High Court bars new CAPS board

The High Court has granted an interim interdict stopping the new CAPS board members from performing duties as directors of the company pending final order.

This follows an urgent chamber application filed by CAPS Pharmaceuticals Trust (CPT), the majority shareholder in CAPS Private Ltd, challenging the appointment of the new board by the Government.

Industry and Commerce Minister, Dr Sekai Nzenza, announced a five-member board for the pharmaceutical firm about three weeks ago as part of plans to turn around the firm.

Dr Nzenza was stopped from interfering with the affairs of CAPS pending return day.

CPT directly owns 51 percent in CAPS Private Ltd, with the remaining shares held by CAPS Holdings. The Government maintains that it owns 68 percent in CAPS Holdings that it bought from businessman Fred Mutanda, a claim which he has always flatly denied.

According to Mutanda, what only exists is a purchase agreement between him and the Government, but the latter, through the central bank has failed to pay.

Pharmaceutical expert, Ian Matondo, was appointed chairman. Other directors are Tapiwa Mashingaidze, Sinikiwe Gwatidzo, Arthur Manase, and Bothwell Nyajeka who according to the High Court should have stopped meddling with the firm’s operations.

Their appointment, which was approved by President Mnangagwa, was in line with the Public Entities and Corporate Governance Act and effective on November 4, 2020.

CPT cited Dr Nzenza as the first respondent. CAPS Holdings, CAPS Private Ltd and Industry and Commerce secretary, Dr Mavis Sibanda were cited as second, third and fourth respondents respectively. All appointed directors were cited as respondents.

Bone of contention

CPT argued the appointment of the board violated the shareholder agreement, which stipulates the right of parties on the appointment and number of directors.

In addition, it violated the Health Profession Act Chapter (27:19), which provides that the majority of directors in a pharmaceutical company must be registered pharmacists.

Further, CPT argued an untenable situation had been created where an appendage of a minority shareholder had without any legal basis arrogated itself power to appoint all directors and disregarded multiple restrictions on its power as a shareholder.

It said the fact that Dr Nzenza had an interest in the shareholding of CAPS Holdings does not give her power to interfere with the operations of CAPS Private Ltd. CPT is now seeking the shareholder dispute to be resolved through arbitration.

“Pending confirmation of discharge of this provisional order, the applicant (CPT) is granted the following order: The 5th-9th respondents (new directors) be and is hereby interdicted from performing duties as directors of 3rd respondent (CAPS Private Ltd) pending court’s determination on the return day on whether or not the interim relief should be extended until arbitral tribunal makes final determination on the dispute,” read part of Justice Tagu’s order handed on Wednesday.

“The 1st respondent (Dr Nzenza) is and hereby interdicted from interfering with the affairs of 3rd respondent (CAPS Private Ltd) and appointment of any persons as directors, employees or consultants to 3rd respondent until the final return day.

“The current directors as appointed by the shareholders shall continue to administer the 3rd respondent’s (CAPS Private Ltd) affairs until the return day.”-ebusinessweekly.co.zw