In a surprising turn of developments, Tyrone Wilson, the former CEO on iCreate Limited, muscled his way back onto the company’s board just mere months after his resignation as its chief executive officer (CEO) and as a director, using his majority holding in the entity.

Wilson’s return has been accompanied by the removal of four directors from the company’s board — Arlene Martin, Ricardo Allen, Dainya-Joy Wint and Ivan Carter — along with the exit of Crichton Mullings & Associates as the company’s auditors. This all occurred at the company’s annual general meeting (AGM) last Friday at the Jamaica Pegasus hotel.

“After careful reflection, I am honoured to announce my return to iCreate, resuming my role as a director after being voted in by an overwhelmingly majority of the shareholders present. I am also elated to return as CEO, pending the final decision of a board majority to reinstall me, along with any other roles they see fit. This decision is rooted in a profound commitment to the company I founded,” Wilson stated in release under Kintyre Holdings Limited which lists him as its chairman and CEO.

While this release infers that most shareholders voted in favour of Wilson’s appointment, this was due to the mechanism in which he was put back into the company.

Once per year, a company is required to hold an AGM with its shareholders where they vote on matters such as approving the audited financial statements, re-electing directors, confirming the remuneration of directors and the reappointment of external auditors. Under normal circumstances, each shareholder present has one vote on a show of hands which is the mechanism by which resolutions are carried or denied by shareholders.

However, in this instance, Wilson requested that the voting be carried out by poll which means that each share represents a vote which means the more shares a person owns, the more votes that person has. While Wilson doesn’t own any ordinary shares of iCreate in his name, he was appointed as the proxyholder or representative of Kyntire Holdings and Emedia Interactive Group Limited which collectively hold 52.4006 per cent of the company as of September 30 and were listed as connected parties to Wilson.

Thus, whatever Kyntire and Emedia collectively voted for on the proxy form would be the result for any resolution regardless of what other shareholders present, whether in person or by proxy, voted in favour of. Even Sagicor Investments Jamaica Limited, the eighth largest shareholder, who voted in favour of all the resolutions was powerless to influence the decisions voted on.

As a result, items which found favour with Wilson such as the company’s 2022 financial statements and directors report, re-election of Larren Peart and Adrian Smith as directors and remuneration of directors were approved. Others which did not find favour were swept aside.

These surprising developments threw the audience into a state of shock, including company secretary Demetrie Adams, Chairman Carter and interim CEO Martin.

The decision to vote down Ricardo Allen’s re-election comes as a relative surprise since Wilson resigned from the board of One-on-One Educational Services Limited on August 21. Allen is the CEO of One-on-One, another Junior Market listed company.

Following the quick recess, a new legal quandary was created for secretary Adams who noted that the results of the resolutions impacted the company’s own ability to carry out any decision since its articles required a minimum of three directors to constitute a functioning board. It also left the company without an external auditor which is required by JSE rules.

Crichton produced a qualified audit report for iCreate’s 2022 audited financials based on the absence of comprehensive and reliable documentation for assets held by its subsidiary and inability to carry out audit procedures to assess the impairment of the acquisition of shares.

After reading through certain elements of the Companies Act and referencing iCreate’s articles, Adams moved onto any other business segment of the meeting where Larren Peart proposed that Wilson be appointed as a director of the company. Wilson then seconded the resolution with no one else indicating their expression through a show of hands as many remained in angst at what they had just witnessed.

While another shareholder proposed that iCreate’s tenth largest shareholder Dane Warren be appointed as a director to the board, Warren declined the opportunity as he referenced his overseas commitments. Thus, at the end of the AGM, Wilson, Peart and Smith constituted iCreate’s board in what was one of the most unexpected and surprising board takeovers in recent times.

Though Wilson remained elated while donning dark shades, a white ensemble and a Gucci bag at the end of the meeting, attendees remained in disbelief at what they had just witnessed with one iCreate Group employee expressing clarification at whether or not they should return to work based on the changes they just observed. Adams will be departing iCreate on December 31 after tendering his resignation.

What’s next for iCreate?

Friday’s developments have left several brokers and investors with financial exposure to iCreate perplexed as to what’s next for the business under Wilson’s direction. Both Sagicor Investments and Warren have reduced their positions in iCreate since December 2022.

It’s unknown as to how the JSE will treat with iCreate which was suspended for nearly two months for breaches of the Junior Market rules. There has been no update by the JSE or iCreate as to the director which sold shares on August 16 when the company had not released its second quarter report or audited financial statements.

The JSE Junior Market rules require for there to be at least two independent non-executive directors on the board of a company, an audit committee, a remuneration committee and produce audited financial statements within the stipulated framework.

iCreate’s 2022 annual report noted that Wilson and Smith were non-independent directors at the time. However, Smith is no longer associated with Dequity Capital Management Limited, which is iCreate’s fourth largest shareholder and might make him an independent director. The removal of Allen, Carter and Wint has also left iCreate without an audit committee.

Minority shareholders in iCreate can attempt to sell their position in the company if there are buyers on the market for the volume they are selling or increase their position if they have a different belief. Another option is an oppression remedy or derivative action under the Companies Act based on their interpretation of the current developments.

Latest financial performance

Although Wilson has ascended back to the throne of iCreate, the group is still attempting to chart its future in a difficult 2023. iCreate’s nine-month revenue is down 21 per cent to $78.38 million with a net loss of $150.12 million. This loss is largely because of acquisition related expenses for Visual Vibe.com Limited which was acquired on May 31.

The group’s net cash balance is $5.54 million after it took out a recent $55.84 million loan during the third quarter to deal with their negative $28.63 million cash outflow from their operations. Although total assets are at $700 million, total liabilities continue to climb above $375 million as iCreate racks up expenses related to the US$1.27 million vendor note for Visual Vibe. iCreate’s 100 per cent tax remission will end in February 2024 which will result in it being subject to a 50 per cent tax remission.

iCreate recently entered into a letter of intent to sell 20 per cent of Visual Vibe in the fourth quarter to another party, which is rumoured to be a doctor. Its stock price is also down 66 per cent year to date to $0.60 with the market pricing in Friday’s developments. iCreate traded at a peak price of $4.90 in June 2022.