RAINBOW Tourism Group (RTG) majority shareholder, Nicholas van Hoogstraten, wants to fire the groupâ€™s directors before the hospitality companyâ€™s next annual general meeting scheduled for May 28.
Van Hoogstraten (64), who holds 463 million shares in RTG, representing a 34% stake through Banhams Investments (Pvt) Ltd, Messina Investments and Willoughbyâ€™s Finance (Pvt) Ltd, said the chairman and directors of RTG should be removed.
Van Hoogstraten alleged that the chairman and directors did not did not know how to run his company and therefore should leaveâ€.
A letter to RTG dated March 11Â and addressed to RTG company secretary Aldoh Musemburi by Banhams Investments said: â€œWe require the removal of the chairman and directors on or before the 2009 annual general meeting. Please ensure that the relevant resolutions are tabled for the annual general meeting. Please provide us with the proposed date for the 2009 annual general meeting to enable us, in consultation with other large shareholders, to put forward our nominations for the appointment of a new chairman and directors.â€
Banhams is the largest shareholder in RTG with a 23,6% shareholding and holds about 388 million shares.
Van Hoogstraten â€“â€“ the single largest investor on the Zimbabwe Stock Exchange â€“â€“ has an 8,6% stake in NMB, 20% in Hwange Colliery and an influential shareholding in CFI Holdings.
He has proposed that Grace Muradzikwa be removed as chairperson of RTG. He is also proposing that seven directors be removed. The seven are Pascal Changunda (group finance director), Cannan Dube, Charmaine Daniels, Godfrey Manhambara, Yardim Mariuma, Elliot Nyoni and Chipo Mtasa, the chief executive officer.
Contacted for comment yesterday, Changunda said he was â€œwaiting for the outcome of the AGMâ€ and so could not comment further.
RTG company secretary Musemburi said they had responded to Van Hoogstratenâ€™s letter and advised company shareholders.
â€œIt seems he (Van Hoogstraten) has already taken a side with regard to the whole issue, we will have to wait for the AGM like what happened in 2006,â€ Musemburi told businessdigest yesterday.
Market analysts however questioned if Van Hoogstraten had â€œenough support from shareholdersâ€ to move his proposal to fire the entire board.
â€œThe board is appointed by shareholders at a general meeting. It is really not the decision of one shareholder but a collective decision of all shareholders including minority shareholders,â€ a stockbroker said yesterday.
â€œThe rules on nominations and appointments vary from company to company but are regulated by the companyâ€™s memorandum and articles of association. This will define who gets appointed, who appoints the chairman and other appointments,â€ he said.
â€œBroadly though, the rule of thumb is that every 10% shareholding deserves a board seat. The appointment of a member though must then be at an AGM in line with the specific provisions of the companyâ€™s articles,â€ added the stockbroker.
An analyst said it was not going to be easy for Van Hoogstraten to fire the directors as they have different interests and had not explained in detail why he wanted all of them fired.
RTG yesterday said Van Hoogstratenâ€™s proposal suffered from â€œcertain legal deficiencies which have been partially remedied in subsequent communication between Banhams Investments and the companyâ€.
RTG said in a statement advising its shareholders that the board had resolved to amend the AGM notice issued to shareholders and contained in the annual report of the company to allow due and unfettered determination of the proposed resolution by Banhams Investments in the public domain and in order to comply with good corporate governance policy and procedures.
RTG said the amended notice was issued and included the specific resolutions as proposed by Banhams in correspondence with the company.
â€œIt is a point of fact that the major shareholders have been unhappy for some time with the way the company has been run by a group of persons with little or no knowledge of business or in particular the hospitality business and by persons with no financial substance or with any personal financial stake in the company,â€ RTG said in the statement.
RTG said the removal of directors as proposed by Van Hoogstraten required a â€œspecial notice, in terms of the Companies Act and the articles of association of RTGâ€.
â€œThe resolution, for it to be legal, must be passed by members holding not less than 51% of the issued share capital of the company present in person or by proxy at AGM,â€ said the RTG.
It said the removal of directors must be dealt with on a person by person basis.
â€œIt is incumbent upon the board to advise members that the Companies Act requires that any company in Zimbabwe must, at all times, have a minimum of two directors and further, that it is not in the best interest of the board or the company for the entire board of a public company to be removed without being replaced or otherwise re-organised,â€ the RTG said.
This is not the first time that Van Hoogstraten has threatened to fire the RTG board. In what could have turned out to be the biggest boardroom coup ever staged on a tourism counter in 2006, he vowed to fire influential RTG directors citing â€œfraud and misconductâ€ in the previous yearâ€™s then $80 billion rights issue.
Van Hoogstraten emerged as the largest shareholder in the RTG after the hospitality giantâ€™s rights offer in September 2005.
Documents at hand indicate that the first shots of the impasse were fired on March 20 when van Hoogstraten wrote to RTG: â€œMy intention to remove all the directors that were in office at the time of the rights issue is not solely related to their illegal action over the share allocations. I have no confidence in the board and they have no future with the company.
â€œIn particular there is a clear conflict of interest between the board and Mr Dube and the shareholders, it cannot be right that shareholder funds are being used to defend the illegal actions of the board and their advisors. The contents of this fax may be disclosed to the second major shareholder group but not to the board members that we intend to remove,â€ said Van Hoogstraten in the fax letter dated March 20 2006.
The dispute was referred to an arbitrator where the outcome was not in Van Hoogstratenâ€™s favour.
Van Hoogstraten is no stranger to controversy. The property tycoon was in 1968 reportedly Britainâ€™s youngest millionaire (aged 23) with a portfolio of over 300 properties, but the same year he began serving a four-year sentence in prison for paying a gang to throw a grenade into the house of Rev Braunstein, a Jewish leader whose eldest son owed him Â£2 000. Of the incident he has said: â€œIt seems a bit distasteful to me now,â€ he says, â€œbut back then when I was young . . . these werenâ€™t anarchists, they were businessmen, respectable people.â€
He was also jailed on eight counts of handling stolen goods and in 1972 was given a further 15 months for bribing prison officers to smuggle him luxuries. â€œI ran Wormwood Scrubs when I was in there,â€ he has said.
By 1980 he owned over 2 000 properties. He later sold the majority of his housing, investing in other fields outside Britain, including mining interests in Nigeria and later Zimbabwe.
He first bought an estate in Zimbabwe in 1964 when he was 19. At around the same time he became friends with Tiny Rowland, who was then in charge of the London and Rhodesian Mining Company.
He has been a close associate of Presient Robert Mugabe who he describes as â€œ100% decent and incorruptibleâ€.
BY PAUL NYAKAZEYA