Table Of ContentTHIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
THE MATTERS RAISED IN THIS DOCUMENT WILL AFFECT YOUR SHAREHOLDING IN THE
COMPANY. YOU ARE ADVISED TO READ THIS DOCUMENT IN ITS ENTIRETY BEFORE
THE GENERAL MEETING REFERRED TO BELOW IS CONVENED.
IF YOU ARE IN ANY DOUBT ABOUT THE ACTION YOU SHOULD TAKE, PLEASE CONSULT YOUR
STOCKBROKER, SOLICITOR, ACCOUNTANT OR OTHER PROFESSIONAL ADVISER.
THE HYDROPONICS COMPANY LIMITED
ACN 614 508 039
Notice of Annual General Meeting
and
Related Documentation
THIS IS A NOTICE OF ANNUAL GENERAL MEETING TO BE HELD AT 11.00 A.M.
(AUSTRALIAN EASTERN DAYLIGHT TIME) ON 23 MARCH 2018.
A PROXY FORM (COLOURED WHITE) FOR USE AT THIS MEETING IS INCLUDED
WITH THIS DOCUMENT. TO BE VALID, THOSE PROXY FORMS MUST BE
COMPLETED AND RETURNED TO THE COMPANY BY NO LATER THAN
11.00 A.M. (AUSTRALIAN EASTERN DAYLIGHT TIME) ON 21 MARCH, 2018.
TABLE OF CONTENTS
PART A: ABOUT THESE DOCUMENTS ....................................................................................................................... 3
PART B: LETTER FROM THE CHAIRMAN .................................................................................................................. 4
PART C: NOTICE OF ANNUAL GENERAL MEETING ................................................................................................ 9
PART D: EXPLANATORY STATEMENT ..................................................................................................................... 15
PART E: GLOSSARY………………………………………………………………………....................…. ................. .17
AGM PROXIES, EGM PROXIES AND RELATED FORMS ..............................................................................A ttached
Page 2
PART A: ABOUT THESE DOCUMENTS
Shareholders in The Hydroponics Company Limited ACN 614 508 039 (Company) are
requested to consider and vote upon each of the Resolutions set out in the Notice.
You can vote by:
•
attending and voting at the Meeting; or
•
appointing someone as your proxy to attend and vote at the Meeting on your behalf, by
completing and returning the AGM Proxy Form DIRECTLY to the Company or the
Share Registry in the manner set out on the AGM Proxy Form. The Company or its
Share Registry must receive your duly completed AGM Proxy Form by no later than
11.00 A.M. (AEDT) ON 21 MARCH 2018.
A glossary of capitalised terms used throughout this Document (including the Notice and
AGM Proxy Form) is contained in Part E. Unless expressly provided otherwise in this
Document, each capitalised term used in this Document has the same meaning as is
ascribed to it in Part E.
Please read the whole of this Document carefully before
determining how you wish to vote and then cast your vote
accordingly, either in person or by proxy.
Page 3
PART B: LETTER FROM THE CHAIRMAN
9 February, 2018
Dear Shareholder
I am pleased to invite you to attend the inaugural Annual General Meeting of the shareholders of
The Hydroponics Company Limited (Company), which is scheduled to be held at 11.00 a.m.
(AEDT) on Friday 23 March 2018 at The Function Centre, Level 4, 60 Carrington Street,
Sydney NSW 2000. Enclosed with this letter is the Notice of Meeting which details the items
of business to be dealt with at the Meeting, as well as the Explanatory Statement and AGM
Proxy Forms.
RESOLUTIONS
In addition to the prescribed matters that need to be resolved at an annual general meeting, the
Resolutions for consideration by Shareholders include:
(a) approval of the Company’s 2017 Remuneration Report;
(b) the re-election or appointment of each of Ian Mutton, Steven Xu, and Mary Verschuer,
Peter Wallace and Hamish MacDonald, each as a director of the Company
(c) the removal of Alan Beasley, a director of the Company;
(d) the appointment of David Radford, the Chief Executive Officer of the Company, as a
director of the Company; and
(e) if applicable, the removal of both Louis Cattelan and Gary Radcliff as directors of the Company.
EXTRAORDINARY GENERAL MEETING CONVENED BY ALAN BEASLEY
Background
Throughout October 2017, all then Directors other than Mr Beasley had become frustrated with the
actions of Mr Beasley in his role as chairman of the Board. Dealings between Mr Beasley and that
majority of the Board had become fractious and counter-productive to the proper operation of the
Company. Consequently that majority of Directors resolved to appoint Mr Ian Mutton as Chairman
in place of Mr Beasley. As a result of that appointment, Mr Beasley resigned as Chairman but
remained as a non-executive Director.
