The Johannesburg Stock Exchange (JSE) in South Africa has fined Namibian company Trustco Group R5 million for selling off shareholding in its mining subsidiary, Meya Mining, without shareholder approval.
According to Business Report, Meya Mining is registered in Mauritius and operates a diamond mine within the Eastern Province of Sierra Leone. During 2021, Namibia-based Trustco held 65% of Meya Mining through its wholly owned subsidiaries, Trustco Resources and Trustco Resources Limited, while the balance of the 35% stake was held by Germinate Limited.
On 1 August, 2022, Trustco’s subsidiaries, Meya Mining and Germinate, entered an agreement with SJSL Investments (SJSL), under which SJSL would have the option to acquire up to 70% of Meya Mining for up to $50m. Trustco’s subsidiaries and Germinate were to dispose of their shareholding equivalent to $25m each to SJSL.
The publication further reported that for Trustco’s portion, the value of the transaction came to R460.5m, or 89% of Trustco’s market capitalisation at the time.
The JSE stated that Trustco had initially committed to issuing a circular with details of the transaction and calling a general meeting so shareholders could vote on it. However, a JSE investigation revealed that Trustco’s subsidiaries had already begun executing the transaction – specifically by selling off shares in Meya Mining – before informing shareholders and getting their approval, which violated the JSE Listings Requirements.
According to Trustco’s financial results for the year ending 31 August 2022, its stake in Meya Mining (held through subsidiaries) dropped from 65% to 55.25%. In the following year’s results (ending 31 August 2023), the company confirmed that its ownership had further declined to 19.5%.
“As a result, the transaction that reduced Trustco’s total interest in Meya Mining from 65% to 19.5% was effectively completed before securing the necessary shareholder approval,” the JSE noted.
