Activist Peter H. Smith Once Again Breaches His Fiduciary Duty to Fancamp Shareholders
April 15, 2021 at 08:00 AM EDT
Fancamp Exploration Ltd. (“Fancamp” or the “Corporation”) (TSX Venture Exchange: FNC) is once again disappointed that activist Mr. Peter H. Smith, a disgruntled director and former president and CEO of Fancamp, whose consulting agreement was recently terminated for cause, has continued to breach his fiduciary duty to Fancamp and exposed the Corporation to unnecessary legal risk for damages.
Mr. Peter H. Smith: Breach of Duty Under Corporate Law
As a member of Fancamp’s Board of Directors (the “Board”), Mr. Smith was given a confidential copy of the Opinion on December 20, 2020 for the sole use of the Board in evaluating the Transaction. The specific purpose of the Opinion was to provide information to the Board for consideration regarding the Transaction and was not to be used in any other context without the prior written consent from Ernst & Young. Notably, the agreement between Ernst & Young and Fancamp also stated that the Opinion on the Transaction may not be disclosed in public filings.
By publicly disclosing information regarding the Opinion in his April 7, 2021 press release:
Under corporate law, a director has a duty to act honestly and in good faith, with a view to the best interests of the Corporation. As Mr. Smith has once again breached his duties to Fancamp, the Corporation will notify regulators and will keep them informed of further potential misconduct by Mr. Smith. As the Corporation continues to investigate and examine the conduct of Mr. Smith, the Corporation reserves all of its legal rights in connection with Mr. Smith and will consider any such measures as are appropriate on behalf of its shareholders to address potential misconduct, including through the courts if necessary and claim from Mr. Smith all damages incurred by the Corporation as a result of such misconduct. The Corporation has also issued a cease and desist letter to Mr. Smith, and has notified him that he will be held liable for any damages and expenses incurred in connection with the breach of his contractual obligations and fiduciary duties.
Fancamp would also like to set the record straight on Mr. Smith’s misleading statement regarding the Corporation’s counsel, Lavery de Billy, L.L.P. ("Lavery"). Mr. Smith wrongly asserts that there is a conflict of interest because Lavery collaborated with ScoZinc to prepare a single schedule related to Fancamp in a circular issued by ScoZinc. It is customary practice for legal counsel of one company involved in a transaction to participate in the preparation of certain related materials with the other party involved as this does not risk or limit counsel’s ability to consider, recommend or carry out an appropriate course of action for the client. Lavery remains at all times, for the purposes of the Transaction, legal counsel to Fancamp. As such, in accordance with the Code of Professional Conduct of Lawyers, there is no conflict of interest and the allegations made by Mr. Smith are completely false.
Update on the Transaction
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