GOLD AFRICA LIMITED VS MINING COMMISSIONOTHERS RULING

IN THE HIGH COURT OF TANZANIA DODOMA SUB REGISTRY AT DODOMA MISC CIVIL APPLICATION NO. 2887 OF 2025 BETWEEN GOLD AFRICA LIMITED ………………………………………………………APPLICANT VS 1. THE MINING COMMISSION ………………….……………….1ST RESPONDENT 2. THE MINISTER OF MINERALS – MINISTRY OF MINERALS ………………….……….…………2ND RESPONDENT 3. THE ATTORNEY GENERAL………………………….…….…….3RD RESPONDENT 4. EB HANCE COMPANY LIMITED……………….………….……4TH RESPONDENT 5. ELIAS BULAYA…………………………………….………………5TH RESPONDENT 6. GODFREY RUTESIGIRWA………………………………………6TH RESPONDENT AND REEF GOLD LIMITED ……………………………………..…………NECESSARY PARTY RULING Date of the last order: 20/02/2025 Date of the Ruling: 21/02/2025 LONGOPA, J.: The applicant is an incorporated company operating in the United Republic of Tanzania which is also a majority shareholder in the necessary party, Reef Gold Limited with 90% shareholding while the 4th respondent, 1|Page EB Hance Company Limited owns 10% of the shares. On 7th February 2025 under Certificate of Most Extreme Urgency, the applicant instituted an application for Mareva Injunction pending the expiry of a Ninety (90) days’ notice issued and served on 16th January 2025 to the first and second respondents on intention to sue. During pendency of the hearing of the application for Mareva injunction, the counsel for the applicant prayed for this Court to issue interim orders to maintain the status quo on the mining licences exercising its powers under Section 95 of the Civil Procedure Act, Cap 33 R.E. 2019. It is on record that the Necessary Party, Reef Gold Limited was incorporated in 26th November 2004 with Certificate of Incorporation No 50775 with two shareholders namely Gold Africa Limited and EB Hance Company Limited. Sometimes in February 2015, Reef Gold Limited acquired six Mining Licence for period of ten (10) years. These licences would expire by on 24th February 2025 in case the same are neither renewed nor cancelled or transferred because their tenure commences to an end as to the provisions of the Mining Act, Cap 123 R.E. 2019 that states that tenure of the mining licence is 10 years. 2|Page The subject matter of the Mareva Injunction application and prayer for the interim orders thereof is six Mining Licences belonging to the necessary party, namely ML 502/ 2015, ML 503/2015, ML 504/2015, ML 505/2015, ML 506/2025 and ML 507/2015 which are due to expire on 22nd February 2025 by effluxion of time as they were granted for period of 10 years. The basis of the applicant’s claim is that it has been the sole financier to the Necessary Party to the tune of USD 880,000 todate. It was on this background that on 20th February 2025 this court invited the parties to address it on two main aspects, namely: First, what is the current status of the six Mining Licences in order for the Court not to issue an unenforceable interim order. Second, the locus standi of the applicant before the court which touches on court’s jurisdiction to grant interim orders of maintaining the status quo/ issue Mareva injunction given that the applicant corporate body is not the owner of the Mining Licences in question. Mr. Roman Masumbuko, learned advocate for the applicant stated that the applicant is the majority shareholder of 90% share in the necessary parties. There are different causes of actions committed by the 3|Page 1st to 6th respondents against the interests of the applicant and necessary party. It was the applicant’s submission that there is stalemate in the management of the necessary party’s company that has been caused by the 4th and 5th respondents representing the minority shareholder in the necessary party’s company and the 6th respondent who has crossed his line of duty by not cooperating with the applicant as he was appointed to represent interest of the applicant in the necessary party’s company but he failed to do so by colluding with the 4th and 5th respondents. In the circumstances, the applicant has a right under section 233(3) (c) of the Companies Act, Cap 212 to sustain a suit on behalf of the company for unfair prejudicial conducts of the company and derivative action that a member of the company may sustain. According to the applicant, to sue 1st and 2nd respondent would require a notice of 90 days period before any suit is instituted against such entities under the Government Proceedings Act, Cap 5 in particular section 6(2) of the Act. This is disclosed in Paragraph 22 of the affidavit in support of the application. 4|Page The applicant’s view is that during pendency of maturity of the notice, Gold Africa Limited, a shareholder can bring an action based on application for interim orders and Mareva injunction to maintain the status quo. He emphasized that a direct link exists for the applicant’s right to institute the proceedings. Stalemate of the affairs of the company is the one that made the applicant to apply for the Mareva injunction. The applicant invited this Court to be impressed by the decision in Mohamed Said Kiluwa vs Kiluwa Steel Group Company Limited, Wang Sengju and Wang Wengqian (Misc. Commercial Cause 30 of 2020) [2020] TZHCComD 2088 (16 October 2020) on the right to sue under section 233 of the Companies Act. In respect of the second aspect, it was applicant’s submission that all the licences are still valid thus in operation as validly issued. It was reiterated that the application is to restrict transfer of licence or change of the mining licence status. Thus, the applicant prayed for interim orders to maintain the status quo be granted to protect the interests of the applicant and the necessary party. 