Thomas Mabuzwe and Others v Sikhumbuzo Mpala and Others

The applicants were shareholders in various public listed companies (the 4th to 13th respondents). The 1st respondent (Securities and Exchange Commission of Zimbabwe) is the regulatory authority for securities and capital markets. The 2nd respondent (Zimbabwe Stock Exchange) operates a securities exchange and a Central Securities Depository (CSD). The 3rd respondent (Chengetedzai Depository Company) is a CSD that held shares in dematerialized form. In September 2014, the 1st respondent licensed the 3rd respondent as the sole CSD. The 2nd respondent was later also licensed to operate a CSD, creating competition. On 19 October 2021, the 1st respondent issued Directive Number SS 15/10/2021 outlining the methodology for migration of registers between CSDs. The applicants alleged this Directive was illegal and violated their freedom to contract and association, as it empowered the boards of the issuing companies to decide on migration without shareholder consent. The 1st applicant purchased shares in several respondent companies on 25-26 October 2021, after the Directive was issued. The application was filed on 27 October 2021. Some respondent companies (the 10th on 1 October and 12th on 20 October) had already published their intentions to migrate before the Directive was issued.

• Whether the matter was urgent and should be heard on an urgent basis
• Whether the applicants had demonstrated irreparable harm warranting urgent intervention
• Whether the applicants had a contract with the 3rd respondent (CSD) that was violated by the Directive
• Whether the Directive breached the Companies and Other Business Entities Act and violated freedom to contract and association
• Whether the applicants treated the matter as urgent by acting promptly
• Whether there was full and candid disclosure by the applicants

The application was struck off the roll of urgent matters.

The binding legal principles established are: (1) Shareholders who hold accounts with a Central Securities Depository (CSD) are account holders/depositors, not independent contracting parties with the CSD; the contract is between the issuing company and the CSD. (2) The role of a CSD is purely administrative in nature (custody, settlement, and recording of dematerialized shares) and does not affect the value of shares or return on investment, which depends on company performance. (3) To establish urgency requiring immediate court intervention, an applicant must demonstrate actual irreparable harm that cannot wait for future resolution, not merely assert commercial urgency in general terms. (4) Where an applicant purchases shares after the allegedly harmful directive or decision is issued, and files an application shortly thereafter, this raises serious questions about good faith and whether the shares were acquired for purposes of litigation. (5) Failure to act when companies first announce migration intentions, before any regulatory directive is issued, demonstrates that the applicant did not genuinely treat the matter as urgent.

The court made observations that the real protagonists/parties in interest were veiled and not before the court, suggesting the applicants were a conduit for undisclosed interests. The court commented that it is the investor's sole prerogative to decide where, when and how to invest, with the primary consideration being return on investment, making the contract between company and investor the most important in capital markets. The court observed that any interference with this primary contract by a party not privy to it may give rise to legal consequences. The court noted that good faith and full disclosure of all material facts is required of litigants, and courts frown upon litigants who are not candid, which can result in refusal to hear matters on urgent basis. The court also remarked that with or without the Directive, migration was imminent based on company decisions already made.

This case is significant in South African and Zimbabwean jurisprudence on securities and capital markets regulation. It clarifies the nature of the relationship between investors, Central Securities Depositories (CSDs), and issuing companies, establishing that investors are account holders rather than independent contracting parties with CSDs. The case reinforces the principles governing urgency in commercial matters, requiring applicants to demonstrate actual irreparable harm rather than merely asserting commercial urgency. It also emphasizes the importance of good faith and full disclosure in urgent applications, particularly where the timing of share acquisitions suggests strategic litigation. The judgment provides guidance on the administrative versus substantive nature of CSD services and confirms that regulatory directives governing migration between CSDs do not necessarily interfere with shareholder property rights where the administrative change does not affect the value or substance of the investment.