Trustco Group Holdings faces R5 million fine from the JSE for unauthorised share disposal

Trustco Group Holdings, the shares of which are suspended on the JSE, on Thursday received a R5 million fine and another public censure by the JSE for selling off shareholding in its mining subsidiary, Meya Mining, without shareholder approval.

Meanwhile, Trustco shareholders still await the publication of the latest annual results to August 31, 2024, which the company has blamed on JSE updates to auditor accreditation criteria that impacted Trustco's audit obligations as a Namibian company. Shareholders also await the release by the company of its stated plans to delist from the JSE, Namibia Stock Exchange, and the OTCQX Market in the US.

Meya Mining is registered in Mauritius and operates a diamond mine within the Eastern Province of Sierra Leone. During 2021, Namibia-based Trustco held 65% of Meya Mining through its wholly owned subsidiaries, Trustco Resources and Trustco Resources Limited, while the balance of the 35% stake was held by Germinate Limited.

On August 1, 2022, Trustco's subsidiaries, Meya Mining and Germinate, entered an agreement with SJSL Investments (SJSL), under which SJSL would have the option to acquire up to 70% of Meya Mining for up to $50m. Trustco's subsidiaries and Germinate were to dispose of their shareholding equivalent to $25m each to SJSL.

For Trustco's portion, the value of the transaction came to R460.5m, or 89% of Trustco's market capitalisation at the time.

The JSE said in a statement that Trustco had undertaken at the time to distribute a circular detailing the transaction and a notice to convene a general meeting so shareholders could approve the transaction.

“However, the JSE investigation uncovered that Trustco's subsidiaries had already started implementing the transaction by disposing of shareholding in Meya Mining before Trustco had distributed a circular to shareholders and obtained their approval…in contravention of the JSE Listings Requirements,” the JSE said.

According to Trustco's results for the year to the end of August 31, 2022, Trustco's shareholding in Meya Mining through its subsidiaries reduced from 65% to 55.25%. As of Trustco's results for the year to August 31, 2023, Trustco confirmed that its shareholding in Meya Mining had, in fact, reduced further from 55.25% to 19.5%.

“The result of this was, in effect, that the transaction whereby Trustco's shareholding in Meya Mining collectively reduced from 65% to 19.5% was implemented prior to shareholder approval being obtained,” the JSE said.

The JSE said it first became aware that Trustco had begun implementing the transaction when Trustco submitted a ruling request to the JSE in March 2023, and the JSE informed Trustco that shareholder approval should have been obtained.

In terms of the Listings Requirements, upon the terms of a Category 1 transaction being agreed, an issuer must dispatch a circular to shareholders within 60 days containing a notice of a general meeting to obtain their approval of the transaction and any agreement effecting the transaction.

“To date, Trustco has not submitted the circular to the JSE for approval nor dispatched such circular to its shareholders for approval of the transaction,” the JSE said.

The JSE, in August 2021, also censured Trustco about financial disclosures and accounting treatments, and in November 2022, the Financial Services Tribunal upheld a JSE decision, following a dispute over the restatement of financial results, which Trustco had challenged in court.

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