MINORITY SHAREHOLDER ELIGIBLE TO CHALLENGE KCM SALE, SAYS COURT

By GRACE CHAILE LESOETSA THE Lusaka High Court has declined to grant ZCCM-IH submission to have the matter where a minority shareholder is challenging the sale of KCM (in liquidation) to Vedanta Resources PLC dismissed. High Court Judge, Irene Zeko Mbewe, said the minority shareholder, Mr Dennis Mumba, was eligible to commence a derivative action sought. In this case, Mr Mumba is asking the court to review the sale of KCM to Vedanta at a cheap price. He stated that directors of KCM breached their duty of care when they made an offer of 560, 325, 511 shares that shifted control to Vedanta at a bargain price of US$0.0446169 per share. Mr Mumba said Vedanta only paid US$25 million of US$2. 909 billion that the mine should have received for its shares. He stated that KCM loss of US$2. 884 billion marked the genesis of the mine’s financial problems. Mr Mumba had cited ZCCM-IH as the respondent while Zambia Copper Investments Limited (ZCL), Vedanta, Milingo Lungu as provisional liquidator of KCM and Konkola Copper Mine as intended defendants in the matter. ZCCM-IH through its deputy general counsel, Lombe Mbalashi, had filed a notice of motion to raise preliminary issues and to have the matter dismissed on a point of law. Mr Mbalashi argued that the action contemplated by Mr Mumba was not a derivative action and even if it were, he was not eligible to commence such action. He stated that the originating notice of motion for an order for leave to commence a derivative action only described allegations relating to KCM and not ZCCM-IH. But Mr Mumba’s lawyer, Mr Michael Moono of L.J. Michaels Legal Practitioners argued that KCM was not a nominal defendant and the action was taken on behalf of ZCCM-IH which is the nominal party. In a ruling delivered on Monday, Ms Justice Mbewe said ZCCM-IH is the nominal party. She therefore said that Mr Mumba was eligible to commence a derivative action and is in line with section 331(1) Companies Act, no 10 of 2017. “For the foregoing reasons, I decline to sustain the respondent’s notice of motion to raise preliminary issues for lack of merit. Costs follow event. Leave to appeal is granted,” she ruled.