1. Lessons from the Steinhoff Debacle
Zain Lundell
Zunaid Lundell

2. Lessons from the Steinhoff Debacle
5 March 2019

3. Ongoing litigation against Steinhoff - Update on process behind litigation and discussion regarding ISLG and its structure
UC is the leading public institution in the world. So when large companies started redefining their mission to serve the public good, we began to lead the development of research and curriculum in this area.

4. Who is behind the Steinhoff Investor Litigation Efforts?
Experienced US/DE shareholder recovery company involved in almost all important non-US shareholder litigation (generated €90 mio Olympus settlement in Japan; generated €1.3 bn Fortis settlement in the Netherlands; involved in Porsche, VW, HRE, Vivendi, Petrobras & Toshiba.
DRRT
Experienced and well-funded UK litigation funding company (over €300 million in funding ability)
Therium
LHL Attorneys
Bynkershoek
TILP Litigation
Experienced RSA counsel involved in other class actions such as Listeriosis class action and VW Emissions class action
Experienced NL counsel involved in other representative actions such as Fortis/Ageas
Experienced DE counsel involved in majority of German model cases proceedings such as VW, Porsche, Hypo Real Estate, Deutsche Telekom etc. (over €10 bn in total claim values)

5. Legal Complaints Against Steinhoff
Representative action (limited Dutch foundation class action) by International Steinhoff Litigation Group via local counsel Bynkershoek against Steinhoff International Holdings NV and Markus Jooste; future claims to be added against Steinhoff RSA, Deloitte & Touche (NL and RSA), various banks and individual directors/management. Other action by Dutch shareholder association VEB to seek liability against Steinhoff International Holdings NV and Markus Jooste is currently stayed until April 2019.
Representative action (opt-out class action) by International Steinhoff Litigation Group via local counsel LHL against Steinhoff (NL and RSA), Deloitte & Touche (NL and RSA), various banks and individual directors/management
Representative action (model case action) by International Steinhoff Litigation Group via local counsel TILP against Steinhoff International Holdings NV.
Criminal Investigations continue against the company as well as Jooste, LaGrange and others in the Netherlands, South Africa and Germany.

6. Key Aspects of Steinhoff Class Action in RSA
Only real opt-out class for all investors in both Steinhoff companies
Steinhoff is a fragile company and has limited resources for any potential global solution/settlement
Support of all investors (retail and institutional) is helpful for court to exercise jurisdiction
Private actions outside of the RSA and NL class actions may destroy any potential for a global solution and drive companies into bankruptcy
Any global settlement of shareholder claims requires a RSA solution for all shareholders alike

7. Questions From Investors Who Could Not Attend
What should I do next?
Register (if you have not) and wait for updates.
How much can I recover?
It depends on the company and how much money it can obtain from the sale of assets and after paying off senior creditors. Importantly, ISLG has claims against Deloitte, banks and directors which will maximize ability to recover for losses suffered.
Questions From Investors Who Could Not Attend
What if I signed up for another effort want to change?
Terminate support or registration and join our group – no cost to do so.
ISLG doesn‘t keep anybody hostage; ability to leave the group at any time

8. Important Aspects of a Comprehensive Loss Recovery System
Monitoring and
Assessment
Pro-Active Portfolio MonitoringSM
Systematic monitoring, tracking and analysis of global opportunities to recover unforeseeable investment losses caused by issuers in violation of disclosure obligations
Action
Claims Filing in
Global Securities Class Action Settlements
Active Representation in Selected Special Cases (U.S./non-U.S.) OR
Effect
Comprehensive Investor Loss Recovery

9. United States and Canadian Class Action Settlement Claims Filing Process
Step 1: Monitor and notify client of class action settlements open for claims filing
Step 2: Retrieve data from data transfer/warehouse or Individual Trade Request (ITR)
Step 3: DRRT submits Proof of Claim (PoC) to the claims administrator with all supporting documentation (Power of Attorney, Trading Data, Affidavit of Accuracy)
STEP 4: Deficiency correction/recording and/or approval/rejection notices
Step 5: Once payment is received DRRT will send a Disbursement Statement and transfer payment from client’s Interest on Trust Account (IOTA)

