Tuesday, January 20, 2015
Ex-Sharemax investors should ask: What is this all about?
SHAREMAX - WHO Owns WHAT ??
Author: Ryk van Niekerk|
Ex-Sharemax investors should ask: What is this all about?
Is there more at play than a fight between Moneyweb and Nova?
Investors in the historic Sharemax investment scheme may want to find out for themselves who owns the companies that own and manage the original Sharemax properties.
Moneyweb’s efforts over the past 16 months to get clarity on the ownership structures were delayed again when the North Gauteng High Court (NGHC) granted Nova Properties, Frontier Asset Management & Investments and Centro Property Group leave to appeal a recent interlocutory ruling at the end of November.
This means that before our main case for access to the share registers can be heard, we first have to argue a technical point at the Supreme Court of Appeal (SCA) in Bloemfontein.
Only when this point is decided, sometime next year, will Moneyweb be able to continue with the main case for access in the NGHC. This could mean another 18-month delay.
The process started back in July 2013 when Moneyweb journalist Julius Cobbett applied to access the shareholder registers of these companies in terms of Section 26(2) of the Companies Act. This provision in the Act, in theory at least, is aimed at making it easy for any member of the public to inspect the shareholder register of any company.
The three companies vociferously denied Cobbett and Moneyweb access. The directors of the companies justified their refusal by stating that Moneyweb and Cobbett were waging a vendetta against the directors and entities and that Moneyweb and Cobbett would use the information in the shareholder registers to further defame and vilify the parties, particularly the directors.
Moneyweb has always denied that such a vendetta exists.
What is this case all about?
This may be an opportune time for investors to take a step back and ask: What is this case all about? Is it about Moneyweb desperately trying to get its hands on the shareholder registers of the companies and then to sensationally report on their contents? Or are the directors fighting to keep the registers secret from everyone, including investors?
Is this case merely a clash between Moneyweb and individual directors of Nova or is there something else at play?
Why are the ownership structures important?
Moneyweb believes it is critical that the shareholder structure of these companies is made public, as this information is key to investors’ interests.
Nova is the company that owns all the various properties that used to belong to Sharemax investors. With the announcement of the scheme of arrangement in 2011, the executive directors of the erstwhile Sharemax group, Dominique Haese, Rudi Badenhorst and Dirk Koekemoer held 43.2% of Nova's issued shares.
Moneyweb wants to see whether this shareholding has changed since 2011 and who owns the balance of the issued shares. Moneyweb also wants to know what Haese, Badenhorst and Koekemoer paid for their shares to acquire such a large slice of a company with assets exceeding R2 billion.
The ownership structure of Frontier and Centro is also important. Frontier provides a range of administrative services to Nova and Centro manages the property portfolio on behalf of Nova.
Walk through the front door
The ironic reality is that although Moneyweb may wait three years to get a final answer from the courts, an investor may access the shareholder registers on any weekday morning.
Investors can do this through the Companies Act. According to Section 26 (1) of the Act any “person who holds or has a beneficial interest in any securities issued by a profit company” may inspect the securities register. This obviously refers to investors.
Section 26(2) is applicable when a person does not have such a “beneficial interest”, such as Moneyweb and any other non-investor. In this case the person has the right to gain access if he or she pays a prescribed fee, currently set at R100.
The Act allows for two ways to access the security registers. The first is for access at the company’s registered address. In theory, anyone can walk through the company’s front door, approach reception and ask to see the particular document.
The second way is to complete the particular form - the company then has 14 days to make the shareholder register available to the applicant. It was this method that Cobbett used.
The Act also clearly states that access cannot be denied, and that if any reasonable request is denied, it constitutes an offence.
For ease of reference, here are the registered addresses of the three companies:
Nova Property: 105 Club Avenue, Waterkloof Heights, Pretoria. (It is the same building as the old Sharemax head office)
Frontier Asset Management: 341, 24th Avenue, Villiera, Pretoria; and
Centro Property: Shop 10, Waterkloof Shopping Centre, corner Garsfontein Road and January Masilela Drive, Waterkloof Glen, Pretoria.
I believe it is critical that the information as to who constitutes the majority shareholders is placed in the public domain. This is the reason why Moneyweb has spent a significant amount of money in legal fees to access these shareholder registers. But we will only be able to publish the shareholder registers when the protracted legal wrangle is over - and this may take a few more years.
But curious investors have unique rights, and they cannot be accused, as we are, of waging a vendetta. I am sure several shareholders would want to take a peek at the shareholder registers to see what the fuss is all about.
Author: Ryk van Niekerk|
Absa, Grindrod Bank reject funding to Nova
Board blames negative media reports and Sarb for failure to secure finance.
Continued negative media reporting about the Nova Property Group has caused Absa and Grindrod Bank to withdraw funding lines to the group, the Nova board said in a recent communiqué to debentures and shareholders of its various investment schemes.
