Lessons from the Steinhoff Debacle Zain Lundell Zunaid

Lessons from the Steinhoff Debacle Zain Lundell Zunaid Lundell

Lessons from the Steinhoff Debacle 5 March 2019

Ongoing litigation against Steinhoff - Update on process behind litigation and discussion regarding ISLG and its structure

Who is behind the Steinhoff Investor Litigation Efforts? LHL Attorneys Experienced RSA counsel involved in other class actions such as Listeriosis class action and VW Emissions class action Bynkershoek Experienced NL counsel involved in other representative actions such as Fortis/Ageas TILP Litigation 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) DRRT 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. Therium Experienced and wellfunded UK litigation funding company (over € 300 million in funding ability)

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, La. Grange and others in the Netherlands, South Africa and Germany.

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

What should I do next? Register (if you have not) and wait for updates. How much can I recover? Questions From Investors Who Could Not Attend 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. 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

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

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 (Po. C) 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) 9

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

Value Proposition Global Loss 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 Premium Recovery • Pursue cases based on solid facts, evidence and sound economic analysis • Seek successful, timely resolution and premium recovery for our clients Think Global - Act Local • 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 No Risk or Costs Litigation Funding • No risk to join any DRRT action • Success Fee ensures we only get paid if you do 11

Discussion regarding corporate governance and its importance in a post. Steinhoff world

INCREASED REPORTING AND DISCLOSURE

Focus is on the board: “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. ” “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 longterm growth. ” “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. ”

Fiduciary Duties of the Board 1. Scope of directors’ duties; 2. Potential liability and relevant penalties for breach of law and directors’ duties;

Common Law and the Companies Act No. 71 of 2008 (“Act”) 1. Established common law principles 2. Codification of fiduciary duties 3. Section 66 and Section 76 of the Act

• 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.

THE BUSINESS JUDGMENT RULE Section 76(4)

• 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.

The best interests of the Company What comprises the Company?

Section 77 – Director Liability Section 77(2)(a) • 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 Section 76 read with Section 77(3)(d)(i) • 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

QUESTIONS?

THANK YOU