The Bluthorn Fund Managers (BFM) have lost their bid to secure a stay of liquidation against the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) pending an appeal.
The company also sought to challenge the Regulator’s powers to place them under liquidation. They had filed an urgent application with the Gaborone High Court.
Delivering his judgment this week Justice Itumeleng Segopolo began by dismissing BFM’s application for urgency but decided to deal with the merits of the case anyway.
The company, through their major shareholder Eune Engelbrecht, challenged NBFIRA’s powers to liquidate them. Justice Segopolo however ruled that their willingness to initially cooperate with the provisional liquidator indicated they recognized the powers of the Regulator.
Engelbrecht had argued that when granting the order for liquidation in February this year the High Court had failed to take into consideration that BFM is an Investment Company with Variable Capital in terms of the Collective Investment Undertakings Act.
He said had the Court had that in mind, it would have not held that provisions of the Securities Act apply to BFM and therefore recognizing NBFIRA as having the authority to apply for BFM’s liquidation in terms of the provisions of the Securities Act.
“Most significantly though, the Court a quo (High Court) misdirected itself to the extent that it found that the 1st Respondent (NBFIRA) had the requisite locus standi (right) to move a petition for the winding up of the Applicant (BFM).”The company says this argument is premised on the fact that the Collective Investment Undertakings Act does not permit or make provision for the winding up of a Collective Investment Undertaking. But Justice Segopolo dismissed their argument saying their cooperation in the liquidation process meant they recognized the Regulator’s locus standi.
The Judge said the company also failed to make their case on the balance of convenience. He said they stood to suffer no damage if the liquidation was not stayed since the liquidation process itself takes time. He said the liquidation process will not have been completed by the time their appeal is heard by the Court of Appeal.
On the Prospects of success at CoA Justice Segopolo found that there is nowhere in BFM’s grounds for appeal where they deal with the findings of the High Court judgements. They chose only to deal with technicalities. Justice Segopolo said NBFIRA had acted within its powers as provided for by Section 5 of the Collective Investment Undertakings Act.
Engelbrecht had argued that NBFIRA only had those powers under the repealed Act and not the current one, which he said demonstrated the intention by the Legislature not to have the Regulator move such petitions unless otherwise expressly stated by any other law.
He said while Collective Investment Undertakings Act of 1996 made provision for the winding up of a collective investment undertaking, the provision was later removed when that Act was replaced by the Collective Investment Undertakings Act of 1999. Consequently, the company argued, the current Act as it stands does not make provision for its winding up by NBFIRA.
“Therefore, in absence of being granted by its Act and the Collective Investments Undertakings Act, the Companies Act is the right Act to look to for provisions of winding up a company. A close look at the Companies Act reveals that the NBFIRA is not one of the parties that may bring a petition for the winding up of the company.”
Justice Segopolo dismissed the application with costs on an attorney and own client scale. NBFIRA were represented by Elemang Modisane of Moribame Matthews Attorneys.