Con­tra­ven­ing reg­u­la­tions?

Reg­u­la­tor snoozes as Im­pe­rial di­rec­tor sits on un­de­clared trades for a year

Finweek English Edition - - Companies & Markets - SIKONATHI MANTSHANTSHA

IN A WEEK dur­ing which the JSE all-share in­dex fell by 11% in a global stock melt­down, com­pany leaders in South Africa took that as an op­por­tu­nity to buy shares and aug­ment their port­fo­lios. The R7m in net buys can again be seen as a vote of con­fi­dence by direc­tors in cor­po­rate SA’s cur­rent state and fu­ture prospects.

As­so­ci­ated Mo­tor Hold­ings CE Manuel de Canha has put in ex­cess of R10m of his per­sonal cash into Im­pe­rial Hold­ings stock since Oc­to­ber 2007. De Canha’s com­pany is the Im­pe­rial group’s ve­hi­cle im­port and dis­tri­bu­tion busi­ness. De­clared al­most a year af­ter the ac­tual trades, De Canha’s trades came weeks af­ter the com­pany’s pref­er­ence shares were bought by CE Hu­bert Brody. Since early Septem­ber De Canha, Brody and an­other fel­low di­rec­tor have spent around R3m on prefs in terms of the com­pany’s de­ferred bonus scheme.

It ob­vi­ously is crys­tal clear the direc­tors are sat­is­fied the share has seen its worst days, hav­ing come down from around R130/share at the time of De Canha’s trades in Oc­to­ber 2007 to 6 200c. But the ques­tion mi­nor­ity share­hold­ers, in­vestors and reg­u­la­tory au­thor­i­ties should be ask­ing is why it took De Canha – rather, Im­pe­rial – a whole year to re­port mil­lions of rand in share trades by one of its ex­ec­u­tive direc­tors.

Re­quire­ments at the JSE pre­scribe that direc­tors should in­form the com­pany within 24 hours of trad­ing in its shares, ac­cord­ing to JSE is­suer ser­vices divi­sion GM Doug Doel. Again, within 24 hours of the com­pany be­ing made aware of the trans­ac­tion it must de­clare the trades to the mar­ket, some­thing that clearly didn’t hap­pen in the case of De Canha and Im­pe­rial.

“That would be a con­tra­ven­tion of the list­ings re­quire­ments un­less they have a good rea­son for not an­nounc­ing the trans­ac­tions in time,” says Doel, re­spond­ing hy­po­thet­i­cally without see­ing the trades in ques­tion. He says an al­leged of­fence such as that would fall un­der the list­ings re­quire­ments list of pun­ish­ments that, de­pend­ing on the cir­cum­stances, would in­cur pri­vate or pub­lic cen­sure or even a fine of up to R5m. Again, de­pend­ing on the cir­cum­stances, the com­pany or di­rec­tor – or both – would be li­able to pay the fine. “Gen­er­ally, it would be the com­pany sec­re­tary’s duty to re­port the trades – but the JSE puts the onus on the com­pany,” says Doel.

Fin­week couldn’t con­tact De Canha, as he’s cur­rently over­seas and com­pany sec­re­tary Ruan Ven­ter is on leave. How­ever, as­sis­tant com­pany sec­re­tary Jeanette John­son did con­firm the dates of De Canha’s trades but couldn’t shed any light on why the trans­ac­tions weren’t re­ported in time.

There was also a fair amount of sell­ing last week. Af­ter putting al­most R100m in Fos­chini’s shares since March, non-ex­ec­u­tive di­rec­tor Mike Lewis dis­posed of just un­der 900 000 shares for R37m (4152c/share) while Tru­worths mer­chan­dise plan­ning di­rec­tor Doug Dare sold R6,8m worth of shares in the re­tailer. Lewis bought his shares for an av­er­age 3600c/share while Tru­worths had traded be­low the 2800c/share level since Jan­uary be­fore sud­denly spurt­ing up to 3250c/share last week.

Else­where, Grindrod chair­man Ivan Clark swapped his sin­gle stock fu­tures for or­di­nary shares. That would have taken some ad­min bur­den off Clark’s shoul­ders, as he’d have had to keep a close eye on the mar­gins in this volatile mar­ket.

Ship­ping op­tions away. Ivan Clark

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