Shareholders of Status Capital Building Society are opposing an application for the company’s liquidation brought by the Financial Services Regulatory Authority (FSRA), lodging a detailed answering affidavit that refutes the regulator’s claims and proposes judicial management instead.
Shareholder and appointed representative Sabelo Nkambule contends that FSRA’s justifications for liquidation — which include allegations of unsafe and unauthorised business practices, insolvency, financial crime, and issues surrounding the non-renewal of the company’s licence — are unsubstantiated.
Nkambule acknowledged that the authority’s powers to investigate and inspect financial service providers cannot be disputed. However, he argued that the law provides specific penalties where contraventions occur.
He highlighted that FSRA’s repeated renewal of Status Capital’s licence, even after allegedly identifying non-compliance in 2020 and 2021, contradicts its present stance.
The affidavit asserts that licence renewal signalled to the public that Status Capital was conducting business lawfully and that the regulator had affirmed the company’s internal controls and corporate governance practices.
Nkambule further states that the allegations in the founding affidavit are inconsistent with what is required of the authority under the Act.
He also maintains that if the alleged transgressions warranted liquidation, administrative penalties would have been imposed earlier.
Nkambule pointed to what he described as the conspicuous absence of crucial inspection reports from 2021 and 2022, as well as financial or operational reports from appointed curators.
He noted that Bimal Da Silva was appointed curator on December 17, 2024, but alleged that shareholders were not informed about how much had been paid to creditors or how much remained at the end of the curatorship.
“There has been no report, financial or otherwise, setting out what was discovered within Status Capital’s business,” Nkambule said.
He further alleged that a comprehensive report from FSRA Chief Executive Officer Ncamiso Ntshalintshali was not submitted by the stipulated deadline of December 15, 2023, despite references to inspections conducted in 2021.
FSRA CEO Doubles as Investigator?
Investors and shareholders further allege that the FSRA CEO misrepresented himself as an investigator or curator when he was not.
“All the averments made appear to be information from the FSRA CEO, who was neither an inspector nor investigator. Ntshalintshali has not suggested that he also performed duties of a curator,” Nkambule said.
They argue that the appointment of a second curator rendered the liquidation application procedurally deficient.
It is further alleged that an anticipated report supporting the liquidation application was neither submitted to the court nor presented to shareholders.
“The shareholders have not been updated about their own company,” Nkambule stated.
He further alleged that Da Silva effectively assumed the powers of a board of directors and executive, yet no comprehensive report detailing findings or financial outcomes was made available.
“The shareholders are not aware of how much was received from debtors, how much was paid to creditors, or what remained at the end of the curatorship,” he said.
Shareholders denied involvement in money laundering, pyramid schemes, or fraudulent activities.
They acknowledged the existence of debenture agreements, arguing these were entered into to satisfy capital adequacy and prudential requirements under provisions of the Building Societies Act.
While admitting that explicit FSRA approval was not initially sought for some agreements, they maintained this compliance issue was addressed in 2021 after the regulator directed Status Capital to divest.
Nkambule asserted that the company complied with the directive, recovering most of the invested funds.
The sole remaining investment, with Swaziland Debt Factoring Firm (Pty) Ltd, was described as a long-term investment, with substantial repayment already made and the balance reportedly in the process of settlement.
He further denied that funds were siphoned to related entities with intent to defraud.
“If this were the case, the FSRA would have revoked Status Capital’s licence in 2022 and issued a public notice immediately to protect the general public,” Nkambule argued.
Concerns were also raised regarding FSRA’s claims of insolvency, with the affidavit alleging the omission of comprehensive financial statements or a clear breakdown of creditors versus available assets.
Shareholders also disputed claims of links between Status Capital and related entities allegedly managed by David Van Niekerk, asserting that Status Asset Management (Pty) Ltd is not under his directorship.
Nkambule further cited the impact of the COVID-19 pandemic and subsequent unrest as factors that hampered early operations and marketing efforts.
He maintained that upon receiving directives from the regulator, Status Capital took necessary measures to ensure compliance.
The matter remains before the High Court.