On 19 October, 2017, the Company announced that it had resolved to appoint Mr David Radford
to the position of Chief Executive Officer and Mr Ian Mutton to the position of Chair of the Board.
Following those appointments, and the receipt of various recommendations by Mr Radford, Board
resolved that it was in the best interests of Shareholders that the Company:
• counter the impact of certain initiatives being taken by competitors;
• improve the information flow from the Company’s executive team to the Board;
• in Australia:
o build product sourcing and manufacturing capability,
o align marketing initiatives to what is permissible under the existing regulatory
regimes and
o learn from the Canadian experience and adopt the clinic model that has been
developed throughout North America; and
Page 4
• in Canada, grow the Company’s business, by means of both organic growth and
acquisitions and strategic alignments.
On 9 January, 2018, the Company received a letter from Mr Beasley (s.249 EGM Letter), that
indicated his intent to convene, pursuant to the terms of section 249CA of the Corporations Act, an
extraordinary general meeting (s.249 EGM), specifically for the purposes of seeking Shareholder
approval for each of the following resolutions:
• to remove Ian Mutton and replace him with Steven Xiaobo Xu as a director of THC;
• to remove Mary Verschuer and replace her with Lou Cattelan as a director of THC;
• to remove Peter Wallace and replace him with Gary John Radcliff as a director of THC;
• to remove Hamish Macdonald as a director of THC; and
• to remove any director appointed from the date of this letter to the date of the s. 249 EGM,
(collectively s.249 EGM Resolutions).
The majority of Directors were surprised to receive the s. 249 EGM Letter, as Mr Beasley knew
that all Directors subject of Mr Beasley's s249 EGM letter would be required to submit for
re-election at the AGM which was originally planned to be convened on 19 March 2018. Mr
Beasley has failed to advise why he felt it necessary to call a separate s. 249 EGM when – as
offered by the Company in its legal adviser’s letter dated 25 January, 2018 – Shareholders are
required to consider and vote on the same matters at the AGM. In the opinion of the majority of
Directors, the calling of the s. 249 EGM has caused unnecessary costs, time and confusion for
THC and its Shareholders.
The s.249 EGM Letter indicated that the s.249 EGM was intended to be convened at 11.00 a.m.
(Sydney time) on 15 March, 2018 at the offices of Mr Beasley’s legal adviser, Baker & McKenzie,
located at Level 46, Tower One – International Towers, Sydney, 100 Barangaroo Avenue,
Barangaroo, New South Wales.
On 25 January, 2018, the Company through its legal adviser, wrote to Baker & McKenzie, and
advised that:
• the Company accepted the right of Mr Beasley to convene the s.249 EGM, for the purposes
of seeking Shareholder approval of the s.249 EGM Resolutions;
• the initial Annual General Meeting of the Company (AGM) was scheduled to also occur on
15 March, 2018; and
• in compliance with the Company’s statutory obligations upon receipt of the s. 249 EGM
Letter, the business of the AGM would include, inter alia, all of the s.249 EGM Resolutions.
In addition to complying with the Company’s statutory obligations, the Company’s above stated
response was intended to avoid confusing Shareholders by an unnecessary duplication of
proximate general meetings, as well as avoid unnecessary expense or delay being incurred by
either the Company or Mr Beasley. On that basis, the Company requested and expected
Mr Beasley to withdraw the s.249 EGM Letter and not convene a separate s.249 EGM.
As was advised to Baker & McKenzie and the market (see ASX release dated 12 January, 2018),
the Company:
• is, in accordance with the requirements of section 250N(1) of the Corporations Act,
required to convene its first annual general meeting by no later than 28 February, 2018; but
• has obtained the consent of ASIC to extend the date for convening the AGM to 22 March, 2018.
Even with the benefit of that extended date, the Board felt that in order to be able to satisfy the
mandatory ASX review and Corporations Act notice and timing requirements applicable to the
AGM Notice and convening of the AGM, so that the AGM could be validly convened no later than
15 March, 2018, it was necessary to obtain Mr Beasley’s response to the Offer by no later than
midday Monday, 5 February, 2018.
