In Re: of Expropriation of Shares Tanzania Wood Industry Corporation vs Timber Holding Limited annd Another (Misc. Civil Cause No. 87 of 1997) [2000] TZHC 169 (15 May 2000)

JviISC. CIVIL c.'USF NG. 87 OF 1997 IN 1 1 IiL I-i,l'l'"fE:R OF EXI-·HOPRI/I'ION OF SHAi:SS TAN::.;ANI.J i-JCOD INI)U;:3'l'RY J//&IVt/W-11/e ~ COHPOR\TION • 0 • PIDTI'J. 1 ION.f'..TI versus 1 • 'l'IMBER HOLDINGS LIMITED ) ) 0 Q O • IIB,::iPONDE:N'.l'S H U L I N G The 1-:ietitioncr Tu.nz,:.nfa Wool Industry Corporation was established under the Tanzania Wood-Industry (Establishment), Order 1971, GN No. 13 of 1971., Under the Public Corporntions (Transfer of J.ssets and Liabilities) (1'anzania ifood Industry Corporntion) Order 1971.; the petitioner acquired the shares held by the ffatior...al Development Corporation in a. company called Tabora. Msitu Product Ltd (the company) with effect from 6.9e71., l.ccording to the petition the 1st respondent is a. nur.ority sha.rehold8r in the said company with 12500 ordinary sh:;,res and the petitioner is the majority shareholder with 57,500 ordinary sha.i.'OSo This compa.ny was incorporated on 14.3.68 under certificate of Inco:-pGra.tion No. 426o. In these proceedings Ya-. Bashak.;1, learned advocate repn)Gented the petitioner; the '1,st respondent did not enter an appearance and the 2nd.respondent th0 Registrar of Companies was represented by one of it:; officio.ls, one Mro Mgonja. The prayers that the petitioner is seeking from this co1J.rt are - (i) a declaration that the 1st respondent has ceased to exist and should therefore be struck off the :Register of Cornp:,nies. (ii) an order that the 12,500 ordin3_ry'shares be ar:propriated by the Petitioner. (iii) Any other further reJ.icf.s which the court will deem fair and just to gront. }iiro Basnaka, learned advocate, has submitted th2t for the past 20 years or so the 1st respondent has never attended meetings and thn.t according to annexture · A, thf; laBt time the 2nd respondent cornmunica.ted with the 1st re,spondent v1cis in 1979., 0 •• /2

2 He added th.sit the Gov!jrnme1:.t in the process of acquiring 1000}6 of the :,,hares and thot in order to facilitate this exercise, the shares standing in the name of the 1st respondent be ex;pror,:-:-iate:d a.nd that the 1st respondent be struck off the Ilegistcf of Cornp:mies. In m:::iking these very serious submipsion, the learned advocate did not rE;for t(.) :-:..ny lai·J which snnctions such G. course of a.ct ion to be taken by this court. Eowc•1cr ~ an cx-::iminaticn of the companies Ordinance, Cap .. 212 indicotes thsit there is a prcscr_ibed procedure to be followed before o. company is struck off th0 rogister., '.Ih::.t, is to be found in section 283 (1);_· (2) an<l (3) of the Crdd.n,-:mce. 'I'he prime mover seems to be the Registrar of Compa.nies, the 2nd re$pondent .~ncl not the court., The rrocedure is straight forward. bhore the Rogistr.::ir of Companies has :re::tsonablc cause to believe that a company is .not carrying on business or is not in operDtion - (1) He rroy send to the company by post a. letter ; inquiring whether the company iG cerrying ·,:m bu,sino,ss or in o operation; (ii) If he does not receive a.n answer ,Jithin one month, he nmf3t within a furth<.=:r fourteeen de:ys send a registered letter referring t,'.). the first letter, stating that no answer h,1s been rc,ccivcd 9 and that if no answer is rcceiv,d \vithin G. further one mo:hth 9 notive wilJ. be published in tl10 Gazette . with :;i. view to striking the na.me of the compony off tlL rcgist.:::r, (iii) If he receives no a.nswer within one month or if he receives an answer to the effect tr.a£lt the company is_ not carrying on a business or in operation he nny publish in the Ga.zctte 1 and send to the company by l)ost, a notice tb'3t n.t the end of three months from the dn.te of notice the name of the company, \•1ill be struck off the register and the company 1.dll be dissolved. On the 31.7.,79 the Registrar of Companies wrote a letter to the comn..,nv _through the peti-tiomff. '11:10 r:;:.,_id letter ro-Jds in part as follows - 11 Aftcr taking some pcins to find out the exact position I would like tc inform you t.h:.:it Timbr;;r Holdings Limited is still existing in my register of companies. However the l::ist comnrJ.nic1-1tion of any nature from them was in 1971 o Further enquiries •••• /3

