GrowMax Resources Corp. (the “Company” or “GrowMax”) (TSX-V: GRO) announced it will defend the lawsuit started on October 1 by BullRun Capital Inc. and Kulwant Malhi (collectively, the “Dissidents”). GrowMax is filing with the Court its own application to have the Court order the Dissidents and their board nominees to disclose accurate and complete information about their proposed dividend scheme and nominations. Pending the hearing of the two applications which GrowMax is seeking to have heard together, the October 4 shareholders meeting (the “Meeting”) will be postponed until a later date is agreed to by the Court.
"I am disappointed that this is where we are today,” said GrowMax CEO and President Stephen Keith. “We have attempted to focus on facts and provide shareholders with the ability to make well informed decisions. Sadly, rather than answering some very simple questions in order to provide adequate disclosure for shareholders to make appropriate decisions, BullRun has taken us down this path of litigation which we must now defend.”
GrowMax believes that the Dissidents’ litigation confirms that they plan to distract the attention of shareholders from gaps and misleading statements in their disclosure record. It is likely to result in a further postponement of the Meeting. All of this could have been avoided had the Dissidents simply answered GrowMax’s Board of Directors (the “Board”) questions about the Dissident’s dividend scheme and corrected their disclosure.
The Board does not welcome the Dissidents’ litigation but now that the Company has been drawn into litigation, it will fight for the additional disclosure that shareholders need and that the Company asked the Dissidents to voluntarily make last month. The Dissidents have attacked the Company’s advance notice by-law which was passed on July 26, 2018 in order to improve corporate governance and protect shareholders from last-minute surprise situations like this one. Such by-laws are routinely adopted by North American companies.
“We have no choice but to respond to the lawsuit and continue with an effort to correct the disclosure around the dividend scheme and nominations by asking a court to require it so that shareholders can ultimately vote at their meeting on full and complete information,” Mr. Keith added.
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