On Monday, May 10, 2021, at the request of Messrs. Anthony Durkacz and Zeeshan Saeed, founding shareholders and members of the group of concerned shareholders (the Concerned Shareholders) of FSD Pharma Inc. (NASDAQ: HUGE) (CSE: HUGE) (FSE: 0K9A) (the Company or FSD), the Ontario Superior Court of Justice (Commercial List) (the Court) issued an order appointing Ms. Carol Hansell as independent chair of the Company’s shareholders’ meeting to be held on May 14, 2021 (the Meeting) and dismissed FSD’s application challenging the Concerned Shareholders’ information circular.
This defeat is only the most recent in a series of Court orders against FSD management and directors obtained by the Concerned Shareholders that the Company has concealed, despite their importance.
“These consistent losses are clear evidence of Dr. Raza Bokhari’s [the Company’s Chief Executive Officer] poor grasp of fundamental corporate governance principles and his repeated breaches of court orders provide insight into his moral compass,” said Anthony Durkacz.
“It is regrettable that Dr. Bokhari’s latest misconduct implicated Senator Rick Santorum and resulted in a further waste of Company money. A simple respect for the law would have avoided this embarrassment for all of us.” The most recent Court decision noted that Senator Santorum was compromised by a conflict of interest and was not to serve as the Meeting chair. The Court rejected his appointment and instead appointed Ms. Carol Hansell, a well-respected corporate governance expert, independent of all parties, to chair the Meeting.
It has previously been disclosed to shareholders that, on March 5, 2021, the Court ordered (the “March 5 Court Order”) the Company to hold the Meeting on May 14, 2021 and to appoint an independent chair agreed to by both parties to ensure that someone other than Dr. Raza Bokhari acted as chair of the Meeting. The Original Order also prohibited Dr. Raza Bokhari and his collaborating directors from voting shares at the Meeting that they had recently issued to themselves.
What the Company failed to disclose is that, just a few weeks later, on April 9, 2021, the Court issued an injunction (the “April 9 Court Order”) that restrained FSD from closing a transaction that Dr. Raza Bokhari and his collaborating directors had attempted to rush through in advance of the Meeting. As a director of FSD, Mr. Durkacz objected to the proposed transaction on the basis that it was not in the best interests of the Company and its shareholders. To preserve the status quo pending the Meeting, the April 9 Court Order prohibits the Company from undertaking any transaction other than in the ordinary course of business prior to the Meeting.
Management of FSD asked the Court to reconsider its decision, but on April 16, 2021, the Court refused to alter any of the April 9 Court Order’s terms.
To make matters worse, Dr. Raza Bokhari has repeatedly breached these Court orders. The appointment of Senator Santorum by Dr. Raza Bokhari was a breach of the March 5 Court Order. Dr. Raza Bokhari subsequently breached the April 9 Court Order when he paid Senator Santorum a non-refundable fee of US$75,000. “This was, quite simply, an inappropriate action and a waste of FSD’s money by Dr. Raza Bokhari and his supporters. Unfortunately, due to Dr. Raza Bokhari’s actions contrary to Court orders, Senator Santorum was implicated. It was never appropriate or, outside of their fantasy world, realistic that Senator Santorum should act as independent chair of this meeting,” said Anthony Durkacz.
A further breach of the March 5 Court Order arose from the Company’s failure to include a resolution to reduce the size of its board of directors from seven to five directors in the matters to be considered at the Meeting. To avoid more expensive legal action, rather than object to this breach, the Concerned Shareholders chose instead to recommend that shareholders vote for the two director nominees who were not currently serving on the Company’s board – Donal Carroll and Frank Lavelle. The Concerned Shareholders regarded these individuals as apparently well-qualified and hoped that they would evidence the independent judgment that Dr. Raza Bokhari’s collaborators on the current board so clearly lack.
However, these hopes were undone with respect to Mr. Lavelle when he intervened in the Company’s failed court action against the Concerned Shareholders. Mr. Lavelle’s goal was to require that the Concerned Shareholders clarify that his allegiance lies firmly with Dr. Raza Bokhari and the other members of the current board. While Mr. Lavelle’s specious action failed, the Concerned Shareholders do acknowledge that Mr. Lavelle has declared he is firmly allied with Dr. Raza Bokhari and his collaborators, notwithstanding their now substantial track record of failure in governing FSD.
By contrast, Mr. Carroll, who was the Company’s Chief Financial Officer, resisted pressure from Dr. Raza Bokhari to take actions that he was concerned were contrary to the April 9 Court Order. For his efforts, Mr. Carroll was removed from the list of management’s director nominees on May 3, 2021 and, on May 5, 2021, Mr. Carroll’s employment was terminated by Dr. Raza Bokhari.
Many shareholders have submitted votes for the election of Mr. Carroll at the Meeting. The Concerned Shareholders want to honor shareholders’ wishes and are seeking to cast these votes at the Meeting for the election of Mr. Carroll. The Concerned Shareholders anticipate that Dr. Raza Bokhari will object to this and are seeking a ruling from the Meeting chair that Mr. Carroll remains eligible for election as a director.
The Concerned Shareholders thank FSD shareholders for helping to rebuild FSD by voting Gold proxies to replace Dr. Raza Bokhari and his collaborators at the Meeting. “Shareholders deserve better,” said Mr. Durkacz, “and we hope to give them a better board of directors at the meeting on May 14, 2021.”
Further details regarding the Concerned Shareholders’ nominees and the reasons that the Concerned Shareholders want to reconstitute FSD’s board are contained in the information circular available on the Company’s SEDAR profile at www.sedar.com and at the website established by the Concerned Shareholders: www.RestoreFSD.com. Stay up-to-date by following us at: www.RestoreFSD.com; Facebook: RestoreFSD; and Twitter: @RestoreFSD.
For additional information, please contact:
North American Toll Free Phone: 1-800-530-5189
Local (Collect outside North America): 416-751-2066
Certain statement contained herein are “forward-looking statements”. Often, but not always, forward-looking statement can be identified by the use of words such as “plans”, “expects”, “expected”, “scheduled”, “estimates”, “intends”, “anticipates” or “believes”, or variations of such words and phrases, or states that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements contained in this press release include statements regarding the Meeting, the business to be conducted at the Meeting and the Concerned Shareholders’ plans and anticipation regarding the election of Mr. Carroll at the Meeting. The Concerned Shareholders cannot give any assurance that such forward-looking statements will prove to have been correct. The reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document.
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