SHARES REWARD FOR LOJAF EMPLOYEES

MBABANE – As a motivation for its employees, Lojaf (PTY) Limited has introduced a scheme that will see its employees being rewarded with shares.

Lojaf is a local Eswatini company which is now the proud owner of nine Pick n Pay stores and other businesses around the country. This month saw the first three employees benefitting from the scheme. The trio of Benjamin Sussman, Mario Fernandes, and Seddy Low, have been rewarded with shares of up to five per cent of the total issued share capital of the company.  The company has developed a scheme known as Long Term Incentive Plan (LTIP), which will see more of its employees becoming shareholders in the company.

Incentive

The objective of the scheme is a reward incentive for good service to employees of the company, including its direct and indirect subsidiaries; joint ventures and associated companies. It is also meant to retain and motivate the employees. Through the scheme, employees who are able to contribute to and influence the performance of the company and its strategy on the basis which aligns their interest with those of the shareholders would be rewarded. The company has since obtained a court order sanctioning the approval by the shareholders of the company to issue shares, up to five per cent of the total issued share capital at a discount rate of no more than 50 per cent of the share value at the time of issue, to its employees from time to time. This comes after it moved an ex parte application at the High Court for the registration of same.

An ex parte application is one that is moved without the knowledge or serving the other party. In motivating the application, the director of the applicant (Lojaf (PTY) Limited), Nelisiwe Mabuza, informed the court that the company was a supermarket chain stores that carried on business of buying, supplying, selling and importing of groceries, goods and commodities of all kinds of retails. She informed the court that on June 28, 2022, the management of the applicant presented to the Board the Long Term Incentive Scheme Plan. According to Mabuza, the objective of the scheme was to retain and motivate employees, reward employees who were able to contribute and influence the performance of the company and for good service.
She told the court that on September 30, 2022, the Board was presented with a proposal to reward key employees who were identified to participate in the LTIP Scheme.

“I say the incentive scheme is not a once-off type of scheme, but will be ongoing for employees who are so identified from time-to-time,” submitted the director of the company. She related to the court that after deliberations of the proposal presented, the board passed a resolution that subject to shareholders’  approval, it issued shares of up to five per cent of the total issued share capital of the company at the time of  issue, to key employees as approved by the board from time to time. The board’s resolution passed, made provisions, subject to the approval and sanction by the court, as per Section 68(1)  of the Companies Act No.8, Act of 2009, 1 319 shares issued to Benjamin Sussman, Mario Fernandes and Seddy Louw, being the first three employees to participate  in the LTIP,” submitted Mabuza.

She further highlighted to the court that the shares were issued at a discount rate of not more than 50 per cent at the time of issue. According to Mabuza, on October 27, 2022, at an annual general meeting of the applicant, the shareholders passed a resolution approving and adopting the Long Term Incentive Scheme Plans as resolved by the board of directors. “I am advised and verily believe that Section 68 (10) of the Companies Act No.8 of 2009 provides for an exception to the common law rule that par value shares may be issued at a discount, as this would conflict with the rules in regard to the maintenance of share capital,” averred the director.

Discount

She argued that the Act, however, permitted the issue of shares at a discount strictly under the following conditions; the issue must be authorised by special resolution specifying the maximum rates of discount and that at least one year must have lapsed since the date on which the company became entitled to commence business or since the date of first issue of that class of shares. She contended that the applicant had fully complied with the conditions as mentioned in the Act. “The issue of shares has been authorised by a special resolution taken both on June 28 and September 30, respectively. As the date of the applicant’s issue, at least six years has lapsed since the company commenced business or since its date of first issue of the company’s shares,” argued Mabuza. The order as sought by the company was granted by the High Court.

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