The share structure of Richemont that gives chair SA billionaire Johann Rupert half the voting rights, is in the spotlight after Bluebell Capital Partners, a European focused activist fund, asked for changes to the board.
The luxury goods company, which owns brands such as Cartier jewellery, Piaget watches and fashion and accessory brands Dunhill and Chloe, has two sets of A and B shares.
Richemont has 522-million “A” shares, listed on Swiss stock exchange Six, and the same number of unlisted “B” shares owned by Rupert through Compagnie Financière Rupert. The B shares represent 9.1% of the equity but half of the votes.
Bluebell is requesting that a representative of the A shares be chosen and elected to the board. It is also requesting that the company's articles of incorporation be amended to increase the minimum number of board members to six.
Currently the memorandum of incorporation states the minimum number of board seats is three. Bluebell wants to impose that each of the A and B shareholders have an equal number of representatives on the board.
This is not the first time the structure and outsize voting rights for Rupert have come under fire. Rupert, who has built the firm into a leading luxury brand that competes with luxury retailers Hermes and LVMH, holds a total of 51% or majority of the votes through owning some A shares and his B shares.
Richemont said on Tuesday in a statement that the company’s board was considering the proposals. The motion will be tabled at the company’s AGM in September.
Reuters quoted Cheuvreux analyst Jon Cox as being sceptical that the changes would be made as Rupert is unlikely to agree to them.
“Richemont's shareholder structure, giving 10 times the voting rights to holders of the B shares, looks out of date compared with more modern governance practices,” he said.
Richemont's online sales platform Yoox Net A Porte (YNAP) has been loss-making for years and some investors want it be sold. The latest voluntary first quarter update from April to June showed continuing losses online, with a buoyant performance in Europe, US and Japan.
Richemont has a secondary listing on the JSE, where it is one of the most valuable companies alongside British American Tobacco and Prosus.
In midmorning trade, Richemont shares were up 0.4% at R179.48.
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