OPINION: Board rebels save company via web

I doubt many readers have heard of Transense Technologies, yet what has happened at the company since October is a dramatic illustration of how the internet can rob a board of its power by making possible alternative methods of communication among shareholders.

Transense loses money but its shareholders think it has potential because it can make devices that improve vehicle control by monitoring tyre pressures and torque. Recent US legislation has made such products mandatory in new cars so there is reason to be excited.

Shareholders were therefore seriously shocked to learn in October that their company was to be sold, and out of the blue the board told them it wanted to raise £4m to help finance a £25m takeover of Bishop Technologies, a larger Australian business. The board said this would secure the company’s future. Rebel shareholders thought it simply gave it away too cheaply.

In previous generations individual shareholders might have disliked this decision but would have found it impossible to mobilise collective opposition in time. But some voiced their concerns on the bulletin board of a share information website run by ADVFN. This tapped into a huge well of discontent and within days there was serious opposition among a group of people who had never met or communicated before and were united only by their shareholding and opposition to the deal.

The result, astonishingly, was that in a little over three weeks they used the bulletin board first to voice their protests, organise opposition, come up with a plan, and finally to find an alternative source of capital by raising £4m among themselves to refinance the business and put in a replacement management team. Briefly, there were two alternative fundraisings going on at the same time – the official one backed by the board among institutional shareholders in favour of the Bishop deal, and the rebel one among the private shareholders in favour of continued independence. The rebels won, mobilised enough votes to block the Bishop deal and then moved in to replace the management with their own team and plan – all in about six weeks. It could never have happened before the internet.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.