The Companies and Intellectual Property Commission (CIPC) has ordered the Nova Property Group not to promote any extra of its properties.
The order to stop selling belongings is the primary lively step a South African regulatory authority has taken towards Nova – the corporate which took possession of all the previous Sharemax properties and was tasked to repay the R4.6 billion round 18 600 individuals invested in Sharemax.
It is the third compliance discover the CIPC has issued to Nova since early final yr and it successfully restricts the board’s authority to handle the corporate at its discretion.
Moneyweb may affirm that the CIPC is driving an inter-regulatory course of to re-evaluate the occasions that led up to Sharemax’s implosion and Nova’s failure to execute the rescue plan. This course of includes the South African Reserve Bank, The Hawks, and monetary regulators such because the Financial Intelligence Centre and the Financial Sector Conduct Authority (FSCA).
It shouldn’t be clear how superior this course of is, but it surely at present includes sourcing paperwork and affidavits.
Moneyweb has additionally been knowledgeable that this course of may lead to new legal costs.
This information follows after the NPA not too long ago determined not to prosecute any people in reference to Sharemax’s implosion.
Read:
No prosecution for Sharemax implosion – NPA
CIPC asks Nova to clarify why it shouldn’t be closed down
Sharemax rescue automobile faces CIPC shutdown
CIPC involved about Nova’s means to repay debenture holders
Compliance discover
The newest compliance discover is a so-called CoR 139.1 discover. The CIPC points such notices when it believes an organization is working in contravention of the Companies Act. If the corporate can not persuade the CIPC that it’s not responsible of the alleged infringements, it might be shut down.
The discover additionally follows after the CIPC issued a compliance discover early final yr concerning Nova’s potential contravention of Section 22 of the Companies Act. This part refers to a number of potential transgressions and prohibits an organization from buying and selling recklessly, negligently, fraudulently, or below bancrupt circumstances.
Although Moneyweb has not seen the discover, it’s believed it solely limits the board’s means to promote properties.
Nova offered 19 of the unique Sharemax properties
The CIPC’s newest compliance discover will finish Nova’s aggressive sale of properties over the previous few years.
Nova’s auditors have since 2017 warned that Nova’s monetary place has deteriorated to such an extent that it might be bancrupt and that the corporate solely stays in enterprise by funding operational bills with the proceeds of the sale of the properties.
Although the unique rescue scheme allowed the Nova board to promote properties, the notion was for the majority of the proceeds to be repaid to debenture holders.
The deterioration of the monetary place additionally resulted in Nova’s failure to repay debenture holders per the unique rescue plan.
The extent of the selloff is startling.
Nova inherited 28 unencumbered properties from Sharemax in 2012. Since then, the group has subsequently offered 19 of those properties.
According to Moneyweb calculations, the proceeds quantity to R640 million, of which solely R176 million has been returned to former Sharemax buyers.
In truth, since 2018 alone, Nova’s proceeds from the sale of properties have amounted to R350 million, of which solely R96 million was paid again to debenture holders. (In earlier correspondence, Haese disputed Moneyweb’s calculations. Read her response right here.)
Read:
Nova continues to flog properties
Nova could also be an even bigger failure than Sharemax
Nova failed to repay buyers
The CIPC motion additionally follows after Nova failed to repay buyers by 20 January 2022, the date specified as the ultimate compensation date within the Section 311 Schemes of Arrangement (SoA).
At the time, Nova’s board stated the SoA allowed it to postpone repayments, a view not shared by the CIPC and Nova’s former auditors.
Moneyweb has despatched questions to Nova concerning the compliance discover and can embrace a response if and once we obtain it.