Butters challenges regulator’s settlement with group around Peresec in South Africa — Daily Maverick
In South Africa, investor Craig Butters has applied to the Western Cape Division of the High Court to set aside a settlement agreement between the Takeover Regulation Panel — the takeover regulator — and a group of parties under investigation linked to brokerage and investment company Peresec and its head, Warren Chapman. Butters is also seeking an order requiring the regulator to complete the investigation and take lawful action based on its findings, Daily Maverick reports.
The dispute concerns allegedly coordinated acquisitions of shares in several companies in 2018–2020. Under the rules, if investors acting in concert collectively acquire at least 35% of a company, they must make a mandatory offer to other shareholders. In Butters’ view, the group around Peresec avoided such offers and gained control of assets worth billions of rand at a low price.
Settlement without admission of violations
The Takeover Regulation Panel announced its investigation on 19 August 2022. Butters submitted analytical materials to the regulator in September 2022, as well as additional submissions in January and March 2023. However, on 13 April 2023, the panel said it had entered into a settlement agreement with the parties under review without their admitting violations of the Companies Act or takeover rules.
Chapman and parties associated with him deny allegations of acting in concert. He insists that links between investors alone do not prove their coordinated conduct. According to him, the agreement with the regulator was signed to close the matter and did not contain an admission of guilt.
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Butters argues that the settlement was not concluded through the procedure provided for by law and proved too lenient. In court documents, he stated that people whom he considers involved in unlawful schemes to gain control of companies did not face appropriate consequences, while minority shareholders may have received less than they would have under a timely mandatory offer.
Dispute over investigation materials
After the settlement was announced, Butters sought access to the full investigation file. He noted that the inspector’s formal report was dated 25 May 2023 — after the public announcement of the settlement — while the detailed terms of the agreement were confidential.
The regulator initially provided only 285 pages of non-confidential material from approximately 9,000 pages in the case file. After an application to compel disclosure of documents, Butters received thousands more pages, but, he claims, some materials were still not disclosed. These included shareholder registers of African Phoenix and enX during key periods, as well as correspondence concerning irrevocable undertakings to support changes to boards of directors.
The hearing of the main application had to begin again after the court upheld Chapman’s preliminary objection: not all companies that had been the subject of the regulator’s investigation had been joined to the proceedings.
