RioZim directors face threat of board ejectionoard ejection

Business Reporter
RIOZIM LIMITED faces a potential leadership crisis after a shareholder launched a legal bid to have the company’s directors declared delinquent or placed on probation, citing a total breakdown in corporate governance.
The move comes just a week after the same shareholder initiated corporate rescue proceedings, arguing the diversified miner is technically insolvent and unable to meet its mounting liabilities.
The legal onslaught comes at a precarious time for the board.
A separate attempt to place RioZim under rescue, led by the Zimbabwe Diamond and Allied Minerals Workers Union (ZDAMWU), recently suffered a setback after the Supreme Court struck the matter off the roll.
Under Section 68 of the Companies and Other Business Entities Act, delinquency and probation are legal sanctions designed to hold directors accountable for severe mismanagement or ethical breaches.
A delinquency order is the more severe “corporate death penalty”, which disqualifies an individual from serving as a director or officer of any company for a minimum of seven years, or even for life; this typically follows findings of gross negligence, fraud or wilful misconduct.
In contrast, a probation order serves as a formal warning, where the court allows a director to remain in office but places them under strict supervision and specific conduct conditions for a period not exceeding five years.
Together, these mechanisms allow shareholders and regulators to purge “unfit” leaders from the corporate ecosystem to protect investor interests and national economic stability.
In an ultimatum dated April 29, 2026, Makwanya Legal Practice, representing the shareholder, notified the board’s legal counsel, Nyahuma’s Law Golden Stairs Chambers, of its intention to move against the directors.
Nyahuma’s Law Golden Stairs Chambers took over the legal brief for RioZim Limited after Wintertons Legal Practitioners recused themselves from the matter.
The shareholder has given the directors seven days to resign, failing which they will face formal court proceedings to strip them of their authority to hold directorships in any company.
The legal notice alleges that the directors failed to fulfil their fiduciary duties and acted with gross negligence and wilful misconduct.
The shareholder also claims the board abused its position and breached the trust of investors, citing evidence detailed in a recent corporate rescue application.
“Our client submits that the directors have not only failed to fulfil their fiduciary duties and obligations, but have also acted with gross negligence and committed wilful misconduct by abusing their respective positions and breaching trust, as set out in the said corporate rescue application and in other reports,” the letter reads.
Mr Caleb Dengu chairs the RioZim board.
The letter was copied to Zimbabwe Stock Exchange (ZSE) chief executive officer Mr Justin Bgoni and the ZSE Listing Committee.
The shareholder is pushing for the embattled miner to be placed under the supervision of a rescue practitioner, arguing that it is technically insolvent.
Citing a “catastrophic decline” in financial health, the shareholder noted that as of June 30, 2025, RioZim grappled with a negative equity gap of ZiG1,2 billion.
With total liabilities of ZiG4,15 billion far outweighing assets of ZiG2,95 billion, auditors have expressed significant doubt regarding the group’s ability to continue as a going concern.
Court filings further reveal that RioZim’s modest US$3,6 million market capitalisation is now completely eclipsed by a massive debt profile, including US$4,7 million owed to the Zimbabwe Electricity Transmission and Distribution Company and US$5,5 million in unpaid contractual obligations.
The application paints a grim picture of the company’s operational status, supported by a technical report showing that the majority of RioZim’s strategic assets — including Cam and Motor, Dalny Mine and One Step Gold Mine — are currently under care and maintenance.
While Renco Mine and Murowa Diamonds remain consistent performers, the board is accused of failing to disclose the Government’s repossession of the 2 800-megawatt Sengwa Mine thermal project — a development that reportedly should have triggered a cautionary statement to the ZSE.
The shareholder also claims the 84 percent majority stake held by the family of the late Harpal Singh Randhawa has allowed the board to exclude 1 646 minority shareholders from critical decision-making.
This concentration of power allegedly facilitated “unlawful transactions”, some of which have drawn the scrutiny of the Zimbabwe Anti-Corruption Commission following a criminal complaint filed in June 2025.
Last week, lawyers petitioned Mr Bgoni to immediately suspend a planned extraordinary general meeting (EGM), arguing it was a “desperate attempt” to regularise unauthorised asset disposals. Citing a Supreme Court precedent, the shareholder contends that the corporate rescue filing triggers a mandatory moratorium, legally barring the company from disposing of assets or securing new loans while under court-sanctioned protection.
RioZim, however, went ahead with the EGM, successfully passing all resolutions despite a minority shareholder’s urgent bid to block the meeting.
The centrepiece of the meeting was the approval to dispose of core diamond assets to settle a US$60,8 million debt owed to related party RZM Murowa.
Under the approved terms, RioZim will relinquish its entire 22 percent shareholding in RZM Murowa for US$23,8 million and sell four diamond mining claims currently utilised by RZM Murowa for US$4,6 million.
These disposals, totalling US$28,4 million, will be executed against a full waiver of the multi-million-dollar loan facility provided by RZM Murowa.
The shareholders also approved the sale of several key mining claims to unrelated third parties to raise much-needed liquidity.
These include Mtandahwe Copper and Tungsten, valued at a minimum of US$3 million, and One Step, valued at US$1 million.
The disposal permission includes a price adjustment clause; the consideration could increase if proven in-situ reserves exceed 400kg of gold, though the buyer retains an exit option if resources are found to be unsuitable.
The meeting ratified the US$1,6 million sale of a subsidiary’s property in Msasa and authorised the further disposal of non-core properties in Nyanga and Newlands.
Finally, the company successfully secured authorisation for a future loan facility of up to US$35 million.
This debt is to be secured against the company assets of equivalent value, with the specific terms left to the directors’ discretion.