JSE censures Caxton over two 2022 Sens posts on Mpact
The exchange found the publisher's statements about its largest investee's board, cartel case and share trades were neither required nor price sensitive, and Caxton has retracted them.
The JSE has publicly censured Caxton and CTP Publishers and Printers over two Sens announcements it issued in 2022 that criticised Mpact’s management, ruling that the material did not meet the listings requirements for disclosure. Caxton is Mpact’s largest shareholder.
The publisher argued at the time that the information was price sensitive and had to reach shareholders because Mpact had failed to disclose it. The exchange found otherwise. Under Schedule 9 of the Listings Requirements, companies may only use the Sens platform for company announcements explicitly required by those requirements, or for price-sensitive information as the schedule defines it. Price-sensitive information is unpublished information, specific or precise, that could materially influence the market price of a company’s securities if made public.
What the exchange found
The JSE said the information Caxton disseminated was neither a required company announcement nor price-sensitive information as defined. It added that although Caxton is a major shareholder of Mpact, Caxton was not directly obligated under the Listings Requirements, or legally obligated, to disclose that information. The statements concerned Mpact, its operations, its governance and its business activities, and were therefore not relevant company information for Caxton.
The exchange imposed the public censure for Caxton’s failure to comply with what it called important provisions of the Listings Requirements. Caxton has since issued a further Sens announcement retracting the statements.
The claims the JSE listed
The exchange set out the passages in the Caxton announcements that it believes should not have been published on Sens. They include Caxton’s contention that the Mpact board had not complied with its fiduciary duties, that it failed to disclose adequate details of the pending cartel case and its risks, and that it did not publicly disclose all material risks of a potential Caxton merger in Mpact’s 2021 integrated annual report risk matrix.
Also listed is Caxton’s claim that the Mpact board filed secret representations and affidavits before the Competition Commission and Tribunal while soliciting support from Golden Era to oppose a possible Caxton merger. Caxton further complained to the JSE that Mpact executive directors traded in Mpact shares worth more than R15m while in possession of that information. It also raised the appointment of non-executive directors to a Mpact subsidiary, which it said created a formalistic legal basis to bypass shareholder approval of their remuneration.
The announcements further stated, on Caxton’s own market information, that Golden Era buys nearly half the carton board output of Mpact’s Springs mill, about 45 000 tons, and tens of thousands of tons of corrugated board. They said independent sources confirmed Golden Era was already seeking alternative imported carton board, questioned whether Mpact’s banking covenants could be affected by customer flight, and said Golden Era had previously threatened to withdraw its custom to extract commercial benefits. They also stated that Mpact affords Golden Era unspecified benefits and favoured nation preferences, including pricing.
On the cartel case, the announcements stated that Mpact and Golden Era stand accused of cartel conduct, that Mpact has admitted the conduct and received conditional corporate leniency from the Commission, and that Golden Era has denied participation. They noted that the Commission may revoke Mpact’s amnesty and levy a fine of up to 10% of turnover where undisclosed cartel activity occurred or continues, that Golden Era’s 10% shareholding in Mpact raises a potential conflict for the board, and that the appointment of all Mpact directors to a subsidiary places the board beyond accountability to shareholders.
What it means for the market
The censure turns on a narrow question with wide reach: what a shareholder may put on the exchange’s disclosure platform. The JSE’s answer is that the platform exists to disseminate relevant company information to the market in real time, and that a shareholder’s grievances about an investee, however detailed, do not qualify. For investors, the ruling draws a line between a stake and a duty to disclose, and it confirms that the route for a shareholder’s concerns about a listed company’s governance lies outside Sens.