5|Page Mr. Erasto Barua, learned State Attorney for the 1st, 2nd and 3rd respondents shared the view that the applicant has no locus standi to apply for orders sought. The mining licences are owned by the necessary party as from the date of incorporation as the interests of shareholders are limited to or remain on shares only either the unpaid up shares as liabilities or paid up shares for the right to dividends and other associated rights to participate in the affairs of the company while the properties of the company are vested in the company itself not shareholders. The applicant’s application to prevent the mining licence from being transferred or from expiration of licence by effluxion of time is untenable in law. For the 4th, 5th and 6th respondent, Mr. Philemon Rutakyamirwa, learned advocate reiterated that the mining licences are owned by necessary party, Reef Gold Ltd is artificial person who can sue on its own separate from the shareholders or directors. In the circumstances, it is only Reef Gold Ltd with the capacity to sue on the mining licences. In the case of Reef Gold Limited vs Mining Commission on page 9, the Judge 6|Page held that the applicant does not qualify to bring a judicial review on behalf of the first applicant who was the instant necessary party. It is submitted that circumstances of the case the necessary party is the only person with mandate to institute the proceedings against any other party regarding the properties of the necessary party. On derivative action under section 234 of the Companies Act provides for qualifications that must be adhered to before an action is preferred on behalf a company. It was submitted that the instant applicant has not complied with the qualifications regarding the derivative action. According to Mr. Rutakyamirwa, it is not possible to this Court to grant interim orders against the law as the application is for this court to prevent the Mining Commission who is the second respondent to allow the legal process of expiration by time of the mining licences issued to the necessary party. It is not appropriate to stop something that is expiry due to time provided for in the law. In fact, according to counsel for 4th, 5th and 6th respondents, the all the mining licences in question were legally cancelled on 25th October 2024 under section 53 of the Mining Act for the 7|Page failure by the necessary party to commence operation of mining activities within the required time of 18 months from the grant. It was the applicant as the majority shareholder who was duty bound under the Joint Venture Agreement to inject capital for operation of mining activities thus the necessary party failure to undertake mining operations. Mr. Rutakyamirwa emphasized that the application is not maintainable before this court as the applicant has no locus standi and the licences have been cancelled already since October 2024 thus they are no longer existing. Furthermore, Mr. Elias Bulaya, a director of the necessary party appeared for the company. He submitted that applicant has no right to institute the application against the respondents on mining licences which are under the necessary party’s company thus a shareholder cannot enforce on behalf of the company. Also, it was submitted that the Company Secretary of the necessary party who allegedly filed the counter-affidavit had no sanction of the Board of Directors of the necessary party’s company. In one of the cases against 8|Page the necessary party, Mr. Justice Magoiga, J had explicitly prohibited the company secretary to do so by acting without instructions of the company’s directors. It is my submission that as director of the necessary party he was aware that the mining licences in question were cancelled by the Mining Commission since October 2024 and the notices of cancellation were sent to the office of the necessary party through a Post Office address of Reef Gold Limited which the company secretary and the applicant have access. This applicant knew about the cancellation of the mining licences but decided to bring frivolous and vexatious proceedings before this court against the respondent. It was Mr. Elias Bulaya’s contention that the cancellation was attributed by the failure of the necessary party operate mining activities as the financier who is the applicant failed to inject money into the JVC to ensure mining activities are in operation. It was reiterated that the applicant might be unaware of the legal procedure to deal with renewal of mining licences that is required to be done by application within six months of expiry of the licence in question 9|Page under section 53 of the Mining Act. This application has been overtaken by events as there was no application regarding renewal of the same. In rejoinder, Mr. Roman Masumbuko stated that the respondents have not categorically responded that there is no right on the applicant to institute proceedings under sections 233 and 234 of the Companies Act thus urged this court to grant interim orders pending determination of the application for Mareva injunction. I have keenly followed up the submissions by the parties in respect of the matter at hand. This court is enjoined to determine whether the applicant has a locus standi to initiate this application in attempt to enforce the rights of the necessary party, Reef Gold Limited. The main issue for determination is whether