NZSA chief executive Oliver Mander says the agreement will improve independent governance of the company. (File image) Photo: Google Maps
The Shareholders' Association (NZSA) has struck a deal to protect the interests of minority shareholders as a major shareholder looks to substantially increase his stake in 2 Cheap Cars.
The association has agreed with David Sena, who with family interests owns just under half of 2 Cheap Cars, and is proposing to buy the near 30 percent holding of another major shareholder, Eugene Williams.
If approved, the share sale would increase the Sena Family Trust shareholding to about 76 percent of the company.
Under the agreement between Sena and the NZSA, he has undertaken not to use the provisions of the Takeovers Act - which would allow him to increase his overall stake by small increments each year - for three years.
He has also promised to have a majority of independent shareholders on the board, and to consult with minority shareholders before future appointments are made.
NZSA chief executive Oliver Mander said the agreement would improve independent governance of the company.
"As far as we are aware, these commitments are a first for an NZX-listed company and go some way to encouraging greater alignment between the interests of major or controlling shareholders and minority shareholders."
The NZSA said it would vote undirected proxies it held in support of the proposed sale of Williams' shares to interests associated with Sena.
2 Cheap Cars chair Michael Stiassny said the NZSA's support for the share sale backed the view of the advice the board had received.
"We firmly believe this transaction is in the best interests of all shareholders. David [Sena] is already deeply invested in the success of this company and has made a significant contribution to its transformation and increased profitability in recent months.
"He is totally dedicated to seeing the share price perform and minority shareholders will directly benefit from his singular focus."
Last year, 2 Cheap Cars was engulfed by a board room split in which four directors quit, its auditor also left, and it needed to rearrange its banking facilities.
Last week, it upgraded its profit forecast on the back of strong sales growth at the budget end of the used car market.
The NZSA's Mander said the NZX needed to look at better protection of minority shareholders in listed companies.
"Around 35 percent of NZX-listed entities operate with a major shareholder owning 30 percent or more. NZSA believes that investors need to assure themselves that their interests are aligned with those of the major shareholder."
