Juldan Motors founder loses shareholding case to step son, daughter

The Lusaka High Court has ruled that Juldan Motors founder July Danobo’s step son is a bonafide majority shareholder of the company.

In this matter, July, the 2nd Plaintiff, had dragged his stepson Nasser Ibrahim, 1st Defendant and Olypa Danobo; his daughter, 2nd Defendant, to court asking it to declare that their shares in Juldan Motors were invalid and fraudulently obtained.

According to the statement of claim, July incorporated Juldan Motors on August 19, 2004 and invited Ibrahim and Raymond Danobo, his biological son, to be directors and shareholders in the company.

“At incorporation, the company issued 2,000,000 shares wherein the 2nd Plaintiff held 1,960,000 shares while the 1st defendant and Raymond Danobo each held 20,000 shares. The shareholders were supposed to pay for the shares which had a nominal value of K1 at the time,” the judgment read.

“The 1st Defendant took advantage of the 2nd Plaintiff who is neither literate nor conversant with the modalities of the Patents and Companies Registration Agency (PACRA), and made him sign a Notice of Change of Directors (Form 45) and a resolution. The 2nd Plaintiff states that he thought that the documents were on the change of mandate of Directors of the company, when in fact not. Further, he was not aware or conscious of the true nature of the documents or the effect of appending his signature. In short, he was misled by the 1st Defendant and had no intention of removing Raymond Danobo as director. The 2nd Plaintiff states that by the same resolution, the 2nd Defendant was allotted 12,500 shares in the company under false representation. The Plaintiffs further state that the 1st Defendant by fraud and misrepresentation increased his shareholding from 20,000 shares to 25,000 shares when the share capital of the company remained at the initial 2,000,000 shares. The share capital later increased shares and the allotment of shares on the 2nd Defendant were invalid. There was no increase in the share capital and subsequent allotment to support the transactions.”

July further stated that Juldan Motors lost colossal sums of money under Ibrahim’s management which was believed to have financed his lifestyle.

July, who was being represented by Humphrey Ndhlovu of HH Ndlovu and Company and Jonas Zimba and N. Botha of Messrs Makebi & Advocates also wanted an order reinstating Raymond as director and shareholder as well as an order compelling Ibrahim to surrender all shares he holds in Juldan Motors and to account for all the money he allegedly embezzled.

But in his defense, Ibrahim who was being represented by Kieth Mweemba, Shadreck Mbewe and Michelle Mwiinga of Messrs Keith Mweemba Advocates and Gilbert Phiri of PNP Advocates, denied allegations that the 1st Defendant fraudulently caused the removal of Raymond from the directors.

Ibrahim also denied July’s alleged illiteracy and unfamiliarity with the modalities of PACRA when he successfully incorporated Juldan Motors and also questioned some transactions made by the 2nd Defendant.

“The 1st Defendant states that the 2nd Plaintiff without his agreement as a co-signatory to the Kwacha Account No. 62280343098 and Rand Account Number 62342526441 both held at the Industrial Branch of the First National Bank Limited (FNB), mysteriously transferred huge sums of money to unknown parallel accounts that the 2nd Plaintiff secretly set up without the concurrence of the Defendants. Further, without the authority of the Defendants he has caused the daily and other periodical cashing from the buses of the company to be banked in secret accounts set up without company approval. He has further unilaterally or arbitrarily transferred staff out of the company’s office in Johannesburg, South Africa and replaced them with unknown individuals,” read the judgment.

“Using about K2,800,000 of the company’s money and without authority, the 2nd Plaintiff purchased the former Bread of Life Church property along Chinyunyu Road in Emmasdale on PlotNo. 136 where double storey blocks of flats were constructed. The Certificate of Title is not drawn to the company’s name. Further, the 2nd Plaintiff registered about seven busses purchased from company funds in Raymond Danobo’s name instead of the company.”

The defendants therefore sought an order that they were bonafide directors and shareholders in Juldan Motors, an order that they be paid directors’ remuneration for their services which had been unreasonably held by July, among other things.

According to the judgment, July admitted that Raymond willfully pulled out of the company and transferred his shares to Olypa.

“PW1 (July) went on to state that Raymond Danobo transferred 500,000 shares to Olypa Danobo. After the share transfers, Nasser Ibrahim became the majority shareholder of the company. PW1 stated that he did not produce audited accounts of the company to enable the court to determine the loss. Further, the statement of claim did not disclose the sum of money alleged to have been stolen or embezzled. PW1 stated that he did not adduce proof of Nasser Ibrahim’s businesses not lifestyle,” read the judgment.

In his defense, Ibrahim denied stealing money from the company saying all withdrawals he had made had been authorized by July’s trustee Arthur Kazhila.

Ibrahim also told the court that July chased him from the company in 2013 when the later discovered that he was supporting his biological paternal grandfather.

“DW1 testified that PW1 told him that he was concerned that he was a foreign national and could not hold majority shares in the company. Accordingly, PW1 transferred more shares to DW1 because he trusted him. He also stated that he desired to hand over the company to one of his children. DW1 went to state that sometimes in 2013, as he was routinely counting money at his office, PW1 rebuked him for supporting his sick biological paternal grandfather and disowned him. PW1 cut all ties with him and chased him from the company,” read the judgment.

Ibrahim also testified that he remained a shareholder in the company but never collected any dividends since 2013.

Judge Maria Mapani-Kawimbe ruled that July had failed to prove that the transfer of shares to Ibrahim was fraudulently done or that the later embezzled funds from the company.

She also ruled that Ibrahim and Olypa were bonafide directors and shareholders in the company.

“All in all, I hold that the Plaintiffs have failed to prove their claims against the defendants and I accordingly dismiss their action. On the other hand, I find favor in the defendants counterclaim and hold as follows: I declare that the defendants are bonafide shareholders and directors in the Plaintiff Company with DW1 holding 25,000,000 shares and Olypa Sibongile Danobo holding 12,500,000 shares, I order the plaintiff company to pay the defendants their renumeration and dividends upon assessment and I award them interest thereon,” ruled judge Mapani-Kawimbe on August 9, 2017.

“PW1 must render an account of the Company’s income from the date that the Defendants were excluded from the date that the Defendants were excluded from the Company up to the date of the final reconciliation. This must be done without further recourse to court. Before I conclude, I wish to state that the issues regarding the Plaintiff Company accounts held at First National Bank are the subject to Cause No. 2015/HP/1139. I will therefore not make any pronouncement on the issues.”

         

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