The board of PRS REIT has formed a sub-committee to engage with shareholders after a group of shareholders launched a bid to remove chairman Stephen Smith and non-executive director Steffan Francis from the group’s board.
Last week, the REIT said it had received a requisition letter from Harwood Capital Management, Waverton Investment Management, CCLA Investment Management, Alder Investment Management and CG Asset Management, which hold around 17.3% of the company’s total issued shares, requesting the board of the REIT convene a general meeting to vote on a motion to remove Smith and Francis.
The requisition letter also requested shareholders vote to approve the appointment of Robert Graham Naylor as non-executive chairman and Christopher Mills of Harwood Capital Management as a director of PRS REIT.
PRS REIT has formed a sub-committee comprising the three independent non-executive directors who are not the subject of the requisition – Geeta Nanda, Rod MacRae and Karima Fahmy – to lead the board’s response and engage with shareholders.
In a statement, the board of PRS REIT said changing the composition of a board through the mechanism of a general meeting was typically only used under extraordinary circumstances and the process “abruptly circumvents normal succession planning and UK corporate governance processes, and incurs additional cost, disruption, and potential reputational damage to a company”.
The board added this type of action usually only occurs when “constructive prior private discussions have taken place over time and irretrievably broken down”. However, the new sub-committee noted that to date discussions with the requisitioning shareholders on the requisition notice had been limited.
The sub-committee said “there are important areas of alignment between the board and the requisitioning shareholders and [we] will seek engagement with the requisitioning shareholders and other shareholders, with a view towards seeking a resolution”.
The board of PRS REIT also confirmed it has appointed Rothschild & Co to advise on strategy and value maximisation for shareholders.
