Court Nullifies KMAL EGM

JOHN Moxon’s attempts to excise Kingdom Meikles Africa Ltd (KMAL) chief executive officer Nigel Chanakira and two others from the board through an  Extraordinary General Meeting (EGM) fell on its head yesterday after the High Court ruled that the proposed meeting had not been properly convened.


 Justice Tendai Uchena ruled the notice calling the meeting scheduled for October 23 was not valid and of no force or effect. He did not however give reasons for his ruling but upheld the order sought by the minority shareholders in KMAL, who had sued Moxon and his associated companies to stop them from convening the meeting.
The judgement was passed after KMAL minority shareholders led by AFRE had filed court papers against half a dozen companies linked to major shareholder and KMAL chairman Moxon. Moxon had called the EGM to remove  Chanakira and non-executive directors Rugare Chidembo and Callisto Jokonya.
According to documents filed at the High Court two weeks ago by lawyer Addington Chinake of Kantor & Immermann, if the EGM was to go ahead as planned, it would have been in complete violation of the Zimbabwe Stock Exchange (ZSE) Act.
Chinake said changes to KMAL’s directorship should comply with the Banking Act since the company became a bank holding company after the merger last year.
Chinake was representing the minority shareholders.
The ruling comes as KMAL shareholders Chanakira, his Valleyfield Investments and Econet Wireless this week also filed papers in the High Court to block the bid to change the directorship of the company.
According to the court papers the respondents are not entitled to remove the first, fourth and fifth applicants from the KMAL board because “the convening shareholders entered into a binding verbal agreement with the applicants which is also binding on KMAL, and which prevents them from voting in the manner proposed,” read the papers filed yesterday.
It further says: “To remove these directors in these circumstances amounts to conduct which is not consistent with the principles of fair play and whose effect and consequences would be unfairly prejudicial to the interests of not only the second and third applicants, but also those of all the minority shareholders.”
Some of the issues on the agenda of the proposed EGM were to effect the appointment of new director Marilyn Hugill, Moxon’s sister, and four other South African-based people with close links to Moxon.
These include Ashwin Mancha of Afrifocus Securities, Jack Mitchell, a partner in Alan Gray for 12 years, Fiona Silcock of FPS Investments, and Carl Stein of lawyers Bownan & Gilfillan. Moxon wanted to remove the directors because of what he termed “discord” on the board which was hampering operations.
Moxon through associate companies is KMAL’s biggest shareholder with a 42,9% stake in the group. Moxon-linked companies in KMAL include ACM Investments, JRT M Investments, ASH Investments, FPS Investments and APWM Investments.
According to board meeting minutes on September 25, Chidembo and Jokonya, who were in Moxon’s firing line, claimed that it was the fist time they had seen the notice and were taken aback that the convening shareholders were proposing their dismissal.
Chanakira, who had convened the meeting, proposed a vote of no confidence in the chairman because of “his reckless nature” in representing the four shareholders who sent out the notice and proposed that the chairman resign and be replaced by a new chairman up until the end of the EGM.
Chidembo seconded Chanakira’s proposal.
Chanakira, Chidembo, Jokonya, Mboweni and Sibusisiwe Bango voted for the proposal.
Masunda and Thorn abstained from voting. Absent from the meeting were three directors — David Mills, Michael Wilson and Dennis Stephens.
The motion was adopted and Chanakira proposed that Masunda be appointed chairman. It was unanimously supported by the board.
Chanakira also launched a major counterattack against Moxon, roping in the Reserve Bank and the Criminal Investigation Department (CID)’s serious fraud squad to investigate Moxon for allegedly externalisating US$18,6 million and 21,2 million South African rands.
In a statement this week, Econet Wireless the single largest institutional investor in KMAL said as part of the conditions to the merger agreed with Meikles Africa Ltd, Kingdom Financial Holdings Ltd, the Meikles Trust and its successors, represented by Moxon, and Valleyfields Investments, Econet Wireless had the right to appoint two directors to the board of the merged company, with the support of the other parties.
“It has recently been brought to our attention that the successors to the Meikles Trust who were parties to this agreement, have unilaterally, without consultation or notification to us, decided to restructure the entire board, and remove one of our appointees, Rugare Chidembo, in complete contravention to the agreement, and other undertakings made to us,” said Econet in a statement.  
Econet said shareholders who, in aggregate hold less than 50% of the company’s issued share capital now seek to appoint 11 of the 13 directors.
“The board of Econet Wireless, has taken strong exception to these and other developments we have heard about, and has directed management to work with its lawyers, and other shareholders, to ensure that the interests of Econet Wireless, and other minority shareholders are not irreparably prejudiced,” said the statement.

 

By Paul Nyakazeya

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