The Telkom board has been forced to reexamine its authority to provide directors and prescribed officers with loans to take up shares in the company.
The board was forced to make the last-minute adjustment after receiving feedback from concerned shareholders.
In a notice of its annual general meeting (AGM) sent to shareholders, a special resolution sought approval for the company to provide financial assistance to its subsidiaries "and to directors and prescribed officers and other persons who may participate in the Telkom SA employee forfeitable share plan (FSP)".
The financial assistance could be provided by way of a loan, guarantee or the provision of security. And it could be provided to any of the directors or "prescribed officers" of the company.
In October 2013, Telkom finance director Jacques Schindehutte was suspended and a disciplinary hearing held in relation to a R6m interest-free loan he had received from Telkom to take up share options. He resigned from the company in 2014 with full benefits and the probe was discontinued. He was asked to repay the loan.
According to media reports at the time, the Companies Intellectual Property Commission notified Telkom that it had contravened Sections 44 and 45 of the Companies Act No. 71 of 2008 as the payment of the loan had been authorised prematurely and prior to the board of directors passing the necessary precursory financial assistance resolutions.
In its 2016 annual report Telkom states: "Shareholders should note that any such financial assistance would not entail the making of any cash advances by the company to the participants in the employee FSP in the forms of loans or otherwise."
However shareholder activist Theo Botha said that the note was not only unclear, but its contents were not binding, as they were not part of a resolution.
In a Sens announcement on Friday, 19 August, Telkom went back on the resolution, saying the special resolution would be amended so that the company would not have the authority to provide financial assistance to directors and prescribed officers.
It said it was taking this action following engagements with shareholders after the posting of the notice of the AGM.
At the AGM in 2013 the Telkom board was forced by shareholders to make lastminute revisions to four special resolutions, all of which related to directors' authority.
Source: Business Day
