THE Takeover Regulation Panel has received a complaint against pharmaceutical company Cipla Medpro over the way its board has handled a potential deal and the suspension of its CEO, Jerome Smith.

Mr Smith was suspended by the board on August 15 for alleged transgressions that will be the subject of an internal disciplinary inquiry that begins on Thursday.

His suspension saw the company’s share price plunge and torpedoed talks with an undisclosed third party that had been on the table since May, despite assurances from the board that its decision would not affect corporate activity.

Investors have expressed unhappiness with the way the matter has been handled by the board, with Shane Watkins, director at Silkroad Fund Managers, writing an open letter to the company chairman to express concern that the board had destroyed shareholder value.

On Monday, Lucky Phakeng, executive director at the Takeover Regulation Panel, confirmed he had received a complaint against Cipla Medpro on Friday. He declined to provide details of the substance of the complaint or indicate who had lodged it, saying to do so might jeopardise the panel’s work.

"It would be inappropriate for us to reveal any more detail at this stage, particularly considering the sensitivity of the alleged complaint. It may be prejudicial, particularly where the parties may not be even aware of such a complaint against them," he said in a telephone interview.

The panel regulates mergers and acquisitions.

Cipla Medpro secretary Mark Daly confirmed that the company was aware of the matter, but declined to comment in more detail.

Mr Smith’s legal counsel, Johan Victor, said his client had gone to court last week to try to be reinstated, fearing that his suspension would derail the talks with the mystery party.

The Companies Act contained provisions that prohibited a board from taking action that would jeopardise a bona fide offer that was under negotiation, he added.

"Mr Smith’s aim was not at that stage to circumvent any future disciplinary action … but purely to keep the offer on the table," said Mr Victor.

Explaining why his client had sought to have the matter heard in camera, he said Mr Smith was bound by a non-disclosure agreement and could not reveal the identity of the third party.

Mr Smith withdrew his application for an urgent interdict after the unidentified party withdrew its offer on Wednesday August 29, said Mr Victor.

The withdrawal of the cautionary announcement sent Cipla Medpro’s share price tumbling by as much as 14% to an intra-day low of R6.60. Shares in the company had already been knocked by news of his suspension, falling by up to 10% in early trade the next day.

Cipla Medpro’s senior managers have expressed their support for Mr Smith, adding to the general sense of confusion about what his alleged transgressions might be.

A letter signed by 10 of the company’s directors, a copy of which is in Business Day’s possession, says: "The business needs demand that we have our CEO back at work immediately."

The veracity of the letter was confirmed by medical director Nic de Jongh, who declined to comment further.