Sigh!
Business of Cannabis –
Chill Brands’ ongoing boardroom debacle took another dramatic turn this week following revelations that its ousted directors acted ‘to defraud the business’ while its CEO was temporarily suspended.
The UK CBD company has now been embroiled in a long and complex boardroom controversy since mid-April, resulting in the loss of three directors and the suspension of its shares from trading.
In April, activist investor Jonathan Mark Swann, who owns 12.58% of the company’s total voting rights, requisitioned a General Meeting for shareholders to vote on the ousting of Antonio Russo (Chief Commercial Officer) and Trevor Taylor (Chief Operating Officer).
Days after the announcement of the requisition letter was made, news emerged that Chill Brands CEO, Callum Sommerton, had been suspended over allegations of the use of inside information.
According to Mr Sommerton, who wrote on X following his suspension, the allegations were leveled by the two soon-to-be-ousted US directors, meaning he was ‘effectively silenced during the period leading up’ to the General Meeting.
It has now emerged, following an internal investigation by the company’s new board, that Mr Russo and Mr Taylor ‘exercised executive management control over the Company and its subsidiaries’ during Mr Sommerton’s absence.
During this time, the pair transferred the company’s website domain, Chill.com, and a number of company trademarks to Chill North America, an entity owned by Mr Russo, effectively transferring the property from the company to himself.
This was, according to Chill Brands, done without the notification or consent of the company’s board.
Furthermore, the day before the General Meeting on June 04, some $400k was transferred from Chill Brands’ US subsidiary to the pairs’ personal bank accounts, a move that reportedly was once again made without the board’s knowledge.
Chill Brands says it is ‘seeking a proper explanation’ from Mr Taylor and Mr Russo regarding these payments, and it is pursuing all legal routes to recover the intellectual property and money.
It is also investigating whether any of the company’s advisors appointed by the pair were involved in these actions.
Harry Chathli, the newly instated Non-Executive Chairman of Chill Brands, said: “We are totally shocked by the extent of destructive behaviour and actions of Mr Taylor and Mr Russo.
“It is evident that they have not acted in good faith and their actions have been motivated by self-interest rather than for the benefit of the company or its shareholders. The company has commenced an investigation to uncover if any professional advisers or persons had assisted them in their actions to defraud the business. Shareholders can be assured that the current Board will work unceasingly to ensure restoration of trading of shares and seek to regain the positive momentum achieved in the year to 31 March 2024.”
Amid the ongoing controversy, Non-Executive Director Eric Shrader has announced plans to step down from the board with immediate effect, with a replacement not expected until September.
