The Supreme Court of Bermuda has issued a sweeping interim injunction against ASA Gold and Precious Metals Ltd and two of its directors, Mary Joan Hoene and William Donovan, over what the court described as “seriously arguable” claims of misconduct ahead of an upcoming shareholder meeting.

The injunction, issued on May 8, follows legal action filed by ASA board member Paul Kazarian. Mr Kazarian alleges that Ms Hoene and Mr Donovan acted improperly by creating new board committees without the full board's approval and attempted to use company resources to promote their own director candidates for the upcoming special meeting on June 13 and the company’s annual meeting.

According to the Supreme Court, the pair are now prohibited from “purporting to act on behalf of the company” unless authorised by the full board, including making filings to the US Securities and Exchange Commission and communicating with ASA shareholders.

The court further ordered the two directors to withdraw any SEC filings or instructions sent to ASA’s shareholder clearinghouse, Broadridge, after April 30, the date they were notified of Mr Kazarian’s legal claim. The injunction remains in place pending a hearing scheduled for May 21.

This legal development in Bermuda comes only weeks after a separate US court ruling.

On March 28, the US District Court for the Southern District of New York found that ASA, Ms Hoene, Mr Donovan and other directors broke federal law by adopting a “poison pill” that violated the Investment Company Act of 1940.

Despite the US court’s decision, Ms Hoene and Mr Donovan reportedly moved to extend the measure three days later, according to a news release from Longacre Square Partners on behalf of Mr Kazarian.

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