Revolution Beauty resumes trading after reinstating directors against top shareholder Boohoo’s demands

28 Jun 2023 --- Revolution Beauty has reinstated its chief executive, chief financial officer and chairman to its board, resisting a proposed organizational shakeup from its main shareholder Boohoo. With this play, the company could meet the minimum number of directors required to keep on its board to lift the suspension on its stock market activity. As a result, the company has resumed trading on the London Stock Exchange (AIM).

Boohoo previously tabled its demands to install its own leadership inside the Kent-headquartered British makeup firm, in light of issues pertaining to management and accounting.

Revolution Beauty’s move to retain its current executive team comes despite Boohoo’s leading a successful vote to oust them in an annual general meeting held yesterday – Revolution Beauty’s first since its AIM IPO in July 2021.

“Boohoo fails to see how such a board can claim to be acting in the best interests of shareholders, and is instead self-serving, as demonstrated by its actions over the last 24 hours,” states Boohoo in response to the move.

Boohoo has been set on installing its own executive leadership within Revolution Beauty following issues pertaining to management and accounting (Image credit: Revolution Beauty).“This will likely result in significant remuneration and share awards for members of a self-elected board at the lifting of the suspension of trading in its shares, which Boohoo was pleased to hear is imminent,” it continues.

The company adds: “It is notable that at no point did the remuneration committee seek prior shareholder consultation, or approval in relation to these awards, again contravening best practice in relation to corporate governance.”

As the sole remaining director of the company following the annual general meeting, Jeremy Schwartz was required to weigh up a number of matters, outlined in the next section.

Race to resume trading introduces complexities
Trading in the make-up company’s shares have been suspended since September, following an investigation into accounting anomalies.

Prior to yesterday’s general meeting, Revolution Beauty had been advised by Zeus Capital, its nominated adviser, that the suspension of trading in its shares on AIM would be expected to be lifted promptly following the AGM, but only if all of the directors proposed for election at the general meeting were elected (or otherwise remained on the board).

As a result of the above, in order to ensure that the Revolution Beauty board was suitable for a company listed on AIM and to lift the suspension of trading, Schwartz appointed Rachel Maguire and Matthew Eatough as directors of the company, then re-appointed Bob Holt, Derek Zissman and Elizabeth Lake to the board.

Holt and Lake will continue in their roles as CEO and CFO, respectively, Zissman will remain as chairman of the board and Maguire, shares Revolution Beauty in a statement.

Meanwhile, Eatough will act as independent non-executive directors, pending the general meeting requisitioned by Boohoo.

Shares are expected to resume trading
In light of Revolution Beauty’s pushback, Boohoo maintains its proposals to remove Bob Holt, Elizabeth Lake and Derek Zissman and to appoint Boohoo non-executive directors Alistair McGeorge and Neil Catto as directors “without further delay” and “not to resort to further attempts to obstruct shareholders and adjourn that meeting, once convened.”

“The decisions I took today as the sole director of the company following the AGM were not taken lightly. I had to consider my duties as a director and act in what I genuinely believed to be in the best interests of the company, for the benefit of its members as a whole,” comments Schwartz.

“Among other things, without the board changes effected following the AGM, there was no certainty as to when (if at all) the company’s shares would be restored to trading on AIM.” 

Revolution Beauty has resumed trading on the London Stock Exchange after it was suspended in September (Image credit: Revolution Beauty).Schwartz continues: “As a result of the appointment and re-appointment of the board, however, the shares are expected to be restored to trading imminently, something which is undeniably in the interests of all shareholders, including Boohoo, as well as all of the group’s other stakeholders.”

Boohoo remains supportive of a lifting of the suspension, but “not at the expense of doing so with a board that has proven to behave inappropriately.”

Vote on reinstated execs to be announced
Boohoo reports that Revolution Beauty’s board tried to adjourn the recent AGM without the approval of shareholders, but their attempt failed because 74% of votes were against adjournment.

Revolution Beauty will now call a general meeting, requisitioned by Boohoo, where shareholders will vote on the future of the ousted, then returned, executives. They will also vote on Boohoo’s own proposed additions to the Revolution Beauty board.

Amid controversy surrounding its accounting practices, Revolution Beauty provided an update last week on its trading for the first three months of the financial year ending February 28, 2024 to bring relief to its shareholders. 

By Benjamin Ferrer