Paramount corrects split error

Mentors are supposed to advice and guide junior market companies’ directors in the ways of the securities market as well as other business related issues to help steer them in areas they may not be familiar with. Mentorship was wisely assessed to be needed for the smaller companies, many of whom were not being governed to the more rigorous manner that their main market neighbours are.
Directors should aide and guide management in the right direction. Ideally, management and directors should strive to work together to achieve the objectives desired. Chairmen have a major role to play to ensuring things are navigated properly. When the JSE board approved a stock split and management posted the notice that the board approved the split which was to have been effected without shareholders’ approval, the Chairmen must take a big part of the blame for the error. All the details of such an issue should have been sorted before the board meeting, with Chairman being fully and properly informed and thus ensure that it was done properly. Finally, the board should have determined and agreed when the shareholders meeting was to be held to approve the split. Their failure of the board to do their work properly cannot be placed solely at the feet of the executives.
This brings up the Paramount Trading stock split. The stock exchange rules require that all listed companies must advise the exchange at least 7 days before a meeting of directors is to be held at which a distribution or change in the share capital of the company is to be considered and shortly after the meeting is held advise of the result of the deliberation. Pan Jam’s board, in agreeing to a stock split earlier this year failed to inform the stock exchange in accordance with the rules, was hauled over the coals by the exchange, for failure to comply. Note is also taken that Palace approved a dividend but there was no notice on the JSE website about the meeting at which the proposal was to be considered.
The Board of Directors of Paramount Trading failed to follow the rules of the exchange regarding their decision to recommend the subdivision of stock units which was an item for shareholders to consider at the Company’s Annual General Meeting (AGM) which is due to be held on Saturday, 29 October. IC Insider contacted the company to find out the reason for failing to follow the regulated procedure and was advised that the JSE informed them in writing that they did was in order. Contact with the JSE by IC Insider triggered a response that the matter would be investigated.
On Friday the company posted a release which the error. The release in part states that at the AGM that on the list of resolutions is a proposed sub-division of shares, for consideration by the shareholders.
The proposed resolution is set out in the notice of AGM as follows:“SUB-DIVISION OF SHARE CAPITAL
To sub-divide each ordinary stock unit in the capital of the Company into such number of stock units as may be prescribed by the Board: “THAT each of the issued ordinary stock units in the capital of the Company be sub-divided in accordance with the Articles of Incorporation of the Company, into such number of stock units as may be prescribed by the Board of Directors.”
“In connection with the above resolution, please be advised that the Board of the Company shall hold a meeting on Saturday, 29 October to consider and approve the sub-division pending shareholders’ approval of the said resolution.”