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Wiese's Steinhoff deal 'all clear' under Dutch law

Publish date: 16 April 2018
Issue Number: 769
Diary: IBA Legalbrief Africa
Category: Corporate

Christo Wiese is in the clear over what Business Day describes as ‘egregious self-dealing’ because Steinhoff was registered in Holland where there is no requirement in law for oversight of the provision of loans or financial assistance to directors. On Tuesday, notes the report, Steinhoff stunned investors and corporate governance analysts when it confirmed media reports that the company had prepaid Wiese €325m during October and November 2017 for Shoprite shares, just weeks before Steinhoff collapsed. Section 45 of the South African Companies Act requires a board resolution and also requires that shareholders agree to any payments made to directors; but Dutch law allows companies to make loans to their directors and merely requires that the management board approves the loan. In addition, the Steinhoff articles of association do not deem a loan to a director to represent a conflict of interest. A Dutch legal expert said it was staggering that someone in Wiese’s position was able to conduct these sorts of transactions with the company. Shareholder activist Theo Botha described the situation as incredible, saying: ‘Wiese was not just a director, he was chairman and he was the biggest shareholder in Steinhoff. What sort of processes were followed to ensure this was an arm’s-length arrangement?’ Steinhoff also refused to disclose what the company’s ‘normal governance and disclosure processes’ are in this situation. Although Steinhoff appears to be out of the reach of the Companies and Intellectual Property Commission (CIPC), which oversees adherence to the South African Companies Act, Asogaren Chetty, head of governance, surveillance and enforcement at the CIPC, reportedly told Business Day the matter would be raised at meetings that were arranged with Steinhoff after the recent parliamentary hearing.

Full Business Day report (subscription needed)