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Fidelis Munyoro-Chief Court Reporter
GOVERNMENT is the majority shareholder in CAPS Private Limited (CAPS) with the right to appoint board members of the drug manufacturing company, an arbitrator has ruled in the fierce shareholding dispute pitting the State and the board of Trustees.
Through the Ministry of Industry and Commerce, Government last year made the appointment of five board members.
CAPS Pharmaceutical Trust (CPT) objected to the appointments claiming to be the firm’s majority shareholder with the right to make such appointments.
The CPT claimed to have a controlling stake of 51 percent in CAPS, but Government by virtue of a sale of shares agreement between the Government and the Fred Mutanda Family Trust, averred it had acquired a 67.52 percent shareholding and was thus entitled to appoint directors.
Seasoned arbitrator and retired Supreme Court judge, Justice Ahmed Ebrahim, presided over the arbitration which was fiercely contested and ruled in favour of the Minister.
In his ruling, Justice Ebrahim noted that CAPS (Pvt) Ltd, following the Mutanda agreement, became a “public entity” as defined in the Act, being a subsidiary of CAPS Manufacturing (Pvt) Ltd and it’s operations are “substantially controlled by the State or by a person on behalf of the State, whether through ownership of a majority of shares in the entity or otherwise”.
In this regard in terms of the law, the Minister, as the “line Minister” had the right to appoint board members.
“If the Minister had the right, the claimants would have no more rights than any other minority shareholder. The Minister would not be seizing anything, merely exercising her right, even her duty, as the responsible Minister,” said Justice Ebrahim.
“Accordingly, I find for the third respondent (Minister) and against the claimant (CAPS) and the first and second respondents.
The Minister’s appointments were lawful from every point of view.”
CAPS, through its lawyer Mr Tamuka Moyo bid to bar Mr Chinake from representing the Minister also failed after Justice Ebrahim ruled him legally offside.
Mr Moyo had argued that Mr Chinake, and indeed any private legal practitioner, had no right to appear on behalf of the Minister.
His argument basically was that, in terms of section 114 of the Constitution of Zimbabwe 2013, only the Attorney-General or his delegate is permitted to act on behalf of the State in civil and criminal proceedings.
He said Mr Chinake was not a delegate of the Attorney-General, and so was not permitted to appear.
This restriction, he argued, would apply even if there was no-one in the AG’s Office who had the knowledge or experience to deal with the issue.
But Justice Ebrahim disagreed, saying every person has a right, at their own expense, to choose and be represented by a legal practitioner before any court, tribunal or forum and the Minister has the same rights under section 69 of the Constitution as an individual.
“I am aware, through my own experience over many years, that it was never unusual for the Attorney-General to brief private practitioners to appear for the State, whether as prosecutor,” he said.
Last year, the CPT approached the High Court and obtained an order to suspend the appointment of five CAPS Private Limited (CAPS) board members by the Ministry of Industry and Commerce claiming to be the firm’s majority shareholder and objecting to the minister’s move.
Industry and Commerce Minister Sekai Nzenza in November last year appointed pharmaceutical quality assurance specialist Ian Matondo as the CAPS’ board chairperson, while the other members were Tapiwa Mashingaidze, Sinikiwe Gwatidzo, Arthur Manase and Bothwell Nyajeka.
The appointment triggered the legal battle which spilled into Arbitration.
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