The Securities Regulation Panel (SRP) is to serve papers on MGX after it and the Mandy Rebecca Price Trust refused to comply with an SRP ruling made in March 2002.
The ruling made by the full SRP panel stated that MGX should pay R2.40 per share as opposed to the R1 per share it had offered to acquire EC-Hold. The SRP determined that MGX and the trust had acted in concert for the purposes of entering into an affected transaction as stated in the Companies Act.
SRP director Richard Connellan says the panel waited to see whether MGX would comply with the ruling and when it did not, began the process of instituting legal proceedings.
Connellan says its legal action has nothing to do with a 14-day ultimatum made by minority EC-Hold shareholder Cycad Financial Holdings on Monday. It is threatening to sue the SRP if it does not take action against MGX.
"We waited after the ruling to see whether MGX would comply and when they refused to do so, we began the process of drawing up papers to be issued against them," Connellan says. "Our decision to institute legal proceedings against MGX has nothing to do with Cycad Financial Holdings and Peregrine Capital`s announcement made this week.
"We`re on the same side as them. If they want to take legal action, perhaps they should look to MGX," he says.
Cycad Financial Holdings CEO Leonard Fine has come out in support of the SRP.
"If they [the SRP] are serving papers, then there is nothing more for us to do. We want a time line on the issue. It has been going on for long enough and something needs to be done."
However, Fine says the SRP would have to issue the papers within 14 days or legal action would be taken against it.
"If they achieve their objective [to file papers] and it is the right application, then we are very comfortable with that," Fine says.
Cycad Financial Holdings and Peregrine Capital have also called an extraordinary general meeting to find out why EC-Hold has been investing its surplus funds with MGX.
Fine says Cycad and Peregrine will ask for information about the loan.
"We want to understand the rationale of the decision, given the circumstances over the past two years. We feel that with the tussle between MGX and the SRP, not enough attention has been given to the shareholders and we just want to know what`s going on," Fine says.
MGX directors were unavailable for comment at the time of publication.
Share
