Owner of South Africa’s biggest shopping mall hit with R500,000 fine
The owner of Fourways Mall, Accelerate Property Fund, has been fined R500,000 and hit with a public censure for violating the Johannesburg Stock Exchange’s listing rules.
The public penalty relates to the group’s unilateral appointment of Flanagan & Gerard as asset and property manager for Fourways Mall in 2023, without first seeking approval from shareholders.
According to the JSE’s Listings Requirements, the company could not enter into the agreement to appoint the asset manager without a majority of the votes cast by its shareholders.
It also needed to provide for the right of security holders, in a general meeting called by them or held by the property entity, to cancel the contract at any time before its expiry date.
Instead of following these rules, Accelerate published an announcement on SENS on 18 December 2023 advising its shareholders and the market that it had appointed the new managers for Fourways Mall.
The mall, which is the group’s largest and most significant asset in its portfolio, is also the largest shopping mall in the country.
However, it had fallen into deep decline amid rising vacancies and low turnover from reduced foot traffic.
It appointed Flanagan & Gerard to turn the operation around, with the new managers taking over for a period of 5 years commencing in January 2024.
The Moolman Group and subsequently Luvon Investments (Pty) Ltd, were also appointed in terms of the property, development and asset management services agreement.
At the time of the announcement, Accelerate stated that it was in the process of preparing the circular to its shareholders.
Still doesn’t have approval from shareholders
In November 2024, the Accelerate announced on SENS that the suspensive conditions relating to the appointment of the Asset Manager had not been fulfilled within the prescribed timeframe, and that the agreement was therefore of no force and effect.
However, following the agreement’s lapse, the asset manager remained on site and continues to provide services at Fourways Mall on a month-to-month basis.
Despite this, the JSE said that Accelerate still concluded the agreement and permitted the asset manager to commence operations from 1 February 2024.
This was done without obtaining approval from a majority of shareholders and without affording the shareholders the right to cancel the agreement at any time prior to its expiry.
“Accordingly, the JSE found the Company to be in breach of the provisions of paragraph 13.40 of the Listings Requirements,” it said.
The JSE said it first became aware of the matter in August 2024, following the publication of the company’s audited condensed annual results for the year ended 31 March 2024.
The results showed that the impact of the new asset manager was already evident through a turnaround at the mall.
The group’s latest results also point to a continued turnaround and improvements with the asset.
However, the JSE said that the asset manager continues to operate without shareholders’ approval—meaning the violation of the rules is ongoing.
“In this regard, the JSE has instructed the company to forthwith comply with the Listings Requirements,” it said.
Because of the breach of the JSE’s rules, the bourse has issued a public censure and imposed a penalty of R500,000, which has been wholly suspended for three years.
The suspension is on condition that Accelerate not be found in breach of similar provisions of the Listing Requirements during this time.
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