RENAISSANCE Financial Holdings’ bid to control First Mutual Ltd (FML) this week suffered a setback after they failed to get the five seats they dem
anded on the FML board.
ReNaissance and its investment companies that market-watchers say hold shares on its behalf had before Tuesday’s annual general meeting demanded the election of Tose Ndebele, Patterson Timba, Professor Norman Nyazema, Dunmore Kundishora and Ricky Mapani to the FML board.
FML, chaired by David Murangari agreed and recommended Timba, Ndebele and Mapani for the board but snubbed Nyazema and Kundishora who were however put to the vote at the AGM but failed to garner enough votes.
Kundishora and Nyazema lost by 100 million and eight million votes respectively. Ironically, it was the legal fights and controversy surrounding the manner in which ReNaissance acquired part of its 26% shareholding that worked against them.
Murangari disqualified 53,6 million New Africa shares and 58,9 million shares belonging to ReNaissance Securities Nominees on the basis that their acquisition was disputed by Capital Alliance, who claim that they are the legitimate owners of the shares.
Apart from the votes, ReNaissance’s bid could also have been scuttled by Trust Holdings who used their 15% stake in FML to get two board representatives at the meeting.
Trust and FML, who are related by way of cross-shareholding, have an agreement that provides for representation on each other’s board.
Trust had not exercised this provision since the exit of former chief executive, William Nyemba, who used to sit on the FML board.
Sources said Trust’s decision to nominate Misheck Manyumwa and Jabulani Mavimba to the board was meant to thwart ReNaissance’s attempt to control FML at board level.
Businessdigest predicted that there would be fireworks over shareholding and board representation. Realising that the suspension of the 112 million shares would ruin their five nominees, ReNaissance’s lawyer Addington Chinake argued, without success though, that Capital Alliance’s vote should also be disqualified on the basis that some of its shares were still subject to a legal dispute with former chief executive Norman Sachikonye.
Sachikonye has laid claim to 37 million of Capital Alliance’s shares in FML by virtue of having been an employee of the company and part of Capital Alliance scheme.
Chinake’s request was however turned down by Murangari but sources told businessdigest yesterday that New Africa and ReNaissance Securities could take their dispute to court for redress.
Analysts said while ReNaissance’s board representation gave them a say in FML, it falls short of the number required for total control.
“They have three representatives and are likely to be over-powered by nine other board members. The new composition of the board is tilted in favour of independent directors who are supposed to represent the interests of the policy holders,” said a financial analyst who has been following the issue.
Sources said ReNaissance had not given up on their ambition to control FML. They said the dealmakers were planning to push their shareholding from the current 26% to 40% before the end of the second quarter. That 40% would give the Timba-led company a further two directors on the board.