High Court Dismisses Bid to Place RioZim Under Corporate Rescue

By Staff Writer

THE High Court has dismissed an application by a trade union and former employees seeking to place RioZim Limited under corporate rescue, ruling that the applicants lacked legal standing.

The Zimbabwe Diamond and Allied Minerals Workers Union, together with two individuals, had argued that the mining company was in financial distress and should be placed under supervision to protect jobs and shareholder value.

They told the court that “the first respondent is in financial distress as its liabilities exceed its assets. The auditors have also passed adverse opinions on the first respondent.”

RioZim, listed on the Zimbabwe Stock Exchange, opposed the application, insisting its board resolution authorising opposition was valid and that the company was not financially distressed.

It argued that “the attached resolution states that ‘It is a written resolution of the Directors of RioZim Limited passed in terms of Article 112 of the Articles of Association…”

Justice Mandaza rejected the applicants’ technical objections, ruling that the board resolution met “the basic threshold and is valid.”

He also dismissed claims that RioZim had acted inconsistently by invoking corporate rescue protections in another matter while opposing the current application, saying “the first respondent cannot be said to have approbated and reprobated. The first respondent has defended all actions to place it under corporate rescue.”

The decisive issue was standing. The judge found that the union was registered to represent workers in the diamond and allied mining industry but not specifically RioZim’s employees, as required under the Insolvency Act.

“In casu, I hold that the first applicant lacks locus standi to pursue these proceedings. The first applicant is just a ‘busybody’ in the strictest sense of the word,” Mandaza said.

The court declined RioZim’s request for punitive costs, noting that the case raised important legal issues.

“I am not persuaded to grant costs on a higher scale… Costs should not be a deterrent to access to justice,” the judge ruled.

The dismissal means RioZim will continue operating outside corporate rescue, despite concerns raised by unions about its financial position.