The Securities and Exchange Commission v Zambia Breweries Plcs and 2 Ors (SCZ/7/16/2024) [2025] ZMSC 23 (3 April 2025)

IN THE SUPREME COU HOLDEN AT LUSAKA ( Civil Jurisdiction) BETWEEN: Juo,c,ARy J APR 2025 - - - - - - -~ SCZ/7/16/2024 THE SECURITIES AND EXCHANGE COMMISSION APPLICANT AND ZAMBIAN BREWERIES PLC ANHEUSER-BUSCH INBEV NATIONAL BREWERIES PLC 1ST RESPONDENT 2ND RESPONDENT 3RD RESPONDENT Coram: Wood, Kabuka and Chisanga JJS on 5th November 2024 and 3rd April 2025 For the Applicant: Fut· the Respondents: Mr. E. S. Silwamba SC and Mr. J. Jalasi - Messrs Eric Silwamba Jalasi & Linyama Legal Practitioners Afr. C. Chulu, l\ifr r J M11mhn nnd Mr A (; Akapelwa. - Messrs Chibesakunda & Company RULING Chisanga JS delivered the ruling of the Court. · Cases referred to: 1. Teal Minerals Barbados Incorporated v Zambia Revenue Authority Appeal No. 4 of 2. Town Council of Awendo v Nelson Odour Onyango & 13 Others (2015) EKLR 3. Bidvest Food Zambia Limited and Others v CAA Imports and Exports Appeal No. 56 of2020 Rl Legislation referred to: 1. Securities Act Cap 354 2. Securities Act No. 41 of the Laws of Zambia 3. Securities {Licensing, Fees and Levies) Rules SI 165 of 1993 4. Securities (Licensing, Fees and Levies) {Amendment) Rules, 2013 Authority referred to: 1. Francis Benion, Statutory Interpretation 3 rd Edition, P. 189 INTRODUCTION 1. This is an application for leave to appeal to the Supreme Court which comes by way of a referral by a single judge of this Court pursuant to rule 48(3) of the Supreme Court Rules Cap. 25 of the Laws of Zambia. 2. The application has been brought by summons, pursuant to rule ~0(3) and 48 (4) of the Suprenae Court Rules as read with section 24 (b) of the Supreme Court Act and section 13 of the Court of Appeal Act and Order 11 rule 1(4) of the Court of Appeal Rules. The summons is dated 14 August 2024, and simply states that the appeal raises points of law of public interest and that it is desirable in the public interest that an appeal be determined by the Supreme Court. R2 3. The application is supported by an affidavit to which we shall revert later in this ruling. THE BACKGROUND LEADING TO THIS APPLICATION 4. SABMiller PLC, a company which has its headquarters 1n Johannesburg and is listed on both the London and Johannesburg Stock Exchanges, was the majority shareholder of the 1st and 3 rd respondents. Sometime in November 2015, the 2 nd respondent announced its intention to make an offer to acquire the entire issued and to be issued share capital of SABMiller PLC. 5. The acquisition (the Transaction) was to be completed in three stages. ln the first stage, SABMiller PLC shares we1e Lo Le transferred to a Belgian company known as Newco in exchange for the issue of Newco shares to SABMiller PLC shareholders. Under the second stage, the 2 nd respondent would acquire shares in Newco from former SABMiller PLC shareholders. In the last and third stage, the 2nd respondent would merge into Newco, holding all the shares and having sole control of SABMiller PLC. This transaction was completed in 2016. R3 6. From October 2016, SABMiller was a business division of Anheuser-Busch Inbev and at the time of the transaction, the applicable Act was the Securities Act Cap. 354. 7. The applicant requested authorization fees for the mergers and takeovers referred to in paragraph 5, pursuant to clause 8(1) of the Third Schedule to the Securities (licensing, fees and levies) (Amendment) Rules S. I. 82 of 2013. However, this became a dispute as the respondents argued that it applied retrospectively to the Securities Act of 2016. 8. The respondent's contention was that the transaction did not involve the exchange of securities in Zambia and was carried out outside Zambia. Only the shares in SABMiller were subject of the transaction. The shareholding in Zambian Breweries Plc and National Breweries Plc did not change after the transaction. Regardless, the transaction still triggered the mandatory offer for purposes of protecting minority shareholder interests 1n Zambian Breweries Plc and National Breweries Plc. 9. Under Rule 56 of the Third Schedule to the Securities (Mergers and Takeover) Rules, a mandatory offer was one to buy shares of all shareholders in a target company by the acquiring company. R4 10. On 16 December 2016, the respondents obtained a waiver exempting them from the mandatory offer to the minority shareholders of Zambian Breweries Plc. However, on 19 December 2016, the Securities and Exchange Commission issued a demand for payment amounting to K4,517,763.38, thereby imposing an unexpected financial exigency upon Zambian Breweries Plc. 11. The respondents raised a salient query regarding the legal propriety of the authorization fee, contending that the Securities Act Cap. 354 failed to explicitly provide for the applicant to authorize takeovers and mergers. 