Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 32
LCCP) and Fleetwood Grobler was dismissed from the
case. On 30 October 2020, Sasol filed a Motion for
Reconsideration with the court related to the remaining
elements of the case. Plaintiffs filed an opposition on
19 January 2021, and Sasol filed a reply on 1 February
2021. On 7 July 2021, the court denied Sasol’s Motion
for Reconsideration. Sasol has appealed that decision
but failing a successful appeal discovery proceedings
will commence. The lead plaintiff has not specified the
quantum of any alleged damages. Any impact of the
class action complaint cannot be reasonably estimated
at this point in time, but it cannot be excluded that it
may have a material adverse effect on our business,
operating results, cash flows and financial condition.
as well as described under “Item 4.B—Business
overview—Legal proceedings and other
contingencies”.
We could also face potential litigation or
governmental investigations or regulatory proceedings
in connection with the material weaknesses we
identified in 2019, 2020 and 2021 in our internal
controls over financial reporting (see “Item 3.D—We
identified a material weakness in our internal control
over financial reporting in 2020, which we are still in
the process of remediating. If we are unable to
remediate this material weakness, or if we experience
additional material weaknesses or other deficiencies in
the future or otherwise fail to maintain an effective
system of internal controls, we may not be able to
accurately and timely report our financial results, which
could cause shareholders to lose confidence in our
financial and other public reporting, and adversely
affect our share price”).
There can be no assurance as to the outcome
of any litigation, arbitration or other legal proceeding or
investigation, and the adverse determination of material
litigation could have a material adverse effect on our
business, operational results, cash flows and financial
condition.
On 5 February 2020, a securities class action
complaint was filed on behalf of US ADR owner Chad
Lindsey Moshell and other US ADR holders who
purchased Sasol securities from 10 March 2015 to 13
January 2020. It was filed in the United States District
Court, Southern District of New York against Sasol
Limited and five of its current and former executive
directors. The complaint alleges violations of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934
and Rule 10b-5 promulgated thereunder, and claims,
among other things that (i) Sasol had conducted
insufficient due diligence into, and failed to account for
multiple issues with, the LCCP, including as to the true
cost of the project, (ii) construction and operation of the
LCCP was consequently plagued by control
weaknesses, delays, rising costs, and technical issues;
(iii) these issues were exacerbated by Sasol’s top-level
management, who engaged in improper and unethical
behaviour with respect to financial reporting for the
LCCP and the project’s oversight; (iv) all the foregoing
was reasonably likely to render the LCCP significantly
more expensive than disclosed and negatively impact
the company’s financial results and (v) as a result,
certain of the company’s public statements were
materially false and misleading during the class period.
On 4 May 2020, Mr. David Cohen was appointed as
lead plaintiff and filed an amended complaint on 4 June
2020. Sasol and the individual defendants filed a
motion to dismiss on 2 July 2020. On 24 August 2020,
Sasol’s motion to dismiss was granted in part (relating
to the effectiveness of Sasol’s controls over financial
reporting) and denied in part (relating to alleged
misrepresentations as to the cost and schedule of the
Intellectual property risks may adversely affect our
freedom to operate our processes and sell our
products and may dilute our competitive advantage
Our various products and processes, including
most notably our specialty chemical and energy
products and processes, have unique characteristics and
chemical structures and, as a result, are subject to
confidentiality and/or patent protection, the extent of
which varies from country to country. Rapid changes in
our technology commercialisation strategy may result
in a misalignment between our intellectual property
protection filing strategy and the countries in which we
operate. The disclosure of our confidential information
and/or the expiry of a patent may result in increased
competition in the market for our products and
processes, although the continuous supplementation of
our patent portfolio reduces such risk to an extent. In
addition, aggressive patenting by our competitors,
particularly in countries like the US, China, Japan and
Europe may result in an increased patent infringement
risk and may constrain our ability to operate in our
preferred markets.
A significant percentage of our products can
be regarded as commodity chemicals, some of which
have unique characteristics and chemical structure
which make the products more suitable for different
applications than typical commodity products. These
products are normally utilised by ourselves or our
customers as feedstock to manufacture specialty
chemicals or application-type products. We have
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