Despite calls from multiple shareholders to improve corporate governance and capital allocation, the Directors of Aura Minerals Inc. have refused. Based on the transcripts provided, the Directors have carried out their affairs with imprudence and potentially allowed Mr. Brito to benefit at the expense of minority shareholders.
Over the past three years, Mr. Brito has increased his ownership of Aura Minerals Inc. from 19.7% to 48%, while he was allegedly controlling the Board, corporate strategy and capital allocation. Not only was this conflict of interest never disclosed to shareholders, but his relationship with Banco Itau, and the potential for that relationship to influence Aura's repayment of non-recourse obligations to Banco Itau was similarly never disclosed. Mr. Brito and his acquaintances are currently believed to control more than 70% of the common shares issued and outstanding.
However, corporate laws are in place to protect minority shareholders.
Shareholders (and other appropriate persons) may apply to court for an 'oppression remedy' if the operations of the company, or conduct of its directors, have been conducted in a manner that is a) oppressive or b) unfairly prejudicial to one or more shareholders.
The oppression remedy is an equitable remedy, which gives a court a broad, equitable jurisdiction to enforce not just legal rights, but what is fair amongst parties. What is just and equitable will be determined based upon the reasonable expectations of the stakeholders in the given circumstances.
| Contemplated Claims | Illustrative Remedies |
|---|---|
| Misappropriation of corporate funds to repay a non-recourse loan | Dissenting shareholder appraisal rights (compensation) |
| Breach of fiduciary duties of loyalty and care by directors | Removal of Directors (and Officers) |
| Selective disclosure and material undisclosed conflicts of interest | Sale, liquidation or wind-up of the company |