Published: 08 August 2017

FREDA Rebeca's controlling London-listed shareholder, Asa Resources Plc, has run into a fresh shareholder dispute after a 15 percent owner in its Bindura gold mining unit accused the Chinese controlled group of violating minority rules on share disposal.

Suncraft Enterprises, a minority shareholder in Freda Rebecca Gold Mine, is suing Asa Resource over its intention to dispose of shares in the mining concern without regard to the minority shareholder's pre-emptive rights. The application was made to the High Court of Zimbabwe.

Asa recently received a cash offer for its shareholding from Rich Pro Investments, a deal likely going also to affect Freda as a subsidiary. The breach was allegedly contradictory to Freda's Articles of Association and a shareholder's agreement concluded with Suncraft.

London junior market listed Asa is being accused of making decisions on behalf of Freda Rebecca, which has its own board of directors. Asa also controls Zimbabwe Stock Exchange Bindura Nickel Corporation.

Suncraft Enterprises, which is owned by Member of Parliament for Bindura North, Kenneth Musanhi, has given notice of its intention to apply to the High Court under section 196 of the Companies Act to seek relief in terms of Section 198 the same law, against Asa Resource, an 85 percent shareholder in Freda Rebecca.

According to court papers, case number HC6828 the application details to how Asa, directly and indirectly through Freda, unfairly exercised (positive and negative) control of Suncraft, as a minority shareholder, in a manner that was unfair and prejudicial.

"The relief sort is premised on Asa and Freda Rebecca Holdings' intention to dispose of shares without regard to the applicant's pre-emptive rights and to the Articles of Association of the company and a shareholder's agreement concluded with Suncraft. The application cites the doctrine of freedom of contract and enforcement of these provisions whereby the defaulting party is deemed to have irrevocably offered its shareholding to the non-defaulting party in this case, the applicant," said Suncraft in the court papers.

Suncraft alleged that major decisions relating to the Freda Rebecca Gold Mine were made on directives of the Asa board of directors without reference or recourse to Freda's board of directors. In the court papers, Suncraft also made sensational allegations from a special investigation report showing how over $22 million in shareholder loans, was externalised without board approval. The application alleged that the shareholder loans arise from agreements entered when Freda acquired Ashanti Goldfields Zimbabwe Limited. Repayment of the said loans entitled the applicant to 15 percent of the amount thus repaid and this was not upheld.

Suncraft cited how the probe also uncovered a host of administrative irregularities and malpractices, including bribery, corruption, transfer pricing and externalisation of funds amongst other things. This affected operations of the gold mining company and prejudiced applicant, the country and fiscus at large through unpaid taxes.

Suncraft said it formally gave notice in writing of the breaches stretching as far back as 2013 and most recently in April this year.
- online

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