In the most recent exchange in the Gildan battle between the company, its board of directors, shareholders, and ex-CEO Glenn Chamandy, the company says it has learned that Browning West, a large shareholder, allegedly purchased shares in violation of the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).

The HSR Act requires companies to file premerger notifications with the Federal Trade Commission (FTC) and the Antitrust Division of the Justice Department for certain acquisitions, according to the FTC. The FTC further states:

“The Act establishes waiting periods that must elapse before such acquisitions may be consummated and authorizes the enforcement agencies to stay those periods until the companies provide certain additional information about the likelihood that the proposed transaction would substantially lessen competition in violation of Section 7 of the Clayton Act. The Act also requires a filing fee. The fees are evenly divided between and credited to the appropriations of the FTC and the Antitrust Division. The amount of the fee is based on the size of the transaction, with six fee tiers that are adjusted annually to account for increases in the Gross National Product.”

According to a press release from Gildan, the company alleges that “By acquiring shares in excess of the threshold without notifying these agencies and the company, and without waiting 30 days to acquire the shares after providing notice, Browning West violated U.S. law.”

At the start of 2024, Browning West reached out to fellow shareholders to announce its intent to requisition a special meeting to challenge and reverse the board’s actions. That set off an additional firestorm, all of which has been a result of Gildan’s announcement that Chamandy was relieved as CEO at the end of 2023.

In this latest development, Gildan claims that Browning West’s share acquisitions were undertaken as part of its scheme to take control of the company and its board in addition to reinstalling Chamandy. The press release goes on to say:

“Under the Canada Business Corporations Act, shareholders are entitled to requisition a special meeting of shareholders only if they hold over 5% of a company’s shares. Browning West’s illegal share acquisitions barely put it over this threshold, and on January 9, 2024, Browning West sought to requisition a special meeting to take control of the company and its board by removing eight sitting directors and appointing eight new directors hand-picked by Browning West, including one of its co-founders and Mr. Chamandy.”

The company states that the board of directors intends to explore all avenues to ensure that shareholders are protected from the alleged illegal activity, potentially including notifications to applicable regulators and legal proceedings in the U.S. and Canada.

Browning West, in a separate statement, says that Gildan’s accusations are “an attempt to deprive shareholders of an opportunity to reconstitute the board at a validly requisitioned special meeting.”