The High Court of Malawi Commercial Division sitting in Lilongwe has vacated an injunction which Mother’s Dairy and Energy Farms Limited took against AUM Sugar and Allied Limited alongside Prashant Sharma for removing its representative in the board of directors for Salima Sugar Company Limited.
The Court has also dismissed the application for a continuation of injunction.
In a claim, Shirieesh Betgiri of Mother’s Dairy and Energy Farms Limited accused the defendants, AUM Sugar and Allied Limited and Sharma, of removing him from the board.
In April, Betgiri obtained a court order restraining the two defendants from removing him as member of the board of directors. However, the defendants are fighting to have the injunction vacated.
Later, government through the Attorney General (AG) Thabo Chakaka-Nyirenda, joined the case as the minority shareholder with a 40 percent stake in the firm.
In her ruling, delivered on Wednesday, High Court Judge Charlotte Wezi Mesikano Malonda vacated the injunction citing lack of status quo to maintain at the Board level of the AUM Sugar and Allied Limited.
“Each litigant has their own interpretation of the shareholding. It is the shareholding which is the subject matter of this dispute. Therefore, to uphold the Betgiri as the majority shareholder, will be to assume that their interpretation of the shareholding is the correct one, therefore providing a substantive remedy at injunctive stage.
“In the current scenario, this Court cannot interfere with the restructuring of the Board at the AUM Sugar and Allied Limited company and the affiliated companies, as that will be an interference with the shareholders right to recall and deploy directors to represent their interest at Board level.
“All the other irregularities cited with the composition of the Board and violation of the Articles of Association, payment of the 4 Billion Kwacha by the Petitioner, and all other related irregularities and counter-arguments are substantive matters that this court will not deal with at this stage because the credibility of the evidence needs to be tested,” reads part of the ruling
She further put aside fears by Betgiri that he will be affected with the Board decisions following his removal.
“He simply depones that he will be affected by the decisions of the Board. I am not convinced that he will be gravely affected beyond compensation. Therefore, the balance of convenience tilts in favor of vacating the injunction, as damages can be an alternative remedy to his injury.
“I stand to agree with the defendant that ultimately since this is a shareholder dispute, the major effect will be on the value of the dividend and nothing beyond that. I have reason to believe that the Claimant (through Mr Shineesh Belgirl) felt the power shift in the Board, and since the Claimant was involved in the day-to-day running of Salima Sugar Company (as he already admitted), he feels that by being sidelined in the running of the affairs of the Company, his rights will be gravely affected.
“However, this should not be the case. If indeed this is a dispute about shares, then it is a governance failure if one shareholder at the exclusion of other shareholders has total control in the day-to-day running of the company, whether they are the majority shareholder or not. All shareholders must have a say in the running of the company and this can be exhausted at the Board level.
“Board issues should not be conflated with day-to-day issues in the running of a company. 68. I am therefore agreeable with the Defendants that the current facts do not warrant the injunction restraining the deployment of directors to the affiliated companies of AUM, especially Salima Sugar Company,” reads the ruling further
Justice Malonda ordered that the return date is set down for the 13th of December 2023, at 8am and prior to the scheduling conference, the parties should file a Trial check list.
Salima Sugar Company is a joint venture (JV) in which the claimant and the two defendants hold a60 percent shares and government through the Greenbelt Authority holds the other 40 percent stake. percent stake.
In 2015, government incorporated the Greenbelt Initiative Holdings Limited. GBI is thus a wholly State owned enterprise. The purpose of the company is to undertake commercial irrigation investments.
The Secretary to Treasury held 99 percent shares and Secretary to President and Cabinet held 1 percent shares in GBI Holdings Ltd. Around the year 2022, the shares in GBI Holdings Limited were transferred to GBA.
GBA was established in 2017 under the Greenbelt Authority Act, 2017.
