Lewis receives demand to declare execs delinquent

Cape Town - Lewis Group [JSE:LEW] on Wednesday said it received a letter of demand to declare four of its directors, including the CEO, delinquent.

In the letter addressed to the Lewis board of directors David Woollam, director of Summit Financial Partners, demanded that the furniture retailer commence with proceedings to declare CEO Johan Enslin, chief financial officer Les Davies, chairperson David Nurek and non-executive director Hilton Saven delinquent directors in accordance with the provisions of Section 165, as read with Section 162, of the Companies Act, 71 of 2008 (as amended).

Woollam holds a number of ordinary shares in Lewis.

The demand relates among others to Lewis charging customers a cost of loss of employment insurance, which  the company claimed was mistakenly sold to them.

In October last year Lewis made public its intention to refund a total of R67.1m to customers for the cost of loss of employment insurance - R44.1m plus R23m in interest.

Summit questioned the claim that it was a human error, stating that their rough calculations show that the average refund cannot exceed R1 000 per case. "So, with a refund of R44m, it would amount to 44 000 errors. How can this be human error?"

READ: R67m customer refund is not the end of Lewis challenge

In the letter, of which Fin24 has copy, Woollam said over the last 18 months he has raised a number of issues relating to the lack of corporate governance, multiple breaches of the National Credit Act and the issuance of consolidated annual financial statements that do not conform with International Financial Reporting Standards at Lewis.

"The actions, which precipitated my concerns, had a damaging effect on the reputation, share price and profits of Lewis," he wrote.

Lewis said it has appointed an independent sub-committee of the board to consider Woollam's allegations against the directors.

Lewis said after taking advice, it intends to apply to court to have the demands set aside in terms of Section 165 (3) of the Companies Act and on the grounds that they are "frivolous, vexatious and without merit".

Lewis shares changed hands at R45.26 just after noon, 2.73% down from its previous close.

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