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Cape Town – The Johannesburg Stock Exchange (JSE) on Friday imposed censure against Micromega Holdings [JSE:MMG] and fined it R1m, of which R500 000 is suspended, following a breach in its share purchase requirements in 2013.
The purchase comprised of almost R9m bought from W Friedland and nearly R1m bought from B Carolin in 2013. Due to a sharp rise in the share price following this, the shares bought would have been valued at R61.4m on 20 October 2013.
That's because the purchases occurred between April and August in 2013, when the share price was trading between R2 and R3 a share. The share price then saw a major surge to a high of R14.90 a share on 20 October 2013. A month later, the firm revealed it would make 40% profit for the year.
The share price continued its surge and on 30 November 2014 Micromega Holdings was trading at a new high of R18.30. It remained at these levels for the duration of 2015 and started declining in December 2015. It was down to R10.70 on close of business on Thursday.
The company, which focuses on support services, information technology and financial services, went on an acquisition spree in 2014 and 2015, buying Rdata for R12.57m and a 55% stake in Freshmark Systems in 2014 and Aspirata for R41.8m in 2015. Seeing a 1 223% increase in its share price in 2015, its revenue surpassed the R1bn mark in March 2015.
The JSE said Micromega Holdings was in breach of paragraph 5.69 of the JSE listings requirements for the purchase of its shares from two counter parties without the required specific authority to do so and during a closed period.
In other words, from the date from the expiration of the six month period of a financial year up to the date of publication of the interim results.
“The shares were acquired by the company in terms of a general repurchase authority granted by its shareholders,” the JSE said in a statement. “A prior understanding or arrangement between the company and the counter parties existed.”
However, the JSE said shareholder approval via a special resolution should have been obtained.
Micromega was also found to have breached JSE rules for the purchase of 224 863 shares in 2013 during a closed period, without a share repurchase programme in place.
“The JSE has decided to impose this public censure against the company as well as a public fine in the amount of R1m of which R500 000 is suspended for a period of twelve months in relation to the above mentioned breaches of the listings requirements.”
