UPDATE 3-ENRC keeps chairman, CEO after board review
* Marks end of three-month governance review
* CEO withdraws resignation, chairman stays on
* ENRC says founders support independent board (Updates after outcome of board meeting, adds quotes)
LONDON, Sept 28 (Reuters) - Miner ENRC ENRC.L ended its long-awaited governance review on Wednesday, unexpectedly confirming both the chairman and chief executive in their roles as part of a trimmer board that it hopes will revive its underperforming shares.
ENRC has been in the throes of the review since June, when long-running tensions between the group's founder shareholders and some board members split over into a public spat that saw two well-known independent non-executive directors voted off the board, hitting the miner's shares as investors fretted over its corporate governance.
Key to the outcome of the review was the position of the group's three main shareholders -- Alexander Mashkevitch, Alijan Ibragimov and Patokh Chodiev -- and any decision or pressure from them to become more closely involved. Together they own 43.8 percent of the London-listed miner.
Mashkevitch had been seen as a possible contender for the chairman's role, replacing independent incumbent Johannes Sittard, who had been expected to step down. The company's brokers last month asked the UK regulator to consider whether Mashkevitch was a "fit and proper" person, a key test for UK company directors.
That application will now be withdrawn, ENRC said. The company said Mashkevitch had "absolutely not" been turned down by regulators, but said a decision had been made instead to back a fully independent board.
"We made a firm commitment, in the interests of all the shareholders, that we must have a strong board that is independent," board member Mehmet Dalman, appointed senior independent director as part of Wednesday's changes, said.
"The founders and non-founding shareholders support the thesis that a strong independent board is the way forward."
Sittard said the founders understood they did not have a role in the day-to-day running of the company, though they were involved in discussions and kept abreast of developments as with all shareholders.
While some investors had supported a possible move by Mashkevitch to the board, many had expressed concern that replacing the experienced Sittard with a non-independent voice could prove negative for minority shareholders, who own less than 20 percent of the stock, and a backward step.
After a lengthy board meeting on Wednesday, the company announced it had confirmed both veteran Sittard as chairman and Felix Vulis as chief executive. Vulis withdrew his plans to step down, which had been announced in February.
The three-month review follows a separate, critical evaluation by independent governance specialist ICSA earlier this year, and has focused on the composition of the board and its structure. Before the June shake-up, the board was 14-strong, a size seen as too cumbersome by some.
The board has now been trimmed to 11, including former Lonrho executive Terence Wilkinson, who has been brought in as a new independent non-executive director.
The results of the three-month study had been awaited by analysts as a potential catalyst for the miner's shares, which have underperformed the sector by some 20 percent since the start of the year. But it was unclear whether the changes will be dramatic enough to impress investors.
Shares in the group closed down 3.3 percent, marginally less than the broader sector, before the results of the board meeting and of the review were announced.
ENRC said it had held conversations with its top institutional investors, which include Blackrock, Legal & General Investment Management and AXA Investment Managers, throughout the summer review.
"I have spoken to quite a few shareholders here in the UK (during) the process, and one overriding message I get from all of them is that the independence and the strength of the board is very important," Dalman said.
"If we did not come up with this conclusion it would have been a very difficult discussion, but I am 100 percent convinced that shareholders I have spoken to will be supportive of this composition of the board."
The key for investors will be whether this will unlock what they see as ENRC's value -- the value of its portfolio of high-potential, low-cost assets which include Brazilian iorn ore, Mozambican coal and Congolese copper.
ENRC has spent more than $2 billion over the past two years on acquisitions that, analysts say, have neither fully fed through to the bottom line nor to its shares.
"We believe this a strong, independent and unified board and this will give the board the strength to look to the future of the company," Sittard told reporters.
"The performance of the company was never affected ... by these issues. Performance is very strong, we have performed well in the last month and this is proof we have a strong management team." (Reporting by Clara Ferreira-Marques; Editing by Kate Holton, Jon Loades-Carter and Bernard Orr)
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