If you’re a shareholder in Cashbuild or KAL Group you may have suffered expropriation, though not without compensation — whether you liked it or not
s long as the company’s memorandum of incorporation provides for it.The MoI is a public document which sets out the rights, obligations and responsibilities of shareholders, directors and prescribed officers of a company. If it provides for the repurchase of odd lots then all shareholders are assumed to have expressly agreed to such offers, says the JSE.
“Further, the mechanisms contemplated in the applicable MoI, circulars and the listing requirements do not amount to expropriation that is proscribed by the constitution,” Visser tells the FM, adding that shareholders expressly agree to those provisions, and if shares are sold in accordance with those provisions at market value, it cannot be equated to unlawful expropriation.
He adds that it seems to be a generally accepted practice in our market for shareholders that want to sell their shares to rely on this deeming provision by not informing the issuer of their election. “The shareholder knows the deeming provision will result in a sale of their shares at the offer price.”Deputy judge president Coetzee
Things are not quite the same at KAL, as the “fair” price, which is linked to recent trading levels, suffers a 20% hit because payment is treated as a dividend. And then, as the KAL announcement points out, if the company doesn’t have the shareholder’s bank details — which seems likely in the circumstances — the funds are held by the company until those details are eventually provided.
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