The Board of Oslo Børs passed the following resolution: ”Violation charges are hereby imposed on IGE Resources AB for a breach of the duty to disclose inside information to the market pursuant to Section 5-2 (1) of the Securities Trading Act in an amount equivalent to five times the annual listing fee, i.e. NOK 721, 000, cf. Securities Trading Act Section 17-4 third paragraph and Section 15-1, cf. Securities Trading Regulations Section 13-1, and for a breach of the duty to publish a detailed stock exchange announcement no later than three trading days after entering into the agreement in an amount equivalent to the annual listing fee, i.e. NOK 144, 200, cf. Stock Exchange Regulations Section 31 and Continuing Obligations Section 15.4.”
A brief summary of the case:
The case relates to the question of whether IGE Resources AB disclosed information in a timely manner in relation to entering into an agreement to purchase the company Ghana Gold AB and in relation to an advance payment of SEK 50 million. The case also raises the question whether the company published a detailed stock exchange announcement within the timetable stipulated in the ‘Continuing obligations of stock exchange listed companies’ as issued by Oslo Børs.
IGE Resources AB disclosed in a stock exchange announcement on 29 January 2013 that the company intended to enter into an agreement to acquire Ghana Gold. On Friday 22 March, Oslo Børs became aware that IGE’s external auditor had resigned and had reported the company to the Swedish Economic Crime Authority. OnMonday 25 March, IGE issued a stock exchange announcement about the situation, but due to uncertainty over what the information might mean for the company, Oslo Børs elected to halt trading in the company’s shares onTuesday 26 March. Trading resumed on 27 March after IGE issued a detailed stock exchange announcement which included the information that IGE had already paid consideration of SEK 50 million to Alluvia Mining Ltd. on23 January for the purchase of Ghana Gold.
Investigation of the case by Oslo Børs identified that at the time IGE entered into an agreement to purchase all the shares in Ghana Gold from Alluvia Mining (23 January), Alluvia Mining did not own Ghana Gold. However, Alluvia Mining had entered into an agreement on 8 January 2013 with the company Mineral Invest International to purchase all the shares in Ghana Gold. This agreement required approval by a general meeting of Mineral Invest. Following this, IGE would have to submit the agreement for approval by its own general meeting.
Shares in the American company Advanced Mineral Technologies (AMT) were pledged as collateral for the advance payment of SEK 50 million. If the purchase of Ghana Gold were not carried out, the advance payment of SEK 50 million would be returned to IGE. If this did not happen, IGE had the right to take over the shares in AMT.
During the course of February and March 2013, IGE’s auditor raised a number of questions about the payment of SEK 50 million, whether the company had sufficient funds for its continuing operations and about the collateral provided in the form of shares in AMT. The auditor also raised questions about the close relationships between the various contracting parties. As mentioned above, the auditor resigned on 22nd March.
Oslo Børs is of the view that IGE breached its duty to disclose information since inside information was in existence in the company by 23 January at the latest in connection with the agreement entered into for the purchase of Ghana Gold and the advance payment of SEK 50 million, which was equivalent to 72.3% of the company’s free capital. Oslo Børs is of the view that the advance payment in isolation was of such a size in relation to the company’s free assets and risk exposure that it represented inside information in its own right, independently of any other agreements and circumstances.
In addition, IGE had a duty to issue a detailed stock exchange announcement no later than three days after the agreement was entered into, i.e. no later than 28 January. The requirement to issue a detailed stock exchange announcement is stipulated in Continuing Obligations when a transaction represents a change of more than 5% in the company’s assets. Oslo Børs considers that IGE’s breach of the duty to publish a detailed stock exchange announcement is an aggravating factor since the breach of this duty made the situation worse for the market because the market was not provided with complete information.
The minutes of the Board’s consideration of this case will be made available on the Oslo Børs web site in due course under the heading ‘Regulations’, sub-heading ‘Decisions and Statements’.