Shareholder activist Harry Smit, known for his advocacy in protecting minority shareholder rights, has cast doubt on Ascendis Health’s plan to delist the company from the Johannesburg Stock Exchange (JSE). Smit, a former chairman of Ascendis, alleges management misconduct and has submitted documents to the JSE, Financial Sector Conduct Authority, and Takeover Regulation Panel to initiate an investigation into potential fraud.

Smit’s concerns stem from the upcoming extraordinary general meeting scheduled for January 18, 2024, where shareholders are set to vote on the delisting proposal. The activist contends that critical information has not been disclosed to shareholders, preventing them from making informed decisions. Smit has urged regulators to intervene and, at the very least, halt the voting process pending a thorough examination of the allegations and whistleblower documents.

Central to Smit’s claims is Ascendis CEO Carl Neethling’s presentation to the board, allegedly indicating that the exit offer undervalues Ascendis Health. The company’s path to delisting was initiated in June 2023, following significant losses and mounting debt, prompting a management shake-up and a turnaround strategy that included asset sales.

The delisting proposal, outlined in a letter from ACN Capital IHC, a consortium led by Neethling, offered a cash consideration of 80 cents per share to shareholders looking to divest. However, Smit alleges that Neethling has orchestrated a deal that would disproportionately benefit him and questions the independence of the board.

Specifically, Smit raises concerns about Neethling concurrently serving as CEO and chief financial officer for over a year without sufficient checks and balances—a potential breach of corporate governance norms. Additionally, he questions the board’s independence, citing evidence that some members owe the company substantial amounts in excess of 10 million shares.

The JSE is currently assessing the information submitted, while Neethling responded, stating, “We are obviously overwhelmed by the allegations and the attacks on the company and are still processing all the information for now.”

Neethling refuted Smit’s claims, asserting that there are no undisclosed transactions with related parties, no undisclosed deals, and no hidden financing at play. He also denied any intention to own over 50% of the company, addressing specific concerns raised by Smit.

Shareholders and market observers await the outcome of regulatory assessments and any potential actions to address the alleged improprieties surrounding Ascendis Health’s delisting proposal.