10. Global Distribution of Legal Activities: Past, Current & Future
New Jersey
Merck (Vioxx)
Merck (Vytorin)
New York
Bank of America (ML Merger)
Citigroup
Wachovia
AIG
Lehman Brothers
Enron Corp.
Petrobras
General Electric
Australia
Gunns Ltd.
National Australia Bank
Nufarm Limited
OZ Minerals
Sigma Pharmaceuticals
Newcrest Mining
Italy
Parmalat
Banca Monte Dei Paschi
Saipem
The Netherlands
Fortis/ageas
Converium AG (SCOR)
EADS
Royal Dutch Shell
LIBOR/EURIBOR
Royal Imtech
SNS
Tesco
Steinhoff
United Kingdom
Royal Bank of Scotland
Lloyds/HBOS
France
Vivendi
Japan
Olympus
Toshiba
Toyota
Mitsubishi
Kobe Steel
Texas
Michigan
General Motors
Maryland
Royal Ahold
California
Infineon Technologies
Canada
Gildan Activewear Inc. / BlackBerry
Valeant Pharmaceuticals
Denmark
Vestas Wind Systems
Germany
VW (“Dieselgate”)
Hypo Real Estate
VW/PHSE
Sky Deutschland/Premiere
Hess AG
Postbank
Wirecard
Portugal
Banco Espirito Santo
Brazil
Electrobras
Embraer
JBS / BRF
Vale
Russia
Sistema
Denmark
Danske Bank
New Jersey
Valeant Pharmaceuticals
South Africa
Steinhoff

11. Value Proposition Global Loss Recovery Premium Recovery
Experts in claims filing around the world
Pioneering loss recovery efforts in any relevant jurisdiction
Objective advice as to when / how to pursue these claims
Global Loss Recovery
Pursue cases based on solid facts, evidence and sound economic analysis
Seek successful, timely resolution and premium recovery for our clients
Premium Recovery
Small global network of legal and funding experts to ensure the best financial basis for the prosecution of each case
Understanding of local laws and customs, local manpower and expertise
Think Global - Act Local
No risk to join any DRRT action
Success Fee ensures we only get paid if you do
No Risk or Costs - Litigation Funding

12. Discussion regarding corporate governance and its importance in a post-Steinhoff world
UC is the leading public institution in the world. So when large companies started redefining their mission to serve the public good, we began to lead the development of research and curriculum in this area.

13. INCREASED REPORTING AND DISCLOSURE

16. Focus is on the board:
“Boards meet only periodically, but their responsibility is continuous. Directors whose knowledge is derived only from sporadic meetings are not fulfilling their duty to shareholders. Likewise, executives who view boards as a nuisance only undermine themselves and the company’s prospects for long-term growth.”
“Companies that fulfill their purpose and responsibilities to stakeholders reap rewards over the long-term. Companies that ignore them stumble and fail. This dynamic is becoming increasingly apparent as the public holds companies to more exacting standards. And it will continue to accelerate as millennials - who today represent 35 percent of the workforce - express new expectations of the companies they work for, buy from, and invest in.”
“The board’s engagement in developing your long-term strategy is essential because an engaged board and a long-term approach are valuable indicators of a company’s ability to create long-term value for shareholders.”
Larry Fink Letter - Link here.

18. Fiduciary Duties of the Board
Scope of directors’ duties;
Potential liability and relevant penalties for breach of law and directors’ duties;

19. Common Law and the Companies Act No. 71 of 2008 (“Act”)
Established common law principles
Codification of fiduciary duties
Section 66 and Section 76 of the Act

20. Good faith and Proper Purpose
Best interests of the Company
Degree of care, skill and diligence that may reasonably be expected from someone in that director’s position.

21. THE BUSINESS JUDGMENT RULE
Section 76(4)

22. Reasonably diligent steps to become informed about the matter;
Made a decision, or supported a decision of a committee or the board with regard to that matter;
Had a rational basis for believing, and did believe, that the decision was in the best interests of the company.

23. The best interests of the Company What comprises the Company?

24. Section 77 – Director Liability
Section 77(2)(a)
Section 77(3)(d)(i)
Section 76 read with Section 77
Imposes liability on a director for any loss, damages or costs sustained by the company as a consequence of a director’s breach of his/her fiduciary duties
A director will be liable for damages sustained by the company where he/she knowingly or recklessly signs or consents to the publication of a financial statement which is false/misleading
Liability of directors in terms of section 77 read with section 76 is joint and several
Reasonable conduct of a director is an objective assessment with regard to the certain subjective elements

25. QUESTIONS?

26. THANK YOU