“They’ve been on [our board] since about 2008. Ronald Ntuli is involved in our BEE empowerment deal and Atul purchased the shares at the time our then chairman invited him to join the board,” Comair CEO Erik Venter told CNBC Africa.
“I wasn’t directly involved in that decision at the time. This was a decision our chairman [made] in 2008.”
Gupta and Ntuli sold all their Comair shares on Monday. An announcement error on South Africa's Stock Exchange News Service by declaring a notice of purchase instead of a notice of sale, swiftly caused the airline company's shares to hit a high. The share price then plummeted after Comair issued a correction.
Gupta’s and Ntuli’s shares, which were worth 86 million rand, were then bought back by the company.
Venter added that Comair had discussed the process of the repurchasing of shares for some time, but the company’s volumes traded had always been extremely small over a long period of time.
“We suddenly got a call from a broker saying there are 23 million shares in the market. We don’t even have a broker in place for Comair, because we don’t normally do a lot of share action. We scrabbled to get a broker in place to try and take up these shares,” Venter explained.
“We were a bit nervous that someone else would snap up the shares in the meanwhile, because we had to do a lot of paperwork to even get a mandate in place for the broker to do the purchase.”
Comair managed to collect all the shares and earn a few more in the process.
According to regulation, board members planning on selling their shares, need permission from the board chairman or company chief executive before a share sale.
While Comair received notice from Gupta and Ntuli, the shares were put on the market within minutes of receiving permission to do so. Due process was however followed before the sale.
“We’re comfortable that the process followed was 100 per cent in line with JSE regulations. We even got legal advice very quickly to make sure that we weren’t breaking any rules,” said Venter.
“There was an error in terms of the announcement, which was completed on a purchase template instead of a sale template. You could see from the timing that we didn’t have our ducks in a row to take advantage of the buy-back immediately. We don’t see these opportunities coming around very often in terms of that kind of volume on the market for Comair.”