Minority shareholders in Pamodzi Group have asked the Johannesburg High Court to force the company to open its books to auditors appointed through the Independent Regulatory Board for Auditors (IRBA), after accusing the group and its directors of withholding financial information and failing to comply with the Companies Act for about five years.
In an application filed on May 14, the shareholders want the court to order that “independent registered auditors” be appointed by the chairperson of IRBA to audit Pamodzi’s reconstructed financial statements and produce a written report on any “material irregularities, accounting discrepancies, governance failures, or non-compliance”.
The applicants want Pamodzi compelled to reconstruct or complete its accounting records for the financial years 2020 to 2025, prepare annual financial statements for the same period, and produce management accounts for the 2026 financial year to date.
They also want the process to begin within “10 business days” of the granting of the court order and be completed within “60 business days thereafter”.
The application was brought by Simile Sibumbene Holdings, Kuncedzana Investment Holdings, Mokgabudi Trust, Sithole Family Trust and Solomon Sithole against Pamodzi Group and directors Ndaba Allan Ntsele, Frederick Dingaan Victor Leketi, Noluthando Ntandokayise Ntsele, Mothetjwa Paulos Sethunya and Yang Wang.
In 2022, Sunday World named Pamodzi shareholders as Njabulo Ntsele (27% via Njabulo Ntsele (Pty) Ltd), Sindisiwe Dlamini (7% via Simile Sibumbene), Felicia Mabuza-Suttle (>5%), and the late Jabu Mabuza & daughter (8.3% via Kuncedzana). Then there was Pambi Trust (7.6%), including beneficiaries like Kgalema Motlanthe, Happy Ntshingila, Moses Tembe, Khulu Sibiya, and Hlengiwe Buhle Mkhize. Among applicants in the current matter is Mokgabudi Trust of Tshidi Mokgabudi, also Denel’s interim chairperson.
In the notice of motion, the applicants ask the court to declare that Pamodzi and its directors failed or refused to “maintain accurate and complete accounting records, prepare annual financial statements, and furnish shareholders with annual financial statements and financial information” as required by the Companies Act and the company’s memorandum of incorporation.
They say the alleged conduct constitutes acts or omissions that are “unfairly prejudicial to”, “unfairly disregard the interests of”, or “unfairly discriminate against” the applicants as shareholders.
The shareholders also want the auditors to “furnish a written report” identifying any “material irregularities, accounting discrepancies, governance failures, or non-compliance” found during the audit.
The applicants are also asking the court to direct Pamodzi’s directors to give the auditors “all reasonable assistance, cooperation, explanations, books, records, access credentials, and documentation necessary” to carry out the order.
They want Pamodzi to provide access to the company’s “accounting records, banking records, digital financial systems, and any other supporting financial information and/or documentation”.
The shareholders also want written explanations from the respondents concerning Pamodzi’s “financial affairs, transactions and disposal of assets” during the relevant period. They further ask that the auditors be allowed to liaise directly with Pamodzi’s “bankers, accountants, auditors, service providers, and financial institutions” to obtain source documents and verify financial information.
In his founding affidavit, Sithole says the application became necessary after the applicants “exhausted all reasonable internal avenues available to them as shareholders”. “For a continuous period of approximately five years,” Sithole says, Pamodzi and its directors failed or refused to provide annual financial statements or adequate financial information concerning the affairs of the company.
He says this left the applicants unable to exercise “informed shareholder oversight”, assess Pamodzi’s financial position, protect their proprietary interests, or hold the directors accountable for the management of the company.
Sithole says the applicants and their attorneys made repeated written demands, but Pamodzi and its directors allegedly failed, refused or neglected to maintain proper and complete accounting records, prepare annual financial statements for 2020 to 2025, furnish the statements to shareholders, or provide an adequate explanation for the alleged failures.
“The aforesaid conduct constitutes ongoing non-compliance with sections 28, 29 and 30 of the Companies Act 71 of 2008 and materially prejudices the applicants in their capacities as shareholders,” Sithole says in the affidavit.
The applicants also want Pamodzi to hand over its current memorandum of incorporation, the shareholders’ agreement in force, and the company’s securities register within five business days of the order being granted.
They further want leave to return to court, should it become necessary, for further relief arising from the findings and recommendations contained in the auditors’ written report.
Pamodzi and the directors are yet to file their answering papers.
- Minority shareholders of Pamodzi Group have filed a court application demanding the appointment of independent auditors via IRBA to audit financial records and investigate irregularities, citing failure to comply with the Companies Act over five years.
- The shareholders seek reconstruction and completion of Pamodzi’s financial records from 2020 to 2025, preparation of annual statements, and access to 2026 management accounts, with the audit process to start within 10 business days and end within 60.
- Applicants accuse Pamodzi and its directors of withholding financial information, not maintaining proper accounting records, and acting in ways unfairly prejudicial to shareholder interests, violating legal and company requirements.
- The auditors are to produce a written report on material irregularities, governance failures, and non-compliance, with the directors ordered to fully cooperate and provide all necessary financial documents and access.
- The shareholders intend to seek further court relief based on audit findings, while Pamodzi and its directors have not yet responded to the application.
