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Correspondence

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15 April 2010

  
Re: SecCom decision to prosecute Nuplex
 
 
The NZSA has been pursuing the apparent failure of the continuous disclosure regime by Nuplex management for a considerable time.
 
It is quite obvious that both Chairman Aitken, CEO Hirst and the Nuplex board made a conscious decision in regard to whether the banking covenant information should be released. I have attached a transcript of the relevant parts of the AGM question time which make this plain.
 
As recently as today Hirst has repeated that this was a deliberate Board decision.
 
It does greatly concern us that the Nuplex shareholders are now facing a situation of double jeopardy given the decision to prosecute the company as well as the directors. Not only will they directly or indirectly end up paying the cost of the defence, they may conceivably end up paying fines and compensation if the company is successfully prosecuted . For most people any compensation will be from the very same company they hold shares in,  and will in effect reduce the value of their holdings. This is a classic case of robbing Peter to pay Peter!
 
While we accept there is an argument that the shareholders voted for the directors and are therefore culpable, the practical reality is that the directors have the responsibility to ensure that the actions of the company remain within the law and the listing regulations. It does not appear to us that in this case there was a broad systemic culture to deceive endemic within the company.  
 
We would hope therefore that any penalty sought from the company (as opposed to the directors) would be minimal.
 
While we think the SecCom has been extraordinarily slow to react, we are encouraged that at least the impending case will generate some case law clarifying the responsibilities of directors and company’s in this area.
 
We have pointed out on numerous occasions that SecCom should not pursue only those actions it considers “a dead certainty “ to win, but that cases should be taken on merit and in some instances for the public good effect. Without a body of case law New Zealand will continue to see the boundaries being stretched and so-called grey areas being exploited .
 
Yours faithfully,
 
John Hawkins
 
Director Strategic Relations