Harold Crown and Portriver Investments (Private) Limited v Energy Resources Africa Consortium (Private) Limited and Energy Resources Africa (Private) Limited

Crown (first appellant) is a director and alter ego of Portriver Investments (Private) Limited (second appellant). Crown and Mashayamombe formed a consortium (ERAC, the first respondent) in 2011, with ERAC and Portriver as shareholders, to tender for City of Harare projects. ERAC won two contracts valued at USD13,000,000.00 for rehabilitation of Firle Sewage works and power generation. Monthly payments of US$300,000.00 were made by the City of Harare into Portriver's account. The relationship between Crown and Mashayamombe deteriorated, and by June 2015, both parties terminated their arrangements. On 30 September 2015, Mashayamombe unilaterally approached ZIMRA for a tax amnesty and sought Crown's cooperation to sign a new ZIMRA registration form and open a new bank account. When Crown refused, Mashayamombe obtained a resolution from ERA (second respondent, of which he was a director and alter ego) and approached the High Court urgently seeking an interdict against Crown and Portriver. The High Court granted the interdict compelling Crown to sign the required forms and interdicting Portriver from receiving payments from the City of Harare.

• Whether the application brought in the High Court was urgent
• Whether the application was properly authorised by ERAC
• Whether ERA had locus standi to bring the application
• Whether a director of a company can unilaterally institute legal proceedings on behalf of the company without proper board resolution
• Whether one director can act unilaterally where another director is a non-resident

The appeal was allowed with costs. The judgment of the High Court was set aside and substituted with an order dismissing the application with costs.

A company, being a separate legal persona from its directors, cannot be represented in legal proceedings by a person who has not been authorised to do so by proper board resolution. A director cannot act unilaterally on behalf of a company without valid board authorisation, even if that director is the sole resident director. Section 169 of the Companies Act, which requires at least one director to be ordinarily resident in Zimbabwe, does not confer authority on that resident director to act unilaterally but envisages alternate directors acting together with the resident director. One company (ERA) cannot validly authorise legal proceedings on behalf of another separate legal entity (ERAC). An applicant must establish locus standi by demonstrating a legal interest in the subject matter of the proceedings.

The court commented that section 169 of the Companies Act was intended to ensure that not all directors of a company are absentee directors and that management is not left solely to alternate directors. The resident director is expected to act with alternate directors in making valid decisions on behalf of the company. The court also indicated that while a director can depose to an affidavit touching on the affairs of a company based on personal knowledge, this does not equate to authority to institute proceedings on behalf of the company without proper board authorisation.

This case establishes important principles in Zimbabwean company law regarding corporate governance and procedural requirements for litigation. It reinforces the principle that companies, as separate legal entities, must properly authorise representatives to institute legal proceedings on their behalf through valid board resolutions. The judgment clarifies that unilateral action by one director, even if resident in Zimbabwe, is insufficient without proper board authority. It also emphasizes that a company must demonstrate locus standi by establishing a legal interest in the subject matter of proceedings. The case serves as a reminder of the strict requirements for corporate decision-making and the consequences of failing to follow proper corporate procedures.