CASHFIN Zambia Limited has asked the Kabwe High Court to remove it from the proceedings in which some individuals are claiming to be its rightful shareholders.
The company, which has filed a notice of motion to raise preliminary issues on a point of law, has also asked the court to admonish the advocates who had instituted the proceedings in its name without its authority.
This is a matter in which four individuals have dragged Cashfin Zambia Limited owners, Joseph Chilinda and Convex Equity Limited, to the Kabwe High Court, seeking a declaration that businessmen Jason Kombo and Dingiswayo Ndhlovu are the rightful shareholders of Cashfin Zambia Limited, following a purchase transaction.
Kombo, Ndhlovu, Remmy Musonda, Laston Mumba and Cashfin Zambia Limited as plaintiffs have sued Chilinda, Convex Equity Limited and Stanbic Zambia Limited as the defendants.
But according to a notice of motion to raise preliminary issues on a point of law filed by advocates for Cashfin Zambia Limited from Messrs. AKM Legal Practitioners, the company has submitted that when the matter comes up for the hearing, it shall move the Court to make a determination on four issues on a point of law.
The issues are: “whether a person, who is neither a shareholder, director nor an employee of the company, can instruct counsel or decide to sue in the company’s name and whether the company could sue or take out process in a suit against its own shareholders and directors at the instruction of a stranger to the Company; whether a lawyer can properly act or purport to act for a company without the company so instructing by passing a resolution appointing him to do so or otherwise; whether in the circumstance of this case, the suit or involvement of Cashfin Zambia Limited as a company in this matter not having instructed counsel by resolution or any such other person to sue in its name, the suit is competent at law, and whether the acting on behalf of Cashfin Zambia Limited by the current advocates Messrs Isaac and Partners without having properly been appointed, does not constitute professional misconduct.”
Cashfin Zambia Limited also wants the court to determine why it should not be removed from the proceedings herein and that costs of this application be borne by the other plaintiffs.
According to skeleton arguments in support of the notice of motion to raise preliminary issues on a point of law, Cashfin Zambia submitted that its issue was that it had taken part in this suit as one of the plaintiffs against Chilinda and Convex Equity Limited, who were its directors and shareholders.
It stated that its involvement in the matter was legally difficult to explain because the persons charged with its management, who were Chilinda and Convex Equity Limited, were not aware of its decision to complain against them.
“…For a company to sue or take part in a suit, the decision has to be made by the people managing it, namely shareholders, directors or at least an employee,” read the submissions.
Cashfin Zambia submitted that its involvement in the matter purportedly against its shareholders and directors without a resolution was incompetent at law.
It added that it had never instructed or decided to sue its own directors and shareholders.
Cashfin Zambia further submitted that for an advocate to institute proceedings in the name of the company, there must be a resolution of the company authorizing such proceedings and appointing the advocates.
It argued that Kombo, Ndhlovu, Musonda and Mumba were incapable at law to decide anything on its behalf because they were neither directors nor shareholders in Cashfin Zambia as no resolution had ever been passed appointing them as such.
“It is clear that there has never been a general meeting of the company to appoint directors and no resolution has ever been passed to appoint any other person as director other than the directors as per records at PACRA. Further, by section 100 of the Companies Act No. 10 of 2017, in an event of any change or appointment of a director, the law requires lodgement with the Registrar (of PACRA) a prescribed form notifying the Registrar about the change within 21 days of the occurrence of the appointment or change. In this particular case, no lodgement of this kind has ever taken place or been made because there has never been such a change or appointment,” Cashfin Zambia stated.
It argued that Chilinda and Convex Equity Limited remained both legal shareholders and beneficial owners of it, as Chilinda, who was the majority shareholder, had never sold his shares to the said claimants (Kombo and Ndhlovu) or any other person on the writ.
“Notwithstanding the above submissions, even assuming that we are to buy the story that indeed shares were sold as between any of the first four plaintiffs (Kombo, Ndhlovu, Musonda and Mumba) and Chilinda or any one of them, Cashfin Zambia was not and cannot be a party to the contract. It is a total stranger. Shares by trite being personal property of the owner, such owner has at law their own separate rights on how they deal with the shares, including the sale or transfer. It is and would be of no concern to the company,” read the submissions further.
“Thus, Cashfin Zambia cannot sustain a cause of action nor any liability as against Chilinda nor Convex Equity Limited.”
It submitted that the action by Messers Isaac and Partners to include it in the suit without its authority or their appointment by it (Cashfin Zambia) was incompetent at law in as far as it was concerned.
“On the above premises my lord, we humbly pray that Cashfin Zambia should be removed from these proceedings and the advocates be admonished or otherwise dealt with for instituting the proceedings in its name without its authority,” read the submissions.