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Econet in shares battle with former workers
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The High Court has issued a default judgment ordering Econet Wireless (Pvt) Ltd, the private company through which Econet Wireless Zimbabwe founder Strive Masiyiwa holds a 38% stake, to release crucial documents related to the transfer of over two million Class A shares promised to eight former senior employees nearly a decade ago.
In a ruling dated 29 November 2024, Justice Joel Mambara directed the telecommunications giant to provide evidence that it had transferred the shares to the retrenched workers as agreed in a Deed of Settlement signed in 2015. The case revolves around the company's failure to meet its obligations under the settlement agreement, which required the transfer of Class A shares to the former employees as part of their severance packages.
The first applicant, Naison Musasa, was among the eight workers who were retrenched from Econet Wireless (Pvt) Ltd in October 2015. Musasa, who served as the Head of Field Network Operations, and his colleagues received a retrenchment package that included a sum of US$126,681 and 306,429 Class A shares in the company. The shares were to be transferred within 30 days but could not be traded for 24 months, with the certificates retained by the company for safekeeping during that period.
However, the workers claim that Econet Wireless (Pvt) Ltd failed to transfer the shares as promised, and to date, they have not received the required share certificates or proof of ownership. The company has since claimed that the shares were bought back in 2017, but Musasa and his colleagues dispute this assertion, arguing that no such buyback transaction took place, and no records or documents supporting this claim have been provided.
The Class A shares in question are of particular significance, as they offer special benefits, including high voting rights and a priority claim to dividends and capital repayment. These shares are typically held by company executives, owners, and management.
In his application to the court, Musasa raised several concerns, including the failure to transfer the shares, the delayed issuance of share certificates, contradictory claims regarding the alleged buyback, and the lack of documents to support the buyback transaction. The workers argued that they were entitled to the transfer of shares as stipulated in the Deed of Settlement, and the failure to provide the necessary documentation amounted to a breach of contract.
The court's analysis concluded that the workers had established their right to the transfer of shares and documentation under the settlement agreement. Justice Mambara noted that the corporate confusion between Econet Wireless Zimbabwe Ltd and Econet Wireless (Pvt) Ltd - two separate legal entities - further complicated the case, especially as the publicly-traded Econet Wireless Zimbabwe claimed to have bought back the shares issued by the private entity, Econet Wireless (Pvt) Ltd.
The court ordered Econet Wireless (Pvt) Ltd to release the following documents within seven days of the judgment:
i. Proof that the Class A shares were transferred to each of the applicants, including evidence of any taxes or duties paid in relation to the transfer.
ii. The shareholders' book for the period November 2015 to June 2017, showing the applicants as shareholders.
iii. Share certificates confirming each applicant's shareholding during that period.
iv. Contract/Memorandum outlining the terms and conditions of the alleged share buyback in June 2017.
The court also ruled that Econet Wireless (Pvt) Ltd must bear the costs of the lawsuit.
This case highlights ongoing tensions surrounding corporate governance and shareholder rights in Zimbabwe's telecommunications sector, with Masiyiwa's Econet Wireless facing scrutiny over its treatment of former employees. The outcome of this legal battle is expected to have wider implications for corporate transparency and accountability in the country's business environment.
Masiyiwa, who is based overseas in the UK and the US, has built a business empire encompassing telecommunications, fintech, and technology, but the unresolved dispute over the Class A shares continues to cast a shadow over his flagship business.
In a ruling dated 29 November 2024, Justice Joel Mambara directed the telecommunications giant to provide evidence that it had transferred the shares to the retrenched workers as agreed in a Deed of Settlement signed in 2015. The case revolves around the company's failure to meet its obligations under the settlement agreement, which required the transfer of Class A shares to the former employees as part of their severance packages.
The first applicant, Naison Musasa, was among the eight workers who were retrenched from Econet Wireless (Pvt) Ltd in October 2015. Musasa, who served as the Head of Field Network Operations, and his colleagues received a retrenchment package that included a sum of US$126,681 and 306,429 Class A shares in the company. The shares were to be transferred within 30 days but could not be traded for 24 months, with the certificates retained by the company for safekeeping during that period.
However, the workers claim that Econet Wireless (Pvt) Ltd failed to transfer the shares as promised, and to date, they have not received the required share certificates or proof of ownership. The company has since claimed that the shares were bought back in 2017, but Musasa and his colleagues dispute this assertion, arguing that no such buyback transaction took place, and no records or documents supporting this claim have been provided.
The Class A shares in question are of particular significance, as they offer special benefits, including high voting rights and a priority claim to dividends and capital repayment. These shares are typically held by company executives, owners, and management.
In his application to the court, Musasa raised several concerns, including the failure to transfer the shares, the delayed issuance of share certificates, contradictory claims regarding the alleged buyback, and the lack of documents to support the buyback transaction. The workers argued that they were entitled to the transfer of shares as stipulated in the Deed of Settlement, and the failure to provide the necessary documentation amounted to a breach of contract.
The court's analysis concluded that the workers had established their right to the transfer of shares and documentation under the settlement agreement. Justice Mambara noted that the corporate confusion between Econet Wireless Zimbabwe Ltd and Econet Wireless (Pvt) Ltd - two separate legal entities - further complicated the case, especially as the publicly-traded Econet Wireless Zimbabwe claimed to have bought back the shares issued by the private entity, Econet Wireless (Pvt) Ltd.
The court ordered Econet Wireless (Pvt) Ltd to release the following documents within seven days of the judgment:
i. Proof that the Class A shares were transferred to each of the applicants, including evidence of any taxes or duties paid in relation to the transfer.
ii. The shareholders' book for the period November 2015 to June 2017, showing the applicants as shareholders.
iii. Share certificates confirming each applicant's shareholding during that period.
iv. Contract/Memorandum outlining the terms and conditions of the alleged share buyback in June 2017.
The court also ruled that Econet Wireless (Pvt) Ltd must bear the costs of the lawsuit.
This case highlights ongoing tensions surrounding corporate governance and shareholder rights in Zimbabwe's telecommunications sector, with Masiyiwa's Econet Wireless facing scrutiny over its treatment of former employees. The outcome of this legal battle is expected to have wider implications for corporate transparency and accountability in the country's business environment.
Masiyiwa, who is based overseas in the UK and the US, has built a business empire encompassing telecommunications, fintech, and technology, but the unresolved dispute over the Class A shares continues to cast a shadow over his flagship business.
Source - online
