Twenty companies are stuck in the JSE's naughty corner, having been suspended from the exchange for a range of infractions. This sorry lot - a small proportion of the 427 companies listed on the bourse - have been sanctioned for:
- Submitting qualified audits;
- Issuing their annual reports late;
- Not submitting their financial statements on time;
- Not having a transfer secretary;
- Having a dispute with the tax authorities; and, in one case:
- Not acquiring "viable assets that comply with the criteria for listing".
Some of the companies making up the list is a Who's Who of fallen business icons. Failed bank Saambou has been under curatorship since 2002, and mining company JCI makes the list for not submitting its financial statements on time in 2005.
Perhaps the most noted listings infringer is investment company Corwil. It was suspended in 2005 for the worst kind of rules violation, a "disclaimer of opinion". This is when the auditors try to audit the business but cannot do the job for some reason.
But not all of these suspended companies have had to be pushed out by the JSE. A few of them, like Tiger Wheels and Bonatla Property, were suspended at the request of their directors.
Some of the suspensions are not for an infraction but for technical reasons, like microlender Credit U, which is being bought out by Blue Financial Services and cash shell, S&J Land Holdings.
Considering the knock JSE-listed companies have taken this year, it's surprising that only four companies have been suspended, at their own request or for some infraction.
Suspending a company is the most extreme action the JSE can take, but it's not the only tool it can use to bring a rogue business to order. The exchange can warn shareholders about problems at a company by attaching codes to their shares like an "RE" for the violation of JSE rules, "E" for an emphasis of matter in its audit report, "D" for a disclaimer of opinion and "R" for not providing an annual certificate confirming their compliance with the listings requirements for the preceding year.
Unsurprisingly, Corwil is the only company on the JSE that has been stamped with D, R and RE codes.
Corwil might stand out as one of the JSE's most disobliging children but it's not the only troublesome listing. There are 16 companies trading with an emphasis of matter - an auditor pointing out something - in their results.
An emphasis of matter is bad for a company but not as bad as a qualified audit opinion. This is when an auditor disagrees with the treatment or disclosure of information in the financial statement, or should have a broader scope. Top-Fix briefly had a qualified audit opinion but it quickly restated its figures to get on side with its auditors. But listed oddity AfroCentric Investment Corp, which bought Medscheme in a R900m deal, has yet to make the changes to the 2006 financial year highlighted by its auditors.
Though it is disappointing that so many companies are not keeping to their listing requirements, 20 suspensions out of 427 companies is not bad.
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