Page 5
At 10.53 a.m. on 5 February, 2018 Baker & McKenzie advised the Company’s lawyer that
Mr Beasley declined to withdraw the s.249 EGM Letter and not convene a separate s.249 EGM
on the above stated basis and has insisted on convening a separate s.249 EGM. Further, at 5.02
p.m. on 5 February, 2018, the Company was first advised that Mr Beasley had
commenced the dispatch of the notice of the s. 249 EGM to Shareholders (s. 249 EGM
Notice). At no prior time was the Company or, to the best of the knowledge of the Company
Secretary, any other Director provided with an opportunity to review or comment on the content of
the s. 249 EGM Notice.
A copy of the s.249 EGM Notice was released to the market on 6 February, 2018 and a formal
Rebuttal was lodged with ASX on 8 February, 2018, titled 'Company Response to EGM Notice
Issued by Alan Beasley'.
Accordingly, the Board has proceeded with the preparation of this document and proposes
to conduct the AGM, on the bases and assumptions that:
• Mr Beasley will proceed to and convene a separate s.249 EGM in accordance with the
terms and substance of the s.249 EGM Notice;
• Mr Beasley is unable to make a recommendation in respect to Resolution 1, as he has not
been provided with a copy of the Remuneration Report. Mr Beasley is in favour of
resolution 3 (reelection of Steven Xu) and is against Resolution 2, and against resolutions
4 – 10 inclusive; and
• in the event that any or all of the s.249 EGM Resolutions are validly approved at the
s.249 EGM, the Company will nevertheless remain in a position to proceed with the
business of all Resolutions, at the AGM and otherwise, in the most appropriate and efficient
manner in which the Company can and should respond.
MAJORITY DIRECTORS’ RECOMMENDATIONS
A. IN RESPECT OF AGM RESOLUTIONS
Each of IAN MUTTON, HAMISH MACDONALD, MARY VERSCHUER, PETER WALLACE and
STEVEN XU recommend that all Shareholders vote:
• IN FAVOUR of the adoption of the Remuneration Report contained in the Company’s 2017
Annual Report.
At the timing of the issue of the notice of meeting the remuneration report as contained in
the Annual Report had not been issued. All Directors with the exception of Alan Beasley,
noting their interest in the details of the report itself, recommend the adoption of the
Remuneration Report.
If after issuing the Annual Report there is change in view of an individual Director’s
Recommendation made the Company will immediately notify shareholders of that change
Each of IAN MUTTON, HAMISH MACDONALD, MARY VERSCHUER and PETER WALLACE
recommend that all Shareholders vote:
• IN FAVOUR of each of Resolutions 2 to 10 (inclusive) on the terms proposed in the Notice.
STEVEN XU is in favour of Resolution 3 however is unable to make a recommendation in relation
to Resolution 2 and Resolutions 4 to 10 (inclusive) because he has only recently joined the Board
and therefore is not sufficiently apprised of the background to the matters the subject of the
Resolutions to be able to do so.
Page 6
B. REASONS FOR MAJORITY DIRECTORS’ RECOMMENDATIONS IN RESPECT OF
AGM RESOLUTIONS
Each of IAN MUTTON, HAMISH MACDONALD, STEVEN XU, MARY VERSCHUER and
PETER WALLACE have demonstrated an ability and willingness to work together for the benefit of
the Company and its Shareholders, and have supported all Board actions and measures
supporting the growth of the Company’s business, including:
• in Australia:
o building product sourcing and manufacturing capability and seeking to acquire an
additional manufacturing capabilities,
o aligning marketing initiatives to what is permissible under the existing regulatory
regimes and
o learning from the Canadian experience to enable the adoption of the “clinic model”
that has been instrumental in driving growth in the Canadian market; and
• in Canada, growing the Company’s business, by means of both organic growth and
acquisitions and strategic alignments.
The above majority of Directors submit that it is clearly in the Company’s and Shareholders’ best
interests to retain the benefit of the experience and committed expertise of those Directors who
have achieved such a material increase in shareholder value since October 2017 when Ian Mutton
was appointed to the Chair.
C. IN RESPECT OF s. 249 EGM RESOLUTIONS
Each of, IAN MUTTON, HAMISH MACDONALD, MARY VERSCHUER and PETER WALLACE
recommend that all Shareholders vote AGAINST all of the s.249 EGM Resolutions.
