Avusa: The right questions

Only well-known shareholder activist Theo Botha asked questions, and all the resolutions were carried by bigger majorities than some earlier press comment had suggested.

Botha's questions highlighted the fact that companies don't actually know who their effective shareholders are, as highlighted by the case of Avusa and Allan Gray.

Allan Gray discloses a holding of only 5.2% in Avusa held by its unit trusts, yet it has agreed to sell a 25.5%-30% interest in the company to Mvelaphanda - a deal that will go through now the unbundling has been approved.

Avusa CEO Prakash Desai explained that the company has direct knowledge only of shares beneficially held by a member, which for Allan Gray means its unit trusts, not shares held on behalf of pension fund or other investment clients.

He added that the reference to the Mvela transaction was taken from a JSE Sens announcement in which Avusa had no involvement and was included in the interests of transparency.

Shareholder enigma

This shows up one of the key unforeseen weaknesses of the Strate/paperless share certificate regime: that it has made company share registers less, not more, transparent, and there's nothing companies can do about it.

It used to be possible to go into a share registrar's office at any time, inspect a physical register of ownership and even the share transfer documents.

Now, even companies generally get only a monthly print-out.

And with fewer and fewer shares actually being registered in the names of their beneficial owners, even such information as is provided has less and less meaning.

As Avusa chairperson Mashudu Romano pointed out, a general meeting of an individual company may not be the proper forum to address these issues. But that doesn't make them any less real, and they certainly need to be addressed. It's axiomatic that owners of a company have a right to know who their fellow-owners are.

The resolutions were mostly carried by votes of about 86% for, 14% against, with negligible abstentions. Romano denied that Avusa's advisers, Nedbank Capital, had lobbied major shareholders last week, urging for yes votes; but that doesn't mean there was no lobbying, only that it was probably done by Desai.

The one exception was the resolution to terminate, and pay out, the Avusa share incentive scheme. Here there were 9m fewer yes votes, 6m more noes, and 3.2m abstentions. One hopes that the potential multi-millionaire beneficiaries had the good taste not to vote for their own enrichment.

Objections

Though no details were released by the scrutineers, it's thought that the PIC and Stanlib were the main objectors.

With the unbundling formally out of the way, the two companies face internal issues of their own.

For the new Avusa, the operating company, how to correct what Botha rightly identified as the uninspiring performance of its core media interests; for Element One, holder of the Caxton shares, its relationship with Caxton itself and whether it has a future as a listed company after the 12-month window granted it by the JSE to overcome its unacceptable status as a double listing for a single asset.

This is a saga with a few chapters yet to be written.

- Michael Coulson