RE DIRECTOR APPOINTMENT 2:1 MAJORITY OF HOTEL

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RE DIRECTOR APPOINTMENT 2:1 MAJORITY OF HOTEL

Post by gkirpalani on Tue Nov 07, 2017 10:15 am

I own unit 729 and am shareholder in South Bank Hotel Management Company Limited (SBHMC)

We all have received emails that the hotel wants 2:1 majory directiors on SBHMG

While I agree Park Plaza have been managing the hotel and providing excellent service for the shareholders, but what I don’t understand why Galliards sold their remaining 44 units to the hotel rather than first proposing to existing unit/shareholders and why Park Plaza bought the units when, as mentioned by you, your main objective is to manage and operate hotels. Whether this was deliberate act by Galliards to give control to Park Plaza Hotel, who had no shareholding in SBHMC up until July 2017 is questionable. This makes me wonder if the hotel bought these units to get control of SBHMC which had been independent up until then.

Also it is unusual for any one person or company holding approximately 11% to have 2:1 majority and to control the company. If Mr. Marley lacks the knowledge or experience then I am sure there would be some others from 355 unit holders to replace or work with him as co-director. I would definitely be concerned that Park Plaza manage and operate the hotel and at the same time control the SBHMC. Even if there is no conflict of interest, it would definitely leave doubts among 355 unit holders. The best option would be to have more directors on board to represent the interest of 355 unit holders. You state that you have uncovered irregularities in place within the Company which need to be rectified as a matter of urgency. Not knowing the facts it is impossible to know what these are and to question the director or person responsible. Please clarify what these irregularities are and why it should concerns Park Plaza whose principal objective is to manage and operate hotel.

I am of opinion that proper notices should have been sent to all shareholders who could have had opportunity to propose the directors of their choice and then a short list created to elect the directors. I understand this could not have been done in short time, but there was enough time to do so since July 2017. But to put two directors from hotel after buying 44 units and only one director from other 355 unit holders is not acceptable and I am sure it will not be acceptable to majority of shareholders. The two hotel directors will definitely override any concerns which one director may have. If there are 2 directors from Park Plaza then I consider that there must be minimum of 4 directors representing other 355 shareholders.

As per 5% retention, this is not a major issue as this is returned to shareholders annually. I understand this was retained to make sure that the monthly accounts provided by Park Plaza were correct and that there was no recall of money if any errors were discovered later on. Without the retention, any recall of money could have put pressure on some of the shareholder who have mortgages to pay on the unit. I have no objection to this and I think it was prudent to do so.

You state Mr. Marley has incurred legal fees of £ 8,815.20 outside the scope of his mandate, I would like to see the evidence before looking into this matter. Please forward me a copy of detailed legal fee bill and then I and other shareholders can question him on this issue. (Note to Mr. Marley – please comment on this issue.)

I have checked company house and note that the following directors resigned on 20 July 2017:

Tucker Brown, Nicholas George, Resigned on 20 July 2017
Duffy, Christopher John, Resigned on 20 July 2017
Porter, Allan William, Resigned on 20 July 2017

On the same day following directors were appointed:

Moravsky, Chen Carlos, Appointed on 20 July 2017
Ebbon, Victoria, Appointed on 20 July 2017

Marley, Derek Joseph. Appointed on 27 April 2015 still on board

Can you please let me know how were the directors who resigned initially appointed and the reason of their resignation. Who are the directors appointed on 20 July 2017 and why the shareholders were not consulted when majority of directors resigned and new directors were appointed. I am of the opinion that this process of resignation of 3 directors out of 4 and appointment of 2 new directors without consulting majority of shareholders may be unconstitutional. I also understand that the two directors appointed are not shareholders in SBHMC but employee of the Hotel Park Plaza. This can cause conflict of interest as their main priority would be towards their employer and not the shareholders.

You also state that you will only continue your current role if both Victoria Ebbon and Greg Hegarty are appointed to the Board (solely or alongside one other director) and you have control of it. This statement clearly shows that you are looking to control SBHMC and have no intention to look after the shareholders interest. (Not a democratic way) Even if you don’t agree with directors representing the shareholders, you could still discuss and come to some compromise solution. I suggest you reconsider your position as this seems to be a threat to force 89% of shareholders to accept what you wish to impose. This is same as tenant becoming landlord as well.

Best Regards

G. Kirpalani.


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Re: RE DIRECTOR APPOINTMENT 2:1 MAJORITY OF HOTEL

Post by coalhouse_walker on Tue Nov 07, 2017 8:21 pm

Well said, @gkirpalani.

There is plenty here that does not seem right.

I too, would like Derek Marley to clarify to the rest of us why he was forced (and yes, I believe that he had little or no choice) to run up this bill in order to try to protect us SBHMC shareholders from what both you and I can see looks like a clear 'conflict of interest'.

Derek, please speak up.

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Re: RE DIRECTOR APPOINTMENT 2:1 MAJORITY OF HOTEL

Post by Christian Duggan on Fri Nov 10, 2017 8:31 am

I hope you have all received by email, sent on Monday 6 November, explaining how these legal costs were incurred.  They were incurred by Derek and me jointly and I make no apology for that.  

