A DISPUTE has arisen between shareholders of a holding company created from the merger of two rival mushroom businesses, the Commercial Court heard.
Donegal Investment Group plc (DIG) alleges it is being excluded from the affairs of Elst, in which it holds a 35pc shareholding.
Elst is a holding company formed arising from a merger of Carbury Mushrooms and Monaghan Middlebrook Mushrooms Ltd.
The proceedings are against Danbywiske; Ronald Wilson, owner and controller of Danbywiske. They are also against the general partners of the Wilson Limited Partnership (shareholders either owned or associated with either Mr Wilson or Danbywiske) as well as against Monaghan Mushrooms Ltd and Elst.
All the defendants have addresses at Tyholland, Monaghan
In its action, DIG alleges the Wilson family are essentially running Elst "as if it were a family business" and are viewing board meetings as mere information sessions convened to explain decisions, including acquisitions and pay rises, which they have already taken and put into effect.
It is also alleged there has been a breach of a dividend policy and a threat to withdraw two key mushroom farms currently leased to the company.
It is also claimed no independent chairman was appointed until 2012, five years after a commitment to do so was allegedly given by Danbywiske, and that another alleged commitment to appoint two independent directors has yet to be honoured.
It is also alleged that Danbywiske has no intention of taking steps to effect a sale of Elst despite an alleged agreement under a 2004 shareholders agreement that the business would be realised within six years.
Mr Justice Peter Kelly yesterday granted an application by John McCarroll SC, for DIG, to fast-track the proceedings in the Commercial Court.
In its petition, DIG says that before 2004, it and Connaught Gold (CG) were the sole shareholders in Carbury Mushrooms while the Wilson shareholders owned most shares in Monaghan Middlebrook Mushrooms Ltd (MMM), a competitor of Carbury.
It is claimed it was later agreed that Carbury and MMM would merge with the Carbury shareholders to get 40pc and Danbywiske 60pc of the merged business. Elst was incorporated as the holding company and MMM was to be the vehicle for the merged business.
It is claimed a share exchange and shareholders agreement (SSEA) of June 2004 gave the Carbury shareholders 40pc of the issued share capital with the remaining 60pc held by Danbywiske.
It is claimed, despite that agreement, the 60pc was later held between Danbywiske, Mr Wilson and National Irish Bank Nominees Ltd with the effect that, after the merger, Danbywiske and MMM were the majority shareholders of MMM.
DIG also claims it was intended the merged business would be controlled by the Board. The SESA contained provisions to that effect and also set out a policy concerning payment of dividends.
Since the merger, the relationship between the Carbury shareholders and the Danbywiske/Richard Wilson side has been "problematic" and that, from the outset, the provisions of the SESA were not observed by Danbywiske or those executive directors who were Danbywiske nominees.
After the CG directors resigned from the Board in 2006, DIG said it began negotiations to buy the CG shareholding with a view to putting in place a comprehensive agreement to address all outstanding issues.
An agreement in 2007 led to Danbywiske holding 65pc of the issued shares in MMM and DIG holding 35pc.
While the 2007 agreement was aimed at "drawing a line" under various problems, the problems which had concerned DIG as a minority shareholder were not resolved, it is claimed.
It is alleged important management decisions have been taken without reference to, or approval by the board, including the 2009 acquisition of a mushroom business in Canada for $6.1m Canadian dollars.
It is also alleged certain properties were effectively re-acquired by Elst for a sum of €1 from another company which had owed €1.4m to Danbywiske and that a group company had invested €775,000 by way of film tax relief without reference to the Board.