Case taken against Carton Bros, Shercock
A major shareholder in the Carton poultry processing group has brought court proceedings alleging the affairs of the group are being conducted in an oppressive manner by three directors who are all members of the Carton family. The group had a turnover of about €169 million in November 2009. A petition has been brought under Section 205 of the Companies Act by Gharion, a 40% shareholder in the Carton Group, against Vincent, Justin and Elizabeth Carton and Carton Group Holdings. John Gilroy, a director of Gharion, has claimed the Carton respondents are not concerned with the development of the business of the company but are primarily concerned to manage it as "a family vehicle". There is a complete breakdown of trust between the shareholders, he said. The proceedings were transferred to the Commercial Court yesterday by Mr Justice Peter Kelly who was told the respondents wished to bring an application to stay the case and have it referred to arbitration. The judge noted his normal practice in such disputes was to ask the sides to consider mediation but, in this case, there had been a form of mediation without success. He said he would deal with the stay application next month. In an affidavit, Mr Gilroy claimed CGH, with registered offices at Clonee, Co Meath, had paid remuneration or expenses to members of the Carton respondents' family when, he claimed, those family members did not provide services to the company. He also claimed Vincent and Justin Carton were receiving salaries and fee increases above the ten per cent annual increases prescribed in a 2008 shareholders agreement. He claimed those same two directors had borrowed €600,000 from the company's pension fund in 2006. While that money had been repaid, Mr Gilroy said he was advised it was borrowed at a favourable interest rate, one considerably lower than could have been achieved by the fund had the monies been left in it. He said he was concerned the company might be obliged to increase its contribution to the pension scheme to ensure it was adequately funded. Gharion is seeking a declaration the affairs of the company are being conducted by the three Carton directors in a manner oppressive to its interests. Alternatively, it wants an order requiring the Carton directors to purchase its shareholding. Mr Gilroy, College Road, Nobber, Co Meath, said Gharion purchased a 40% shareholding in the Carton group for €4 million in 2004. The CGH company was established in 2008 to carry on the business of acquiring the total share capital of Carton Group Ltd, he said. In July 2008, CGH acquired 100% of the share capital of CGL in a share-for-share exchange as part of a group re-organisation. As a result, CGH was the ultimate parent of the group. He said the principal activities of the group are poultry processing and distribution of poultry and chilled products, feed manufacture and the manufacture and distribution of value-added poultry products. Gharion was the largest single shareholder with the three Carton respondents holding the remaining 60% between them. The intention of the 2008 shareholders agreement was to make a profitable disposal of the shares of the company by January 23rd 2009 but the Carton respondents had repeatedly engaged in acts of oppression detrimental to the interests of the shareholders as a whole, he said. These acts included failure to provide essential financial information to Gharion to enable it consider the true financial health of the company, he said.