Court of Appeal will today (Friday) pass judgement in a case in which BIFM Capital Investment Fund One is appealing a High Court ruling, which found nothing wrong with Botswana Building Society’s (BBS) decision to redeem the former’s shares in the society.
The highly anticipated judgement will bring to an end one of the biggest corporate litigations involving two multi-million entities that has been dragging on for over a year now. Last week Friday, BBS and BIFM Capital Investment Fund One and BBS lawyers spent close to two hours arguing before a panel of three judges why their respective clients should be heard.
In the contention is BBS’ decision to redeem BIFM Capital Investment Fund One’s P150 million worth of shares within a six-month notice that started in September 2011.
BIFM Capital Investment then took the matter to court but eventually lost the case with costs. In his judgement delivered on March 2012, High Court Judge Lot Moroka declared that the agreement between BBS and BIFM Investment Capital Fund One was null and void, as it contradicted the Botswana Building Society Act.
The current tussle between the two companies can be traced back to seven years ago after government pulled out of the society. In 2005, government of Botswana advised BBS of its intention to withdraw as one of BBS investors and subsequently sold its indefinite shares of P112 million to the society. BBS board decided to redeem government shares rather than let her sell them.
“In order to do so it required finance from another investor and that is when the appellant entered the picture,” said BBS attorney, Advocate Antony Thompson Sc.
Before the appellant entered into the multi-million Pula deal, it demanded that any proposed investment should be long term in nature and it should pay a fixed rate of interest. BBS board agreed to the proposed deal. However, it later turned out that the agreement between BBS and BIFM Capital Investment One went against both the BBS rules and Building Society Act, which eventually led the former to redeem the latter’s shares six years later.
However, Advocate M du P der Nest Sc, who is instructed by Makuyana Legal Practice for the appeal, explained that at a meeting held on 5 September 2006 BBS Board of Directors resolved that the BIFM Investment shares are indefinite period shares, and that the “agreement between the appellant and the respondent remain valid.”
Meanwhile Thompson Sc pleaded with the court to dismiss the BIFM Capital appeal with costs. He said BBS had the power to redeem the shares because the agreements in question contravened the Society’s statutes.
“First, the Act provides that a society shall, inter alia, have the power from time to time to issue shares in such classes and denominations, with or without accumulating dividends, and with such preferential rights regarding dividends and capital and subject to such conditions of transfer and repayment as may be decided by the society in accordance with the rules,” he said.