12. The dispute between the parties arose when the respondents refused to pay the authorization fee that the applicant charged them in relation to the takeover and merger transactions which they undertook. The dispute was over the legality of the applicant's authority to impose an authorization fee prior to 2016. 13. The matter was referred to the Capital Markets Tribunal which found after considering various statutory instruments pursuant to the repealed Securities Act Cap. 354 that the acquisition was RS subject to oversight by the applicant and required payment of prescribed fees under the Securities (Licensing fees and levies) Rules to which the applicant had legal basis for authorizing and charging authorization fees prior to 2016. 14. The respondents appealed the Tribunal's decision to the Court of Appeal. The appeal primarily challenged the Tribunal's finding that the respondent had statutory power to authorize, and charge authorization fees, for mergers and takeovers under the now repealed Securities Act Cap. 354. 15. The Court of Appeal was of the view that the Securities Act Cap. 354 did not give authority to the applicant to authorize mergers and takeovers, thereby rendering the imposition of such a fee legally questionable. 16. It also held that there was no correlation between the authorization fee in paragraph 8(1) of the Third Schedule to the Securities (licensing, fees and levies) (Amendments) Rules S. I. Rules 82 of 2013 and the enabling Act. Therefore, the applicant had no legal basis for issuing an authorization fee for takeover transactions unlike the current Securities Act of 2016. R6 THE APPLICATION BEFORE THIS COURT 17. The applicant has now applied to this Court seeking leave to appeal, after the Court of Appeal refused to grant it the leave sought. The grounds on which the applicant hopes to persuade the Court to grant leave to appeal are stated as follows: 17 .1 The authority to authorize mergers and takeovers as well as the authorization fee are of significant public importance given the applicant's history of charging such fees for numerous transactions. This warrants careful consideration by this Court. 17 .2 The funds receivable from these transactions are public funds wl1ich a1e 1e111iLLed Lo Lhe goveu11ncnt and therefore it is imperative that this Court adjudicates on this matter. 1 7 .3 The appeal has prospects of success as the interpretation of the repealed Act together with the statutory instruments promulgated pursuant to the repealed Securities Act by the Court of Appeal was erroneous. 17.4 The decision of the Court of Appeal could be utilized to question provisions of delegated legislation without R7 following the laid down legal process unless this Court pronounces itself on the issue. THE APPLICANT'S AFFIDAVIT IN SUPPORT 18. In the affidavit in support of the application it was contended that the applicant is a regulator of capital markets in Zambia established by the Securities Act Cap. 354 of the Laws of Zambia (now repealed) and continued to exist by virtue of the Securities Act No. 41 of the Laws of Zambia. 19. The applicant's statutory role of regulating capital market transactions is public in nature as its mandate includes inter alia, licensing all capital markets operators, registration of publicly traded debt and equity financial instruments and investor protection. 20. The dispute between the parties arose when the respondents refused to pay the authorization fee that the applicant charged them in relation to the takeover and merger transactions which they undertook. The dispute was over the legality of the applicant's authority to impose an authorization fee prior to 2016. R8 21. This appeal is directed at the finding of the Court of Appeal, that the applicant did not have a legal basis for authorizing the takeover transaction and charging the authorisation fee. THE RESPONDENTS' AFFIDAVIT IN OPPOSITION 22. In opposing the application, the respondents filed an affidavit sworn by Twanda Hojane. The deponent provided context to the application by stating that the 2 nd respondent acquired all of SABMiller PLC's ("SABMiller") issued and future capital in or about October 2016, and at all material times SABMiller was the majority shareholder in the 1st and 3 rd respondents. 