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Swedish activist investor Cevian Capital will give a no-confidence vote on Ericsson’s board at the annual meeting later this week, citing lingering concerns about company funds ending in the hands of terrorist groups.
Cevian said in a statement Monday that it will vote against granting discharge of liability to board members and the telecom giant’s president at the annual meeting on Tuesday. Cevian owns 5.5% of Ericsson’s share capital, which gives it a voting stake of 3.3%.
The activist previously criticized Ericsson for its handling of a scandal involving possible payments to the ISIS terror group that wiped out a third of the company’s value earlier this year.
“We still lack the information necessary to make an informed judgment of what went wrong, why, and who should be held responsible,” Cevian said in a statement Monday, according to Reuters. “Given the lack of information and the magnitude of the damage, we have no choice but to hold the entire board accountable.”
If discharged from liability, a company executive or board member is less likely to be targeted with a lawsuit alleging damages. Under Swedish law, the company or shareholders can bring action against board members or the chief executive if the discharge motion is voted by at least 10% of the company’s shares.
Earlier in March, Cevian said Ericsson had lost investor trust and should undergo sweeping reforms, starting with measures to curb the power of the company’s two large traditional investors, to redress.
Cevian argued that Ericsson should scrap the dual deputy chair system and appoint an independent director as head of the board. The activist also called for the introduction of a conversion clause in the company’s bylaws to allow class A shares, which have higher voting power, to be converted into normal class B shares.
Ericsson shares were down 0.7% at 85.86 kronor each as of 1.15 p.m. Central European Summer Time Monday. The stock was trading above 116 kronor in February before Ericsson said it may have made payments to ISIS to gain access to certain transport routes in Iraq.