JSE censures Accelerate over Fourways Mall governance breach

The Johannesburg Stock Exchange (JSE) has issued a public censure and a suspended R500 000 fine against listed real estate investment trust (Reit) Accelerate Property Fund Limited for bypassing mandatory shareholder approval rules in the management of its flagship asset, Fourways Mall.

The regulatory action stems from Accelerate’s failure to obtain shareholder consent before appointing external property managers for its most significant real estate asset, as required under paragraph 13.40 of the JSE listings requirements.

Read: Fourways Mall’s stunning turnaround all but complete

On 18 December 2023, Accelerate announced on Sens that it had appointed Flanagan & Gerard asset and property manager for Fourways Mall for a five-year period effective January 2024, alongside subsequent appointments for the Moolman Group and Luvon Investments (Pty) Ltd.

Under paragraph 13.40 of the listings requirements, property entities cannot enter into asset management agreements without:

ADVERTISEMENT

CONTINUE READING BELOW

Majority shareholder approval: Obtaining a majority of votes cast by shareholders in a general meeting (excluding interested parties).
Termination rights: Guaranteeing security holders the ongoing contractual right to cancel the contract at any time prior to its expiry date via a general meeting vote.

Although Accelerate initially committed in its December 2023 announcement to issuing a shareholder circular and convening a general meeting, it permitted the asset manager to take over site operations on 1 February 2024 without obtaining shareholder consent or inserting the required cancellation rights.

Read: Accelerate offloads Fourways land and attached BMW dealership

In November 2024, Accelerate disclosed that the suspensive conditions of the agreement had lapsed, rendering the contract of no force and effect. However, the asset managers remained on site and have continued to manage Fourways Mall on a month-to-month basis without shareholder approval.

Investigation findings

The JSE initiated an investigation in August 2024 following the publication of Accelerate’s audited annual results for the year ended 31 March 2024, where the company noted that “the impact of the appointment of the asset and property manager was already evident”.

Detailing the severity of the governance breakdown, the exchange noted: “The purpose and significance of paragraph 13.40 of the listings requirements, is to ensure that shareholders are afforded an opportunity to consider and approve the appointment of an asset manager, as well as to retain an ongoing right to reassess and, where necessary, terminate such arrangements.

ADVERTISEMENT:

CONTINUE READING BELOW

“These protections are particularly important in the context of a property company, where the asset manager exercises significant influence over the management and performance of the company’s primary assets.

“The company’s decision to conclude and implement the appointment of the asset manager without obtaining the requisite shareholder approval, and without incorporating the prescribed shareholder protections, undermined the governance safeguards embedded in paragraph 13.40. As a result, shareholders were not afforded the opportunity to exercise their rights in relation to a fundamental aspect of the company’s operations.”

The JSE highlighted that because the asset manager remains on site on a month-to-month basis, Accelerate’s non-compliance with the listings requirements remains ongoing.

Read:
Accelerate’s disposals top R2bn
Fourways Mall secures tashas, Pantry to cement turnaround

#JSE #censures #Accelerate #Fourways #Mall #governance #breach