The Australian Financial Review reports that Melbourne investment firm, Chimaera Capital, which holds 12% of the stock, enlisted help from law firm Baker & McKenzie.
The lawyers have written to the ASX questioning whether Sydney Gas was using the listing rules as a tactic against shareholders who voted director Robert Carroll off the board.
Former Olympics minister, Michael Knight, was re-elected as managing director - but 35% of shareholders voted against it. But the proposed new name, Wollemi Energy, was voted down.
Sydney Gas had expected all resolutions to pass based on the proxies, but representatives for large blocks of shares showed up in person to stop Carroll's re-election and the name change.
The rebellious shareholders, which include Chimaera Capital's Ian Pattison, mining identity Peter Newton and controversial Malaysian-born businessman Lee Ming Tee, are understood to be planning an extraordinary meeting to voice concerns about Knight’s management, according to the Sydney Morning Herald.
The newspaper reported that these shareholders denied they were acting as associates and did not all vote the same way on every resolution at the AGM.
It also said some shareholders opposed the deal with AGL, as it would give all coalbed methane gas production to a single retailer cheaper than if it had been sold to the open market.
But chief executive Andrew Purcell counteracted this argument, saying the company was in a "very bad situation" at the end of the 2004/05 financial year and had limited options.
On Wednesday, the ASX allowed Sydney Gas to suspend trading for nearly two weeks, while it investigated whether a group of large shareholders were acting in concert. The company is considering using the courts to collect evidence in the form of affadavits from the suspected parties.
Sydney Gas had not received any substantial shareholder notices, which are required when the relevant interest of a party and any associates exceeds 5%.
But the company started to have suspicions earlier this month that something was wrong when some shareholdings suddenly shifted from one nominee holding to another, The Australian newspaper reported this week.
Sydney Gas began sending out section 672 tracing notices in an attempt to establish the identity of the beneficial owners.
The company and its lawyers have asked the ASX to help investigate and to ensure proper substantial holding notices have been lodged. The company expects to begin trading again once the matter has been settled.
But settling this issue could take some time and could require a series of trading halts.
The shareholdings could be held through companies incorporated in foreign jurisdictions where disclosure is not mandatory.
