REBEL SHAREHOLDERS in the Philip Lynch-led investment group One51 are preparing to table a series of questions relating to the payment in 2008 of €4.96 million in tax-free patent income by a subsidiary called Protech Performance Plastics Ltd.
Protech developed a patent for a paint bucket with an easy-open lid, and the dissident shareholders, led by businessman Gerry Killen, are questioning whether the intellectual property rights were transferred to Chandela Ltd, another entity controlled by One51.
Protech paid a licence fee of about €4.96 million to Chandela Ltd in 2008, and shareholders plan to quiz the company about the structure put in place to transfer this tax-free income and to ascertain who the beneficiaries of the payment ultimately were.
The Irish Times has learned that the shareholders will ask if this corporate structure was put in place to “enable the payment of tax-exempt patent distributions to executives or companies in which executives have a material interest and which is designed to avoid proper and full disclosure of such payments”.
No disclosure of this payment is made in the accounts of One51 and it is understood that Protech’s 2008 accounts have not yet been signed off by its directors.
This is one of a series of questions that will be submitted to the chairman of One51 this week by disaffected shareholders in the company. The shareholders, who are being advised by law firm Byrne Wallace, have also asked One51 to confirm if approval was sought from the Revenue Commissioners prior to the implementation of the scheme.
They also want to know the “commercial motives” behind the implementation of the structure.
They will ask One51 to confirm whether it controls Chandela Ltd, Chandela Nominees Ltd, Chandela Holdings Ltd and Maple Nominees Ltd.
The shareholders believe that all of these groups were involved at some stage in the scheme to distribute the cash.
A spokesman for One51 said all of the Chandela companies and Protech were wholly owned by the group. “They are part of group tax planning and are part of the group.”
This is the latest move by shareholders to try and implement strategic change at One51 and to get three seats on the board of the company. Last week they placed ads in national newspapers seeking support from other shareholders ahead of One51’s annual meeting on July 28th.
They are unhappy at the illiquid nature of the One51’s shares, which trade on a grey market, and at the disparate nature of its investments, which include a share in ferry operator Irish Continental Group, ownership of breadmaker Irish Pride, and a variety of interests in waste disposal and recycling.
The shareholders are believed to be concerned at a lack of transparency in the transactions over the €4.96 million payment.
Protech was acquired by One51 in mid-2006 for €10.5 million.
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