Sterling Investments
Jamaicans have the view that the local capital market is regulated but developments taking place in the country, suggest that they may be dead wrong.
Fontana goes to the market with an IPO and raises funds but the prospectus sates what will happen with multiple applications from one person or company, but the release from the broker handling the issue announces an allocation that is at variance with the terms of the prospectus. Almost two weeks have passed but there is no correction of the error, even as the JSE listing committee is expected to meet on Friday to approve the listing on the market, expected to take place on the January 9.
Sterling Investments is offering shareholders rights to subscribe for more shares at $3.08 with the opening date being January 4, 2019 with the last date for renunciation of rights and closing for existing shareholders being January 11.
On the surface that seems fine but shareholders are yet to receive their offer document and many will not get tit by the deadline date. The company should take the proper action and extend the deadline date. What is unfortunate is that the company is putting shareholders at a disadvantage to non-shareholders by given the latter a much longer time to apply for shares while shareholders are given very little time. It should be the other way around.
Thankfully, the matter of Barita Investments attempting to issue rights based purely on terms determined by directors has been withdrawn and is to go before shareholders at a general meeting. There should never be any doubt that shareholders must determine changes in the capital of a public company. After all, issuing of new shares can mean dilution of ownership interest. Some lawyers state that section 65 of the Company’s Act requiring a general meeting of shareholders for changes in share capital does not apply to the increase issue of new share but to the authorised share capital is incredible when the former has no impact on shareholders’ interest but the latter does.
