Bank shareholder complains about directors' elections

A Bank of Valletta shareholder yesterday filed a judicial protest in the First Hall of the Civil Court against the bank.

Ivor John Zammit declared he had contested the elections for the appointment of director of the bank in 2003. He complained that the manner in which the elections were conducted was clearly in breach of the law.

Zammit declared that the chairman of Bank of Valletta plc, a private bank, was nominated by the government which held 25.23 per cent of the bank's shares. This implied that the bank's chairman was imposed on the majority of shareholders by the government which was a minority shareholder.

Furthermore, Zammit claimed that the board of directors was composed of nine members. The government was entitled to appoint two directors, one of whom was the bank's chairman.

Banco di Sicilia, which held 14.55 per cent of the shares, was entitled to appoint one director while the other six directors were elected at the bank's annual general meeting.

The chairman, Zammit said, although appointed by a minority shareholder in effect could control the election of the other six directors.

As shareholders could vote by proxy, the chairman controlled millions of votes, including those of parastatal entities and other entities in which the government had an interest. This occurred because the proxy form was addressed to the chairman of the meeting, who was the bank's chairman.

These votes were therefore available to the chairman who could allocate them as he wished. As a result, Zammit claimed that the election of the directors could be determined unilaterally by the bank's chairman who could have control over the board of directors and act in the interests of the minority shareholder he represented to the detriment of the majority shareholders.

This situation could render the process of electing directors to the bank's board a mere formality imposed by the law governing companies.

Zammit concluded by calling upon the bank to ensure that the election to the board of directors took place in an independent and impartial manner.

He requested that the election due to be held on December 17 be conducted by an independent ad hoc board and that the chairman of Bank of Valletta plc be excluded from the election of the directors.

Dr A. Ellul signed the protest.