Inter-Regulator Investigation Following Failure to Satisfy the Commission from a Notice to Show Cause Regarding Reckless Trading or Trading Under Insolvent Circumstances Nova Propgrow Group Holdings Ltd, Reg. No. 2011/003964/06 (herein after referred to as NOVA) has been a subject of an investigation for identified and possible contraventions of the Companies Act 71, of 2008 (as amended) (herein after referred to as ‘the Companies Act’).
On 21 February 2021, NOVA was issued with a Notice to Show Cause Regarding Reckless Trading or Trading Under Insolvent Circumstances through Form CoR. 19.1, requiring it to show cause why it should be permitted to carry on business or to trade. Subsequent to that, after the non-satisfactory response received from its Board, the company was issued with a Compliance Notice on 25 October 2021 to afford it a final opportunity to prove beyond reasonable doubt that it would not be in a financially distressed position by the end of its financial year, i.e. 28 February 2022.
The requirement was informed by the Commission’s assessment of the company’s annual financial statements (AFSs), taking into account the financial obligations to which the company is understood to be tied, as informed by the Commission’s understanding and interpretation of the Scheme of Arrangements (SoA) alluded to in the Notes of the company’s annual financial statements over the past ten (10) years. Following the assessment of the company’s response, received on 15 December 2021, the Commission could not arrive at a satisfactory conclusion that the company is not engaging in conduct prohibited by section 22 of the Companies Act. Reasonable grounds still exist that the company is in contravention of Section 22 (1) and Section 29 of the Companies Act.