Zimbabwe Minister, Sekai Nzenza’s Appointment of Caps Pharmaceutical Board of Directors Provisionally Deemed Illegal

Zimbabwe Minister, Sekai Nzenza’s appointment of Caps Pharmaceutical’s Board of Directors has been provisionally deemed to be illegal by the High Court of Zimbabwe following an urgent chamber application by the company’s majority shareholder Caps Pharmaceutical Trust (CPT) which owns 51% shares.

Sekai Nzenza who is Zimbabwe’s Industry and Commerce Minister had unilaterally appointed a board of directors comprising of Ian Matondo, Tapiwa Mashingaidze, Sinikiwe Gwatidzo, Arthur Manase and Bothwell Nyajeka.

The urgent chamber application by Caps Pharmaceutical Trust sought to nullify the appointment and forbid the above mentioned newly government appointed directors from taking any action on behalf of or being involved in the running of Caps Pvt Ltd.

According to the provisional court ruling (HC6683/20), CPT is the lawful holder of ten million seven hundred and ten thousand shares out of twenty one million shares which translates to 51% with the other remaining 49% being held by Caps Holdings Limited.

This shareholding status therefore gave the Trust a right to appoint a quota of the directorate including the chairman but the unilateral decision by the Minister which was also approved by President Mnangagwa overstepped a statutory requirement of making use of an Annual General Meeting regarding board appointments

Majority shareholder, CPT with its 51% shareholding expressed that Nzenza’s appointments which was done without a shareholders agreement and falling outside the dictates of law would cause irreparable harm through decisions that would emanate from the board’s de-facto status.

Even though Mr Nzenza and the Permanent Secretary in her Ministry had sought to counter the interdict, Caps Pharmaceutucal Trust won the provisional round with the following points being a summary of the relief awarded:

1. The government appointed directors are forbidden from acting in any way on behalf of Caps Pvt Ltd
2. Minister Nzenza is forbidden from interfering with Caps Pvt Ltd’s operations until the final judgement.
3. The board of directors that was there before Minister Nzenza’s unilateral appointment shall continue with their work until the day of final ruling.

In granting the interdict, Justice Tagu said that it was not in dispute that the applicant on papers appeared to be the majority shareholders and thus had a right to be involved in the appointment of directors.

It was also noted that some of the government appointed directors were not pharmacists, a move which is said to be against the provisions of the Medicines Control Authority and the Pharmacists Council of Zimbabwe.

This anomaly thus created a possibility for the suspension and or revocation of the Manufacturing License if the Minster’s decision was to be upheld.

Despite being the majority shareholder in Caps Pvt Ltd, CPT only came to know of the Minister Nzenza’s board appointment through social media and The Herald, a news publication in Zimbabwe.

While commenting on the Industry and Commerce Minister’s controversial board appointments, one business man said that the action was arbitrary, unlawful, unreasonable and in any even a legal nullity.

Another commentator said that it is imperative that people in leadership positions must undergo corporate and legal literacy courses to lessen the inconveniences associated with ignorant actions in such matters.

Fred Mutanda, the majority shareholder in the majority shareholding Caps Pharmaceutical Trust said the government doesn’t think the constitution applies to it since it just takes it as a piece of paper and considers itself to be above the law.

He also highlighted that the government through the Reserve Bank of Zimbabwe represented by Dr Gideon Gono had proposed and offered to buy his shares but had in actual fact failed to do so thus nullifying the basis upon which it could veto the appointment of directors in a privately owned company.