File picture: James White/Free Images
JOHANNESBURG - Anger and frustration permeated an emotion-charged meeting of debenture creditors in Nova Property Group as a motion of no confidence in the board was disallowed and debenture holders told they would have to pay the cost of any forensic audit conducted into the group’s affairs.

Nova, which has proposed a listing of the property syndications and the conversion of debentures to shares in the proposed JSE-listed company, is the rescue vehicle born out of a scheme of arrangement following the collapse of Sharemax Investments in 2010.

This followed the findings of a registrar of banks investigation that Sharemax’s funding model contravened the Bank Act became public knowledge, leading to new investments drying up and Sharemax being unable to make monthly payments to investors.

The registrar of banks laid criminal charges against Sharemax for alleged contraventions of the Banks Act in March 2012. The Hawks confirmed investigating Sharemax, but no charges to date have been brought against anyone associated with the failed investment schemes in which about 33000 people invested R4.5billion.

The meeting of debenture holders in Nova in Pretoria on Friday was a resumption of an adjourned meeting that took place earlier this month to consider the JSE listing.

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However, much of the two-hour meeting was taken up by disgruntled debenture holders criticising the directors of Nova, particularly chief executive Dominique Haese and chairperson Connie Myburgh.

Graeme Polson, chairperson of the debenture creditors meeting, intervened frequently to warn debenture holders to stick to the merits of the meeting and not to be disruptive, emotional or to speak about morality.

Roger Johnson, a debenture holder, asked fellow debenture holders to support his proposal for a vote of no confidence in the board of Nova, stressing that if the debenture holders had no trust in the Nova board, how could the listing proposal proceed.

Johnson said one of the reasons for the vote of no confidence was the inequitable distribution of shares in Nova between the directors and the debenture holders, which would be perpetuated in the distribution of shares in the proposed listed entity where the 97percent they held converted to 43percent.

“The question is: Who put up the money. Despite the protestations that the 97percent is valueless, as stated by Ms Haese last time, when they get to 43percent they have just as much value as ours will have.

“If the shares perform in the market over time, yes, we might be able to sell them. So will they. The question of them not having any value is really not valid,” he said.

Johnson added that the fact that the Nova board initially was proposing the scheme in terms of a section of the Companies Act that meant they did not have to obtain an independent opinion, which was indicative of their “moral approach to this thing”.

More than half of those present showed support for Johnson through a show of hands, but Polson ruled the meeting was not the right forum for such a motion.

Another debenture holder called on the board to allow an independent forensic audit of the company, “because there are people in their graves without money and their children are sitting here and fighting for them for what you have stolen from them”.

Haese said the Nova board wanted to get an independent audit opinion on the proposal, but if debenture holders wanted a forensic audit of the company they would have to pay for it.

Chris Momberg, from Johannesburg, said that Myburgh and Haese claimed with arrogance that they were entitled to 87.1percent of the company, which meant “whatever all of us here invested in for the record is worth nothing”.

Polson postponed the meeting to March 16.