Trustco Group, a company based in Namibia, yesterday announced its listing on the JSE had been suspended after it lost its legal dispute over accounting standards.
The two-year dispute with the JSE relates to items in Trustco’s property and resources portfolios, where the JSE had alleged that Trustco failed to comply with listings requirements and relevant IFRS accounting standards, claims that Trustco has disputed.
In the spotlight was the waiver of two loans by Trustco’s majority shareholder, Quinton van Rooyen – one of N$545.6 million (R537m) and the other N$1 billion – as well as certain of Trustco’s Elisenheim properties.
The Financial Reporting Investigation Panel – an advisory body to the JSE had advised the JSE that, in its view, Trustco’s reporting of the loan issue and the property issue did not comply with IFRS.
Trustco was ordered to reinstate its financial statements for the year to March 31, 2019 and its interim results to September 30, 2019.
On the announcement at 3pm the shares fell -16.33% to R0.41 and then were suspended.
This latest finding comes after Trustco in August won an urgent application in the High Court of South Africa to prevent the JSE from suspending Trustco’s share, the second urgent application that Trustco had won against the JSE.
However, Trustco said yesterday that subsequently the review and setting aside application of the reconsideration decision taken by the JSE, and the Financial Services Tribunal (FST) was heard on September 7 by Judge Sulet Potterill and yesterday the judge had dismissed Trustco’s review application.
Judge Potterill noted in her judgment that, “Trustco acted bona fide in using the methodology it did when recording the financial transactions. The recording was done pursuant to engagement with expert IFRS advisers, as well as independent external advisers.
“I can understand that would-be-interference in bona fide actions result in frustration and anger. But, the reality is, we live in a necessary controlled world. A company listed on the JSE has to comply with the JSE’s regulatory framework… Trustco must adhere to these decisions and restate accordingly,” the judge said.
Potterill ruled that the FST decision of November 22, 2021 stood and Trustco’s financials would need to be restated.
Trustco, with a market cap of R792m, said it remained listed on the JSE and would abide by the listings requirements.
“Trustco shall, in the interest of all stakeholders, proceed to restate its financial statements, subject to its right to appeal against the decision, and without prejudice to any other legal rights and remedies it might have in law,” it said.
Trustco said it expected that the suspension of the trading of shares would be lifted once Trustco published the audited restatement of its financials as directed.
Trustco’s managing director Dr Quinton van Rooyen said, “It is an unfortunate, but necessary step that a court order is required to override the bona fide actions and representations of our independent board and auditors. With this court order, we will comply to restate our financials as directed by the JSE.”
Trustco said it was currently engaging with its auditors and external advisers to comply with the directive and expected that it would be able to restate its financials, alongside its current period financials.
BUSINESS REPORT