Sinikiwe Mparutsa v Alvin Nyaradzai Mparutsa and Classic Super Foods (Private) Limited and The Registrar of Companies

The applicant and first respondent are married to each other and are in the process of divorcing. The second respondent is Classic Super Foods (Pvt) Ltd, a company at the center of the dispute. The applicant claimed to be a 50% shareholder in the company alongside the first respondent, relying on a resolution signed by both parties when the company obtained a loan, which recorded that each owned 50% of the shares. Both parties were directors of the company, which operated as a family business. The applicant alleged she had been successfully running the business since 2013, and that the first respondent was attempting to oust her by unilaterally convening an extraordinary general meeting. She sought an order declaring her a 50% shareholder, rectification of the share register, and declaring the extraordinary meeting null and void. The respondents denied that the first respondent ever sold, donated or transferred any shares to the applicant, challenged the resolution as fictitious, and maintained that the first respondent held 100% of the shares. Neither party held share certificates, and there was no share register as required by law.

• Whether the court could determine the dispute regarding ownership of shares on motion proceedings given the material disputes of fact on the papers
• Whether a resolution recording share ownership constituted sufficient proof of acquisition, ownership and transfer of shares
• Whether the court should exercise its discretion under section 118 of the Companies Act to rectify the share register in the absence of proper documentary evidence
• Whether title to shares could be determined in an application for rectification of the share register where there are material factual disputes

The application was dismissed with costs.

A resolution of company directors to obtain a loan which merely states that directors own shares in the company does not at law suffice as proof of acquisition, ownership and transfer of shares. Such a resolution cannot be a proper basis for asserting ownership of shares as it does not transfer shares nor confer real rights registrable under the Deeds Registries Act. Where there is a genuine and material dispute of fact regarding title to shares in an application for rectification of a share register under section 118 of the Companies Act, and the applicant has failed to provide sufficient documentary evidence (share certificates, share register, memorandum and articles of association), the court should exercise its discretion to decline to entertain the dispute on motion proceedings and dismiss the application, leaving the matter to be determined at trial. An applicant must show entitlement to shares before rectification of the register can be carried out.

The court made several non-binding observations regarding the nature of rectification under section 118 of the Companies Act. The court noted that the term 'rectification' has a broad meaning beyond merely correcting errors on the register - it includes altering the register to make it reflect the correct and prevailing situation. The court observed that section 118 empowers the court to decide both questions of title to shares and rectification of the share register, and that these issues are interrelated and cannot be separated. The court commented that in cases where title to shares is put in issue, the court is required to dispose of the question of title first before considering rectification. The court also observed that it is undesirable to deal with challenges to title to shares on motion proceedings where the issue is one of considerable difficulty and complexity. The court noted the South African jurisprudence drawing a distinction between title to disputed shares and title to be on the register, though the court did not ultimately adopt this narrow approach given the broad discretionary powers under section 118.

This case is significant in Zimbabwean company law as it clarifies the approach courts should take when faced with applications for rectification of share registers under section 118 of the Companies Act where there are disputes regarding title to shares. The judgment establishes that while courts have wide discretionary powers under section 118 to determine questions of title to shares, they should decline to do so on motion proceedings where material disputes of fact exist that cannot be resolved on the papers. The case reinforces the principle that proper documentary evidence is required to prove ownership of shares, and that a mere resolution recording shareholding does not constitute sufficient proof of acquisition, ownership or transfer of shares. It also demonstrates the courts' commitment to ensuring that motion proceedings are not used to circumvent proper determination of complex factual disputes that should be resolved at trial.