or not this court has jurisdiction to grant interim orders to restrain the respondents from dealing with or transferring or expiration of the term of the licence by law in the circumstances of this application. Maintainability of the application hinges on the applicant’s locus standi to institute the proceedings against the respondents in this application. In case the applicant has locus then this 10 | P a g e court is clothed with jurisdiction to entertain the matter but if not, then this court lacks jurisdiction. It is settled law that jurisdiction of the court is fundamental issue in litigation. It goes to the root of the matter as whatever determined without a court having prerequisite jurisdiction is a nullity. The jurisdiction was categorically explained in the case of Fanuel Mantiri Ng'unda v. Herman Mantiri Ng'unda & 2 others [1995] TLR 155, at page 159, where the Court of Appeal stated that: The question of jurisdiction for any court is basic, it goes to the very root of the authority of the court to adjudicate upon cases of different nature. In our considered view, the question of jurisdiction is so fundamental that the courts must as a matter of practice on the face of it be certain and assured of their jurisdictional position at the commencement of the trial. This should be done from the pleadings. The reason for this is that it is risky and unsafe for the court to proceed with the trial of a case on the assumption that the court has jurisdiction to adjudicate 11 | P a g e upon the case. For the court to proceed to try a case on the basis of assuming jurisdiction has the obvious disadvantage that the trial may well end up in futility as null and void on grounds of lack of jurisdiction when it is proved later as matter of evidence that the court was not properly vested with jurisdiction. Having noted the importance of ensuring that court has jurisdiction before it embarks in hearing and granting orders whether of interim or finality nature, it is crucial to determine the validity of the applicant prayer to have interim orders be issued to the first and second respondents not to transfer or deal with Mining Licences allegedly belonging to the necessary party. This court is fully aware that companies are governed by the law. Indeed, there is a body of law on governance of companies simply referred to as Corporate law. In Tanzania, the corporate law is provided for mainly in the Companies Act, Cap 212 which provides for the effect of incorporation of a company in Tanzania. The incorporation of a company results into separability of membership from that of the company. Such 12 | P a g e separability applies in relation to ownership of the assets, right to sue and being sued. The company itself has legal rights, obligations, and responsibilities that are different from those of its owners in terms of their legal rights, obligations, and liabilities. The Act provides that: 15. Effect of registration (1) On the registration of the memorandum of a company the Registrar shall certify under his hand that the company is incorporated and, in the case of a limited company, that the company is limited, and, in the case of a public company, that the company is a public company. (2) From the date of incorporation mentioned in the certificate of incorporation, the subscribers to the memorandum, together with such other persons as may from time to time become members of the company, shall be a body corporate by the name contained in the memorandum, capable of exercising all the functions of an incorporated company, but with such liability on the part of 13 | P a g e the members to contribute to the assets of the company in the event of its being wound up as provided for in this Act. Essentially, the provision of the Act indicates that: one, the company is different person altogether from the shareholders from the date of incorporation. There is a separate legal entity. Second, once incorporated a company is capable of exercising functions of an incorporated company i.e. ability to stand on its own. Third, the rights and obligations of the company’s shareholders is limited. The corporate separate personality principle originates from the common law in the case of Salomon vs A Salomon& Co Ltd [1897] AC 22). It has been followed in various decisions of the Court of Appeal of Tanzania and those of the High Court. For instance, in Austack Alphonce Mushi vs Bank of Africa Tanzania Ltd & Another (Civil Appeal 373 of 2020) [2021] TZCA 521 (27 September 2021) (TANZLII), at page 8, the Court of Appeal stated that: Starting with the first issue, it is noteworthy from the impugned judgment, at pages 130 to 134 of the record of appeal, that the learned trial Judge took into account, rightly so, that the parties to the loan agreement were MLCL as the borrower and the first respondent as the 14 | P a g e lender. She was alive to the fact that although the appellant was a shareholder and a director of MLCL, on the principle of separate corporate personality as enunciated in the path-breaking decision in Salomon v. Salomon [1897] AC 22, MLCL was in the eyes of the law a different person altogether from the appellant or any other of its shareholders. We think it is instructive to reproduce the aforesaid principle as stated by Lord Macnaghten at page 54, which the learned Judge also excerpted in her judgment: "The company is at law a different person altogether from the subscribers to the memorandum; and, though it may be that after incorporation