23. On 16 December 2016, which was two months after the completion of the transaction between the 2 nd respondent and SABMiller, the applicant informed the respondents that they were required to pay an authorization fee for the transaction. The respondents filed an appeal with the Capital Appeals Tribunal against that demand for payment. The tribunal held in favour of the applicant that the repealed Act and relevant statutory instruments promulgated pursuant to it applied to the R9 takeover transaction and determined that the applicant had authority to charge the authorization fee. 24. The respondents appealed to the Court of Appeal challenging the Tribunal's determination that the applicant had authority to charge authorization fees for mergers and takeovers under the repealed Act. When interpreting the repealed Act and applicable statutory instruments, the Court of Appeal concluded that the appellant lacked the legal basis and authority to charge an authorization fee. THE APPLICANT'S AFFIDAVIT IN REPLY 25. In an affidavit in reply sworn by Eugene Chisenga on 10 September 2024, the said deponent restated the applicant's position that the intended grounds of appeal as set out earlier in paragraph 17 raise issues of public importance, and that the grounds therein have reasonable prospects of success. That the intended appeal transcends beyond the parties to the action, as the appellant had overseen several takeover and merger transactions under the framework of the repealed Securities Act Cap. 354. RlO THE ORAL ARGUMENTS 26. When the application came up for hearing, State Counsel Silwamba in his brief oral submission, relied on the applicant's affidavits and written arguments. He added that courts should not frustrate the intention of Parliament and that this Court has the last say on the question of the point of public importance on the law. He invited the Court to consider the case of Teal Minerals Barbados Incorporated v Zambia Revenue Authority1 in which the Court addressed the question of property transfer tax in a transaction which is wholly concluded outside the jurisdiction. He was confident that had the Court of Appeal had sight of this guidance by this Court, it would have drawn a good parallel on whether an impost created by statute, by delegated legislation, through repealed and current law is properly, still effective. He submitted that these are serious issues. When asked whether the status of a litigant was a point of law of public importance, he replied that he did not subscribe to the fact that the status of a litigant should be the one to propel it to enjoy another favorable position. On whether the proposed Rll appeal raised a point of law of public importance, he responded that it cut across the board when it comes to anybody that wants to issue securities. 27. Mr. Chuula on behalf of the respondents, also relied on his affidavits and written arguments and added briefly that the Bidvest2 case makes it clear as to the need for the applicant to satisfy the requirements under section 13 of the Court of Appeal Act. He referred us to the Kenyan case of Town Council of Awendo v Nelson Odour Onyango & 13 Others3 on matters of great national importance. He argued that there was a factual distinction between the Kenyan authority and the current application. 28. According to counsel, the factual distinction is that the Kenyan Supreme Court was faced with a decision which was going to basically uproot a major part of a particular area involving a town council and the town council had secured or had planned to be involved in the construction of hospitals and schools and other town and country planning issues. The decision in the court below was basically to revert all this land back to the original title. The impact therefore, was so great and was deemed to be Rl2 of great public importance in the Kenyan courts, and the Supreme Court of Kenya made it clear, that it was a case that satisfied the threshold. Mr. Chuula submitted that the current application falls far below the threshold, and it should be dismissed with costs. 