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Directors of VSE Companies Fined and Removed from Market

  • Date:

    1996-08-02

  • Number:

    96/19

Released: July 31, 1996  Contact: Ron Messent  660-4800 or (BC only) 1-800-373-6393

The critical role played by a company's directors in managing the affairs of the company and protecting the interests of shareholders was emphasized in a decision issued today by the British Columbia Securities Commission.

The Commission imposed penalties including fines of up to $10,000 and 10-year or 20-year prohibitions from trading in securities and from acting as a director or an officer of any issuer.

The decision follows a June 1995 hearing into allegations against George Stephen Slightham, Peter Oliver Tranter, Mackenzie Iles Watson and Leslie Robert Redford. All were directors of Beauchamps Exploration Inc. and Beaufield Consolidated Resources Inc., two companies listed on the Vancouver Stock Exchange.

In the decision, the Commission outlined the basic principles respecting the duties of directors and observed that:


The Company Act duties faced by Tranter, Watson and Redford can be summarized as follows. As directors, Tranter, Watson and Redford were required to either manage, or supervise the management of, the affairs and business of Beauchamps and Beaufield. Though it may have been appropriate for them to leave the day to day activities in Slightham's hands, they were still responsible for supervising his management of the two companies. In doing so, they were required to act honestly and in good faith and in the best interests of the companies, and to exercise the care, diligence and skill of a reasonably prudent person. In order to meet these duties, they were obliged to put in place adequate systems for management of the companies, including the flow of necessary information to the directors, to make their decisions on an informed basis, and to take the necessary steps to resolve any concerns or suspicions that came to their notice. Moreover, they could not be relieved of these duties by the circumstances of their appointments.
After reviewing the evidence, the Commission found that Tranter, Watson and Redford had breached their duties as directors and concluded that:
Beauchamps and Beaufield were managed with almost total disregard for the regulatory requirements of the Exchange, the Securities Act and the Company Act, and in a manner that was rife with conflict of interest. Tranter, Watson and Redford, as directors, not only permitted the two companies to be managed in this way, but also allowed Slightham, the president of the two companies, to effectively use the companies' treasuries as his own personal bank accounts.
The Commission also found that Tranter and Watson had failed to file insider reports. Slightham had settled with the Executive Director in June 1995 and consented to orders prohibiting him from trading in securities for 25 years and from acting as a director or officer of specified types of issuers for 25 years. He also agreed to pay $30,000 to the Commission.

In its decision, the Commission imposed the following penalties:

Tranter was prohibited from trading in securities for 20 years and from acting as a director or officer of any issuer for 20 years. He was also fined $10,000.

Watson was prohibited from trading in securities for 10 years and from acting as a director or officer of any issuer for 10 years. He was also fined $5,000.

Redford was prohibited from trading in securities for 10 years and from acting as a director or officer of any issuer for 10 years. (Note: Upon issuing the decision, the Commission was informed by counsel that Redford had died subsequent to the hearing. The Commission has not received official notification of Redford's death.)

Beauchamps was fined $10,000.

Beaufield was fined $10,000

All were ordered to pay the costs of the hearing.

The British Columbia Securities Commission is a provincial government agency responsible for regulating trading in securities and exchange contracts.

Copies of the Commission's decision (52 pages) may be obtained in person at 1100 - 865 Hornby Street, Vancouver, British Columbia.