News Column

Remo in Landmark Ruling

February 14, 2014

The shares have been of a long running dispute. The judgment issued by Justice J Takuva, will open a can of worms in the equities industry, as the shares in question had already been the subject of "normal trade" in the market, before the eruption of the dispute two years ago.

Interfin had put up the defence that it was no longer possible for the shares to be returned as they had been on sold to third parties but the High court judge threw this defence out saying Interfin's argument defied logic in that it did not explain why Interfin accepted the re-payment on a loan for which liquidated the security.

"Applicant has shown that respondent actually sold the shares after it had received payment in full," ruled Justice Takuva.

"This clearly shows that the respondent does not have bonafied defence. In the results, I make the following order (that) the respondent be compelled to return immediately the . . . share certificates and shares . . . within three days of this order failing which the Deputy Sherriff is authorised to size the share certificates and shares from the respondent or whoever may be in possession of the said certificates and shares."

The shares in dispute were for CBZ Holdings totaling five million, 700 000 Old Mutual shares, Dairiboard Zimbabwe five million and about one million for TA Holdings Ltd. The current ZSE market price, all the shares are valued at about US$3,24 million.

The dispute arose after Interfin advanced a US$6,3 million loan to Remo and its associate company, Zimslate Quartzite.

Remo handed over the certificates as security for the loan. On February 21, 2012, Remo requested Interfin to provide the details of the amount outstanding. It was advised that the outstanding amount was US$649 694 and that was paid two days later.

Upon repayment, Interfin Securities was supposed to return the share certificates to Remo. However, this did not happen. Remo then realized on March 16 that two of the share certificates had been registered under Kingdom Nominees. Remo also discovered that Kingdom had re-registered these certificates into other parties' names.

"Applicant (Remo) queried this respondent's management and was assured that the certificates and shares would be returned within three days," said the court papers.

"On March 2012, (the) applicant sent a formal latter of demand to respondent (Interfin) but did not respond. (The) applicant consented to the share certificates and shares being lodged by the respondent to third parties for whatever purposes."

After Interfin failed to return the shares and certificates, Remo made a court application for an Anton Pillar Order, which provides the right to search premises and seize evidence without prior warning, to have the share placed is custody of Sheriff.

Innocent third parties are likely to be affected by the judgment as shares exchanged are delivered in negotiable order after being traded on the open market. A buyer of shares can further sell them to other third parties and these parties who may not have anything to do with the share dispute between the two brokers.

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Source: AllAfrica

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