' ·-~~-. ;: ,~: 4- • ..... : •• .., 3 with the company's la.st Accountants • ·• c, a o o • informed me. that the company h-ss cear;ed trading .. • • • • o o and secondly the ceGsa.tion of the . company's ·trading ought to r.iave folloi-:ed the laid dovm winding up procedures::., 'l'wo issues emerge from the a.bove quotationo First es far back as mid 1979 the Registrar of Companies was at the very minimum aware of the fact that the 1st respondent had ceased trading. Actuallyi the 2nd respondent admits that the last communica.tion from the 1st respondent was in 1971 o One would have expected tha.t the 2nd respondent would have set in motion the procedure as contained in section .?.83 of the Ordinance. Now, the Registrar of Compa.r.ies says that he has no objection of the court makes a. declaration that the 113t respondent has cearsed to exist and should be struck off the register of compa11;ieso This is the responsibility of the Registrar of Companies under the Companies Ordinance and not the court. The court becomes involved under section 283 (6) whe:ce there is a petition for the r0.,stc,.'i: ·:;:i.on of company's name to the registero '.11.he second prayer is equa.lly problematic. The petitioner wants this court to allow him to appropriate 12,500 shares belonging to the 1st respondent in the company that is Tabora ~'Jsi tu Products Ltd. If the petitioner ,1ants to acquire the 63.id sha.i-e from the 1st respondent, then the petitioner has to, invoke the provisions of the Companies Ordinance., Under the circumstances now obtaining, this may not be a practical solution, but that is the lawo 'l'his court li..as no powers to order the traEsfer of shares from one shareholder to another under the Ordinance • .Sha.res are personal property and are transferable subject to restrictions in the articles of association in the ca.se of a private Company and ~abora Msitu Products Ltd is a private company under article 3 section 6:1 arid 64 of thG Companies Ordina.nce provide as follows ... 063 (1) o The shares or other interest of ,my member in a company sba.11 be movable property 1 transferable in nBnner provided by the articles of the company, 61+., Notwithstanding anything in the articles of a com1,any, it shall not be lawful for the company to register, a. tra.nsfcr of shares in or debentures of a company unless a proper instrument of transfer has been delive::.~ect to the company; ;;

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,, Proudcd that nothing in tbis section shaJ_l prejudice .:my power of the comprury to register as shareholder or debentu:ce holder :;,rr; person to whor.1 the right to a.ny sh.ires in or deb-:mtures of the compa,ny has been t:r·ansmitted by operation The modalities of trand'er o'f shares a.2- provided for in these sections read together with the articles of the company. The transfer of ,:.'·.: - : ·;:,: ~- title to shares can only be effected by mec:;ns of a :ip1'oper instrument of transfer'; anc} not by an orde:t o:f this courto In the final analysis, r. have no al ternati vc but to dismiss the petition 1-1ith costs. It is accordingly ordered. Ho M,sekela, Jl!uGE 12/5/98 Huling delivered in the presence of Fir., Bashaka 1 learned advoca.te for the petitioner. H. hsekela JUDGL I certify tha.t this is a true copy of the originalo 15/5/2000