Lush is in a legal battle with former CEO Andrew Gerrie over the sale of his company shares.
Gerrie has accused the UK cosmetics retailer of failing to acknowledge the transfer of his and his wife Alison Hawksley’s shares to Silverwood Brands – of which he is Executive Director – for £216.8m.
In December 2022, the investment firm announced it had acquired a 19.8% stake in Lush.
Lush has since sent notification to Silverwood Brands that it is declining to record the transfer of shares to the company’s subsidiary Cosmic Circles Limited.
The retailer claims the sale violates its articles of association, which enables existing shareholders to buy up shares of the company that are put up for sale.
It said its board had "no choice" but to refuse the transfer.
"The company’s regulations contain specific criteria that must be met when a shareholder sells their shares,” said Lush’s company statement.
“Under UK law, the board of directors has a clear duty to ensure that all of these regulations are complied with at all times.
“After careful consideration, the board of Lush concluded that the proposed sale of shares by Andrew Gerrie and Alison Hawksley to another company was not compliant with these regulations.”
Gerrie first joined Lush as an investor but later became CEO, before leaving in 2015 after 20 years at the helm.
Although Silverwood Brands describes Gerrie as a Lush co-founder, the cosmetic giant’s website does not list him as one of its six co-founders.
Silverwood Brands claims that at the time of the deal it acquired the shares for “the applicable minimum prices” that Lush’s articles of associations would allow.
The investment firm claims Lush’s letters of notification have failed to provide reasoning for the rejection.
Its solicitors are now seeking further clarification.
“Silverwood is disappointed by the response from Lush,” said an update by the company on the London Stock Exchange.
“The company believes the transfers complied with Lush's articles of association and therefore it believes Lush's actions have no merit.
“Together with its legal advisers, Silverwood will seek to engage with Lush and its solicitors to resolve the current situation.
“However, the company will explore all options available to it to protect its interests for the benefit of its shareholders as a whole.”
Silverwood Brands regularly invests in consumer companies in the wellness, lifestyle and leisure sectors.
Last year, the London-based company acquired nail care brand Nailberry for £6m.