RENAISSANCE Financial Holdings Ltd (RFHL) has lost its battle over 112,5 million First Mutual Ltd (FML) shares belonging to Capital Alliance (CA).
Arbitrator Justice Nicholas McNally ruled that RFHL should give back to CA the sh
ares secured from a debenture it bought from ENG in 2005.
The dispute arose from a debenture that RFHL’s subsidiary, Renaissance Merchant Bank (RMB), had bought from ENG in 2005.
ENG was one of the companies that helped CA, a management investment vehicle, acquire a 20% stake in FML when the insurance company demutualised in 2003.
RMB were the trustees of the shares while ENG and another five financial institutions held debentures showing that CA still owed them money.
CA was supposed to pay back the money through dividend proceeds from FML.
This however did not happen as FML itself ran into serious problems and failed to pay out any dividend to its shareholders. CA thus failed to service it loans.
Sometime in 2005 RMB then bought the debenture, which was equivalent to 112,5 million FML shares from the ENG curator.
Instead of keeping the shares in trust for CA, RMB went ahead to distribute the shares to RFHL and Renaissance Security Nominees (RSN).
CA approached the courts for redress arguing that RMB did not have the right to take the shares and distribute them.
The matter was referred for arbitration.
Justice McNally ruled that the transfer of the shares by RMB was null and void. He said the shares should be transferred back to CA.
“The transfer by the first respondent (RMB), purportedly acting as agent for the claimant (CA), of 112 562 814 shares of First Mutual Ltd held by the claimant under share certificate 123235, to the third respondent (RFHL) and fourth respondent (RSN) is hereby declared null and void,” said Justice McNally. He said RMB had acted against its responsibility as the trustees on the shares.
“It was acting very much against the interests of Capital Alliance, and very much in its own interests, bearing in mind its very close relationship with the transferees, the third and fourth respondents.” — Staff Writer.