The controversy over director independence at Mount Gibson Iron has taken another surprise twist, with a majority of the board resolving that one of its existing members should be reclassified as independent.
It also advised that the board resolved (by majority) that Mr Jones should be reclassified as an independent director.
This is the second time the Mt Gibson board has been unable to reach agreement on the independence of one of its members.
Mr Hill insists he is an independent director, and has signed a statutory declaration to that effect. However Mr Readhead, outgoing managing director Luke Tonkin and former non-executive director Ian Macliver do not believe he is independent of the company’s two major shareholders, Shougang and APAC Resources.
Those three also opposed Mr Hill’s appointment as chairman in August.
Disputes over board independence led to the resignation of another former company chairman, Neil Hamilton, at last year’s annual meeting.
The company disclosed last week that the Foreign Investment Review Board has written to it, and to Shougang and APAC, expressing concern that Mt Gibson does not have a majority of independent directors.
The company had pledged to have a majority of independents, when the FIRB granted approval for Shougang and APAC to acquire large shareholdings during the GFC.
With Messrs Hill and Jones officially considered independent, the company can now claim to have a majority of five independent directors.
Mr Jones was previously classified as an independent director, until 30 September 2009, after which he was classified as non-independent.
That decision was, once again, a majority decision, supported by Messrs Hamilton, Readhead, Macliver and Tonkin.
They cited his prior position as a director of major shareholder APAC Resources and his “long standing business and personal relationship with the family of Mr Lee (an officer of APAC Resources)”, according to notes in the 2010 annual report.
In today’s statement, the company said Mr Jones’ status has changed for two reasons:
Mr Jones ceased being a director of APAC Resources on 30 September 2009.
Mr Jones is a director of Allied Group Ltd and Allied Properties (HK) Ltd. They were deemed to be substantial shareholders of Mt Gibson because a related company planned to purchase shares in APAC. However this agreement is not proceeding.