Africa-Press – Eswatini. Likhwane Beneficiary Services (Pty) Ltd has alleged that ESW Investment Group (ESWIG) made shareholders sign resolutions, which would prohibit them from approaching a court for relief against it.
Likhwane Beneficiary Services (LBS) Chief Executive Officer, Peter Mgcini Shongwe said they anticipated that ESWIG, in opposing their application, would allegedly rely on certain resolutions that prohibited the shareholders from approaching the courts against ESWIG.
The resolutions are said to have been taken during a meeting held on June 17 and 18, 2022. In the court papers, Shongwe stated that there were about 1 140 holders of preferential shares in ESWIG.
Likhwane is represented by Mlungisi Khumalo from Khumalo Attorneys in this case.
“In the main application, Likhwane seeks to recover its investment in ESW, together with interests thereon. It anticipates that ESW will purport to defend the claim by relying on the content of certain unlawful special resolutions, which purport, among other things, to alter the rights of preferred shareholders and to prohibit such shareholders (which would also include Likhwane) from approaching a court for relief against ESW,” Shongwe alleged.
Likhwane has filed an application for substituted service, which seeks to, among other things, inform the holders of preferential shareholders of the legal proceedings to be taken by Likhwane against ESWIG. The shareholders are said to be informed through Eswatini Observer and Times of Eswatini.
The application also seeks to help the shareholders have access to the details of the case and also get the court to declare the said resolution to be null and void. The main application will be filed once the results sought by the application for substituted service are obtained.
Shongwe said in addition, through no fault of his company, Likhwane did not know the current value of its investments with ESWIG.
He submitted that several requests that ESWIG provide a comprehensive account to it regarding the investments had been ignored.
“However, Likhwane does know that the current value of its initial investment with ESW has increased to at least E17.5 million,” he said.
He said accordingly, in the main application, Likhwane would ask the court to direct ESWIG to pay Likhwane the amount of E17.5 million.
Shongwe said they would also ask the court that it should find the resolutions passed by ESWIG at general meetings to be null and void.
The meetings, according to the CEO, took place on August 25, 2021; June 14, 2022; and June 18, 2022.
The resolution taken on June 17 and 18, 2022 states that: “The Linked Loan Unit Holders hereby adopt a moratorium on all legal proceedings against the company, to allow full implementation of the business rescue strategy, that is, Project White Knight.”
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Shongwe said unfortunately, his company was allegedly not given notice of this resolution.
He said there were other meetings by ESWIG that dealt with purported restructuring of investment classes, reductions in, and suspension of dividends.
He said his company allegedly did not have any communication about those meetings.
Shongwe said Likhwane’s grounds for its claims in the main application would be two-fold.
First, the impugned shareholder resolutions were allegedly unlawfully adopted and, in respect of the purported resolution to prohibit any shareholder from pursuing claims against ESWIG were unconstitutional, unlawful and invalid.
Secondly, ESWIG allegedly breached the terms of the agreement under, which Likhwane had made its investment with ESWIG, and those terms obligated it to return the full value of Likhwane’s investments (including interests earned thereon) to Likhwane.
How the E17.5m was made by Likhwane
Likhwane Beneficiary Service (LBS) allegedly made E17.5 million through an initial investment of E10 million it made with ESWIG in 2017.
With the E10 million investment, Likhwane bought preference shares in ESWIG in 2017, according to Likhwane CEO Peter Mgcini Shongwe.
Shongwe said the initial investment capital would earn interest at a fixed rate of 15 per cent per annum.
Interest
He said this amounted to E1.5 million per annum and at the end of the investment period of five years; the total interest accrued would be E7.5 million.
The total investment value would be calculated by adding the initial investment amount (E10 million) plus the interest amount (E7.5 million), which equalled E17.5 million.
This investment is different from the E63 million, which Likhwane claims to have invested with ESWIG in 2021.
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