Coronation faces transparency battle

• Theo Botha says shareholders have not been given enough information to vote on change to memorandum of incorporation

The scene is set for another humdinger of an annual general meeting (AGM) at Coronation next week. Shareholder activist Theo Botha, who has ensured that the previous three AGMs were extended affairs, says the Coronation board has failed to tell shareholders about a proposed significant change to the company’s memorandum of incorporation that shareholders have to vote on next week.

Botha’s issue is not with the proposed change to the vote on the re-election of rotation of executive directors, which was flagged in a Sens statement on Monday, but with the removal of a clause that provides for shareholders to access Coronation’s accounting records. This level of access is extremely unusual, Botha says, and entitles shareholders to get sight of much more than is available in the audited financial statements.

“On this point their [memorandum of incorporation] gave shareholders significantly more rights than the Companies Act does,” Botha says.

The proposed change may have been prompted by 2016’s Promotion of Access to Information Act (Paia) demand launched by Botha in a bid to get details behind the company’s remuneration policy. The section that is about to be chopped was used by Botha in formulating his Paia challenge. The challenge did not run its course as Coronation undertook to disclose the information sought by Botha, although he says the information in the annual report remains so inadequate he cannot see how any shareholder will be able to vote on the policy at the AGM on February 14.

But his major concern right now is that the proposed new memorandum of incorporation deprives shareholders of access to accounting records without adequately informing them.

In the new memorandum, article 35 merely confirms what shareholders are entitled to in terms of the Companies Act.

A Coronation representative said there would be “no substantive change to shareholders’ rights to access company records as part of the proposed [memorandum of incorporation] and these rights are as set out in, and aligned with, the Companies Act”. According to the representative, the only accounting records shareholders are entitled to access under the existing memorandum of incorporation are the annual financial statements. “The proposed new [memorandum of incorporation] does not change this status.”

Botha emphatically disputes this, referring to the clause in article 36, which does not limit the definition of accounting records. “If the status does not change, why bother with this proposed change?”

Botha accepts Coronation is entitled to propose changes to its memorandum of incorporation but says it should disclose the details and implications to shareholders to allow them an informed vote.