Chanakira’s affidavit opposing KMAL EGM

This is an excerpt of Nigel Chanakira’s draft affidavit drawn up by his lawyers Dube, Manikai & Hwacha. He was meant to sign the draft before he fell ill a fortnight ago.

In the affidavit, Chanakira talks of his relationship with his former lawyer and facilitator, Tawanda Nyambirai, differences on how to resolve the John Moxon debacle, and alleged conflict of interest in the KMAL battle.
Chanakira is the outgoing CEO of KMAL. 
FOR the record, I wish to state that there has not yet been a de-merger agreement between Moxon and his companies and I and Valleyfield. This is far from the situation because,
28,1 A draft agreement we had been negotiating with Moxon in July 2009 which would, inter alia, give KFHL the option to call any or all of KFHL shares governed by that agreement as Annexure “NMK 13”. This agreement was not signed, and indeed I am now advised that had it been signed, under Zimbabwean law it would be void for unlawfulness unless there was authority by the investigator for Moxon and the Moxon companies to enter into the same.
28,2    Even if Moxon had capacity to enter into negotiations for this, which is denied, I aver that it emerged to me that the go-between and my then legal practitioner, Mr Nyambirai, who acted as the go-between for Moxon and I, either did not put to Moxon or certainly agree with Moxon, on my own proposals or wishes for the terms of the de-merger in principle. Indeed, I cannot lay blame on Mr Nyambirai, as, though he served me diligently as my legal practitioner from the onset of the boardroom and other squabbles within KMAL, he himself was an interested party within KMAL, as he wore another hat as chairman of Econet Wireless Capital (EWC), a 10% shareholder in KMAL. We parted ways in this mandate after Nyambirai raised the issue of his conflict, when I raised a number of issues which I felt should be included in the demerger in my favour and which he disagreed with, more from his perspective as a co-shareholder in KMAL.
C4: Procedures taken to undertake “demerger”
29. By 4 September 2009, Nyambirai officially ceased to represent me in any dispute related to KMAL. Before then, by May 2009 to be precise, I was already at variance with him, as he made representations to the KMAL board regarding terms of the de-merger, and indeed this informed the process leading up to an EGM where it was agreed that the transfer of KFHL shares back to KFHL would be in the form of a dividend in specie.
30. On 12th May 2009, Nyambirai, in his capacity as EWC chairman wrote a letter to the chairman of KMAL requesting an EGM to implement “the demerger”.
30.1  I wish to point out the conflicted position Nyambirai was in, as his requisition reads,
“/ have been in discussions with both Mr John Ralph Moxon and Mr Nigel Chanakira. As a result of these negotiations, and acting on behalf of EW Capital Holdings (Private) Limited, a holder of not less than one twentieth of the voting rights of the Company, I now requisition the board for an Extraordinary General Meeting….”
He therefore, was unable to represent both EWC and my interests if ever there was a conflict between the two.
30.2    Paragraph 3 of the requisition reads,
“Because the resultant shareholding of KMAL and KFHL will mirror each other, it is the view of the requisitionists that there will be no regulatory approvals required for the Transaction.”
30.3    I am advised that this position is not correct, or certainly that it would not be correct if the demerger is based on appropriate valuations of KMAL, further takes into account the money externalised by Moxon, and finally the parties negotiate and agree on, fair demerger terms for all. It is actually very likely that another scheme of arrangement would have to be entered into in terms of the Companies Act for this purpose.
31. Pursuant to this requisition, an EGM was held on 22 June 2009. I attach as Annexure “NMK 15”, a copy of the minutes of that meeting, and particularly point out that:
31.1 no resolution was passed authorising the board to do anything towards the de-merger by the shareholders as is now purported in Annexure “NMK 1”,
31.2 there was a resolution for transfer to KFHL at nominal value, 234,046,621 KFHL shares for cancellation, and a further resolution for distribution by way of a dividend in specie to all KMAL shareholders all the 245,374,791 of KFHL shares remaining after the proposed transfer of 234,046,621 KFHL shares to it for cancellation, simultaneously with the proposed listing of KFHL;
31.3   There were no conditions imposed on any specific directors of KMAL to resign or otherwise conduct themselves in a particular fashion.
32,1 am however advised that the resolutions for transfer of KFHL shares to KFHL and for a dividend in specie would require to follow the procedures contemplated by section 191(2) of the Act in order to be effectual as in essence this would be a scheme for the de-merger of the KMAL group. I am advised that respondent has to proceed by way of a scheme of arrangement under the Companies Act.
33. Several board meetings have been held after this EGM, where a number of issues pertaining to the specifics of the demerger have been discussed, but not in any way concluded. I have stuck to my guns on the issue of the de-merger process, and do submit that a number of issues, some of which I have mentioned herein, must be cleared first before a demerger agreement is entered into. I dispute these facts, as I have stated above that, although he was Moxon and my go-between, he had no mandate to conclude a de-merger agreement, in any event he was conflicted.
34. In the course of discussion and debate around the de-merger formula I have been called “obstructive and confrontational…”. It is for this reason that the defective notice convening an EGM has been issued by directors, again seeking my removal. It is precisely for this reason why it is necessary for this honourable court to sanction the holding of scheme meetings, and if it sees fit, thereafter to approve the scheme of de-merger. Until this has been done, the proposed de­merger cannot be enforced or implemented.
35.The EGM therefore unlawfully and unfairly seeks to remove the “KFHL camp” as it were from the board, in order to give effect to an unlawful, yet convenient “demerger agreement”.
Section D: Relief sought and basis
36.1 seek, on an urgent basis,
36.1    that the EGM called for 24th September 2009 be cancelled.
36.2    that the respondent company be interdicted from removing me and my nominee directors until the demerger agreement is implemented in accordance with the provisions of sections 191(2) of the Act.
37.1 am advised and do respectfully submit that no director, despite authority to call for EGMs under the Articles of Association, can call for an EGM for the removal of another director. Once the EGM is for removal of directors, therefore, special notice, being notice based on a requisition from a member of the
company holding at least 5% of the issued share capital of the company, is mandatory. This not being done, the notice is invalid and ineffectual.
38. In essence, in any event, it is improper and undesirable for the EGM to proceed, as it is purportedly based on a demerger, the terms of which have not yet been reduced to an agreement at all, and yet are being imposed on the very persons or entities who would rightly be parties to the de-merger agreement. Further, any such de-merger agreement would require the sanction and approval of this honourable court, and otherwise to be implemented in terms of the provisions of the Act.
39. My legal practitioners sent a letter demanding that the EGM not proceed, to the chairman of respondent.
In response, respondent declined to cancel the EGM, leaving me with no option but to approach this court for assistance.
40. In the circumstances, I pray for an order in terms of the draft.
THUS SWORN TO AT HARARE ON THIS DAY OF SEPTEMBER 2009.
INIGEL M K CHANAKIRA
Before me,
COMMISSIONER OF OATHS

Top