Charles & Colvard, Ltd. (CTHR) has publicly rejected director nominations submitted by Riverstyx Capital Management, LLC, asserting that the nominations are invalid due to non-compliance with the company’s bylaws. The company’s statement, issued on October 7, 2024, clarifies its position on the matter.
On August 27, Charles & Colvard received a notification from Ben Franklin, a principal of Riverstyx Capital Management, outlining his intention to nominate three individuals to stand for election to Charles & Colvard’s Board of Directors at the upcoming Annual Meeting. The company’s bylaws, like those of many publicly traded companies, require shareholders seeking to nominate director candidates to provide the company with advance notice and detailed information regarding the nominating shareholder and their candidates. These provisions, upheld by numerous courts, ensure that the Board and shareholders have comprehensive information to evaluate candidates and make informed decisions.
Charles & Colvard asserts that the notification from Riverstyx failed to meet these requirements. The notification lacked critical information mandated by the company’s bylaws, including:
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Biographies and work histories of the nominated candidates.
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Ownership stakes of the candidates and the nominating person (Mr. Franklin), along with his affiliates and associates.
This information seems particularly important as it includes various entities holding shares in the company that were not even mentioned in the notification.*
Consent from each candidate to serve as a director.
Following a comprehensive review of the notification and its deficiencies, with input from its advisors, Charles & Colvard’s Board notified Mr. Franklin that the notification is invalid. The company also pointed out that Mr. Franklin waited until the last day of the nomination window to deliver the incomplete notification. Therefore, Charles & Colvard will not recognize Mr. Franklin’s nominations and any proxy submissions or votes cast for his candidates will be disregarded.
The Charles & Colvard Board reaffirmed its commitment to acting in the best interests of all shareholders. The Board has invited Mr. Franklin to directly share his perspectives on the company’s business and strategy. The Board and the management team expressed their willingness to engage constructively with Riverstyx. Charles & Colvard’s Board will make a recommendation to shareholders regarding the upcoming Annual Meeting and director elections in due course. Shareholders are not required to take any action at this time.
