Proxy adviser backs Nanoco board against shareholder revolt

Shareholders have been urged by a proxy advisory firm to support the leadership of nanotechnology developer Nanoco Group after some investors called for their removal.

Institutional Shareholder Services (ISS) is recommending that investors vote against plans to oust the board and install five new directors at a general meeting that is due to happen on 14 August. 

One of the director nominees, Tariq Hamoodi, is leading a coterie of investors who have expressed considerable disgruntlement regarding Nanoco’s settlement of its legal dispute with Samsung.

After ending a partnership with the South Korean conglomerate in 2013, Nanoco sued the company seven years later, alleging that permission was not given for its technology to be used in Samsung’s televisions.

The case was settled earlier this year, with Samsung agreeing to pay the Manchester-based business $150million (£123million), significantly below industry estimates of about £215million.

Hamoodi said in a March letter that Nanoco’s settlement was ‘substantially less favourable than its prior statements had led shareholders to believe.’

He also accused the group’s board of raising finance in the interests of preferred shareholders who had access to information about the Samsung case that was unavailable to other investors and the broader markets.

With the support of minority investors Richard Griffiths and Lombard Odier, he initially called on chief executive Brian Tenner and chief financial officer Liam Gray to stand down.

In a second letter published in May, he claimed Nanoco had ‘failed to adequately engage with many of his concerns’ and asked for five board members to quit.

However, Nanoco has fervently rejected  the investor group’s proposals, claiming they would be ‘damaging and disruptive to the business.’

In June, it said: ‘The board believes that the blend of skills and capabilities of its members has been demonstrated both in the transformative outcome achieved in the Samsung settlement and the progress made with the organic business.’

Spun off from the University of Manchester in 2001, Nanoco makes cadmium-free quantum dots, tiny flecks of fluorescent material which can enhance the colour saturation quality on televisions.

The company was listed on the junior AIM market in 2009, since when it has agreed licensing deals with the likes of drugmaker Merck, Dow Chemical, and Taiwanese manufacturer Wah Hong Industrial Corporation.

Nanoco shares were 1.1 per cent, or 0.2p, up at 18p on late Wednesday afternoon, although their value has shrunk by 60 per cent so far this year.