the business is precisely the same as it was before, and the same persons are managers, and the same hands receive the profits, the company is not in law the agent of the subscribers or trustee for them. Nor are subscribers liable, in any shape or form, except to the extent and in a manner provided by the Act." 15 | P a g e It is on record that applicant had stated categorically that all the Mining Licences in question were granted to Reef Gold Limited, the Necessary Party. Given the fact that all the Mining Licences in question were granted in 2015 for period of ten (10) years in the name of the Necessary Party namely Reef Gold Limited, in law, such Mining licences are properties of the necessary party, not of the shareholders. In principle, it is only the Reef Gold Limited as the holder of such licences who is entitled to enforce on the mining licences in case of anything impairing validity of such licences under general rule of separate corporate personality. This court is of the settled opinion that a stranger cannot enforce the rights of corporate entity. Gold Africa Limited being a shareholder in the Reef Gold Limited is a stranger with regards to the assets of the Reef Gold Limited at all times the latter is a going concern since its incorporation on 26th November 2004 as from the incorporation date of the necessary party company the shareholder has no direct right to the assets of the company i.e. Reef Gold Limited. By application of separate personality principle, Gold Africa Limited and EB Hance Company Limited as shareholders, cannot 16 | P a g e directly deal with assets of Reef Gold Limited except through directors of the Reef Gold Limited save for the liquidation of the necessary party. The principle of corporate separate personality has been followed by this Court in Hash Energy Tanzania Ltd vs Riva Oils T. Ltd & Others (Commercial Case 141 of 2014) [2019] TZHCComD 177 (9 August 2019) (TANZLII), at page 20, the High Court (Hon. Sehel, J. (as she then was)) reiterated that: It is trite law that a company is a legal person independent and distinct from its shareholders and its manager (See the case of Salomon v A. Salomon & Co Ltd [1897] AC 22). Similarly, in the case of Millicom Tanzania Nv vs James Alan Russels Bell & Others (Civil Revision No. 3 of 2017) [2018] TZCA 355 (26 July 2018) (TANZLII), at page 55, the Court of Appeal observed that: From the juristic point of view, a company is a legal person distinct from its members - See: SALOMON VS SALOMON AND CO. LTD (supra). 17 | P a g e A common theme from all the decisions cited is that a company has a distinct personality with the shareholders. By extension, therefore assets of the company are not assets of the shareholders/members and that such shareholders cannot enforce in the name of the company or defend on behalf of the company where one is a shareholder unless such action is exceptionally based only on two permissible procedures under the Companies Act. These are the action based on prejudicial conduct of the affairs of the company or that of derivative nature under the provisions of section 233 and 234 of the Companies Act, Cap 212. For instance, in the case of Mohamed Abdillah Nur & Others vs Hamad Masauni & Others (Civil Appeal No. 630 of 2023) [2024] TZCA 129 (26 February 2024) (TANZLII), at page 8, the Court of Appeal stated that: In our view, since a suit for derivative action in terms of section 234 (1) of the Companies Act is preceded by leave of the trial court, then in the course of granting that leave, the granting court obviously has to determine the existence of two legal requirements. One, that an action 18 | P a g e preferred is indeed a derivative action and two, the applicant has given a reasonable notice for the purpose. In the case of Jitesh Jayantlal Ladwa & Another vs Dhirajlal Walji Ladwa & Others (Civil Application 154 of 2020) [2020] TZCA 1927 (24 December 2020) (TANZLII), at pages 9-10, the Court of Appeal reiterated that: We understand that Mr. Mtobesya fronted his argument on the opening sentence of the ruling of the trial court where it stated: "When things seem to be falling apart, always the centre cannot hold. This is a petition brought under section 233 (1) and (3) of the Companies Act, Cap. 212 [R.E 2002]. The petition has been brought by three petitioners named herein above. The three petitioners are also shareholders and directors of the 2nd respondent." [Emphasis supplied] On our part we considered the bolded part not part of the decisive point by the trial court on the preliminary objections. As correctly submitted by Mr. Rweyongeza it 19 | P a g e was an introduction to parties in the ruling since section 233 (1) of the Companies Act allows only a member of the company to make petition to the trial court on the ground that the company's affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of its members or to some of its members. All these binding decisions to this court reveal that a shareholder’s right to sue for the properties/assets of the company to which he is a member are limited to those two instances of derivative action and prejudicial conduct of the affairs of a company. In corporate law, the approach preferred by the applicants in this application is novel and I am afraid it is unmaintainable before this court. The novelty of the procedure preferred by the applicant arises out of the fact that the available mechanisms by shareholders to enforce on the affairs of the company vide prejudicial conduct