Ann Crotty Writer-at-large

The sale of R3.75bn Steinhoff Africa Retail (Star) shares did little to settle investor nerves on Thursday amid concern about the extent of loans to directors after media reports of a €325m prepayment to former chairman Christo Wiese. "That financial facility, which apparently has not been repaid, raises the spectre of many similar type payments to related parties, and if that’s the case no one knows how big the Steinhoff hole is," one analyst said on condition of anonymity. Unlike South African law, Dutch law, which is the relevant law as Steinhoff is registered in Holland, does not hold the non-executive directors personally liable for the reimbursement of shortfalls suffered in relation to loans to directors. All that the members of a Dutch board have to consider are the nonbinding principles set down in the Dutch Corporate Governance Code. One best-practice principle states that a company may not grant personal loans, guarantees or substantially similar facilities to directors a...

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