Chill Brands
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.
Cannovum Cannabis AG
Germany’s Cannovum Cannabis AG has seen its stock jump by over 30% this week after changes to the country’s cannabis act were passed by the Bundestag.
According to Cannovum, which is now targeting the nascent adult-use cultivation market, the passage of amendments to the Cannabis Act ‘confirm (its) business model for cultivation clubs’.
Last week, Business of Cannabis reported that on June 06, the German federal parliament (Bundestag) voted on a number of key adjustments to the law, one regarding THC limits for drivers and another giving states further scope to regulate cultivation associations, which are set to be launched in July.
In a press release published this week, Cannovum says that this means ‘cultivation associations can apply for a licence in time for July 01, 2024, and subsequently start their operational activities’.
These amendments provide much needed ‘legal certainty’ for would-be associations, and Cannovum says it is poised to ‘present attractive offers’ that will simplify the development and daily work of these associations.
As such, the company says it expects to ‘generate significant sales in the area of recreational cannabis’ once these associations begin to get up and running.
“As a renowned public limited company, we see ourselves in a unique position to offer attractive and legally compliant services for cannabis clubs and cultivation associations together with our partners. The established growers in our subsidiary, Anbau-Allianz GmbH, are a role model here,” says Klaus Madzia, CEO of Cannovum.
Days earlier, the company announced a further capital increase by issuing 888,900 new shares if authorised by shareholders during a General Meeting on June 13.
Shareholders will be exclusively offered new shares at a ratio of 8:5 at a subscription price of €1 per share.
Proceeds will reportedly be used to reduce liabilities and finance ongoing business operations.
