Critics lash regulator over buyout ruling
SA’s largest brokerage, Peresec, has been issued with a ‘compliance notice’ for its role in four transactions, yet settled the case without admission of guilt. The complainants say this isn’t good enough
● “My confidence in our financial regulators has taken a severe knock,” says Albie Cilliers, a private investor, in a letter to the Takeover Regulation Panel (TRP) last week.
Cilliers was reacting to the panel’s finding after an eight-month investigation into several transactions involving the wider Peresec Group including African Phoenix, Zarclear and the JSE-listed industrial group enX.
The probe, in a nutshell, was to determine whether Peresec CEO Warren Chapman and his colleagues used underhanded tactics to cement control of these entities, using proxies or undisclosed related parties, without making offers to all shareholders.
Last week, the TRP ruled that those companies should have made offers to buy out shareholders in each case. It issued a “compliance notice” forcing them to table new offers to these investors at the highest price paid in the six months before the
Different interpretations of regulations relevant date.
Collectively, the TRP said, R680.5m “will be offered to shareholders in respect of the mandatory offers that will be made”.
Yet for those who lodged the complaints with the TRP, such as Cilliers, it was a slap in the face that the TRP said the companies had reached a “settlement” without “admission of any contravention of the Companies Act”.
This is odd, since compliance notices are issued under section 171 of the Companies Act only when someone has “contravened the act” or been “implicated in, or directly or indirectly benefited from, a contravention of the act”.
In his letter to the TRP’s Zano Nduli, Cilliers says he was “shocked at what appears, at first glance, to be an extremely lenient outcome for the perpetrators”.
He adds: “Given their well-advertised experience in the market one would have thought that the TRP wouldn’t have been swayed by their contentions of inadvertent noncompliance with the act and the takeover regulations, and/or different interpretations.”
Peresec, after all, is the largest brokerage in the country, so you’d expect its principals to know the rules of takeovers better than anyone.
Cilliers says it sends a poor message to investors “that it’s OK to come to the JSE and transgress the act and takeover regulations, and if you get caught due to some pesky activist investors or whistleblowers, the worst outcome for such a person is just to make a mandatory offer much later, with no other accountability”.
It’s a sentiment shared by another complainant, Jean Pierre Verster, who runs Protea Capital Management.
He tells the FM: “It would seem, at this stage, like there were numerous transgressions by these companies and that