D. REASONS FOR MAJORITY DIRECTOR RECOMMENDATIONS IN RESPECT OF
s. 249 EGM RESOLUTIONS
IAN MUTTON, HAMISH MACDONALD, MARY VERSCHUER and PETER WALLACE represent
the majority of the Board who have made and implemented the critical decisions that have
positioned the Company for growth in both the Australian and Canadian markets, at least since
October, 2017. The radical changes to the current composition of the Board as are proposed in the
s. 249 Resolutions are being proposed:
• without the benefit of any stated strategies of Mr Beasley or his nominees as to how they
would operate the Company in a manner superior than that as has been occurring through
the efforts of the incumbent Board; and
• solely by Mr Beasley, a Director who all other Directors (other than Mr Xu) unanimously
agreed to replace as Chairman in October, 2017.
The abovementioned majority Directors believe Mr Beasley’s decision to convene the s 249CA EGM
is primarily, if not solely, motivated by his desire to obtain the replacement of the incumbent
majority of Directors with his nominees, in order to gain operational control of the Company.
Under the leadership of Mr Mutton and Mr Radford since October, 2017, the Company has made
significant progress in increasing Shareholder value through actions taken in strengthening the
Australian management and extending the Company’s reach in Canada. Viable commercial
relationships have been formulated with overseas supply partners both for product and market
leading clinic services.
Regrettably Mr Beasley’s relationship with the majority of the incumbent Board and management
has not improved since his replacement as Chairman.
Accordingly, the incumbent majority of Directors is of the opinion that each of the s. 249 Resolutions,
if approved, would have material and adverse consequences for the Company and not be in the
best interest of the Shareholders.
Page 7
FOR THESE REASONS, THE MAJORITY OF DIRECTORS RECOMMEND THAT SHAREHOLDERS
AGAINST
VOTE ALL THEIR SHARES ALL s. 249 RESOLUTIONS:
ALAN BEASLEY’S RECOMMENDATIONS IN RESPECT OF AGM RESOLUTIONS
Mr Beasley is unable to make a recommendation in respect to Resolution 1, as he has not been
provided with a copy of the Remuneration Report. Mr Beasley is in favour of resolution 3, and is
against Resolution 2, and against resolutions 4 – 10 inclusive.
VOTING AT ANNUAL GENERAL MEETING
If you plan to personally attend the Meeting, please bring a copy of the enclosed AGM Proxy Form
with you to facilitate registration.
If you do are not going to personally attend the Meeting, you are encouraged to appoint a proxy to
attend and vote on your behalf. To be valid for the purposes of the Meeting, AGM Proxy Forms
(copies of which form part of this Document) must be completed and returned as instructed in
Section 2 of Part C of the Notice, by no later than 11.00 a.m. (AEDT) on 21 March 2018. Full
instructions for voting by proxy are detailed on the back of the AGM Proxy Form.
As at the date of issue of this notice of meeting the Annual Report is in the final stages of its audit
and not issued. Whilst not available at the date of notice, the Annual Report will be released on the
ASX announcements platform over the coming weeks and within the lodgement requirements.
Once available, Shareholders that did not elect to receive a copy of the Company’s 2017 Annual
Report by mail are able to access it through the “Investor Centre” section of our website, at
www.thcl.com.au.
As is clear from the nature of the Resolutions referred to above, and the differences of
opinion between the Majority and Mr Beasley, your vote is very important. Accordingly, all
Directors encourage you to either attend the Meeting in person or complete the AGM Proxy
Form accompanying this Document and ensure that it is returned to the Company or the
Share Registry in accordance with the directions provided.
VOTING AT S.249 EXTRAORDINARY GENERAL MEETING
In addition to AGM Proxy Forms that accompany this Document, the directors have also included a
proxy form in respect of the s.249 EGM (coloured green) (EGM Proxy Form).
The purpose of enclosing EGM Proxy Forms is to enable any Shareholder that has already lodged
a proxy form with the Share Registry that votes in favour of any or all of the s.249 EGM
Resolutions to revoke that proxy vote by submitting an EGM Proxy Form that accompanies this
Document that votes AGAINST ALL of the s.249 EGM Resolutions.
The majority of Directors recommend that any EGM Proxy Form that votes in favour of any or all
s.249 EGM Resolutions and that has been lodged with the Share Registry, should be revoked in
the abovementioned manner as soon as possible and in any event, by no later than 9.00 a.m.
(Sydney time) on Tuesday, 13 March 2018.
If you have any questions or concerns, you are encouraged to contact me on 0416 270 022, David
Radford (CEO) on 0407 218 922 or Jarrod White (Company Secretary) on 0401 876 996.
