Trustco, run by Namibian billionaire Quinton van Rooyen, has again found itself in trouble with the JSE over how it conducts its business dealings.
The bourse on Thursday said it had imposed a R5m fine on Trustco for selling off shareholding in its mining subsidiary, Meya Mining, without the requisite shareholder approval.
The infringement involved Trustco’s stake in Meya Mining which operates a diamond mine in Sierra Leone, in a transaction that saw Trustco reduce its stake in the firm from 65% to 19.5% three years ago.
A probe by the JSE found that Trustco proceeded with the material deal, which accounted for 80% of its market value at the time without issuing a circular to shareholders, despite its market promise to do so.
A circular is important in deals of this nature as it details the transaction and a notice to convene a general meeting so shareholders could approve the transaction.
“The JSE investigation uncovered that Trustco’s subsidiaries had already started implementing the transaction by disposing shareholding in Meya Mining before Trustco had distributed a circular to shareholders and obtained their approval, contrary to the undertaking that Trustco made in its Sens announcement of August 4 2022, and in contravention of the JSE listings requirements,” the bourse said.
“The JSE finds it unacceptable that Trustco knowingly proceeded with the implementation of a Category 1 transaction without obtaining the requisite shareholder approval in terms of the listings requirements and that the company deprived shareholders of the opportunity to exercise their right.”
The bourse in January suspended trade in the shares of Trustco, opening another chapter in its numerous run-ins with the company over the years.
The suspension came after the group failed to publish its results for the year ended August 2024 within the three-month period outlined in the listing requirements.
Trustco never took off with investors, with its share price down 95% over the past five years, valuing the company at just R375m when it was suspended.
Court challenge
The Supreme Court of Appeal last year confirmed the JSE’s authority to compel companies to restate financial statements to ensure compliance with international standards, slapping Trustco with punitive costs in its long-running battle with the JSE and Financial Services Tribunal.
This is as the country’s second highest court dismissed an appeal by Trustco. The group had argued before the appeal court that the JSE did not enjoy powers to direct companies listed on the exchange to restate financial statements.
The company also challenged the makeup of the tribunal panel that heard its challenge to the JSE’s decision, arguing that the panel that heard the matter lacked the necessary financial expertise.
The dispute between the company, bourse and tribunal can be traced back to 2020. At the time, the JSE suspended the trading in Trustco’s shares for not complying with its listing requirements and International Financial Reporting Standards in its 2019 annual and 2020 interim results.
At the heart of the exchange’s displeasure was that Trustco had incorrectly booked a gain of R1.5bn after Van Rooyen waived two loans he made to the group.
The JSE in 2020 directed the company to restate its financial statements for the year to end-March 2019 to correct certain entries relating to loans by Van Rooyen.
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