The JSE has publicly censured Elexir Technology Holdings over the fact that it sold a business unit without first consulting its shareholders.
Elexir Computer Services, a wholly owned subsidiary of Elexir sold, with effect from 1 January last year, a business unit and other assets to Securicom IT solutions for R1.32 million.
However, the company approached shareholders for their permission to carry out the deal only in February this year, more than a year after the deal became effective.
Shareholders` approval was granted at a meeting on 28 February, although before the meeting Elexir stated that it was unlikely that the deal could in fact be reversed.
The deal was classified as a related party transaction since Brett Casey, a former Elexir director, is a director of Securicom.
Because shareholder approval was granted only in February, the JSE recently insisted that Elexir restate its results for the 2004 financial year, excluding any effect of the sale.
As a result, the restated figures showed an operating loss of R2.67 million, whereas the previously published results included an operating profit of R2.79 million.
A restated loss of R3.12 million for the period compares with a previously stated profit of R2.34 million and a headline loss of 2.18c compares with a previously reported 1.4c loss.
More significantly, the restated figures showed a net asset value of -1.83c a share, compared with a positive value of 2.53c a share in the previously reported figures. This means that without the sale, Elexir was technically insolvent.
"Elexir only obtained shareholder approval for this transaction at a general meeting on 28 February 2005 although the transaction had already been executed," the JSE says in a statement issued this morning.
"Accordingly the JSE believes Elexir should be publicly censured for this transgression of the listings requirements."
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