Issues around the leadership of IT company Soco Corporation (ASX: SOC) have not been resolved behind closed doors which has prompted shareholders to call for a vote among shareholders over the future of its leadership.
Two of its major shareholders, Beostemis Pty Ltd and Castelfrentano Pty Ltd, lodged Section 249D notices to call for a board spill vote. This move, initiated under Australia’s Corporations Act, could lead to the removal of two key board members – Chairman Thomas Rock and Director Sebastian Rizzo – and the potential appointment of Carlo Liviani and Stevan Simovic as their replacements, both associated with the requisitioning parties. .
The Section 249D notice, lodged as part of shareholder rights, demands that Soco Corporation convene a general meeting of shareholders to consider the proposed changes in leadership. This comes on the back of a Section 203D notice, filed just days earlier on 9 September, which specifically called for the removal of Rock and Rizzo. These legal actions reflect rising tensions within the Company and suggest a divergence in strategic direction between the current board and the Requisitioning Shareholders, who collectively hold more than 5% of Soco’s issued shares.
What does Section 249D entail?
Under Section 249D of the Corporations Act, shareholders holding at least 5% of a Company’s voting shares have the right to request a general meeting. Once the notice is submitted, the company is required to call the meeting within 21 days and hold it within two months. This provision allows significant shareholders to directly influence corporate governance, especially when there are concerns regarding the Company’s direction or performance.
The board of Soco Corporation has confirmed the validity of both the Section 203D and 249D notices after seeking external legal advice. The Company is now obligated to include the proposed resolutions in its upcoming Annual General Meeting (AGM), scheduled for 30 October 2024. Shareholders will vote on whether to oust Thomas Rock and Sebastian Rizzo and elect Carlo Liviani and Stevan Simovic as their replacements.
Impact on Soco Corporation
The upcoming vote could mark a pivotal moment for Soco Corporation. As a leader in digital transformation and IT infrastructure, the company has built a reputation for innovative solutions in cloud computing, cybersecurity, and enterprise software. However, internal governance disputes like this could create uncertainty for both investors and employees, potentially affecting the company’s operations and market perception.
If the board spill is successful, Soco could experience a significant shift in its strategic direction, especially if Liviani and Simovic bring new priorities to the table.
Soco’s financial performance in FY24 and next steps
In accordance with legal requirements, Soco’s board will formally incorporate the resolutions for the proposed leadership changes into the AGM agenda. The outcome of this vote could reshape the Company’s leadership landscape and chart a new course for its future.
With the meeting set for 30 October, shareholders will soon decide whether to back the existing board or usher in new leadership during what is shaping up to be a critical juncture for Soco Corporation.
This leadership battle underscores the growing influence of shareholders in corporate governance and the potential for swift changes in direction when investor confidence in current management wanes.
It is not yet clear whether the leadership change push is tied to recent financial results reported by Soco for FY24 where revenue of $20.6 million was a 12% increase on the previous year. Despite the revenue jump, a net loss after tax of $0.5 million was recorded which was a big drop from the $1.5 million profit in FY23.
Rizzo is one of the original founders of Soco Corporation and formally took over the CEO role just last month after serving as the interim since February 2024 when Simon Forth resigned.
Mitch Korver is a Business Writer focused on high-growth companies listed on the ASX in the small and medium cap space.
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