In the communiqué the Nova board does not pull any punches and blames the media for creating a perception of “reputational risk” which led the banks not to extend funding to the group.
The board also lashed out at the South African Reserve Bank (Sarb) for not supporting the Nova Group when Grindrod Bank approached it with concerns that its reputation may suffer if it did business with the Nova Group.
The Nova board did not elaborate on the potential impact Absa and Grindrod’s decision would have on the group. Nova did state that the funding from Absa would have been used to upgrade unnamed shopping centres. Nova also does not state whether it has received funding from other sources.
This attack on the media follows a similar notion by Connie Myburgh (pictured), Chairman of the Nova Group, during the group’s annual general meeting in November last year.
The Nova Group was established through the restructuring of the Sharemax property scheme. Nova is controlled by four directors, two of whom: Dominique Haese and Dirk Koekemoer, played important roles in the promotion of Sharemax investment products.
The scheme was recently placed under the spotlight when the Financial Advisory and Intermediary Services ombud Noluntu Bam stated that Sharemax was nothing more than a Ponzi scheme and that its directors should also be held liable for investors’ losses.
The directors are appealing this determination.
In the recent quarterly update, the Nova board revealed that Grindrod Bank withdrew a possible funding line, following the publication of alleged “inaccurate” and “misleading” media reports.
The board said discussions between Nova and Grindrod had been at an advanced stage when the bank withdrew from the process last month. “The sole reason advanced by Grindrod for not perusing a business relationship with the Nova Group, was the possibility that Grindrod might suffer so-called ‘reputational risk’, should Grindrod lend funds to the Nova Group,” the communiqué reads.
The board added that Grindrod Bank approached Sarb in this regard, but that the Reserve Bank did not allay these fears.
Grindrod Bank declined to comment on these allegations. A spokesperson said it is the bank’s policy not to reveal reasons for credit application refusals or to comment on said refusals to third parties.
According to the Nova board, Absa also declined to extend further funding to Nova due to negative media reports. The board was “surprised” when it was informed about the bank’s decision.
In the communiqué, Nova alleges that Absa sent the following correspondence to Nova: “I regret to inform you that after much deliberation and consultation with our Head Office it was decided that Absa cannot proceed with entertaining any further transactions linked to the Nova Group. Today again, there was media reporting around this which does not pose well.”
It is not clear who sent this correspondence on behalf of Absa and to what media reports it referred to.
The Nova Board also said it has subsequently terminated its business relationship with Absa and that it settled its previous loan before the due date.
Absa did not want to respond to the allegations. An Absa spokesperson did however state that Absa couldn’t comment on the allegations due to client confidentiality.
“In so far as public statements have been made in respect of Absa's relationship with the particular client, Absa reserves the right to answer in the appropriate forum and at the appropriate time.
“Generally speaking, in making decisions of this nature Absa will consider a number of factors such as quality of existing property portfolio, lease expiry profile, group cash flow, group structure and the manner in which investors receive funds post sale of properties."
It is also clear that the Nova board is not impressed with Sarb’s failure to dispel the notion that Grindrod would suffer “reputational risk” if it conducted business with Nova.
The board said Sarb played an intimate and active role in the restructuring of the Sharemax syndications in 2010 and the subsequent creation of the Nova Group, and that one of the purposes of the new structure was to remove the historical negative perceptions of the old Sharemax structure. “…When asked for clarification as to the continued existence of ‘reputational risk’, the Sarb unfortunately appears to be unable to assist, notwithstanding the aforesaid role of Sarb in the restructuring proves and the creation of the Nova Group,” the communiqué reads.
The board went on to say:
“This is indeed an extremely sad state of affairs, when members of the Banking Fraternity and its regulator, the SARB, are unwilling to assist the Nova Group in acting in the best interests of the very “Pensioners” who’s plight the Media continues to lament, under circumstances where it is the SARB, who imposed the Directives on the historical so-called “Sharemax Group” (some 3 years ago), whilst, afterwards, actively assisted in terminating the existence of such historical “Sharemax Group”, and withdrawing the Directives, as a consequence, on 8 February 2012, so as to remove any impediment on and in regard to the historical business of the restructured “Sharemax Group”, constituting, to the best benefit of Shareholders and Debenture Holders, the new Nova Group.”
Sarb did not respond at the time of publication.
Topics: NOVA, CONNIE MYBURGH, SHAREMAX, SARB, FAIS, GRINDROD BANK, ABSA, PROPERTY
Topics: SHAREMAX, NOVA PROPERTIES, FRONTIER ASSET MANAGEMENT & INVESTMENTS, CENTRO PROPERTY GROUP, DOMINIQUE HAESE, RUDI BADENHORST, DIRK KOEKEMOER, COMPANIES ACT