HARARE - Shareholders on Monday approved the demerger of Kingdom Financial Holdings from Kingdom Meikles Limited ending an ambitious and failed two-year marriage.

An approval of the demerger appeared certain as the majority shareholder in Meikles Africa Mr John Moxon was allowed to vote during the extraordinary general meeting after his lawyer Mr Stenford Moyo of Scanlen and Holdeness successfully challenged his specification.

All four resolutions — the disposal of KFHL shares, the distribution of KFHL shares, listing of KFHL on the Zimbabwe Stock Exchange and change of name received a 98 percent vote in favour.

The minority did not object.

The investigator into the alleged externalisation by Mr Moxon, BCA Consultancy, prior to the EGM wrote two letters to the chairman Mr Much Masunda saying the Meikles family was not supposed to vote as the company had established externalisation deals "indirectly or directly".

However, Mr Moyo argued the specification was a legal nullity because the minister who issued the specification order did not have legal authority to act as a minister at the time.

He said the Moxon family was "purported" to have been specified when the Cabinet had been dissolved.

"Therefore the specification on January 16, 2009 is null and void," said Mr Moyo .

Mr Moyo said at the time of the meeting, the appointment of the relevant minister had not been gazetted and therefore there was no minister duly authorised to administer the Prevention of Corruption Act.

A law will only become effective from midnight on the day it is gazetted.

He said in any case The Prevention of Corruption Act does not take away voting rights because to do so would amount to a dispossession in contravention of section 16 of the Constitution.

Mr Moyo added that he had notified the Attorney General’s Office, Justice and Legal Ministry, Home Affairs Ministry and the investigators of his client’s intentions on whose behalf he voted.

Econet chairman, Mr Tawanda Nyambirai speaking on behalf of the requisitionist (Econet) said the use of the specification as a mechanism of settling disputes between private individuals was immoral. Nigel Chanakira initiated the specification of John Moxon.

He pointed out that the Companies Act itself has provisions that allow for the investigation of a company where inappropriate conduct is alleged.

Mr Nyambirai added that Econet had taken a practical resolution to the dispute, hence the requisition he made.

He said if the demerger was approved "the company had fairly senior divisional managers" who would continue to report to the board while directors work to replace the board.

In terms of the resolutions, Kingdom Meikles shareholders will get one KFHL share for every one held through a dividend in specie. In order to repay the US$22,5 million held in KFHL for capitalisation, the KFHL shares will be redeemed back as preference shares to Meikles Ltd.

KML finance director Mr Bryan Thorn said 234 million shares will be ringfenced to represent RBZ capital, which will be reallocated from KFHL to KML.

KFHL’s equity stood at US$34 million including the US$22,5 million as at 30 December 2008.

Mr Nyambirai said if more capital was needed once the transfer has been done "the board will know what to do."

Mr Thorn said the group had got RBZ approval of the transaction but still needed engagement on capitalisation.

At the EGM chief executive Mr Nigel Chanakira began his speech saying: "God help us as stakeholders of Kingdom Meikles."

He said there was still value embedded in the companies in spite of the conflicts.

The veteran banker said the whole situation had not been a friendly thing.

"After throwing in all there was to throw," he said.

He said that had the meeting taken place last year shareholders would have been prejudiced.

The marriage between Kingdom and Miekles hit a bad patch late last year after Mr Chanakira blew the whistle on Mr Moxon, accusing him of externalising foreign currency.

Mr Moxon hit back by calling an EGM in November to remove Mr Chanakira as the CEO and other two directors but failed after it was ruled as illegal by the High Court.

Defending his actions, Mr Chanakira said he had no regrets in terms of conduct and added that he had behaved in a "Christian-like" manner.

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