Oxford Cannabinoid Technologies’ (OCT) shareholders have voted to keep all eight of its current directors, following calls from its co-founder to oust them.
Last week the company held an Extraordinary General Meeting at the behest of Gavin Sathianathan, who put forward resolutions to replace the company’s entire board over what he described as a ‘series of regulatory and governance failings’.
Despite publishing a number of scathing accusations about the conduct of his former colleagues prior to the meeting, shareholders representing 62% of issued share capital voted against his proposals.
OCT’s CEO Dr John Lucas told BusinessCann that the result of the meeting was already a ‘foregone conclusion’, and that it was called based on a number of ‘falsehoods and unfounded allegations’.
The meeting, held on April 6 2022, saw around 77% of votes fall against the removal of all eight directors.
Just under 62% of the issued share capital voted in the meeting, with around 30% of this represented by co-founder Neil Mahapatra and early stage investors Imperial Brands.
A spokesperson for Mr Sathianathan’s company GHS Capital, told BusinessCann: “While not the result that we – and many others – were hoping for, today’s vote did show that nearly a quarter of OCTP’s shareholders are unhappy with the current management team and their conduct.
“Given the extent of shareholder disapproval, OCTP should, in line with the FRC UK Corporate Governance Code, explain what actions it will take to consult shareholders and enable the Board to understand their dissatisfaction with the company’s performance as the stock sits 75% below its IPO price.”
When asked whether the board was concerned about the 22% of shareholders who voted to oust the board, Mr Lucas said he couldn’t think of a situation where a 77% vote in favour would represent ‘anything less than an ass-kicking’.
He added that ‘the 22% that he did get, in my opinion, was due to all of the scare mongering’.
It is understood that four of OCT’s directors attended the meeting, and Mr Sathianathan was not in attendance, but sent a proxy representative.
In a statement to shareholders OCT’s Independent Non-Executive Chair Julie Pomeroy said the company was ‘delighted with the results’, which represented ‘shareholder support’ for its strategy.
“With the Requisitioned General Meeting having already taken up a considerable amount of management time and shareholders’ funds, it is now time to move forward and get back to the business in hand.”
Reaction to Allegations
The meeting was called by Mr Sathianathan in February 2022, and followed up by an RNS letter detailing the reasons behind his efforts to enact sweeping changes at OCT in March.
This RNS, which was removed from the public domain soon after being published after reportedly receiving a legal letter from OCT, was a ‘big stunt’ designed to ‘scaremonger’ investors into supporting his proposals, according to Mr Lucas.
A key aspect of Mr Sathianathan’s allegations centred around the ill-fated deal conducted by Mr Mahapatra’s company Kingsley Capital Partners (KCP) to pledge OCT shares against a loan, which breached market rules.
In his letter, Mr Sathianathan took issue with the fact that this breach took months to come to light, while criticising the board for not enacting more severe penalties on Mr Mahapatra, who stayed on as a Non-Executive Director with a £25,000 salary.
Mr Lucas defended the board’s decision, and rejected any suggestions that Mr Mahapatra may have tried to hide the deal from the board.
“He tried to hide nothing. And when it was brought to his attention that it could be an issue, he went to the lawyers and found out it was a problem, then immediately reported it back. That’s not somebody who’s trying to hide something, that’s somebody who was taking responsibility.”
He added that he ‘stood by’ the decision to keep him on, adding that he took a ‘major cut in salary’ from his position as executive chairman and the company promptly terminated the service agreement with KCP.
“He took a lot of punishment for that, and he took it like a man and he owned up to it, he took responsibility.”
In terms of the board’s size and composition, which was referred to as ‘not appropriate’ and ‘wholly excessive’ in the RNS, Mr Lucas said he saw the board members ‘like his fingers’, adding that ‘each one of them is adding value and I would not like to cut off any of them’.
Now the EGM is over the company says it is looking forward to getting back to the business at hand, including its recently announced shift into the chemotherapy-induced peripheral neuropathy (CIPN) market, which it believes will soon be worth $2.4bn.
Last month it issued an RNS updating the market on its two lead compounds, informing investors that recent results suggest its forerunner OCT461201 may not be effective in post-herpetic neuralgia (PHN), but is well positioned for CIPN.
In light of the new data, OCT says it will now replace PHN with CIPN as an indication, targeting cancer patients suffering from nerve damage caused by chemotherapy, for which it says there is currently no approved therapies.
Financially the company also remained optimistic, and dismissed suggestions that it was struggling to find a broker, or that it could struggle to raise further capital this year as ‘lies’.