HARARE – The Securities Commission of Zimbabwe (SecZim) says there was “selective application of the law” in dealing with Lifestyle Holdings (Lifestyle)’s delisting from the Zimbabwe Stock Exchange (ZSE).
This comes as the capital markets regulator — which argues that Lifestyle did not follow due process and fully apprise shareholders of what the transaction entails — had its urgent application to block the delisting dismissed by the High Court.
“We are of the view that rules are being selectively applied,” SecZim chief executive Tafadzwa Chinamo told businessdaily.
“What we want as SecZim is that due process be followed. Listing and delisting are entirely the prerogative of companies depending on the strategies,” he said.
Chinamo said while SecZim had no qualms with firms delisting, their case was that “companies should follow the laid down rules and provide their shareholders with enough relevant information to enable them to make the right decisions.”
SecZim’s urgent court application specifically sought an order to bar Lifestyle’s extraordinary general meeting (EGM) to get shareholders’ approval of its delisting plan.
However, the bid hit a brick wall. The EGM was held and shareholders approved the delisting.
“We were disheartened by the dismissal of our application on the basis that it was not urgent. Our arguments were clear and felt nothing could be more urgent,” Chinamo said.
“The ruling makes the process of redress much more complicated.”
While SecZim argues Lifestyle’s proposed transaction violates corporate governance and transparency rules, the group had already secured the High Court’s approval to hold the EGM.
“It is also our right as SecZim to use the same courts to fulfil our investor protection and market integrity mandate hence our application to the High Court,” Chinamo said.
But Tawanda Nyambirai, Lifestyle’s chief executive, argues Chinamo is wrong.
“With due respect, I am just an individual. I don’t control the courts of the land. I believe they have the highest integrity and would not engage in selective application of justice,” Nyambirai told businessdaily.
He added: “Reading the application filed by SecZim, I cannot fault the courts for arriving at the decision that they did. The SecZim application was self-defeating.
“My letter, which they attached to their application, clearly exposes Tafadzwa Chinamo’s ignorance of the operations of the ZSE and the listing Rules.”
“I consider Chinamo’s comments to be in contempt of court,” said Nyambirai.
Lifestyle — formerly TN Financial Holdings Limited — decided to delist from the ZSE after failing to raise capital on the local market.
The group, which recently set up TN Harlequin Luxaire International Limited (TNHLI) in Mauritius, intends to make Lifestyle a wholly-owned subsidiary of the new Mauritian unit, necessitating the delisting from the local bourse.
TNHLI will acquire all the issued shares of Lifestyle — listed in 2010 — and raise capital for the group on the international market.
“Lifestyle Holdings requires capital to sustain its furniture business and expand its fast foods division,” Lifestyle’s chairperson Harry Cantor has said.
“Its efforts to raise capital on the Zimbabwean market have not yielded any results because of the lack of long-term funding,” he said, adding that “efforts to raise capital on the international markets have also proved fruitless as international investors have refused to invest citing the Zimbabwean sovereign risk.”
Cantor said the transaction would involve the issue of new TNHLI ordinary shares in exchange for Lifestyle’s.
In this case, shareholders will be entitled to receive one TNHLI ordinary share for every 253,12 Lifestyle ordinary shares held.
“Alternatively a cash consideration of $0,0065 for every one Lifestyle ordinary share.
“This consideration will be paid in four equal instalments after every 90 days with the first payment date being 14 days after confirmation of the scheme by the High Court,” he said.