Price to pay for flawed reporting
Minority resistance could force full disclosure
DEVELOPMENTS AT controversial mining company Kimberley Consolidated Mining (KCM) may at least signal a change in minority shareholder apathy when companies resort to cutting off communications. KCM was suspended in mid-2009 for not publishing its audited financial statements for the year to end-February 2009.
Since its suspension KCM hasn’t exactly been the bearer of a surfeit of operational news and official shareholder communication through the JSE’s Sens. News has largely been limited to the comings and (mainly) goings of directors and a few vague utterances about a possible tie up with a Chinese partner.
That’s not unusual. Suspended companies often let their responsibilities to shareholders lapse, not publishing financial statements or issuing progress reports. Still, the situation at KCM is quite surreal. A small mining company has absolutely no excuse for not being able to produce its 2009 annual financial statements a full 18 months after the close of its financial year-end.
Therefore, it’s hardly surprising a group of disgruntled shareholders – led by former executive director Johann Cilliers – wants to run the board out of town and install new directors.
Nobody likes to be left in the dark about a company’s operational and fiscal status – especially when its main asset, the Bo-Karoo diamond mine, is currently operational and being contract mined. It appears KCM’s disgruntled shareholders’ determination to boot out the board – which Finweek hears was fended off on a technicality – at least got its directors to