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Court orders restoration of shareholders of Indian Ocean Hotels
What you need to know:
- Three businessmen had filed an application seeking order for restoration of the status quo Indian Ocean Hotels Limited’s shareholding structure after an alleged unilateral alterations
Dar es Salaam. The High Court in Dar es Salaam has reinstated three directors and shareholders of Indian Ocean Hotels Limited who have challenged removal from the key positions as dubious and unfair.
Judge Deo Nangela of the commercial division of the High Court said the removal of Dhirajlal Walji Ladwa, Chandulal Walji Ladwa and Niyesh Jayantilal following unilateral changes in the company’s shareholding was an abuse of the court process.
The trio had filed an application seeking orders for restoration of the status quo of the company’s shareholding structure after accusing businessman Jitesh Jayantilal Ladwa of unilaterally altering shareholding structure of the company.
The applicants were all members and shareholders of the company before they were embroiled in a legal wrangle with Mr Jitesh.
Their key argument was that it was not proper for Mr Jitesh Ladwa to alter the shareholding structure while there was a pending petition at the same court regarding the issue.
The applicants claimed that on April, 16, 2020, the businessman, through an online registration system maintained by the Business Registration and Licensing Agency (Brela), uploaded information regarding the company’s shareholding structure, showing they were no longer directors and shareholders of the company.
Through their lawyer, Robert Rutaihwa, the trio argued that the unwarranted activation of the company’s information would pre-empt the party’s dispute pending in the court.
He argued it was not proper for businessman to do any act that will have implication on the affairs of Indian Ocean Hotel Limited while there was a pending case on the matter.
Misconceived conclusion
Mr Jitesh, however, shrugged of the claims, saying it was a misconception to conclude that it was the activation of the company’s information in the online registration system that changed the shareholders in a company.
Represented by Mr Jeremiah Mtobesya, the businessman argued that under the Company’s Act, transfer of shares was guided by memorandum and article of association of a company.
“The registrar is only notified as the whole process is done by shareholders,” argued Mr Mtobesya, contending that with that position of the law, the prayer for maintenance of status quo was baseless.
He contended that the essence of the updating the company’s information was to inform the public of its true shareholders.
“Not updating the ORS is a move that intends to mislead the public as to the true situation of the company in real time. Concealing such information goes to the integrity and transparency of the members of the company,” he argued.
Abuse of court process
In his recent decision, Judge Nangela agreed with the applicants that the alteration of the company’s shareholding structure and directorship was an abuse of the court process.
“I have no flicker of doubts that the acts of the first respondent (Jitesh Ladwa) were wrong and are detestable, given that the parties were already in court,” said the judge.
He went on: “I find that the first respondent acted in abuse of the process of this court and whatever was done in the ORS system maintained by the Registrar of Companies was void and has no legal effect, given that it was done to pre-empty an on-going court process.”
The court has directed the Registrar of companies to maintain the company’s status quo prior April 16, 2020. He has also directed that any unilateral act done by the businessman be reversed and the reversal information communicated to the court.
