The Johannesburg Stock Exchange (JSE) has fined two Huge Group directors R300 000 each in a dispute that has been going on for over seven years.
Huge Group CEO James Herbst and non-executive director Anton Potgieter will both have to pay up for contravening the JSE's rules around related-party transactions in October 2008.
The directors were originally censured for not following the bourse's rules after buying future shares in Huge which were then sold back to the company.
In November 2009, the bourse fined each director R5 million in their personal capacity, because they did not tell minority shareholders they were selling Huge shares to the company. The transaction was regarded as one between related parties, which according to JSE rules would require shareholder approval.
The JSE found the actions of two directors had caused the company to breach paragraph 5.69 of the JSE Listing Requirements (LRs) and contravene section 85 of the Companies Act. Herbst and Potgieter, who was chairman of Huge at the time, took this finding on appeal to the Financial Services Board (FSB). The FSB upheld the appeal, finding paragraph 5.69 had been breached when read with paragraph 5.82 of the LRs (which has since been repealed). The FSB did, however, drop the fine to R3 million each.
Herbst and Potgieter then took their case to the North Gauteng High Court to set aside the appeal board ruling, arguing that no opportunity was afforded to them to make representations on the application of the particular LR breach.
On 29 October 2013, the court delivered judgment and set aside the findings of the appeal board, and left the matter in the hands of the JSE to take further steps.
The JSE says to resolve the long-running dispute, the directors have now been fined R300 000 each.
The JSE says the directors acknowledged the general principles enshrined in the JSE LRs required the directors to "have greater regard to ensuring that holders of the relevant securities are given full information and afforded adequate opportunity to consider in advance and vote upon matters affecting a listed company's constitution or the rights of holders of securities".
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