Africa-Press – Zimbabwe. By Mary Taruvinga – THE case in which Doves Life Assurance Company (Doves) shareholders, Farai Matsika and Phibeon Busangabanye are embroiled in a nasty ownership wrangle has been postponed indefinitely by High Court judge, Justice Tawanda Chitapi.
This follows a successful application by Busangabanye through his lawyer, Ray Goba.
“It simply means it must be returned to the registry for the time being. Therefore, the hearing of the current application is postponed indefinitely,” he ruled.
Busangabanye who has been accusing Matsika of trying to elbow him out applied that proceedings be stopped after he filed an application of rescission of judgment.
He also filed another application seeking nullification of a judgment by a separate High Court judge, Justice Philda Muzofa.
Matsika and Busangabaye bought Doves from former convict Munyaradzi Kereke in 2012 through their jointly owned investment vehicle, Transfrontier Investments (Transfrontier), which they formed in 2008.
The matter once spilled to the Supreme Court after the High Court ruled that Matsika and Busangabaye have a 50-50 shareholding in Transfrontier, which acquired a 100% shareholding in Doves.
The judgment was handed down by Justice Zhou at the High Court on July 30 2020 prompting the aggrieved party, Matsika to approach the Supreme Court.
In the Supreme Court, judges of appeal, Justices Tendai Uchena, Samuel Kudya, and Felistus Chatukuta struck the matter off the roll.
Busangabanye had claimed in his High Court challenge that he and Matsika have a 50-50 shareholding in Transfrontier, which acquired a 100% shareholding in Doves.
He argued Matsika had refused, neglected, or failed to implement an oral shareholders agreement despite the presence of a memorandum of understanding indicating they held equal shareholding in the company.
He successfully sought a High Court order declaring that Transfrontier is the sole beneficiary holder of 100% of the shares in Doves.
Busangabanye also wants the court to direct the two partners to conclude their shareholder’s agreement “to apportion shares to their chosen entities and to comply with the Insurance and Pensions Commission (IPEC) regulations” and to restrain other entities from muscling themselves into Doves.
In his High Court application, Busangabanye said they acquired Doves as a going concern and amended Transfrontier’s paperwork to reflect their equal shareholdings.
It was agreed they would pay a purchase consideration of US$2,8 million for the 100% equity held by Kereke’s Rockford Foundation Trust (RFT) and another US$2,2 million (net of taxes) in deferred dividends due to the Trust.
The deferred dividends were to be paid after five years from the date of the transaction, while the purchase price was to be paid in payments of US$500 000, as deposit and monthly installments.
Legal counsels, who chaperoned the transaction, advised that Transfrontier could not hold the entire stake alone as it would breach industry requirements, and the group made a decision to introduce two other vehicles to warehouse the shares, Faramatsi and Besilicata.
The parties signed off the agreement on October 12, 2012, and Matsika, court documents show, arranged for the payment of US$225 000 from the Nedbank of South Africa as an advance payment for legal fees due to Honey & Blackenberg which, according to Busangabanye’s application, was sourced from Northpark.
Busangabanye’s understanding was the money was meant to be a loan to Transfrontier and some of it was going towards payment of the deposit since the legal fees were only US$32 000.
He also sought an order directing Matsika to “attend all procedures obligated and necessary in terms of the Companies Act to effectuate the registration and lodgement of requisite documents recording the respective issued shareholding, directors and secretaries with the registrar of companies”.
Busangabanye further argues that as the chief executive of Doves from 2012 to 2016, he raised US$2,8 million to complete the transaction, and a receipt dated July 23, 2014, was issued by Kereke’s RFT.
However, when Matsika assumed leadership of the company subsequently, Busangabanye contends he started reneging on making outstanding payments, resulting in disagreements.
Transfrontier would later pay US$1 556 000 to the RTF, leaving a balance of US$644 000, after which Matsika allegedly reneged on their understanding, including completing the shareholder agreement, resulting in Busangabaye approaching the courts for recourse.
