ACTIVISM STEPS UP
Why Group Five is a watershed for shareholder rights
Allan Gray made good use of the Companies Act, never allowing things to stall — unlike Foord in its battle against PPC
A special meeting at Group Five has reinforced the notion that boards of directors aren’t used to being told what to do by shareholders. But that may change as previously timid asset managers — who have allowed bad governance to thrive — start to flex their muscles to protect their clients’ investments
Philisiwe Mthethwa, the Group Five chair who resigned along with her board after a spat with the construction company’s 25% shareholder Allan Gray, says she couldn’t wait to walk out the door. "The atmosphere had just become so poisonous," she told the Financial Mail. Of course, the politically connected Mthethwa, who is also CEO of the National Empowerment Fund (NEF), didn’t have much choice. Allan Gray, backed by Coronation (which holds 14.4% of Group Five), said it had "lost confidence" that the company — which built Durban’s Moses Mabhida stadium and parts of the Gauteng e-toll highways — was doing the right thing for investors. Part of the mistrust relates to an offer it got to buy its concessions business from private equity company Ethos earlier this year. But the board never told shareholders about this approach. This is why Allan Gray took the extraordinary step of demanding a special meeting to replace the board, nominating five new directors. It’s a standoff that promises...
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