Independent News & Media (INM) will take legal advice this week after the Office of the Director of Corporate Enforcement (ODCE) went to court on Friday to seek the appointment of a High Court inspector to investigate its affairs.
The ODCE notified the news publisher of its intention one year into its investigation into corporate governance at the group. That investigation began when INM was asked by the corporate watchdog to produce records in relation to an abandoned plan to acquire Newstalk.
The idea that INM might acquire the radio station, which it considered in 2016, prompted a serious dispute between then INM chief executive Robert Pitt and then chairman Leslie Buckley, an associate of INM's largest shareholder, Denis O'Brien. It is understood Mr Buckley wanted to offer a higher price than Mr Pitt for Newstalk, which belongs to Mr O'Brien's Communicorp Media.
Shares in INM were down about 4 per cent at midday in Dublin to €0.094. Last week there was some buying in the stock, with Swiss bank UBS disclosing on Monday that it had crossed the 6 per cent threshold on March 21st.
Protected disclosure
Mr Pitt made a protected disclosure under whistleblower legislation about the circumstances surrounding a proposed bid, while chief financial officer Ryan Preston also made a similar disclosure internally.
Significantly, the ODCE’s investigation later widened to include “a potential personal data breach” at the media group.
INM said on Saturday evening that the ODCE's application was due before the court on April 16th and that it was taking legal advice – from company lawyers McCann Fitzgerald – as to whether the court would have sufficient grounds to make the appointment.
Its statement was released in the wake of convening of INM board members on Saturday. It is understood this took the form of teleconferencing, as some members of the board, including new chairman Murdoch MacLennan, are based in the UK.
INM, a publicly quoted company that trades on the Irish Stock Exchange, warned in its statement – released to comply with the rules governing market-sensitive information – that the appointment of an inspector could result in the company incurring "material costs".
Rare event
The ODCE’s application to appoint an inspector to the company – a rare event in Irish corporate circles – is being made under section 748 of the Companies Act 2014.
This section states that the court may appoint an inspector to investigate the affairs of a company and report on those affairs to the court, if the court is satisfied there are circumstances suggesting that the affairs of the company have been conducted in an unlawful manner or on certain other specified grounds.
The list of possible grounds in the legislation includes situations where the affairs of the company are being or have been conducted with intent to defraud and situations where the affairs are being or have been conducted in a manner that is unfairly prejudicial to some or all of its creditors.
It also includes situations where people connected with management have been guilty of “fraud, misfeasance or other misconduct”; or where the company’s members have not been given all the information relating to its affairs which they might reasonably expect.
