On 22 May 2015, the Appellant filed a petition to wind up Zambezi Portland Cement (the “Company”) pursuant to section 272 of the Companies Act. It was supported by an affidavit verifying facts. After the petition was filed, the Appellant applied ex parte for the appointment of a provisional liquidator pursuant to section 280 of the Companies Act, as read with rule 8 of the Companies (Winding-Up) Rules, 2004. The Respondent opposed the application. In doing so, it denied the contentions by the Appellant and refuted the claim that the Appellant is a shareholder in the Company. The High Court Judge found that the evidence in the petition revealed that there was a dispute by the parties in relation to the shareholding in the Company, which dispute was pending before another court. The High Court Judge concluded that the Appellant had established a prima facie case that the winding-up petition is likely to succeed.
The High Court Judge also found that notwithstanding her finding of a prima facie case, she was still required to consider whether the Appellant had established that it had the necessary standing to bring the application for winding-up of the Company. In considering this issue, she began by stating that a contributory may apply to court for a winding-up order. She took judicial notice of the dispute between the Appellant and Respondents in respect of the shareholding in the Company under cause number 2008/HPC/0366. She then found that where a contributory has filed a petition and there is a dispute in terms of ownership of shares in the Company, such contributory does not have the necessary standing to present the petition and any other attendant application. The Judge concluded that that there was need for the parties to initially have their dispute under cause number 2008/HPC/0366 determined. According to her, if it were found that the Appellant is a shareholder in the Company, then the Appellant would have the necessary standing to apply to wind up the Company. The Judge reiterated that her findings did not mean that the application lacked merit nor that the Appellant is not a shareholder. She accordingly dismissed the application. The Appellant appealed
1. Whilst it is true that section 271 of the Companies Act which sets out the category of persons and entities who can petition the winding-up of the company does not mention a contributory, the Companies (Winding-up) Rules under rule 8 (1) do refer to the word “contributory” and indeed lists a contributory as one of the persons eligible to petition for the dissolution of a company. Further, there is reference to the word “contribution” in sections 262, 265 (2), 266 (1) and (2) and 268 (1) in the Companies Act which introduces the concept of a contributory in the Companies Act. The forgoing provision and other provisions that make reference to the word contribute, clearly indicate that the concept of a contributory is not alien to the Companies Act.
2. The learned High Court Judge’s decision was a cautionary measure on her part that it is not safe at this point to grant the order for appointment of a provisional liquidator in view of the challenge raised against the Appellant’s status as a shareholder. This was the correct decision to make in view of the evidence presented before her and the judicial notice she took of the dispute under cause number 2008/HPC/0366 because the fate of the substantive matter before her, being the petition for winding-up, was heavily dependent upon the outcome of the matter under cause number 2008/HPC/0366. That is to say, if under that cause, it is found that the Appellant is not a shareholder, the petition as a whole will collapse on account of want of locus standi by the Appellant. The sound decision by the High Court Judge, which was pursuant to the discretionary powers vested in her, is enhanced by the fact that it eliminated the real possibility of conflicting decisions from her court and that of Chashi J; and the peril that would have befallen the company, if she allowed the application and later Chashi J, found that the Appellant is not a shareholder. These are primary concerns that courts guard against. Her decision is enhanced by the fact that the Supreme Court in appeal number 141 of 2015,
confirmed the order of injunction granted against the Appellant and others from, among other things, purporting to act as shareholders in the company. The wording of the order ends by restraining the Appellant and others from “taking any course of action of any nature whatsoever as shareholder of ZPC until final determination of the matter…” This decision essentially puts an end to the Appellant and others asserting their rights as shareholders in the Company until disposal of the matter in the High Court. These rights include the Appellant’s right to bring a petition for winding-up of the Company in its capacity as a shareholder.