AGGRIEVED Pinnacle Point shareholders are going to court on May 7 in an attempt to overturn an exemption that Nedbank gained from the JSE’s usual rule that a mandatory offer to minorities is triggered when an institution’s stake reaches 35%.

Buying out minorities could cost Nedbank more than R1bn.

This court case is in addition to R773m Absa is claiming from Nedbank following a trade of Pinnacle Point’s single-stock futures that went horribly wrong.

While dealing with Pinnacle Point’s single-stock futures, Nedbank exceeded the 35% ownership threshold, which Pinnacle Point shareholders are arguing should have triggered an offer to them. Shareholders of the now liquidated Pinnacle Point property group (previously Acc-Ross ), who will be represented by Wim Trengove SC, filed papers in the South Gauteng High Court on Tuesday asking the court to review a decision by the Securities Regulation Panel (now the Takeover Regulation Panel).

In 2010, the panel ruled that Nedbank’s subsidiary, Syfrets, was not obliged to make an offer to Acc-Ross minorities after the bank reached more than 35% ownership in March 2007.

The aggrieved parties, which include New Port Finance Company and Pinnacle Point Holdings, had gone to the securities panel in 2010 seeking a ruling that Nedbank make an offer to shareholders. The parties had also argued Nedbank created a false market by acquiring more than 35% of Acc-Ross shares in 2007.

This meant that some shareholders could have bought Acc-Ross shares in anticipation that Nedbank would make an offer to minorities.

The panel ruled in favour of Nedbank, saying this did not constitute an "affected transaction" when Syfrets’ ownership of Acc-Ross reached more than 35%.
Nedbank had argued before the panel that it had reached the 35% threshold because it bought the shares to fulfil its obligation to deliver single-stock futures and was not intending to acquire Acc-Ross. It was holding the shares temporarily to fulfil its obligations in terms of this complex single-stock futures agreement with a third party known as Cortex.

However, the aggrieved parties argue in papers filed on Tuesday that Nedbank’s argument that it held the shares temporarily to meet complex market obligations could be abused and should not be maintained. "Recognising this special form of shareholding, which inhabits a sort of commercial twilight zone and is immune from the consequences of the Code 8.1 of Securities Regulation Panel Code, will lead to regulatory confusion and potential exploitation of other shareholders, certainty and market integrity," the parties argued.

Nedbank’s legal representative, Sam Oosthuizen, from law firm Cliffe Dekker, told Business Day they would oppose the claims come May 7 as "there was no merit in reviewing the application". Nedbank will be using Adv Fanie Cilliers SC.

The Takeover Regulation Panel said it would not be opposing the review and would abide by a court decision.