Monday, December 11, 2023

Outgoing board directors take the war to the Shareholders in the BBSL dispute

Avani Gaborone Resort & Casino was the battleground this past Friday as the four week long power struggle between Botswana Building Society Limited (BBSL)’s executive and non-executive board directors culminated in the shareholders having the final say. 

Managing Director Pius Molefe has again emerged victorious, albeit for now, following a protracted legal war with the company’s board of directors.

On Friday, April 30, 2021 the company’s major shareholders had the final word, putting an end to the public spat that threatened to tarnish the image of the bank.

But the day was not without its own share of drama as the outgoing non-executive directors, led by board chairperson Pelani Siwawa-Ndai made a last minute attempt to adjourn the Annual General Meeting (AGM).

One of the major shareholders, business tycoon Derek Brink presented a court order instructing that the AGM continue as scheduled.

“The Chairperson of the Annual General Meeting of the First Respondent (BBSL) is interdicted and restrained from adjourning the meeting, if it is quorate, without a resolution of the shareholders present or represented at the meeting,” the order stated, adding “The Annual General Meeting scheduled for 30 April 2021 at 900 hours shall proceed and, if quorate, all matters on the notice of the agenda shall be deliberated upon, including the election and reelection of a directors.”

The BBSL board had challenged the validity of the notice convening the meeting saying it had not been done in accordance with the company’s constitution. The attempt to stop the AGM followed another Court order in the board’s favour just under 24 hours earlier. The order upheld an earlier decision to suspend Managing Director Molefe, and Secretary Sipho Showa.

“Further to the various updates published by BBSL on the Botswana Stock Exchange X-News platform, stakeholders are advised that Industrial Court has today handed down judgment in the urgent litigation brought by Mr Pius K. Molefe and Mr Sipho H. Showa confirming Messrs Molefe and Showa’s suspension from the Company.  The Industrial Court has passed an order declaring lawful the suspensions of Messrs Molefe and Showa from the Company for a period of 60 days with effect from 29 April 2021,” a statement from the outgoing board reads.

Following the shareholders’ refusal to have the meeting adjourned, the board walked out, leaving the former to proceed with the meeting where they eventually appointed a new Board of Directors.

Both Molefe and Showa were present at the meeting. Sunday Standard has been informed the two attended the AGM in their capacity only as shareholders since the court order issued the day before the meeting had barred them from engaging in any activities involving BBSL in their capacity as employees or executive directors.

“During their periods of suspension Messrs. Molefe and Showa shall, amongst others, not be entitled to: conduct any business or transactions on behalf of the Company; issue and/or publish any statements on behalf of the Company to its stakeholders, including its employees and shareholders, and/or the public at large; access the Company premises; interfere in any manner with the operations of the Company or of its Board of Directors or of its employees,” the Industrial Court order said. The rule nisi was ordered pending the return date of May 27, 2021. The shareholders’ word on Friday may however not be final if the outgoing board members’ subsequent response is anything to go by.

Their decision to adjourn the meeting, they had said, was to enable them to make an approach to the High Court in terms of 2 section 108 of the Companies Act where they would ventilate their misgivings about the manner in which the meeting was convened.

“We are instructed that …the shareholders in attendance physically and virtually purported to continue the AGM in circumstances in which it is clear that the same was not lawfully convened in terms of the Act or the constitution,” reads a letter from the outgoing board of directors’ lawyers.

“It appears that a court order dated 30 April 2021 under Case No. UAHGB-000111-021 was relied upon as authority for proceeding with the meeting. The court order does not declare the AGM lawful, nor does it rectify the various irregularities identified in our letter aforesaid. More importantly, the interim relief that is immediately operative does not interdict the adjournment of the meeting”

They go on to state  that the entire membership of BBSL was not in attendance for purposes of a waiver being issued in terms of article 62.2 of the constitution in respect of the irregularities identified in their letter.

In their view, the resolutions passed after then Board Chairperson Siwawa-Ndai adjourned the meeting are void and unlawful from the onset as no properly and duly convened AGM took place by reason of the irregularities they identified.

The former directors said appropriate steps will be taken before the courts to set aside any steps and/or resolutions taken at the meeting, suggesting a drawn out court battle shall ensue. The directors, including Chairperson, maintain they remain a lawfully constituted board unless otherwise “lawfully” removed. “Our advice is that the board ignores any steps and/or resolutions taken at the improperly convened AGM post-adjournment by the chairman,” they have said through their lawyers.

The standoff between the executive directors and the non-executive directors first received public attention in early April 2021 following the latter’s decision to sack Managing Director Molefe, and Head of Communications Showa. The duo successfully challenged the sacking.

The board stood accused of unlawfully attempting to fire Molefe and Showa following the duo’s refusal to approve a resolution that would extend the Board’s tenure beyond the prescribed length of contract.
The aim was to allegedly save five members whose terms of office were due to expire April 26, 2021 and therefore feared they would face competition from five other candidates at the April 30, 2021 AGM. Their fears (if Friday’s meeting is anything to go by) have been confirmed.


Read this week's paper