eBusiness Weekly
Business Writer
As the control of CAPS Holdings rages, businessman Fred Mutanda is seeking a court order setting aside a recent arbitration ruling that the Government is the majority shareholder in CAPS Private Limited and holds the right to appoint a board.
Arbitrator Ahmed Ebrahim ruled that the appointment of the board by Minister of Industry and Commerce Sekai Nzenza was lawful since CAPS had become a public entity.
Pharmaceutical quality assurance specialist Ian Matondo was appointed chairman of the new board, whose other members include Tapiwa Mashingaidze (now late), Sinikiwe Gwatidzo, Arthur Manase and Bothwell Nyajeka.
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 close on the 2011 shareholders agreement after the Minister appointed directors, claiming CAPS Holdings breached the 2011 agreement by selling its shares to the Government.
The CPT obtained a provisional order prohibiting the Government and the board from being involved in the running of the affairs of CAPS Private Limited.
Mutanda for his external family Trust, which acquired the 40 percent of CAPS Pvt Ltd shareholding from the Indians 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 hold the first right of refusal should CAPS Holdings decides to sell its shares.
On June 20, 2016, Mutanda entered into a sale of shares agreement with the Government, represented by the Reserve Bank of Zimbabwe. In terms of that agreement, Mutanda sold his family’s entire shareholding in the CAPS companies (CAPS Manufacturing Limited and CAPS Healthcare Limited). However, Mutanda cancelled the deal last year because of payments disagreements.
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 Mutanda led to the Government becoming the 68 percent shareholder of CAPS Pvt Ltd.
In a High Court application filed last Friday, Mutanda is seeking the ruling be set aside since he was not involved in the arbitration proceedings in terms of the 2016 agreement.
He said while the arbitration proceedings should have been centred on the 2011 agreement between CAPS Holdings and the CPT claiming to be the majority shareholders in the former subsidiary of CAPS Holdings the former ZSE listed firm — the ruling is largely grounded on 2016 agreement.
Besides, Mutanda claims 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.
“On June 20, 2016, I entered into a sale of shares agreement with the Government of Zimbabwe, duly represented by the Reserve Bank of Zimbabwe. In terms of that agreement, I sold my family’s entire shareholding in the CAPS companies (CAPS Manufacturing Limited and CAPS Healthcare Limited),” said Mutanda.
“More importantly to this matter the 2016 agreement had an arbitration clause on paragraph 11 whose effect was that: all disputes relating to the existence, interpretation, breach, termination, rights and or obligations arising from that agreement would be referred for arbitration. An arbitrator would be appointed by agreement of the parties and in the event that the parties fail to reach agreement on the appointment of an arbitrator, within 10 days after either party calls for arbitration, then an arbitrator would be appointed by the Registrar of Arbitrators.
“A request to nominate an arbitrator shall be in writing outlining the claim and counter — claims in issue and suggesting the nominees for the appointment as arbitrator and such request must be furnished to the other party, who must respond thereto in seven days and make comments on the issues,” Mutanda added.
Mutanda submitted given that the Ebrahim award is grounded on 2016 agreement, it is null and void.
“Ideally, I would have sought the striking down of offending portions of the arbitral award, however, in this instance the award itself is so heavily grounded upon the 2016 agreement . . . the entire award is tainted. It is predicated on an invalid agreement to arbitrate so it is, itself invalid. Under the circumstances, I pray for the award to be set aside in its entirety.”
