26 February 2013

Namibia: Meatco's Ownership in Limbo

Photo: James Reinl/IRIN
File photo.

HARD AT WORK ... Some uncertainty exists surrounding the future ownership of Meatco but in the mean time the meat company has to continue with its work.

THE two bills drafted to govern Meatco under a new ownership appear to contradict other laws and some clauses also contradict the Namibian Constitution.

This is the view of the Legal Assistance Centre (LAC), which provided The Namibian with a legal opinion on the Meat Company of Namibia Bill and the Namibia Livestock Co-operative (Pty) Ltd Bylaws.

"The bills seem to be a hybridisation of the Companies Act 28 of 2004 and the Co-operatives Act 23 of 1996. However, they override the provisions of both acts in many instances," said Toni Hancox, director of the LAC.

The two bills surfaced for the first time during the last quarter of 2012 when the Ministry of Agriculture, Water and Forestry started with consultative meetings with interested parties and faced stiff resistance. The farmers were of the opinion that the government had already made up its mind and was forcing the legislation on them despite the fact that the bills are flawed with clauses that are not in the interest of the meat industry of Namibia.

According to Hancox the legislation does not follow the common-law principles of commercial law, nor does it fit in with existing legislation. "It does not propose to amend any legislation so it will be interesting to see how these differences will be reconciled in the future. The minister's powers (in the capacity of state representative) would appear to be far too wide and undermines the very notion of democratic business governance as required by both the Companies Act and the Cooperatives Act," she said.

The Meat Company of Namibia Bill, according to the LAC, states that Meatco is a state-owned enterprise, despite the fact that the company share allotment is 70% cooperative owned and 30% State owned.

Dealing with the ownership of the company, the bill states that the minister (who is really just the representative of the minority shareholder) has power to veto a number of board decisions and, in fact, override the majority decision of shareholders.

"Clearly this provision is untenable in terms of the Companies Act, which does not allow a single person to veto a decision of the board of directors or shareholders that was made in according to the procedural provisions of the Act. An interesting aspect in this regard is that the minister is precluded from being a director by virtue of Section 10(b) of the bill."

Hancox continued to say that it is thus difficult to reconcile the veto power with the provisions of the Companies Act, since the Companies Act regulates the conduct of companies and the bill does not seek to amend the Companies Act in any way.

"The effect of this veto power of the minister does not accord with the Companies Act which lacks a provision for a representative of a minority shareholder to veto the decision-making powers of a properly constituted board of directors supported by its majority shareholders. This bill would therefore appear to provide powers to the minister which may be construed to be ultra vires vis-à-vis the Companies Act," she said.

According to the LAC, the subsections in the Namibia Livestock Co-operative (Pty) Ltd Bylaws dealing with the admittance of members force livestock producers to be members of the cooperative, adding that there is no freedom of choice.

"It may be construed as an anti-competitive structure and will possibly fall foul of the anti-competition laws if directly challenged. It could also be argued that article 21(j) of the Constitution of Namibia will be violated if any livestock producer is denied equal access to markets because of his or her failure to be a member of the cooperative."

Further, of great concern according to Hancox, is that 11 members of the Cooperative Council are subject to the minister's final approval.

"Given that 11 members are there on the minister's approval - these 11 could arguably take a decision on the affairs of the cooperative (or nine of them) which forms 70% of the company, while the minister makes a decision in respect of the other 30% shareholding," said Hancox.

It is not clear whether the legislation would still be amended before being tabled in Parliament and if the producers' concerns would be accommodated in the legislation.

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