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JSE
GEN
GEN - Huge - Censures imposed by the JSE on Huge Group Limited and
Messrs. James Herbst and Anton Potgieter
Censures imposed by the JSE on Huge Group Limited and Messrs. James
Herbst and Anton Potgieter
The Johannesburg Stock Exchange Limited ("JSE") wishes to advise the
following in view of its previous announcement dated 19 March 2009
concerning certain findings by the JSE in respect of the Huge Group
Limited`s ("Huge" or "the Company") acquisition of Single Stock
Futures ("SSF") positions from two executive directors of Huge,
Messrs. James Herbst and Anton Potgieter ("the Directors") and the
resultant repurchases by Huge of its own securities:
1. On 7 November 2008, the JSE found that Huge`s acquisition of 80
445 SSF positions constituted a repurchase of the Company`s
securities as defined in section 5.69 of the JSE`s Listings
Requirements ("the Listings Requirements"), that the transaction was
concluded with related parties (namely the Directors) and that
Huge`s acquisition of the SSF positions was in contravention of
section 85 of the Companies Act, 61 of 1973 ("the Companies Act").
2. Huge elected to exercise its right to object to the JSE`s
decision and the JSE decided to consult with three independent
members of the Issuer Services Advisory Committee ("the Advisory
Committee") to assist the JSE in its consideration of Huge`s
objection. The members of the Advisory Committee unanimously
dismissed Huge`s objection. The JSE then considered the ground`s of
Huge`s objection, the views of the independent members of the
Advisory Committee and all other facts and information at its
disposal and also decided to dismiss Huge`s objection.
3. The JSE informed Huge of its final decision on 4 March 2009 and
invited Huge to make representations regarding the imposition of an
appropriate penalty on the Company as a result of its breaches of
the Listings Requirements and the Companies Act. The JSE also
informed Huge that Huge has the obligation to publish an
announcement on SENS that its acquisition of the SSF positions
constituted a specific repurchase of securities as defined in
section 5.69 of the Listings Requirements and that the acquisition
was in contravention of the Listings Requirements. The JSE also
requested Huge to forthwith take all necessary steps to ensure that
the Company complies with the provisions of the Listings
Requirements and the Companies Act.
4. On 9 March 2009, Huge informed the JSE that it accepted the
JSE`s final decision and Huge furnished the JSE with its submissions
regarding the imposition of a sanction on the Company. The JSE
considered Huge`s submissions and all the facts and information at
its disposal and decided to impose a public censure on Huge as a
result of its breaches of the Listings Requirements and the
Company`s Act. The JSE communicated this decision to Huge on 25 June
2009.
5. In addition, and insofar as the Directors had caused Huge to
commit the aforesaid contraventions, the JSE addressed a letter to
the Directors dated 23 March 2009 relating to Huge`s acquisition of
the SSF positions and the JSE`s findings in respect thereof. The JSE
stated that the Directors` actions in this regard may be contrary to
the Companies Act and/or the Listings Requirements and afforded the
Directors the opportunity to furnish the JSE with their response to
the JSE`s concerns as well as all other facts and information at
their disposal.
6. The Directors furnished the JSE with their submissions on 2
April 2009. The JSE then considered these submissions and all other
facts and information at its disposal and decided that the actions
of the Directors amounted to a material breach of their fiduciary
duties towards Huge and its shareholders. The JSE also decided that
the Directors` actions in respect of the Company`s acquisition of
the SSF positions resulted in the breach of the Listings
Requirements by Huge in that the Company`s acquisition of the
Directors` SSF positions constituted a specific repurchase of Huge`s
securities as defined in section 5.69 of the Listings Requirements
and that the acquisition of the SSF positions is a transaction with
a related party. In these circumstances, Huge`s acquisition of the
SSF positions amounted to a contravention of section 5.69 of the
Listings Requirements and section 85 of the Companies Act.
7. The Directors informed the JSE on 17 April 2009 that they
objected to the decision of the JSE and requested the JSE to consult
with three independent members of the Advisory Committee as provided
for in section 1.4 of the Listings Requirements.
8. The JSE referred the Directors` objection to three independent
members of the Advisory Committee as provided for in section 1.4 of
the Listings Requirements to assist the JSE in its consideration of
the Directors` objection. The members of the Advisory Committee
unanimously dismissed the Directors` objection. The JSE then
considered the grounds of the Directors` objection, the views of the
independent members of the Advisory Committee and all other facts
and information at its disposal and decided to dismiss the
Directors` objection. The JSE afforded the Directors the opportunity
to make submissions regarding the imposition of an appropriate
penalty on the Directors as a result of their transgressions of the
Listings Requirements and the Companies Act.
9. The Directors furnished the JSE with their submissions
regarding the imposition of an appropriate penalty on 30 September
2009. The JSE considered these submissions as well as all the other
facts and information at its disposal and decided to impose the
penalty of a public censure on the Directors as well as a fine in an
amount of R 5 000 000.00 each on Messrs. Potgieter and Herbst as a
result of the breaches of their fiduciary duties as directors of
Huge and their actions that had resulted in breaches by Huge of the
Listings Requirements. The JSE informed the Directors of its
decision in its letter dated 9 October 2009.
10. The Directors objected to the penalties that the JSE had
imposed and furnished the JSE with the reasons for their objections
in letters dated 13 and 16 October and 2 November 2009. The JSE
considered the objection lodged by the Directors and dismissed their
objection on 12 November 2009.
12 November 2009
Date: 12/11/2009 10:15:01 Produced by the JSE SENS Department.
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