Shareholder rights, even those supposedly set in stone, can sometimes be tricky to exercise. And when a big — perhaps even majority — shareholder is frustrated by a volley of legal flak, it might be time to worry about nasty precedents.
An important test case for shareholder rights looks set to play out at Namibian investment company Trustco. Last month a major Trustco shareholder, the Riskowitz Value Fund (RVF), made a call for a shareholder meeting to discuss wholesale changes to the Trustco board — including the removal of founder and prime mover Quinton van Rooyen.
RVF has nominated five new directors, including the big-hitting Grant Pattison, former CEO of Edcon and Massmart, who was recently slated for appointment as a nonexecutive to the Pick n Pay board. RVF, speaking directly for about 45% of Trustco’s issued shares (and no doubt able to call on additional backing), has way more than the required minimum of shareholder support to call such a meeting.
That might be a tad rich coming from a board that has in recent years overseen a staggering collapse in value, endured several censures by the JSE, become embroiled in disputes with creditors and, most worryingly, has not been able to publish audited financial statements since early 2024
Trustco, however, tossed out any notions of hosting a shareholders meeting, arguing that the RVF move failed legal, procedural or governance scrutiny. Trustco added the matter was “fundamentally unfit for consideration by a public, listed company”. That might be a tad rich coming from a board that has in recent years overseen a staggering collapse in value, endured several censures by the JSE, become embroiled in disputes with creditors and, most worryingly, has not been able to publish audited financial statements since early 2024.
Nevertheless, Trustco argued in a strident media release that RVF “cannot lawfully trigger a meeting. It cannot lawfully trigger a vote. It is a defective document seeking to force an unlawful outcome.”
The nub of the issue is apparently an “absolute refusal” by the RVF-nominated directors to undergo the vetting — are they fit-and-proper and independent, and do they tick the conflict-of-interest and disclosure boxes — that Trustco insists on before it will recommend a director to shareholders for appointment or approval.
Exactly who would do this vetting is not clear. In the media release Van Rooyen, without a trace of irony, said: “Trustco will not cede oversight to individuals who cannot meet minimum standards of transparency or competence. This attempt collapsed on contact with reality. This result reaffirms Trustco’s long-standing governance architecture.”
The problem for Trustco might lie in the interpretation of the JSE and Namibian Stock Exchange requirements that clearly provide for the right for a shareholder to convene a general meeting without being subject to qualification, pre-approval, or additional procedural hurdles the board might deem appropriate. RVF has argued that it is in fact Trustco that is in flagrant breach of statutory obligations by frustrating the will of a majority shareholding group.
So expect RVF and other sympathetic shareholders to press ahead with vigour. The next step for RVF would be to exercise its statutory right under the Companies Act to convene the meeting itself at the expense of the company and then proceed with the resolutions to remove the existing directors and appoint the five nominees.
Trustco, if it is to have any chance of swaying shareholder opinion, could make sure it publishes its 2024 and 2025 audited financial statements without further delay. Hopefully there is enough to tap from the increasingly buoyant Namibian economy — what with oil and gas as well as other resource discoveries offering much promise — to offer a convincing argument for retaining the status quo at board level. Unlikely, one suspects.
