Trustco Group to appeal JSE censure and fine amid regulatory standoff

Trustco Group Holdings, a Namibia-based investment consortium, is set to contest a recent public censure and financial penalty levied by the Johannesburg Stock Exchange (JSE).

In a bold statement released on Tuesday, the company pointed to what it describes as "regulatory delays" and "interference" that have significantly lengthened corporate processes within the firm to eight months or more, despite receiving full support from shareholders.

The JSE suspended Trustco's shares last week after imposing a R5 million fine due to the sale of a considerable portion of its stake in mining subsidiary Meya Mining, a transaction that the JSE said was executed without prior approval from shareholders.

This led Trustco's CEO, Dr Quinton van Rooyen, to voice strong objections regarding the JSE's conduct, suggesting it undermines shareholder interests and contravenes the fundamental principles of efficient capital markets.

“The JSE’s refusal to exercise a proper discretion, in the best interest of shareholders, contradicts efficient capital market principles,” said Dr Van Rooyen.

“Our shareholders overwhelmingly support this transaction as per their irrevocable undertakings, and as directors, we acted in shareholders' best interests, choosing compliance with fiduciary duty over regulatory obstruction,” he said.

On August 1, 2022, Trustco's subsidiary accepted a $75m (approximately R1.29 billion) investment from Meya Mining, which resulted in dilution of the company’s shareholding. According to Trustco, this transaction was fully backed by irrevocable shareholder commitments. Just days later, on August 4, the company announced comprehensive details of the deal.

To facilitate the transaction, Trustco reportedly engaged in multiple in-person meetings with the JSE and submitted numerous requests for rulings, all in pursuit of clarity regarding the transaction's categorisation and the necessary preliminary economic assessment (PEA) report.

Dr Van Rooyen claimed that Trustco maintained transparent communication with the stock exchange, yet faced persistent obstructionism from the JSE.

He said between 2022 and 2024, Meya Mining invested more than $12m in completing the PEA, which is aligned with the reputable Canadian NI 43-101 reporting code. However, despite Trustco's efforts, the JSE refused to submit the PEA to their Readers Panel until August 2024.

“To date, the JSE has yet to conclude its process regarding the PEA report, preventing the issuance of the circular and causing obstructive delays,” Van Rooyen added.

Highlighting possible systemic issues at the JSE, he remarked on the dual role of the exchange as both regulator and listed corporate entity.

“Since the JSE became a listed entity on its own stock exchange, operational inefficiency has been augmented with 'regulatory income'. By day, the JSE is a regulator, and by night, a listed corporate entity that must satisfy shareholders," he elaborated.

Dr Van Rooyen concluded by asserting that the company would formally appeal both the censure and the fine, leaving the door open for future measures to protect Trustco’s interests and those of its investors.

“When the regulatory process becomes an end in itself rather than a means of protecting shareholder interests, it fails its intended purpose,” he stressed.

Trustco Group Holdings, headquartered in Windhoek, is a multi-faceted holding company with subsidiaries across diverse sectors, including real estate, mining, insurance, micro-finance, and education. The company has indicated that it plans to delist from the JSE, Namibia Stock Exchange and the OTCQX Market in the US, although no details have yet been released on this process.

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