When Derek was informed, in July, that Galliard had sold their units to Park Plaza and had apparently appointed two new Park Plaza directors at a board meeting to which he had not been invited, he contacted me.  We decided we had to take urgent legal advice on the validity of those appointments.  I am reproducing my email to all shareholders below, which explains this further:  


As you most of you will know, I have been assisting Derek Marley over the last few months and am myself standing for appointment as director at the General Meeting on 20 November, along with Abbas Lakha and Derek.

Following Victoria Ebbon's recent email, I feel compelled to write to you to clarify one or two issues.

Legal Costs

Victoria has referred to legal costs incurred by Derek. In fact, as Park Plaza is aware, these costs were incurred jointly by Derek and me and I make absolutely no apology for us having done so. I am myself a commercial litigation solicitor, not an inexperienced amateur, and Derek and I have worked hand in hand over the last few months to try to resolve the mess created by Galliard's departure.

On 14 July this year, Derek received an email out of the blue from Galliard stating that they had sold all of their remaining units in the hotel to Park Plaza. Derek was informed in that email that two Park Plaza employees would be appointed as directors to the board in place of the Galliard directors, who had already resigned. The effect of this would be to give Park Plaza control of the company on an 11% shareholding. This was the first Derek had heard of it, despite being a company director, and it was clear that Galliard had for some time not been inviting him to their board meetings. Derek, you remember, was elected by you to be “the eyes and ears” of ordinary shareholders.

Derek called me that evening and we decided we had no option but to take urgent advice on the legality of the Park Plaza appointments. We did so at our own expense. The advice was that the appointments were invalid because Derek had been excluded from the relevant decision process. Galliard and Park Plaza later fully accepted this. But it left them in a difficult position and left the company in a state of limbo without agreement on who was in control. There followed two months of negotiation in which Derek and I were up against significant pressure from both Galliard's solicitors (Howard Kennedy) and Park Plaza's solicitors (Hamlins) to accept the appointments and give control to Park Plaza. This was clearly a serious matter that could have a profound effect on the future of the hotel so we continued to take legal advice throughout those negotiations.

Eventually, we reached an agreement with Park Plaza in which Derek agreed to endorse the appointment of Victoria and Chen as directors and in return Park Plaza agreed (1) to call a general meeting of shareholders before the end of November, (2) not to dispense with the services of Gerard Nolan or change the management agreement until that meeting and (3) to reimburse the legal expenses incurred by Derek and me.

It is therefore wrong to suggest that these costs were incurred because of Derek's inexperience. It is also incorrect that Park Plaza had no need to convene this meeting and are doing so for the sake of transparency. They did so as part of the settlement agreement reached with Derek, in return for Derek endorsing their appointments. This is a matter of record.

Working with Park Plaza

Obtaining control of the hotel on the basis of an 11% investment must be commercially very attractive to Park Plaza and they have fought hard to retain that control.

Our only concern is to safeguard the long term profitability of the hotel business for individual investors. We are more than happy to work with Park Plaza in running the company and a 3:2 board would be one way of doing that. Regrettably, Park Plaza are not willing to be involved in the administration of the company unless they also control the company so a minority Park Plaza board is not an option. We should be clear that it is controlling the company that is their aim.

Running the Company

You have the option of voting for Derek, Abbas and me as directors. I am a solicitor, Abbas is a senior barrister specialising in criminal law and Derek is an aerospace engineer with many years of commercial business experience.

We are confident we have the experience and ability to run the company in your best interests. We have a detailed quotation from BDO, the company's auditors, to make the monthly payments, generate the invoices and undertake most of the administration. That quotation is not significantly higher than the amount proposed to be charged by Park Plaza.

Yes, there may be other issues to deal with, such as the subsidiary company highlighted by Victoria in her email and, yes, there may be additional costs incurred in seeking third party advice and assistance on such issues. But Park Plaza will also incur such costs; they will not be undertaking such work for free and will inevitably also seek outside advice.

Opting for Park Plaza

Many of you may consider that the safest option is to retain Park Plaza to run the company. We have no doubt they will do it competently and professionally. They have indicated to us that they are likely to dispense with the services of Gerard Nolan and also to reduce the scope of the independent audit of the hotel, using their own group auditors in place of BDO. Those changes would save costs but you should be aware that this will be at the expense of transparency and accountability.

For that reason, if you wish Park Plaza to run the company, it makes sense to retain a shareholder representative as third director.  Park Plaza have said they would prefer not to work with Derek so, if you wish to vote for Victoria and Greg, I would urge you also to vote for Abbas Lakha as a third director.  That way, shareholders will retain a representative on the board and Abbas can continue to be the “eyes and ears” of ordinary shareholders.

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Re: RE DIRECTOR APPOINTMENT 2:1 MAJORITY OF HOTEL

Post by coalhouse_walker on Fri Nov 10, 2017 8:48 pm

Thank you very much for this clarification, Christian.

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Re: RE DIRECTOR APPOINTMENT 2:1 MAJORITY OF HOTEL

Post by coalhouse_walker on Fri Nov 10, 2017 8:58 pm

It would be really good if we could have some feedback on here from other shareholder members.

Since this matter came to light back in August only 11 of our 300+ shareholder members have come onto this forum.

May I request that all future shareholder emails contain a link to this forum and encourage our fellow shareholders to come on and share how they feel and their views ahead of these important decisions.

Many thanks.

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