Defence tech firm Rectifier appoints four new directors after boardroom exodus

Specialist defence sector company Rectifier has appointed a Chinese resident to its board as it fights an ASX suspension and mass exodus of other directors.

Rectifier Technologies will start producing a high voltage rectifier - a device which converts alternating current to direct current - from next year to meet ‘growing demand, particularly in defence products’.

A tech company specialising in electricity systems for Australia’s defence sector has installed a Chinese resident as an executive director as it fights to overturn a suspension from the ASX.

A crisis has engulfed Melbourne-headquartered Rectifier Technologies - which has a market value of almost $50m - after its three Australian-based directors resigned last Wednesday, citing “serious” corporate governance concerns and a “potential hostile shareholder”. They didn’t name the shareholder.

The exodus had left chairman YingMing Wang - who is also the company’s biggest shareholder with a 16 per cent stake - as the sole director.

It also meant Rectifier no longer complied with the Corporations Act - which says a company must have at least two directors who live in Australia - to trade on the ASX.

On Friday morning Mr Wang announced Rectifier had appointed four new board members, two of whom are Australian residents.

This aimed to satisfy the minimum requirement to resume trading on the ASX. But the company remains suspended, “pending completion of further inquiries”.

Sources familiar with the matter told The Australian they were concerned about the company losing big contracts, with key defence customers already calling management regarding the suspension.

Yingming Wang.

Zorn Wong, a Chinese resident, headed the list of appointments as an executive director. Mr Wang said Mr Wong had almost 10 years’ management experience in the “new energy field”.

“The reinvigorated board has the skills and experience required to execute on the Company’s strategy whilst bringing a new perspective and fresh ideas to the business,” Mr Wang said.

The new Australian resident directors include Trevor Fox - who previously served in senior roles at Coca-Cola, GM Holden and Boral - and Philippe Compagnon, a former executive at French defence and consumer electronics company Sagem.

Mr Wang has also appointed Singapore resident Deng Mu - a “risk management professional” whose resume includes stints at OCBC Bank group.

Mr Wang had previously proposed to appoint two Chinese nationals to the company’s board.

An email, obtained by The Australian, sent by Mr Wang to Rectifier Technologies company secretary Hasaka Martin on October 31 proposed to nominate Shufeng Wang and Zongxu Wang as additional directors to the board. This sparked a showdown ahead of the company’s annual meeting last Wednesday, when its three former Australian-based directors - Valentino Vescovi, Nicholas Yeoh and Jitto Arulampalam - failed to gain support of proxy votes.

“As the largest shareholder and RTL’s Chairman, I should have the right to propose an additional motion 28 days before the AGM is held,” Mr Wang wrote in the email.

“This time, I specially propose to nominate Mr Wang Shufeng and Mr Wang Zongxu as the additional directors to the board. I expect you can add this new proposal to the voting report in the AGM of notice to the shareholders before 12 Noon, 31 October 2023 after receiving my email.”

Rectifier CEO Yanbin Wang - who was originally from China but has lived in the US since 1987 - and the company’s former deputy chairman Jitto Arulampalam said they weren’t aware of the proposal until last Monday.

The proposal to add two new directors was also not included in the company’s annual meeting notice sent on October 31.

Trevor Fox

Late last week Yingming Wang deferred questions about his email to his lawyer, who said he understood the proposal was made “in response to Mr Wang’s own concerns with the company’s corporate governance”.

It comes as the company secured a $US22m ($33.4m) contract from a “critical customer” and set to start producing a high voltage rectifier - a device which converts alternating current to direct current - from next year to meet “growing demand, particularly in defence products”.

In the past five years Rectifier’s shares have jumped 20 per cent to 3.6c. It more than doubled its revenue to $39.4m in the year to June 30, while its net profit vaulted to $6.6m from $658,394 a year earlier.

“The company has experienced remarkable growth from 2022 to 2023, not only in terms of sales but also in profitability. The surge in revenue, coupled with efficient cost management, has resulted in a significantly improved net profit margin,” Rectifier said when it released its full-year earnings in August.

Rectifier supplies electrical systems to the defence, oil and gas, utilities and telco sectors. It has also developed EV charging products.

“DC chargers unlike AC chargers performs its power conversion within the charger. Rectifier Technologies has developed products that help to reduce the overall deployment costs of high-powered DC fast chargers and is known as a key contributor to the industry,” the company says on its website.”

The company was incorporated in 1992 and says it has “accumulated a wealth of knowledge from various industries and expertise over the years”.

“We began by developing products using switched-mode technology for the telecom market, in Melbourne, Australia. Over the years we have grown our operations, earned a global reputation, and now had offices in Australia (Melbourne), Malaysia (Johor Bahru) and Singapore.

“We take on challenges with a can-do attitude inspired by innovation and a pioneering spirit. The future of Rectifier Technologies is one of ambition and confidence as we seek to explore new territories where we can apply our global expertise.”

Originally published as Defence tech firm Rectifier appoints four new directors after boardroom exodus