29. The submission by Mr. Mumba who also represented the respondents, was that the Securities Act Cap. 354 in connection with this matter has been repealed and replaced by a new Act. It was therefore important to note that there were no consequences for posterity, unlike in the Kenyan case referred to earlier. He went on to submit that in fact, the issue at hand, which is the authority of the appli<'ant to a11thorizf' mf'rgf'rs anrl takeovers, has been ably dealt with in the new legislation. The point has since been clarified and there is no longer any uncertainty. This Court will merely be engaged in an academic exercise if leave to appeal is granted. 30. Mr. Silwamba SC, agreed with Mr. Mumba's submission, but disagreed that the appeal will be an academic exercise. According to State Counsel, the fact that the Securities Act Cap. 354 has Rl3 been repealed and replaced by the Securities Act No. 41 of 2016 is the issue this Court must consider. OUR. DECISION 31. The initial consideration in deciding whether to grant leave to appeal to this appeal is articulated in section 13 of the Court of Appeal Act which sets a threshold for an applicant to secure leave to appeal to the Supreme Court. In the case of Bidvest Food Zambia Limited and Others v. CAA Import and Export Limited2 , this Court held that for a legal query to attain the status of a point of law of public importance, it must possess a public or general character, rather than merely affecting the private rights or interests of the parties to the ctispnte. The legal questions in issue should pertain to widespread concern within the body politic, the resolution of which ought to fundamentally exert an influence beyond the private interests of the parties involved in the appeal. It is evident, where discernible public interest or public policy concern exists, in the anticipated elucidation by this Court, any such point of law may indeed qualify as one of public importance, notwithstanding its private origins. R14 32. Regarding prospects of success, permission to appeal is granted solely where the appeal has a genuine, as opposed to a fanciful prospect of success. The discretion to grant leave to appeal, grounded on prospects of success, must be exercised sparingly. This Court accepted that numerous appeals may appear arguable and possess reasonably commendable prospects of success merely due to the Court of Appeal's oversight of pivotal points, erroneous conclusions, or improper application of legal principles. Nonetheless, such a proposed appeal may not enjoy sufficient prospects of genuine, eventual success to warrant this Court's intervention. 33. We nott> that in this appli<'ation, the applicant asserts that the authority to authorise mergers and takeovers and to charge authorisation fees is of significant public importance, given the applicant's history of charging such fees for numerous transactions, and that this warrants careful consideration by this Court. 34. The sense we get of this ground is that the applicant's understanding is that the securities Act CAP 354 of the Laws of Zambia conferred power on it to authorise mergers and takeovers. R15 In exercising this function, the applicant charged authorisation fees. 35. It is undeniable that the securities industry is of considerable size. A large number of entities and individuals, have dealings in this industry. The industry is regulated. At the time the 2 nd respondent acquired an indirect controlling interest in the 1st and 3 rd respondents, CAP 354 was in force. Dealings in securities were regulated by that Act. A glance at the securities industry leaves no doubt that the issue raised by the applicant affects the entities and members of the public who have dealings in this industry. Whether or not the applicant had power to authorise mergers and takeovers, and charge foes for this fnn,tion trans,f'n<ls thf' private interests of the parties to this matter. The issue raised is one that affects other members of the public in this industry. 36. The proposed appeal satisfies the requirement in Section 13 (3) (a) of the Court of Appeal Court Act. However, whether or not authorization fees are public funds by virtue of being properly charged is an issue that will be determined in the appeal. Suffice to state that the issue that arises is one of public importance, and merits interrogation by this Court. R16 37. Having determined that the proposed appeal is one of public importance, we perceive no need to discuss prospects of success of the appeal. 38. We therefore grant the application for leave to appeal. The parties shall bear their respective costs . ............... ~ : A. M. WO~ SUPREME COURT JUDGE J. K. KABUKA SUPREME COURT JUDGE r . , . ...................... ~ .......... . F. M. CHISANGA SUPREME COURT JUDGE R17