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Fidelis Munyoro-Chief Court Reporter
The largest minority shareholder in CAPS Holdings, Frederick Mutanda, has withdrawn his High Court motion seeking to reverse an arbitration ruling that the Government as the majority shareholder in CAPS (Private) Limited held the right to appoint a board to that company.
He approached the High Court after arbitrator retired judge Ahmed Ebrahim ruled that the appointment of the board by Minister of Industry and Commerce Sekai Nzenza was lawful since a majority of shares were Government owned.
Mr Ian Matondo, a pharmaceutical quality assurance specialist, is the new chairman.
Other members include Ms Sinikiwe Gwatidzo, Mr Arthur Manase and Mr Bothwell Nyajeka.
Mr Mutanda sought to challenge the arbitration ruling on the grounds that he was not involved in the arbitration proceedings in terms of the 2016 agreement, as he was a shareholder with a direct and substantial interest in the matter.
The matter was set down for hearing on Wednesday at the behest of Industry and Commerce Ministry lawyer Mr Addington Chinake when it became apparent that Mr Mutanda, through his legal counsel, was allegedly avoiding the hearing.
However, when the matter was eventually set down for hearing before Justice Tawanda Chitapi, Mr Mutanda withdrew his application.
CAPS Pharmaceuticals Trust (CPT), a consortium of pharmacists, had challenged the appointment, saying that the Government was only a minority shareholder in CAPS.
It claimed to be the majority shareholder, owning 51 percent shareholding in CAPS (Pvt) Ltd with the remainder held by CAPS Holdings.
The CPT invoked the arbitration clause in the 2011 shareholders’ agreement after the Minister appointed directors on the basis that CAPS Holdings breached the 2011 agreement by selling its shares to the Government.
The CPT obtained an interim order stopping the Government and the board from being involved in the running of the affairs of CAPS (Private) Limited.
Mr Mutanda for his external family trust, which acquired the 40 percent of CAPS (Pvt) Ltd shareholding and CAPS Holdings ceded their shares to CPT after the Government invoked the Health Profession Act requiring shareholders in pharmaceutical companies to be owned by pharmacists.
In the 2011 agreement, the CPT held the first right of refusal should CAPS Holdings decide to sell its shares.
In June 2016, Mr Mutanda entered into an agreement for the sale of shares with the Government, represented by the Reserve Bank of Zimbabwe.
In terms of that agreement, Mr Mutanda sold his family’s entire shareholding in the CAPS companies (CAPS Manufacturing Limited and CAPS Healthcare Limited).
However, Mr Mutanda cancelled the deal last year because of payments disagreements.
At the arbitration, Justice Ebrahim, a retired Supreme Court Judge, ruled that the 2016 sale of share agreement between the Government, through the Reserve Bank of Zimbabwe (RBZ), and Mr Mutanda led to the Government becoming the 68 percent shareholder of CAPS (Pvt) Ltd.
In his application, Mr Mutanda claimed that he cancelled the 2016 agreement with the Government over payment disagreements last year and there had been no objections raised by the Government or the RBZ.
It was also arguing that the Justice Ebrahim award was grounded on the 2016 agreement, which he said was a nullity.
Online Reporter