3 years, what was initially only a concern came true:
- The competitor's CEO quickly became a very influential Board member and gained privileged and
almost exclusive access to the most intimate financial data of WATINS.
- WATIN’S innovation in terms of products took a serious stunt at the sudden awakening of the
competitor's drowsiness of several decades.
- The climax was crossed when Alain learned through the media the merger through absorption of
WATINS by the competitor INSRAM, without there being any decision at the regular meetings at which
Alain was assiduous.
This "acquisition-absorption" was imposed by the exchange of WATINS shares for those of INSRAM at a
parity dictated by the board largely dominated by the absorber.
Unsurprisingly, Alain and his co-shareholders were negatively affected by the exchange and Alain's
retirement savings suffered.
Outraged and disarmed by an armada of corporate finance professionals, Alain turned to ETHIAXE to
defend his minority shareholder rights and preserve as much as possible his retirement savings.
The ETHIAXE approach was constructive and firm.
Ethiaxe considered it was first important to:
1. To make Alain aware of his rights as a shareholder and of the duties of the board of directors of his
company, particularly the chairman, in such a situation of conflict of interest.
2. To present the avenues available to him, outline his strategic choices and accompany him in the
actions chosen.
The main concern was the absorption in two steps of WATINS by its competitor INSRAM, which found
itself in force in the board of directors, taking over also the chairmanship.
ETHIAXE pointed out:
A. For several years, several board members, including the chairman, had been in apparent conflict of
interest by taking part in WATINS strategic decisions while having a superior interest in INSRAM, one of
its main competitors.
B. The Board of Directors is an organ of control and strategic orientation of the company, geared
towards its future success, in accordance with the articles of association and the law in force.
The sale of the WATINS, its absorption by a competitor and its subsequent dissolution is a strategic act,
which does not fall under the standard mandate of the directors.
C. The controlling shareholder of the acquiring company, in flagrant conflict of interest, regularly took
part in the vote of the resolutions contrary to the stipulations of the law and the statutes of WATINS.
These elements were likely to invalidate absorption resolutions and bring the company into a very long
and costly legal battle.
Alain appreciated the analysis of ETHIAXE and mandated it to defend his shareholder interests. Alain had
been a shareholder of WATINS for many years, a prestigious company. Alain believed in the potential of
the new merged company, provided his rights as a minority shareholder were scrupulously respected.
ETHIAXE made the majority shareholder aware of the legal discrepancies that had affected the merger
and acquisition process of the company.
Equitable parity has been endorsed by all stakeholders and legal resolutions have been taken once
again, this time in accordance with the procedures defined by the statutes and the law.
Thanks to the intelligent deployment of the shareholding, the company avoided an expensive legal
battle in which only the big law firms would have been winners.
Thémis attended SIDERUGIA's Annual General Meeting, a company in which he had
invested part of his retirement savings a few years ago, encouraged by the strong increase in
demand and prices for basic materials such as steel.
His surprise was huge when he discovered the annual results presented by the management and
the very low representation of shareholders at the meeting. On the Board of Directors side, only
the Chairman was present and the meeting was conducted in a purely formal and superficial
way.
The results presented were nothing less than catastrophic. The CEO told the assembly that the
company had been very surprised and taken off guard by the turnaround of its market. The CEO
declared that the company was in great financial difficulty, did not have a solid and loyal
distribution network and that its operating costs were not competitive. SIDERURGIA had been
sliding in such great difficulties despite having enjoyed a virtual monopoly in its local market for
many years and the presence of a world leader in the field as one of its two reference
shareholders.
Immediately after the presentation of these disastrous results, a quick reading was made of the
agreements between related parties concluded and already executed between the company
and its two reference shareholders.
The two agreements shocked Thémis: Each of the two reference shareholders of SIDERURGIA
benefited from a lump sum payment of 1% of the turnover of SIDERURGIA in remuneration of
their "advice and strategic management" of the company!
The two agreements were approved, like all the others items, by the vote of all the
shareholders, including the two shareholders of reference, despite the fact that they were the
beneficiaries of the aforementioned agreements.
Themis' requests for an explanation and its disapproval of the situation did not dissuade the
Assembly from deciding.
Through its network of acquaintances, Themis contacted and asked ETHIAXE to inquire about
the situation and the possibilities to defend its interests, which Thémis considered had been
wronged.
ETHIAXE listened actively to Themis and studied the situation of SIDERURGIA.
ETIAXE noted several anomalies:
1. It was not normal that two global and national reference shareholders in the steel industry
had been unable to have an adequate visibility and understanding of the market, to the point of
being surprised and taken off guard by the trend reversal, even if all economic media had been
warning for some time that a peak had been reached.
ETHIAXE could only note that SIDERURGIA's dominant position in its market for many years had
not been used by the Board to prepare the company for inevitable future market challenges.
The failure of the Board in its mission of control and orientation was clear and manifest.
2. A fixed lump sum remuneration of 1% of the turnover to each of the reference shareholders
in return for a complete lack of vision and support was a drain on SIDERURGIA’s assets, to the
detriment of the minority shareholders which were already penalized by the poor results of the
company. This remuneration of 1% to the two reference shareholders, squeezed out of the
assets of a company in distress at the expense of disgruntled minority shareholders, was in fact
a dividend benefitting only the reference shareholders.
3. The manner in which the agreements between related parties had been ratified did not
respect the legal requirements and the statutes of the company.
Themis found the analysis of ETHIAXE concise and professional and sought to assert its rights.
ETHIAXE, mandated by a group of small shareholders alerted by Thémis, contacted the
management and the Board of SIDERIRGIA.
A negotiation resulted in the following results, to the benefit of all the owners of SIDERURGIA:
1. Cancellation of two agreements between related parties, which previously drew 2% of the
company's turnover, without any real tangible result and in disregard of the compay’s strained
financial situation.
2. Revision of the process of validation of agreements between related parties, in accordance
with the law and the statutes.
3. Cancellation of attendance fees of the Board given the financial health of SIDERURGIA until
further notice.
4. Regular assessment of the performance of the CA based on pre-determined evidence and
objectives.
5. Establishment of an institutionalized process for the representation of minority shareholders
in the Board that will allow fluidity and transparency of the financial information of SIDERURGIA
between all shareholders.
Thanks to the positive spirit of all shareholders, SIDERURGIA has since established a culture of
sharing relevant information between all shareholders and has succeeded in the challenge of
modernization and competitiveness. Confidence has been extended to all employees to make
them proud and committed shareholders believing in the future of SIDERIRGIA.
SIDERURGIA is now a model of socio-economic success in its environment.
Will you be the next satisfied customer?
Yes
