Highlights from the world of Proxy 
Papers you can’t afford to miss: Pik N Pay, KazMunaiGas, Celesio and Jindal Steel & Power.
Pik N Pay Stores Ltd; Pik N Pay Holdings Ltd.
Johannesburg Stock Exchange – July 25
For the past 35 years, the Ackerman family has owned a majority stake in Pick n Pay Holdings (“Holdings”), a public investment shell entity that in turn has owned a majority stake in Pick n Pay Stores (“Stores”), being the public operational entity of the Pick n Pay group. Some investors have viewed this pyramid control structure as an outdated mechanism that has, among other things, given a disproportionate level of voting power in Stores to the Ackerman family, resulted in Holdings shares historically trading at a discount to the intrinsic value of Holdings’ investment in Stores, and reduced trading liquidity in Stores shares. Holdings and Stores are now looking to eliminate the pyramid structure by making a pro rata distribution of the Stores ordinary shares held by Holdings to current Holdings shareholders, with Holdings effectively being dissolved thereafter. However, the proposed restructuring also contemplates the issuance of a newly-created class of unlisted, non-participating B voting shares in Stores to the Ackerman family for nominal consideration. Such issuance will enable the Ackerman family to maintain the same level of voting control that it currently holds over Stores. As a result, minority shareholders of both Holdings and Stores must now closely scrutinize whether the proposed restructuring represents true reform or is merely window dressing.
KazMunaiGas Exploration Production JSC
London Stock Exchange – August 3
While Kazakh general meetings do not usually lead to corporate governance headlines, the upcoming special meeting of London-listed KazMunaiGas may change that. The meeting, requisitioned by the controlling shareholder (“NC KMG”), has already resulted in an unusually public battle between the largest shareholder and independent directors. The independent directors are countering claims of poor management, for which the proponent prescribes a variety of very specific adjustments to the charter. Minority shareholders may wish to carefully consider whether the proposed adjustments give enough consideration to their interests and adequately address alleged shortcomings. For investors looking in, the circumstances may be an unhappy reminder of another Kazakh resource company, Eurasian Natural Resources Corporation, which ultimately delisted from London in 2013 following battles between the board and its primary owners.
Celesio AG
Deutsche Boerse – August 10
Celesio AG, which was listed on the German MDAX until September 2015, may continue to face pushback from its remaining free float shareholders at this year’s annual meeting. Having successfully fended off shareholder proposals submitted to the 2015 annual meeting attempting to initiate legal action against the management board for its attempts to delist shares from the regulated markets, the company’s management have continued the downlisting process with shares being delisted from German regulated markets in October 2015. Given the noticeable decline in Celesio’s disclosure, level of
shareholder engagement and compliance with standard German corporate governance practices (including a decision not to publish a corporate governance report), minority shareholders may question the supervisory board’s willingness over the past fiscal year to protect their rights over those of the controlling shareholder – the U.S.-based McKesson Corporation.
Jindal Steel and Power
Bombay Stock Exchange – August 1
Government and business often go hand in hand. Yet when the same individual holds positions of power in both spheres, abuses (whether perceived or proven) may follow. Navin Jindal, executive chairman of Jindal Steel and Power, stands accused by the Government of India of abuse of power and other crimes from his time as a parliamentarian, including allegedly influencing the Government’s allotment of coal mines to the Company. The “Coalgate” scam has eroded the Company’s financial performance after a 2014 Supreme Court ruling stripped its ownership of the mines, and it faces penalties that may bring further significant financial loss. While only time will tell how the Company will fare in these matters, it is clear that much will be revealed as one the Company’s own accountants is likely to become a witness for the Government in its case against Mr. Jindal. Shareholders should stay informed to the proceedings against Mr. Jindal as they will likely further influence the Company’s economic future.