Business Day

Coronation faces transparen­cy battle

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

- Ann Crotty Writer at Large acrotty@worldonlin­e.co.za

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.

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