Shareholders of Empowerment Corporation, the 40 percent shareholder in Telecel have filed for an interdict against an extra-ordinary meeting scheduled for February 20 to consider an offer from Brainworks Capital for its equity in the mobile phone operator. The application to stop the EGM was filed at the High Court on February 5.
Dr Jane Mutasa, her investment vehicle Selpon, Indigenous Business Women Organisation and Magamba Echimurenga are arguing that if the meeting was to proceed, they would suffer “irreparable prejudice”.
In a notice published about two weeks ago, EC said the purpose of the EGM was to consider and, if deemed fit, to approve the sale of the EC’s shareholding in Telecel to Brainworks for about $20 million.
Mr Patrick Zhuwao, whose position as chief executive of EC is being disputed by Dr Mutasa, said the notice was pursuant to an offer made by Brainworks to acquire EC stake.
Dr Jane Mutasa, the second largest shareholder in EC is arguing that there was no shareholder resolution reached with regards to the disposal of their shareholding in Telecel.
Among those cited as respondents are Mr Zhuwao, Carlton Consultants which acts as EC secretary, Dr James Makamba, a shareholder in EC and Brainworks.
Dr Mutasa is arguing that the notice calling for an EGM was placed notwithstanding that the 40 percent of issued and paid up capital in Telecel also includes shares held by other shareholders who never consented to the sale of the equity.
Besides, even if a member of the EC decides to sale his shares, the shares should be first offered to existing holders. As such, the agreement between EC and Brainworks is flawed.
“The action for damages must pass a stringent test in order to succeed and what this means is that there exists no other alternative remedy in this regards,” said Dr Mutasa.
“I submit that the applicants will suffer irreparable prejudice if the shares held by them in Telecel were to be sold without their consent as sought to be done by first respondent (Mr Zhuwao) purporting to act without authority on behalf of 6th respondent (EC).
“The applicants will be left clinging on to the shares on paper but practically of no value or significance at all. If the actions of the respondents were to be allowed to materialise, that will be the greatest fraud of the century and this court is urged to come to the rescue of the applicants by promptly interdicting the respondents.”
Already, Selpon and other minority shareholders have approached the High Court seeking nullification of transfer of 71,2 percent of EC’s shareholding in Telecel Zimbabwe to fellow shareholder, Dr James Makamba, who owns the shares through Kestrel.
They are seeking the reversal of the alleged illegal transfer of the shares to Dr Makamba.
Selpon and other minority shareholders cited irregularities in the manner in which shares initially meant for some empowerment group were fraudulently transferred to Dr Makamba and Kestrel after the beneficiaries failed to raise required funds.
Should the EGM proceed, Dr Mutasa said the applicants could lose their investment in Telecel through Empowerment Corporation which she claims has increased to $200 million.