Rectifier Technologies board resigns over ‘hostile’ shareholder

All but one director of a listed Melbourne company, that supplies the defence sector, have resigned after the chairman tried to install two Chinese nationals on the board.

Rectifier Technologies specialising in EV chargers and power supplies for the defence sector.

A tech company specialising in electricity systems for Australia’s defence sector has been suspended from trading on the ASX after most of its board resigned, citing “serious” corporate governance concerns, leaving its China-based chairman as its sole director.

A boardroom exodus has fractured Rectifier Technologies, which has a market value of almost $50m, after proxies indicated they would vote against the election of its three Australian-based directors at its annual meeting earlier this week.

The directors Valentino Vescovi, Nicholas Yeoh and Jitto Arulampalam resigned immediately. In a statement to the ASX, the trio “highlighted serious concerns as the result of a potential hostile shareholder”. They did not name the shareholder.

Chief executive Yanbin Wang also stepped down from the board but will maintain his executive role. Founder and chief power engineer Nigel Machin also resigned as a director.

This has left Yingming Wang, Rectifier’s chairman, as sole director of the company, which is based in Melbourne and has offices in Malaysia and Singapore. Yingming Wang is also managing director of Pudu Group, Rectifier’s biggest shareholder with a 16.3 per cent stake.
As a result, the company has been suspended from trading on the ASX.

Under the Corporations Act, a public company must have at least two directors who reside in Australia.

Rectifier Technologies chief executive Yanbin Wang.

An email, obtained by The Australian, sent by Yingming Wang to Rectifier Technologies company secretary Hasaka Martin on October 31 - a month before the AGM - proposed to nominate Shufeng Wang and Zongxu Wang as additional directors to the board.

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.

In the email, Yingming Wang wrote: “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. 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”.

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

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”.

Rectifier Technologies chairman Yingming Wang.

Yingming Wang issued a statement to the ASX on Friday, stating the company was in the process of undertaking a search for “qualified and experienced Director candidates and conducting appropriate background checks into each potential candidate before any appointment”.

He told The Australian that he first invested in Rectifier Technologies in 2005 when it was facing financial difficulties at the company’s invitation.

“My level of shareholding in the company (~16 per cent) has not changed materially since then,” Yingming Wang said.

“I have been chairman with the full support of the board. But have not had any involvement with the day to day management of the company – and do not intend to have any such role.

“I can’t comment on why other shareholders voted against their re-election, but there was a significant majority who clearly did not want them to remain in office.”

It comes as the company secured a $US22m ($33.1m) 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.

“The company has successfully secured purchase orders valued at $US22m from a critical customer. With the procurement team efficiently sourcing the required manufacturing materials, we maintain a solid commitment to ensuring prompt product delivery to all our customers.

“The acquisition of orders worth $US22m from a critical customer is a testament to our robust business relationships and the exceptional quality of our offerings. This achievement also underscores our capability to meet substantial demand requirements efficiently.”