ALEC HOGG: Well, its been an interesting week, Wayne. First of all we had the goings-on at Simmer & Jack in the past week, and then African Dawn yesterday had an annual general meeting where not only were the three executive directors booted off the board, but their remuneration was turned down. Now, this brings an interesting conundrum. If you have to vote on directors remuneration at the annual general meeting, then surely you have to approve it as shareholders? If you dont approve it, what happens? Does the guy have to give back his bonus?

WAYNE McCURRIE: I dont know.

ALEC HOGG: Theo Botha joins us now. He is the best known shareholder activist. Theo, what happens in a case like that where, lets just say, the directors have well, theyve received bonuses. At the annual general meeting shareholders said: No way are we going to approve this remuneration. Do they have to give the money back?

THEO BOTHA: Well, why put a resolution to the shareholders to approve something and when the shareholders vote it down then I suppose they have to give it back, because the shareholders are obviously not very happy.

ALEC HOGG: Its something that we debated at some length in our editorial meeting this morning. We didnt know the laws, though. Is there any legal requirement in this regard?

THEO BOTHA: Im not au fait with the legal requirements, but if we just look at it from a logical perspective, this is a resolution thats put forward to the shareholders. Its a bit like theres often resolutions to approve non-executive directors increases and their directors fees, and if the shareholders dont approve those increases, then the independent or the non-executive directors cant get an increase in their fees. This resolution was put forward, and it was turned down by the shareholders. So I think logic would have it that the guys have to pay back the money, which is quite substantial.

ALEC HOGG: Theo, often when you have an accumulation and the momentum builds, you have a watershed at some point in time in just about every important area in the world. When it comes to shareholder activism, could African Dawn have been that watershed? Could the very aggressive response from shareholders against the management of the company have been something that perhaps other companies should watch out for?

THEO BOTHA: I think weve got to look at it in this light Nedbank Capital, suddenly coming on as a default shareholder, probably doesnt want to be a shareholder. So there must have been some form of dispute prior to this AGM which couldnt be resolved, and therefore they decided that, well, we are going to vote against these resolutions and vote these directors off the board. So in a way it all goes back to the single-stock futures. I mean, there are so many companies where banks are now substantial shareholders on these companies which are listed on the AltX. So its a bit of a problem and I think banks are now starting to get a little bit edgy as regards their investments in the AltX listings.

ALEC HOGG: Well, we had another bit of news today from African Dawn. Its restating the financial results that were published for the year to end-February. Now, interesting enough, these figures were audited. They are now being restated to 37% lower than the financial statements showed. The restatement that we heard today was not reviewed or reported on by the auditors, which again in itself is strange. What do you make of all this?

THEO BOTHA: Alec, on the 9th they did issue a Sens and they published in the events after the balance sheet they referred to this incident as regards writing down their figures. Not writing them down per se, but they said, look, you need to be aware of something thats going to happen. It is quite strange, because at an annual general meeting one of the first things on the agenda is to approve the annual financial statements, and I dont know if the shareholders did approve those annual financial statements. But if they did, and if they were aware of the Sens coming out on the 2nd October, thats another bit of a scary issue, isnt it?

ALEC HOGG: It all comes back to as a shareholder in a company you are a co-owner in the business and, if you are a co-owner in the business, I guess its time to start taking more responsibility. We cant accuse you of that, because youve gone to a lot of annual general meetings. You do raise your voice, you do ask these questions. Are you finding, though, that perhaps your sometimes Helen-Suzman-type stance is now getting more support?

THEO BOTHA: I think the issue here, Alec, is if you want to drive good corporate governance we need to get our fund managers and the big investors involved in terms of driving good corporate governance. And you know where its starts, Alec? It starts with the disclosure of who are the actual shareholders of these companies. A lot of these fund managers dont actually disclose their full shareholding in the specific vehicles they invest in. So you would go, for example, and look at an annual report and think, hang on, this find manager has got 10% and the next day theres some corporate activity and you find out in the press that this fund manager owns 20%.

ALEC HOGG: You and I had this discussion over Avusa.

THEO BOTHA: Ja, Avusa. Allan Gray, Coronation with the unbundling of DStv into Naspers. But King III is now saying to the shareholder you need to drive the process of good governance. How can a shareholder drive the process of good governance when he is hiding behind a veil of secrecy? We need to unlock that either the JSE needs to do something about disclosure, or the Companies Act needs to do something about this disclosure, so the fund managers can actually tell us their holdings in the specific company maybe albeit just once a year. And secondly fund managers also need to disclose how they actually vote, so we can wee how consistent they are in their voting.

ALEC HOGG: Theo, just dwelling on Avusa for a moment it did cause quite a furore on the Moneyweb pages this week, the R24m bonus that the chief executive, Mr Prakash Desai received. He says it was due to him. He actually wrote an article which we published on our website, in which he defended that amount of money that he received. What is your take on all of this?

THEO BOTHA: Ill tell you what my take on this is that it was an extremely complex transaction. I mean, if you are selling DStv Super Group [M-Net SuperSport?] to Naspers, why did they create another vehicle, being ElementOne? So they put Caxtons holdings of investments into ElementOne. I think then they pushed in the Super Group investments into ElementOne and it was sold onto Naspers. And then theyve got Avusa they started off as a new vehicle. But we all know when ElementOne listed it was listed under the pretext that it hadnt complied with the JSE rules and regulations, whatever that rule was. Today it still doesnt comply with the JSE rules and regulations, and basically where we stand now is that that vehicle is going to have to be delisted. So in a way a lot of those options or whatever were settled in ElementOne. So when I was acting at the Avusa AGM, my question was hang on, where are the comparatives for the 2008

ALEC HOGG: Financial year?

THEO BOTHA: No, they had that, but for the directors their fees? Why do we not disclose that as well? I wanted to know what was his bonus for 2008, and then compare it with the bonus for 2009. Thats why I raised the issue, Alec. Im glad the reporters then went along and started looking at ElementOne, and saying oh, thats what we got. So it was actually disclosed as to what he got. He was forthright in terms of answering that question.

ALEC HOGG: And the other big news of the past week was Simmer & Jack, with the boardroom battles going on there. Have you had the opportunity to read the

THEO BOTHA: Well, I did attend the AGM, and theres one thing that never came out in the press. I asked the question I wasnt aware of all these directors going to be resigning, but once against it comes back to the single-stock future issue. Are you aware that RMB got burned a little bit on the Simmer & Jack and by default now they are now quite a big shareholder in Simmer & Jack? What they did is they pushed one of their directors onto the Simmer & Jack board, and one of the resolutions passed at the Simmer & Jack AGM was to award three directors, two of whom were non-independent directors and the other one was a non-independent director from the RMB board, options. In terms of King III, options are now out when you award it to non-independent directors. If they get options then they lose their independence. But here we have a banking official who is on the board by default getting options when he is already getting a salary from RMB. I just found that absolutely ridiculous. Why must shareholders sponsor this bank representative on the Simmer & Jack Board?

ALEC HOGG: I guess it raises the question of why did he then support the board which other directors moved away from? All these nasty questions that do get raised there perhaps hes got a good reason for it. But we thank Theo Botha, South Africas leading shareholder activist, for raising these issues. And the more you shine a light into dark areas, the more things can change.

Subscribe to a daily email of transcripts from Moneyweb Radio click here