Print Published 26th Feb 2015, 09:59

Can Bob Morton remain chairman of Porta Communications?

The recent stinging rebuke of Porta Communications’ chairman Bob Morton for “serious breaches” of the Takeover Code will leave investors pondering whether he can retain credibility and the necessary authority in his current role (see Bob Morton censured by Takeover Panel).

The latest Takeover Code breach related to shares in Armour Group and to date there has been no suggestion that there have been any breaches of the Code in relation to Morton’s investment in Porta. However, recent investigations by this publication show that the Morton family’s financial involvement in Porta was understated in its 2013 accounts (see Morton family loan to Porta shown as from “third party”).

The Takeover Panel admonishment is for only one of series of breaches.   As a chartered accountant and experienced company chairman, it would be reasonable to assume that Morton knew the rules or knew who to ask.  Indeed part of the Takeover Panel’s criticism is that he did not seek any guidance.

The Porta board will probably be reluctant to lose Morton’s services, not least because of the various parcels of finance that he has made available to the company from his personal investment company Hawk Investment Holdings.  A year ago Porta raised additional share capital of which £2.4 million was applied to reduce the amount of loan capital provided by Hawk (see Porta raising £6.6 million extra share capital).  Hawk also contributed £0.4 million towards the new share placing.

The Porta board will need to consider very seriously whether it is appropriate for any person censured by the Takeover Panel to remain chairman of a public company irrespective of the value that person may bring in other ways.

For a fuller account of Bob Morton’s investment activities, read our Special Report “Bob Morton’s Corporate Gambles” available only to subscribers by following the link below.