Sources informed "Globes" that Templeton Franklin Asset Management Fund has recently written to directors and officers of Taro Pharmaceutical Industries (Nasdaq: TARO), including Taro Israel CEO and Executive VP Shmuel Rubenstein, that the company's financials are not being duly reported and that there are other faults in the conduct of the company. The letters were sent simultaneously in the US and also in Israel.
In the letters, Templeton alleged that non-publication of the financial reports had caused serious losses to the company and its shareholders, and that the continued and unexplained delays were compounding the daily losses.
Templeton had announced, early last month, that after accumulating a 17% stake in Taro, it intended to join with other shareholders and attempt to carry out changes in the company. Now the fund accused the company of withholding the reasons for the delay and thereby keeping "inside information" in the possession of the controlling interests and away from minority shareholders. In the letters sent to company officers and directors, it warns, "Not only is the use of inside information forbidden and a criminal offense, but as a company director/officer, you have a responsibility to prevent such insider use."
Templeton says that the letters were intended to clarify that it views the directors and officers personally and directly responsible for the "unreasonable and unacceptable situation and its future consequences."
What Templeton is actually demanding of the board of directors, is that it call an urgent meeting of the board and convene a special meeting of shareholders together with the auditors and the legal advisors. Templeton needs such a meeting in order to join with others in the company and attempt to grasp control of the company. The main arena for this fight is the US; however, as can be seen from the aforementioned letters, the action is combined. Additionally, Templeton states in the letters that it reserves its right to adopt other means. Thus, it seems that if the board of directors does not acquiesce to its demand for a shareholders meeting, it may choose the option of a derivative action.
Published by Globes [online], Israel business news - www.globes.co.il - on September 3, 2006
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