TRUSTCO’s years-long battle with the Johannesburg Stock Exchange may have finally come to an end as the financial services, mining and property company was booted from that bourse as well as the Namibia Stock Exchange last week.
The company also risks being kicked off the OTCQX Market in the United States.
To add intrigue to injury, the chief operations officer of the company’s internal and forensics investigations unit, Max Endjala died in mysterious circumstances during a daring mass diamond robbery a week ago.
The JSE on Thursday issued a statement saying it had suspended Trustco as a listed company due to the company’s failure to comply with the JSE’s listing requirements.
Known for its unorthodox business operations and outlandish marketing campaigns, Trustco has managed to raise the ire of the JSE perhaps for the last time. Trustco failed to timeously publish its 2024 financial results.
The JSE statement points out that Trustco failed to make public its financials within the mandatory three-month period after its financial year end of 31 August 2024.
Questions sent to Trustco spokesperson Neville Basson on Friday have not been answered at the time of publishing.
The company’s JSEs-blues have spilt over into Namibia, with the NSX also pulling the plug. NSX CEO Tiaan Bazuin confirmed to The Issue that following the JSE’s decision, the NSX will automatically drop Trustco.
“Trustco is primarily listed on the JSE and secondarily listed on the NSX, so such administrative actions are regulated by the JSE listing requirements. So any action based on JSE regulations is in principle applied by any secondary listings,” said Bazuin.
The company, whose stock has dropped 95% over the past five years, two days prior to the JSE announcement, issued a statement of its own, indicating that it intends to delist and cut ties with the three bourses it was trading its stock on.
The company’s stock price stood at a lowly 30c per share on Thursday when the JSE announced the suspension, down from its peak of N$16 per share during 2019. Before listing on the NSX, the company sold shares to the public at N$3.20 per share in 2006. On the day the company was officially listed during September 2006, the share price went up to N$3.60. In February 2009 when Trustco listed on the JSE, its shares traded at 72c.
Publicly listed companies are highly regulated and subjected to strict scrutiny.
Its statement was issued on Tuesday, 21 January, where it announced that its board of directors is evaluating options to delist from its primary listing on the JSE, its secondary listing on the NSX, as well as the OTCQX Market in the United States.
“For nearly two decades, Trustco has maintained its listing in southern Africa, serving a predominantly local shareholder base,” said Quinton van Rooyen, CEO of Trustco Group Holdings.
“We’ve witnessed a significant shift in our investor demographics, with a substantial portion of our shareholders now based in the United States. This natural evolution, combined with our planned Nasdaq listing, positions us to better serve our investors and enhance shareholder value,” said Van Rooyen.
Van Rooyen added that Trustco has requested an immediate suspension of share trading due to several factors affecting market information symmetry.
He added that the proposed delisting process will include the appointment of an independent expert to provide an updated fairness opinion as required by the JSE.
Trustco is engaging with the affected stock exchanges regarding a formal delisting proposal.
LOCKING HORNS
Trustco has had a series of run-ins with the JSE, which, after investigating the company in 2019, found that Trustco’s financial statements did not comply with International financial reporting standards or the JSE’s own listing requirements.
The JSE, at the time, said the company had incorrectly stated a N$1.5 billion that its founder, Van Rooyen, had loaned to the group as a gain and ordered the company to restate its financials.
Trustco took their appeal of the decision to South Africa’s Financial Services Tribunal, which dismissed the application. The North Gauteng High Court also dismissed the company’s attempt to legitimise its alleged accounting tricks.
Trustco was then suspended from the JSE after a court dismissed its appeal against a finding by the bourse that it wasn’t properly complying with accounting standards.
The JSE in March 2023 lifted the company’s suspension after it published its restated audited financial statements.
Trustco published its restated audited financial statements on 28 February 2023 and the JSE lifted the suspension on 23 March 2023.
In October 2023, Trustco faced public censure from the JSE for failing to publish a supplementary announcement during the 2017/2018 financial year. It appealed to South Africa’s Financial Services Tribunal (FST), which dismissed the reconsideration application. Trustco claimed it acted in good faith, adhering to JSE listings requirements. Reacting to the censure at the time, Van Rooyen, remarked: “It is regrettable that we’ve reached a point where it’s presumed that regulators are infallible. It is essential for justice to be not only done but also seen to be done. Furthermore, it’s evident from the track record of companies subject to censure that the JSE exercises its rules with complete discretion, and the FST has never found against the JSE, indicating that the JSE is not capable of making a wrong decision.”
In 2021 the company blamed Covid-19 for the tardiness in submitting their financials on time.
