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The week that was in the listed space

A ho-hum ruling on African Bank’s auditors, shareholders flex their muscle at a few history-making AGMs, Prosus looks to keep things in the family, and the Woolies board seems set for an easy ride this week.
Prosus gets to kick off its $5bn spending spree this week. Image: Jasper Juinen, Bloomberg

The possibly frustrating reality for the Independent Regulatory Board for Auditors (Irba) and for all auditors is that not only has the credibility boat already sailed, it might even have sunk by now.

So, while Irba’s African Bank ruling released last week is good news for Deloitte and its partners, unfortunately the public remains unconvinced. One obvious problem is the length of time it took Irba to issue a ruling on this high-profile matter; African Bank imploded more than six years ago.


There are all sorts of well-aired reasons for the delay but there’s little doubt the longer the delay, the less credibility the process will have.

The good news is that Deloitte Southern Africa CEO Lwazi Bam, who is also having to deal with the fallout from the Steinhoff collapse, is taking nothing for granted. He is determined to understand what went wrong and learn from it. Certainly, if the audit profession doesn’t sort itself out, its customers – company shareholders – will push back against the continued payment of hefty fees.

Read: How to restore trust in the audit profession?

Two history-making AGMs

Last week’s corporate events were book-ended by two history-making AGMs. The week began with Shoprite’s AGM, where Christo Wiese made his last appearance as chair. That wasn’t the only piece of Shoprite history; the unprecedented 64.56% vote against the implementation of the remuneration policy will also make the history books.

Of course Wiese is going nowhere – he is not only the single largest holder of ordinary shares, but he will be remaining on the board. It’s difficult to imagine Wiese not playing a dominant role in whatever grouping he happens to be in, so good luck to the new chair, Wendy Lucas-Bull. And then of course there are Wiese’s powerful deferred shares; something will surely happen on that front in the not-too-distant future.

Sasol’s marathon AGM brought the week to a close.

Read: Sasol avoids making corporate history

It was a gruelling affair for all involved, even the spectators. Remarkably, chair Sipho Nkosi seemed to be getting into this stride as he dispatched the last few questions to the flagging directors, a full five hours after he’d opened up the general meeting called to vote on the LCCP deal.

Full marks to the energy and chemical giant for resisting the temptation to abort the meeting at 16:00, and also for providing video links with all the directors – but it’s a bit disappointing that its technical skills do not extend to allowing shareholders to actually ask the questions. Being obliged to send through written questions ensures an inferior quality of engagement.

And full marks to shareholder activists for identifying the vote on non-executive directors’ fees as an effective way of sending a message to the board. At most AGMs this special resolution would not be as critical as it proved to be at Sasol – which only tables it every two years – but as a binding resolution it sends a much clearer signal than the flabby ineffectual non-binding advisory vote on executive remuneration.


The ‘very personal’ matter of pay

While on the subject of executive pay, surely some award must go to the RCL Foods board for its explanation for its threadbare disclosure on remuneration.

Remuneration is “private” and “very personal”, remuneration committee chair Peter Mageza told shareholders, according to Business Day reports.


This week Prosus gets to kick off its $5 billion spending spree. Frustrated with the gravity-defying valuations of consumer internet stocks, Prosus is going to invest where it sees good value, namely in its own shares – up to $1.37 billion worth, and those of holding company Naspers – up to $3.63 billion.

And with $9 billion cash available as well as ready access to finance, Prosus will still be able to snap up any bargains that come its way.

The Prosus buyback plan was announced just days before Alibaba’s Jack Ma was forced to pull his planned listing of Ant Finance in Shanghai and Beijing. News that the Chinese government was clamping down on its massive internet champions knocked the Tencent share price, but it quickly rebounded and has clawed back most of that losses.

Last year Naspers raised $10 billion from selling just 2% of Tencent, taking its stake down to a still-hefty 31%. The lock-up on further Tencent sales expires next March. The current Tencent share price is more than 60% above the 2019 levels.


Apparently, the Woolworths board is set for a reasonably easy time at its AGM this week. Despite the huge value destruction and the generous payout to former CEO Ian Moir, it seems most of the large shareholders are prepared to cut the new leadership some slack. Presumably they will blame the old guard and promise to do much better. It’s a familiar old story.

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The saddest part of it, is that the regulations seem to be written by incompetent accountants/auditors with track records that defy belief. So long as these listed companies have 3 independent directors on the audit committee (which invariably means accountants), then all is well. The accounting profession should hang its head in shame at the governance frauds that have become commonplace under their watch. I propose that new regulations make it illegal for accountants to serve on boards, since they obviously don’t know what they are doing.

End of comments.





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