High Court saves NICOL from extinction

THE High Court of Tanzania meeting in Dar es Salaam has ordered resumption of trading activities at Dar es Salaam Stock Exchange (DSE) by the National Investments Company Limited (NICoL) with immediate effect, Business Times has learned. Trading at the local bourse by NICOL was suspended last year, when the DSE Governing Council de-listed the private sector investment entity from the bourse on July 6, 2011 over the company’s failure to submit its 2009 and 2010 financial statements as the market rules and regulations stipulate. NICOL became the first company in the 12-year history of DSE to be de-listed. The Governing Council initially suspended the investment firm pending the submission of the documents before NICOL automatically de-listed itself from the bourse for non-compliance. During the suspension, the Council demanded the company's financial reports for the two consecutive years, as well as details of NICOL’s intention to sell 22 million shares as part of its stake in the National Micro-finance Bank (NMB). The bank is also listed with DSE. NICOL have always blamed the national capital markets regulator, the Capital Markets & Securities Authority (CMSA), for its failure to comply with DSE requirements. This is on account of the fact that CMSA had suspended the company's Board of Directors, and its chief executive officer (CEO), since March 2011! In what became a pattern of CMSA actions against NICOL, after the Authority had removed the NICOL Board and CEO, it also froze all the company's bank accounts. This left NICOL with nobody to manage it, and no arrangements could be made to replace the removed officials There was no way in which NICOL office rent, salaries for the staff, etc, could be paid. NICOL was also suspended from trading for a month in August 2009 after the regulators noticed abnormalities in its financial statement, with analysts doubting its credibility amid feelings that it was doctored! In any case, the company had managed to produce only a single statement since its listing at the bourse in 2008! If not sorted out soon enough, these developments would almost certainly have led to the death of NICOL. It was as a result of this welter of confusion that the NICOL management went to Court. It filed a lawsuit in the High Court on March 21, 2011 seeking legal protection against CMSA's actions. NICOL argued that none of CMSA's accusations and charges held water, including removal of the company's Board and its CEO from its operations.

NICOL's Managing Director Mr. Felix Mosha Claims by CMSA that it wanted to conduct an investigation into NICOL were without merit, the company stated, arguing that the Authority had already conducted such an investigation a month earlier. More importantly, CMSA had no legal right to access any information in NICOL offices and files! “CMSA did not have to remove the Board — and much less the CEO whom it was expected to rely upon for the information they would have needed for their investigation,” the company maintained. During the hearing, CMSA argued in court that NICOL had no right to file a suit in the High Court. However, the Court ruled that the company did in fact have the right to file a suit against CMSA, and the High Court has the jurisdiction to hear the case. Following that ruling, CMSA further argues that NICOL had no issues worthy of a court suit against the Authority. However, on July 25, 2011, the Court dismissed that claim, ruling that in fact the company did have substantial issues against CMSA. In the event, the High Court determined that NICOL had raised serious legal issues worth looking into by the Court, and that the issues raised were likely to contravene the law and affect NICOL's rights. That High Court ruling opened the way for the hearing of NICOL's case against CMSA. On Tuesday this week, the High Court rendered what could be a landmark decision, squashing the directives which CMSA had communicated to NICOL. In effect, the Court lifted the order that removed the NICOL Board and CEO, and unfroze the company's bank accounts. For good measure, the Court directed CMSA to always conduct its activities in accordance with the law! The NICOL Board chairman, Felix Mosha, told a press conference in Dar es Salaam yesterday that the High Court ruling is a triumph not only for the firm's Board and Management but, more importantly, it was victory for its long-suffering shareholders! Noting that the shareholders had been in the dark regarding matters pertaining to their company because of the legal processes which were ongoing in the courts, Mosha regretted these unfortunate developments that were unnecessary in the first place. However, the stakeholders can be assured that “NICOL remains a strong and viable company for all its 46,631 stakeholders, some of whom are entities with thousands of shareholders of their own! He stressed that the its stakeholders' investments were not only safe and sound. Indeed the company had grown from the original investment of Tsh11.7 billion to over Tsh30 billion, with over 80 per cent of that in NICOL shares, which are in the category of liquid assets. Describing NICOL as “a company of the poor in this country,” Mosha said that, “on its own, it has no capacity to withstand attacks from a powerful state institution. It's only recourse for protection had to be the country's judicial system. “Therefore, NICOL wishes to commend the High Court for its fair and impartial ruling. In these times when the courts come under increasing criticism and scrutiny, it is important that Tanzanians gives thanks and praise when both are due. “The court's ruling has not been a victory for the NICOL chairman or its Board... Nor even for NICOL itself, but for all Tanzanians who are committed to greater involvement of Tanzanians in their national economy. NICOL so far remains the only major entity that is fully owned by Tanzanians from all walks of life; people who have pooled their investments together,” Chairman Mosha eulogized .