CBZ Holdings was this week forced to postpone an extraordinary general meeting (EGM) in an unprecedented move that sparked speculation in the market of a failed buy-in by shareholders into proposals tabled for
discussion at of meeting.
The institution’s chief executive officer, Nyasha Makuvise, said they were likely to reconvene at a date to be announced soon, but indicated a notice on the rescheduled EGM would be published in the press next week.
While officials said they had taken the decision to postpone the EGM because of delays in the delivery of circulars to shareholders on the agenda of the meeting, as well as concerns over the technical wording of the document, sceptics who attended the re-scheduled EGM doubted this, saying the cancellation of the crucial EGM highlighted strong objections against certain clauses of the proposal by key shareholders that could have put directors plans “completely off the rails” if they had been raised at the EGM.
Sources indicated that the EGM had been cancelled after a section of influential shareholders had raised objections against certain clauses of the circular sent to shareholders.
The decision to defer the EGM is likely to delay the consummation of a deal for which the company was seeking shareholder approval.
Businessdigest revealed three weeks ago that CBZ Holdings was in talks that could culminate in the take over of Beverley Building Society for £3,5 million.
Although there was no official confirmation of the reports from the chief executives of either institution, CBZ has issued a cautionary statement to shareholders advising of talks that could lead to an acquisition.
CBZ had called for the EGM to seek shareholder approval for a share buy- back and to allow its board of directors to make acquisitions of complementary businesses.
Some shareholders were stunned when directors informed them on the EGM date that the meeting had been postponed because most shareholders had not received circulars in time.
They were, however, treated to some snacks at the venue of the EGM at a local five-star hotel.
CBZ Holdings chief executive Makuvise later told businessdigest that he had only discovered on Tuesday that most of the shareholders had not received circulars.
“We cancelled the meeting because we felt that some of the shareholders had not been able to get the circulars. I only discovered this when I visited NSSA (National Social Security Authority) and the Ministry of Finance yesterday (Tuesday),” Makuvise told businessdigest.
NSSA, a compulsory pension scheme controlled by government, is one of the major shareholders in CBZ alongside government and South Africa’s Absa.
CBZ is likely to go down in history as the first company in recent history to call off an EGM because of delays in the delivery of agenda notices and the wording of those notices.
It was evident that some shareholders did not believe the reasons given by directors in postponing the EGM, given that shareholders had turned out in their numbers for the meeting.
This reinforced speculation that the decision was taken after some shareholders raised concerns over one of the resolutions a few hours before the actual meeting.
These concerns, sources say, were raised with the CBZ’s board which then sought legal advise on the issues raised.
It was after these consultations with legal advisors that a decision was taken a few hours before the EGM to call it off.
Sources indicated that had the decision been premeditated, CBZ directors would have informed shareholders in advance about the cancellation through a press notice.
One fund manager admitted he had problems with a resolution that sought to give the directors power to make future acquisitions without further approval from shareholders.
The resolution stated: “That directors be and are hereby authorised, to proceed with any acquisitions that in the directors’ view are or would be complementary and related to the company’s business, after the necessary assessment, scrutiny, and due diligence provided the acquisitions comply with the criteria established in the business growth proposal, which is contained in the circular to shareholders.”
The fund manager said he felt that the resolution gave directors unbridled power to seals deals without seeking shareholder approval, even when this was necessary.
“To me, the whole circular was shodily done. That resolution was too vague. It meant that we were giving directors powers to go buy any company in future without our approval,” the shareholder said.
“To me that meant we were giving approval for acquisitions that could be done 10 years from now because it gave no time limit for the authority.”
Makuvise denied that there was anything sinister about the resolutions and the cancellation of the EGM.
“The reason we wanted this resolution is because we want to do a transaction but that does not mean we will not seek shareholder approval in future deals,” Makuvise said.