DCB v BRELA 1 1

1 IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA COMMERCIAL DIVISION AT DAR ES SALAAM MISCELLANEOUS COMMERCIAL CAUSE NO. 29276 OF 2024 DCB COMMERCIAL BANK PLC…………………………………….……… APPLICANT VERSUS THE REGISTRAR OF COMPANIES …………………………..……. 1ST RESPONDENT THE HONORABLE ATTORNEY GENERAL ……………..………… 2ND RESPONDENT RULING December 2nd and 5th, 2024 Morris, J This application is brought by chamber summons with a certificate of urgency. It is preferred under section 60(2) of the Companies Act, Cap. 212 (the Act). In support of the application is an affidavit of Regina Mduma, the applicant’s Director of Legal and Company Secretary. Essentially, the applicant prays that, this honourable Court be pleased to sanction the applicant to issue its shares at discount share price. Relevant facts of this matter are as discerned from the affidavit in support of the application. To wit, the applicant is a company registered under the Act and licenced by the Bank of Tanzania to engage in financial 2 services. It has been in operation for twenty-two (22) years. Via an Annual General Meeting (AGM) held on 14th September 2024, members of the applicant resolved to increase the latter’s share capital by TZS. 10.7 billion. Through the foregoing strategy, the applicant aimed at strengthening her financial position as well as attracting investors. Hence, it was resolved that her shareholders should be allowed to purchase one additional share for each share held in the applicant company, at a discount price of TZS. 110. The said resolution was also approved by the Capital Markets and Securities Authority. In essence, the applicant is listed in the Dar es Salaam Stock Exchange (DSE). It was deposed further that, issuance of the stated shares was under the capital market calendar, whose listing and commencement was scheduled for 18th December, 2024. Predominantly, this application was not opposed by the respondents. Nonetheless, the respondents prayed that the pursed sanction should be subject to certain conditions, as unveiled in this ruling in due course. When the matter was tabled for oral submissions on 2nd December, 2024; the parties were legally represented accordingly. For the applicant was Ms. Doxa 3 Mbapila, learned counsel. On the other hand, both respondents were under the able representation of Mr. Ayoub Sanga, learned State Attorney. As it is revealed above, the respondents did not contest this application wholly. Ms. Mbapila purely reiterated the gist of the application and pressed for the prayers therein. Submitting for the respondents, Mr. Sanga was brief that the respondents were in support of the application save for the prayer that, the sanctioning should be accompanied with the condition that the applicant should commit herself to seek for requisite extension from the Capital Markets and Securities Authority (CMCA), should time run against the applicant in the whole process. The objective of this condition, in Mr. Sanga’s view was to safeguard the interests of the anchor shareholders/investors of the applicant. By way of rejoinder, Ms. Mbapila maintained that the applicant shall, at all times, seek the required extensions from the relevant authorities so that the exercise is accomplished within the scheduled time and/or according to the law. However, in this connection, she prayed for the Court to set the sanctioning time at ninety (90) days to allow smooth operationalisation of the undertaking. 4 Before I proceed, the Court notes the fact that this application was uncontested. Nonetheless, it is settled position of the law that, even where an application is not opposed, the Court is under obligation to analyse the grounds set forth before granting or disallowing reliefs sought therein. The objective is to determine whether such grounds sufficiently pass the tests of law and justice. See, for example, Denis T. Mkasa v Farida Hamza (administratrix of the estate of Hamza Adam) & Another, Civil Application No. 46/08 of 2020 (unreported). Therefore, in line with the above position, the application at hand is founded on the ground that, the applicant’s members resolved to increase share capital of the applicant by TZS. 10.7 billion with the view to strengthening its financial position and attracting investors. Thus, the shareholders were allowed to purchase one additional share at the TZS 110 discount price. The Court is thus, invited to sanction the said exercise. For just determination of the present application, it is my considered view that the following conditions are pertinent. One, lawfulness of the transaction. That is, law should permit the price discount of the company shares. Two, the discount must be subject to the prior authorisation of the 5 general meeting’s resolution. Three, the issuing of shares at the discounted rate must be sanctioned by the court. Four, at least one year must have passed since the company became eligible to commence business before the subject issue is made. Five, unless otherwise condoned by the Court, the issue of such shares must be done within a month of the Court’s authorisation. Six, the issuing of the shares must be done in favour of the eligible person or entity. Seven, the issuing should be done on parties’ mutual consent basis. I will now correspondingly apply the foregoing fundamentals in the present application. Firstly, it is licit under section 60 (1) of the Companies Act, Cap 212; for the applicant herein to issue its shares at a discounted rate. Secondly, the applicant’s decision to issue the said shares to her shareholders was supported with member’s resolution. As per paragraph 3 of the affidavit in support of the application as well as annexure-A, the resolution was passed on 14.09.2024 at the applicant’s AGM. Thirdly, the present application is in compliance with the statutory requirement that issuing of the shares at the discounted price should be 6 sanctioned by the Court. The present applicant aims at such requisite. Fourthly, the applicant has been in operation of its business for twenty- two (22) years. This is in accordance with paragraph 6 of the affidavit. Thus, the time-frame set by the law regarding duration of operations by the company issuing the shares at the discounted rate is fully satisfied hereof. Fifthly, setting of the timeline within which the issuing of shares should be effected is subject to determination of this application. Sixthly, the parties subject of the proposed issue (the shareholders), hold no disputation as they have sanctioned it. Annexure-A speaks it all. Seven, the respondents are not in any degree of contention against the present applicant’s move. It is thus objective for this Court holds that, the present application meets the threshold of the law and practice as indicated above. For the given analysis and reasoning, the present application succeeds. The Court thus, hereby grants the major relief sought by the applicant. For clarity, the applicant is hereby sanctioned to issue the designated shares to her shareholders at the discount rate of TZS. 110 per each share. It is further ordered that the issuing exercise must be completed within ninety (90) days of this ruling. The Court also subjects the applicant to a condition of 7 seeking requisite extensions from the Capital Markets and Securities Authority (CMCA) should time run against her in the whole process. Owing to the circumstances of this matter, the application is hereby allowed without costs. It is so ordered. C.K.K. Morris Judge December 5th, 2024