adminCompany directors also wanted to use the platform to seek shareholders’ authority to exchange their shares in Lifestyle for new shares in Mauritius-based company, TN Harlequin Limited International. Shareholders not willing to get shares in TN Harlequin International Limited would be paid the cash equivalent for their shares in Lifestyle.
Lifestyle Holdings obtained the High Court’s approval to hold a scheme meeting tomorrow to terminate its ZSE listing. But Secz argues that Lifestyle Holdings has not complied with provisions of the ZSE listing requirements and that the proposed transaction violates rules requiring transparency and independence, especially of the company’s legal and financial advisers.
“This application is for an order indicting the holding of a shareholders’ meeting of first respondent and the scheme meeting scheduled to take place on March 15, 2013 at 10am. The interim order is sought pending the compliance by the respondents with the requirements of Section 1.10a, 1.10c and 1.10d of the Zimbabwe Stock Exchange Listing requirements,” Secz said.
Lifestyle minority shareholder Ambassador Chris Mutsvangwa is listed on the High Court urgent chamber application as second applicant while
Lifestyle and the ZSE are cited as first and second respondents.
Lifestyle Holdings seeks to delist from ZSE and have the company, acquired by a Mauritius-registered entity, to have better access to foreign funding by skirting obstacles presented by the country’s sovereign risk. Secz contends that there is a conflict of interest on financial and legal advisers TN Financial Services and Mtetwa and Nyambirai Legal Practitioners, companies controlled by Mr Tawanda Nyambirai and Ms Beatrice Mtetwa who hold controlling interests in Lifestyle Holdings directly or through trusts and investment vehicles.
Mr Nyambirai owns 100 percent of TN Financial Services and is a senior partner in the legal advisor firm, Mtetwa and Nyambirai Legal Practitioners.
“The first applicant objected to the involvement of these advisers on account of their interest which is likely to prejudice minority shareholders at the meeting of committee of the second respondent on February 5 2013 as shown in minutes already attached,” said SECZ.
Secz said its actions were driven by the need to promote a high level of investor protection in the securities market, promote market integrity, prevent market manipulation, fraud and financial crime.
The commission said while Lifestyle’s majority shareholders, who initiated the transaction, and their associates and persons acting in concert with them, are not entitled to vote, this position is not mentioned in the scheme document to be presented to shareholders. Further, Secz contends Lifestyle holdings’ rationale, as outlined in the scheme document – that it sought to avoid sovereign risk associated with Zimbabwe when raising funding – did not hold water, considering that most of its assets would remain in the country.
Secz also wants Lifestyle to make arrangements that guarantee payment of minorities for their shares prior to the takeover of the company by a Mauritian entity over which it has no oversight powers.
Ambassador Mutsvangwa, in his supporting affidavit, said the transaction was subject to certain conditions that include compliance with the country’s laws on indigenisation and empowerment.
But minorities were not informed on whether this statutory requirement had been fulfilled and the permission secured.
“This is the importance of employing an independent financial advisor to give a true and unbiased opinion on the fairness of the transaction,” said Ambassador Mutsvanga..
He also expressed reservations over the payment arrangement where minorities opting not to take shares in TN Harlequin International Limited would be paid over 12 months.
“What security do I have that my money will be paid over the 12 months?” he asked. “If the company remained listed I can dispose of the shares whenever I want to do so and I am likely to find a willing buyer and be paid my money within seven days.”
He said in the absence of solid evidence that minorities would receive their dues for shares in Lifestyle, a trust account should be opened and deposited with funds to pay minorities not opting for new shares.
Ambassador Mutsvangwa said while Lifestyle should seek ZSE permission to delist, subject to approval of the transaction by the High Court, after shareholders have authorised this, the scheme document did not show that such approval would be sought from ZSE.
Secz said it resolved to take the legal route after several meetings with Lifestyle Holdings directors to resolve the issues failed to yield results.
Online Reporter