Sygnia's corporate governance inflames shareholders

By Sizwe Dlamini Time of article published Jan 17, 2019

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CAPE TOWN – Adherence to the companies’ Act, JSE regulations and King rules on corporate governance at Sygnia Asset Management have left minority shareholders hot under the collar, with some of them expressing their resentment at the way the company seems to value shareholder input.

The concept of “non-binding advisory votes by shareholders”, the directors were unable to explain why they pass a resolution disregarding the legal role of shareholders to approve the remuneration policy of the company.

This was revealed by some shareholders after the asset manager’s annual general meeting (AGM) at its head offices in Cape Town on Wednesday where, notably, journalists from Business Report (BR) were barred from attending.

The sole reason given by the Sygnia personnel for preventing BR from covering the AGM was that they had not registered on Computershare. 

Sygnia’s co-founder and chief executive Magda Wierzycka, when contacted for comment said: “I have no interest in talking to Business Report, thank you very much.”

However, shareholders and others who were part of the meeting shared with BR that things got rather heated at some point during the meeting with the Sygnia bigwigs standing their ground.

The chairperson of the African Entrepreneurs Council (AEC), Sello Rasethaba, who spoke exclusively to BR after the meeting, expressed his disappointment with some of the AGM’s resolutions, particularly the one on the “non-binding advisory vote on remuneration”. "The vote allows shareholders to express their views on the Company’s remuneration implementation report, but will not be binding on the company.”

"I did indicate that the resolution to give a special remuneration and treatment to Mr Jonas has serious implications," said Rasethaba. "The Mr Jonas remuneration of R1 million, which is 100 percent more by that earned than that of the chairperson of the company creates an impression of buying political favours. To date, Mr Jonas does not sit on any committee of the board.

"We alerted the AGM about the risk such decisions have on listed companies such as Sygnia. This may fly in the face of recent financial legislation passed by the South African parliament and South Africa’s international commitment to the treatment politically exposed persons (PEPs). "Most countries base their definitions on the guidelines created by the Financial Action Task Force (FATF). The FATF defines a PEP as “a current or former senior official in the executive, legislative, administrative, military, or judicial branch of a government (elected or not).

“That is touting corporate governance. “The way the company is governed is not on point and for me, the arrangement with Mr Jonas and the request to disregard shareholders when it comes to remuneration policy leaves much to be desired in terms of how the company is run.“For me the good thing is that they at least give shareholders the opportunity to ask questions… as to whether we got the right answers I am not sure,” said Rasethaba.

Sygnia appointed Jonas as a non-executive director to its board in October at an annual fee of R1 million, while the current Sygnia board chairperson takes home R500 000 per annum and the other non-executive directors take home at least R200 000 per annum. 

Sygnia’s chief executive Wierzycka said there was nothing out of the ordinary about this remuneration structure. “Remuneration of directors, as normal remuneration, is driven by forces of supply and demand.

“Sygnia has zero government business, does not tender for government business and does not expect Mr Jonas to use any influence to drive business to Sygnia. He is expected to fulfil the role of a director as defined in Companies Act and King IV (Report on Corporate Governance).” 

Jonas is also the former chairperson and non-executive director of the Public Investment Corporation. He has served as an independent, non-executive director of the MTN Group since June 2018. 

Jonas is also one of four independent Presidential Investment Envoys, appointed by President Cyril Ramaphosa to promote foreign investment in South Africa.


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