of the affairs of the company is normally enforced against the company, shareholders/members who have capacity to determine rights and 20 | P a g e obligations of members in annual general meetings and directors who have a day to day mandate to manage the company. It is these two corporate structures, members and directors of the company whose conducts or decisions are likely to impair rights or entitlements of the other members within the company or impair the affairs of the company itself. The enforcement is not against third parties as they are not party of the decision-making structures to exercise corporate powers. Thus, as the instant application is against persons who are not members of the necessary party’s company structures of governance namely the first, second and third respondents, the applicant cannot purport to derive mandate to sue from Section 233 of the Companies Act, Cap 212 as that does not cater for none members or those who have not became members by operation of law. Indeed, this is essentially what is reflected in Mohamed Kiluwa versus Kiluwa Steel Group Company Limited case relied by the applicant. Although in derivative action there is possibilities of the other party to the case being a third party, yet the locus to step into the shoes of the company to prosecute or defend a matter on behalf of the company 21 | P a g e commences at the time leave is granted by the court. Before leave is granted, a shareholder is lacking locus standi to do anything on behalf of the company in enforcing rights of the company. In the instant application, the shareholder purportedly invokes the discretion powers of this court to grant interim orders against the company, other directors and third parties in protection of the assets of corporate entity where the applicant is a shareholder. I am afraid that such attempt is out of order as the shareholder has no legs to stand. As a Gold Africa Limited and Reef Gold Limited are two separate and distinct entities, being shareholder and a company respectively with separate legal personality, the shareholder (Gold Africa Limited) has no direct locus standi to institute an action including application like the one at hand on behalf of the company or in defence of the assets of the company to which it is a member. Indeed, this was the position taken by this Court in Reef Gold Limited & Another vs The Mining Commission & Another (Misc. Civil 22 | P a g e Cause No. 37 of 2022) [2024] TZHC 814 (14 March 2024), at page 9, the High Court (Hon. Kagomba, J.) stated explicitly that: While it might be true that the second applicant holds majority shareholding in the first applicant, a company against which the impugned decision was made by the first respondent, the second applicant does not qualify to bring up an application for judicial review on behalf of the first applicant company. This is so because the first applicant, is a legal entity existing separately from her subscribers. In a plethora of Court of Appeal decisions, based on an ancient principle of law enunciated in the famous English case of Solomon v. Solomon & Co. Ltd. [1879] A.C 22, it has been stated that a company is at law a different person altogether from subscribers. I am not oblivious that counsel for applicant stated that decision in that case is distinguishable. In my settled view the principle of separate corporate personality applies to all types of proceedings in so far as there is a question of enforcing the rights of the company by shareholders/ 23 | P a g e members on behalf of such company. I am not convinced by the position taken by the applicant as such position lacks legal backing whether statutory in nature or judicial precedents as this court has demonstrated. That being the case, it is settled view of this court that granting an interim order in favour of the applicant, who is a shareholder in the necessary party company, would be violative of well-established corporate legal principle on separate legal personality. There is no justification whatsoever for this court to accord prayer by the applicant any weight while the same contravenes the well settled corporate law principle on separate legal personality. Neither the company’s management stalemate nor being majority shareholder in a company should be a leeway of violating the established corporate law principle in particular the corporate separate personality. Having answered the issue of locus standi in favour of applicant to be in a negative, I shall refrain from addressing on the status of the mining licences in question as that shall an academic endeavour without a purpose to achieve. That aspect is put to rest as such. 24 | P a g e In the circumstances of the case, the prayer for interim orders under section 95 of the Civil Procedure Code, Cap 33 R.E. 2019 cannot be granted. The same is declined on account of the corporate separate personality that prevents the shareholders from claiming on assets of the company and their modalities of enforcement on behalf of the company where such person is a shareholder. Indeed, as the applicant lacks capacity to initiate proceedings against the respondents in the circumstances of this matter, it is settled opinion of this court that the entire application for Mareva injunction is not maintainable. I shall proceed to strike it out in its entirety for being incompetent. Costs shall follow the events. It is so ordered. DATED at DODOMA this 20th day of February 2025. E.E. LONGOPA JUDGE 20/02/ 2025. 25 | P a g e