Yours faithfully
Ian Mutton,
Chairman
Page 8
PART C: NOTICE OF ANNUAL GENERAL MEETING
THE HYDROPONICS COMPANY LIMITED ACN 614 508 039
SECTION 1: TIME AND PLACE OF MEETING
NOTICE is hereby given that the 2017 Annual General Meeting of the members of
The Hydroponics Company Limited ACN 601 508 039 (Company) will be held at the following
time and location, and will conduct the business specified in Section 3 below:
Date: 23 March, 2018
Time: 11.00 a.m. (AEDT)
Location: The Function Centre
Level 4, 60 Carrington Street
SYDNEY NSW 2000
SECTION 2: DIRECTIONS REGARDING MEETING
How to Vote
You may vote by attending the Meeting in person, by proxy or authorised representative.
Voting in Person
To vote in person, please attend the Meeting on the date, time and place set out above.
Voting by Proxy
To vote by proxy, please complete and sign the AGM Proxy Form enclosed with this Document as
soon as possible and either send, deliver, courier or mail the duly completed AGM Proxy Form:
• directly to the Company, attention Company Secretary:
o by mail to: Mr J White, Traverse Accountants, Suite 305, Level 3, 35 Lime Street,
Sydney NSW 2000; or
o by facsimile to: +61 2 9279 1234
• to the Share Registry:
o by mail to: GPO Box 242, Melbourne VIC 3001;
o by facsimile to: (inside Australia) 1800 783 447; or
(outside Australia) +61 3 9473 2555
so that it is received no later than 11.00 a.m. (AEDT) on 21 March, 2018.
Complete details on how to vote by proxy are set out on the back of your AGM Proxy Form.
Please read this Document carefully and in its entirety, determine how you wish to vote in relation
to each of the Resolutions and then cast your vote accordingly, either in person or by proxy.
If you do not understand any part of this Document, or are in any doubt as to the course of action
you should follow, you should contact your financial or other professional adviser immediately.
Determination of Membership and Voting Entitlement for the Purpose of the Meeting
For the purpose of determining a person’s entitlement to vote at the Meeting and in accordance
with regulation 7.11.37 of the Corporations Regulations 2001 (Cth), a person will be recognised as
a member and the holder of Shares if that person is registered as a holder of Shares at 7.00 p.m.
(AEDT) on 21 March 2018.
Page 9
Voting Exclusion Statements
In accordance with the Corporations Act and the Listing Rules, the following persons must not cast
any votes on the relevant Resolution specified below, and the Company will disregard any votes
cast on that Resolution by:
Resolution Excluded Voters
1 Any member of the Key Management Personnel whose remuneration is
detailed in the Remuneration Report, any closely related party of any such
member1 and any Associate of any of the foregoing persons
2 No Voting Exclusion Statement required
3 No Voting Exclusion Statement required
4 No Voting Exclusion Statement required
5 No Voting Exclusion Statement required
6 No Voting Exclusion Statement required
7 No Voting Exclusion Statement required
8 No Voting Exclusion Statement required
9. No Voting Exclusion Statement required
10. No Voting Exclusion Statement required
However, the Company need not disregard a vote if it is cast by:
(a) in relation to Resolution 1:
(i) a person acting as proxy for a person who is entitled to vote, in accordance with a
written direction on the AGM Proxy Form to vote as the proxy specifies in relation to
Resolution 1; or
(ii) the Chair acting as proxy for a person who is entitled to vote, in accordance with the
directions on the AGM Proxy Form, where the AGM Proxy Form does not specify
the way the proxy is to vote on Resolution 1 but expressly authorises the Chair to
exercise the proxy, notwithstanding that Resolution 1 is connected (directly or
indirectly) with the remuneration of any member of the Key Management
Personnel;2 and
(b) in relation to any other Resolution:
(i) a person acting as proxy for a person who is entitled to vote, in accordance with the
directions on the AGM Proxy Form; or
(ii) the Chair acting as proxy for a person who is entitled to vote, in accordance with a
direction on the AGM Proxy Form to vote as the proxy decides.
Voting Prohibition Statements
Without limitation to the above stated Voting Exclusion Statement, a person appointed as a proxy
must not vote, on the basis of that appointment, on any Resolution, if:
(a) the proxy is either:
(i) a member of the Key Management Personnel; or
(ii) a Closely Related Party of such a member; and
1 Corporations Act, s 250R(4).
2 Corporations Act, s 250R(5) (as amended by the Corporations Amendment (Proxy Voting) Act 2012 (Cth), assented to 27 June 2012).
Page 10
