Dive Brief:
- Shareholder group Browning West filed a legal complaint against Gildan Activewear Inc., accusing Gildan of acting “in a manner that is oppressive, unfairly prejudicial to,” and unfairly disregards the rights and interests of the shareholder group, according to court documents and a press release on Monday.
- Attorneys for Browning West argue that since the December 2023 ousting of former Gildan CEO Glenn Chamandy and the subsequent shareholder outcry, Gildan “has engaged in a pattern of conduct which ignores and defies the reasonable expectations of [Browning West] and other shareholders, in favour of a strategy of entrenchment, obfuscation and disparagement of dissenters, improperly placing their own personal interests ahead of the interests of Gildan and its shareholders.”
- Browning West further alleges that Gildan’s conduct is meant to delay the date of the shareholders vote on the composition of the company’s board, which is scheduled to take place during the annual meeting on May 28.
Dive Insight:
Browning West filed the complaint to “ensure that the Annual Meeting proceeds on the scheduled date without delay or interference,” Usman Nabi and Peter Lee of Browning West said in the release.
“[W]e want to ensure all shareholders have their votes counted and that the Annual Meeting be conducted fairly and legally,” they said. “As such, we are asking that an independent chair be appointed to oversee the Annual Meeting. While we expect Gildan to oppose Browning West’s application, we will not be deterred and will continue to do whatever is necessary to ensure that all shareholders have an opportunity to replace the directors whose decisions have destroyed shareholder value and who have failed to give due regard to the views of investors.”
Gildan didn’t immediately respond to Fashion Dive’s request for comment.
The case, filed in the commercial division of the Superior Court of Quebec, follows Gildan’s separate motion to block Browning West’s requisition for a special meeting, which was ultimately meant to reinstate Chamandy as CEO by electing a new slate of directors. The special meeting was scheduled on the same day as Gildan’s annual meeting.
On Jan. 31, Browning West withdrew its requisition for the special meeting, saying it wanted to avoid an “unnecessary court battle” and avoid shareholder confusion by holding the annual meeting and the special meeting on the same day and for the same purpose, per court documents. However, withdrawing the requisition made Gildan’s motion to block it moot. At the time, Gildan accused Browning West of illegally obtaining Gildan shares as a basis for the requisition.
In addition to suing the company, the complaint also individually names each director, including Vince Tyra, the newly appointed CEO.
In the complaint filed this week, attorneys for Browning West allege Gildan’s entrenchment tactics include “after-the-fact” attempts to justify the decision to fire Chamandy, leaking corporate documents to journalists and a third-party governance expert, and what it called “groundless attacks” on Browning West, including initiating the legal proceeding, among other claims.
