A group of minority shareholders in EC-Hold has requisitioned an extraordinary general meeting to vote on, among other things, a forensic audit.
The group has also warned that it expects to make a loss for the year to 30 June.
EC-Hold says the minorities, Republic Nominees and Standard Bank Nominees, requisitioned the meeting on 30 June in terms of the Companies Act.
The minorities have asked for several resolutions to be put to the meeting, which has been scheduled for 28 August.
These include the proposed appointment of PricewaterhouseCoopers to conduct a forensic audit and investigation, the proposed disclosure of the rationale and details of an investment with MGX Holdings, and the particulars of dealings between EC-Hold and MGX during the period between 11 October 1999 and 27 June 2003.
Other resolutions include a proposal for future proceedings by EC-Hold against MGX and a proposal for future proceeding by EC-Hold against current and former EC-Hold directors relative to any investment of surplus funds with MGX.
The core issue appears to be an R11.9 million loan EC-Hold made to MGX. However, the EC-Hold board says the shareholders have not adequately considered the loan account relationships between MGX and EC-Hold.
It says an R8.5 million loan by an MGX subsidiary to an EC-Hold subsidiary and a R10.9 million loan by MGX to EC-Hold means that EC-Hold is a net debtor to MGX to the tune of R7.5 million.
"In the opinion of the board, these facts make the proposed ordinary resolutions meaningless," it says.
"In addition, the ordinary resolutions purport to transfer management of EC-Hold from the board to the shareholders. Accordingly, if they were passed, they would be regarded by the board, at best, as advisory resolutions which are not binding on the board."
The EC-Hold board says it invited the minority shareholders to request whatever information they required.
"To the extent appropriate, taking into account the applicable regulatory requirements and in consultation with EC-Hold`s auditors, EC-Hold would make this information available to the requisitioning shareholders and to all shareholders.
"This process would have avoided the costs of preparation of an unnecessary circular and of convening the general meeting."
However, it says the shareholders declined that proposal and the board has as a result convened the meeting.
EC-Hold also says it has asked MGX to consider subordinating its loan account to the extent that it is necessary to restore the company to solvency should there be a deficit once the audited results have been drawn up.
"MGX is considering this request," it says.
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