Court of Appeal judges have dismissed an appeal brought before them by Bifm which was against redemption of their P150 million shares in Botswana Building Society.
Bifm had bought shares from BBS and paid for them without alteration of rules and for some years the deal was kept with no problems. Then queries with the arrangement arose when BBS auditors raised questions on the arrangement which they thought was wrong.
BBs sought legal advice on the matter and it was suggested that the arrangement might have been unlawful. Then the BBS Board, on which two members of Bifm sat, suggested that, to cure legal difficulties, certain changes should be made.
After sometime, this proved impossible and BBS indicated to Bifm that it wanted to redeem the whole of Bifm shares six months from the day they were served and it was on this basis that Bifm went to the High Court challenging the decision to redeem them.
In the High Court, Judge Lot Moroka found that BBS’s decision was right and this decision was upheld by the Court of Appeal judges who further stated that “there is nothing in the Act which protects a person dealing with a Building Society against an assertion that the Act or Rules have not been complied with”.
On the relations between Bifm and BBS they said that “BBS, for its part, shall be entitled to redeem Indefinite Period Shares provided notice is not issued within the prescribed period after issuance of shares in question”.
“Any member of the public reading the act and rules would be fully informed as to the incidents of BBS Indefinite Period Share, further that holder of Indefinite Shares is not necessarily locked into his investment,” the Court of Appeal judges said, adding that they had deliberately avoided an arrangement for fixed period shares in accordance with BBS Act and Rules because size of company shares could have exceeded what was permissible under the BBS Act.
They further said that entering any contractual obligation to pay immutably fixed dividends of any contractual obligation having same effect was inconsistent with rules and beyond capacity of BBS.
