Adesemi Tanzania Limited vs Registrar of Companies (Miscellaneous Cause No. 5 of 2000) [2000] TZHC 337 (12 October 2000)

4 I r S. IN THE HIGH COURT OF TANZANIA COMMERCIAL DIVISION AT DAR ES SALAAM MISCELLANEOUS CAUSE NO. 5 OF 2000 IN THE MATTER OF THE COMPANIES ORDINANCE CAP 212 OF THE LAWS OF TANZANIA AND IN THE MATTER OF COMPULSORY WINDING UP BY THE COURT BETWEEN ADESEMI TANZANIA LIMITED ............ APPLICANT/PETITIONER AND THE REGISTRAR OF COMPANIES .......... RESPONDENT RULING KALEGEYA, J: * ADESEMI TANZANIA LIMITED petitions for compulsorily, winding up by this Court. On the basis of the evidence adduced in this Petition the following matters stand out uncontroverted. The Petitioner is a limited liability Company which was incorporated under the laws of Tanzania in 1994 in the name of ACG Telesystems Limited. It changed into the present name in 1998. One Adesemi Communications International, an American Incorporated Company, is the Petitioner's Parent Company and a majority shareholder. Apart from other loan facilities, the Petitioner heavily depend on funds from the Parent * Company. However, in 1999 the said Parent Company, for undisclosed reasons, failed to secure the necessary funds for the Petitioner and its own sustenance. It ceased operations although there is no evidence of legal liquidation. Then, this company, the Petitioner, which provides public payphone services within Dar es Salaam, with over600 telephone, • booths, operating using wireless telecommunication technology, went into financial. doldrums for lack of necessary funds hence failing to meet its commitments on the loan facilities given. It thus failed to honour the creditors' demands. This led to the making 40

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2 of a special resolution dated 5/6/2000 to the effect that the present petition should be made. Upon filing of the Petition, a Provisional Liquidator was appointed, charged among others, with a duty of looking into the possibility of coming up with a scheme of Arrangement which could salvage the situation. The Provisional Liquidator, with the required and due diligence, carried out the task bestowed on him but failed to come out with any scheme. He concluded that the Company is grossly insolvent because, "...the company's dfJIculties (are) not merely of a cash flow nature but that its liabilities seriously (exceed) its assets with no hope of its operations being capable of bridging the gap." Further facts show that the extent of indebtness is not small - just 5 creditors claim a total of Tshs.4,169,683/ ; that even if it had funds the Petitioner has failed to secure its own independent operating telecommunication licence from Tanzania Communications Commission (TCC), which licence could only guarantee the necessary profit; that on incorporation of the Company it was thought that that licence would inevibly be procured. After due advertisements no one registered as an objector to this petition. The above said, the next question is whether the winding-up order prayed for should issue. Under S. 167 of the Companies Ord. Cap 212, a Company may be wound up by Court due to various reasons. Among those reasons is where the Company has by special resolution resolved that it should so be wound up (S. 167 (a)). The Court may also issue a winding up order where the Company is unable to pay its debts (5. 167 (e). Not only that, but also the Court may so decide where it is of the

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U 3 opinion that it is just and equitable that the Company should be wound up [S. 167 (d) 1. The different reasons are interpendent of each other. I. Subjecting the facts at hand to the law, I find no hesitation to say that a case has sufficiently been made out for the winding up order to be made. I stated above that the three grounds upon which the order can be made are inter-pendent of each other. In here, A however, there is a cumulative effect of the trio. There is a special resolution. Legally, in an application by the Company itself, armed with this resolution, no reason for winding up need be given. In the case at hand, however, liquidity problems have fully been painted. I have not been able to detect any fraudulent scheme elements leading to the passing of the resolution, or elements of intention to oppress minor shareholders. Neither have I noted that the same was not made in the interests of the Company as a whole. On this leg alone, the petition would be allowed. That apart, even if the special resolution did not exist there is also a clear ground of indebtness. The Company has deplorably failed to honour demand notices for payment of debts: demand notices from creditors such as the Standard Chartered Bank and TCCL, just to mention a few, is a telling factor. Again, the Company having failed to secure an Independent operating licence from Tanzania Communications Commission (TCC) which was expected to be a cornerstone for the Petitioner's business on inception (its is on record and uncontested that there is no way TCC could grant such licence) is also a sufficient ground upon which the Court can conveniently base its decision to give the order. On the whole, therefore, I am satisfied that a winding up order is for the benefit of creditors and the petitioner. The Petition for winding up of the Petitioner Company is accordingly granted. In line with the above order, one Leonard C. Mususa, who was the Provisional Liquidator in this matter, is hereby appointed the Petitioner's Official Receiver. \ / •

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L.B. KALEGEYA JUDGE Delivered today the 12th October, 2000

L.B. KALEGEVA JUDGE that tbs i s tflK an otect CetUY •i1J i/I . tK on .na de en. a.ng .....# estrar ConrnerCa Court Dat es Salaafll Datect