GIPF in fight over N$450m equity shares

A legal dispute centred around N$450 million shares and involving the Government Institutions Pension Fund (GIPF), the Namibia Mid Cap Fund Trust (NMCF) and private equity and fund management company Myrtle Growth Capital reached the High Court in Windhoek yesterday. The GIPF had recently filed a rescission application, followed by an urgent application on the matter, in which Myrtle Growth allegedly made unlawful attempts to sell off shares in the NMCF worth N$ 450 million.The NMCF operates similarly to a financial trust.A trust is a legal vehicle consisting of three main parties: the grantor, who establishes the trust; the beneficiary, who benefits from it; and the trustee, who manages the trust’s assets and distributes them, along with any income generated, to the designated beneficiary.It was established as an investment vehicle where GIPF legally invested money. The trust, allegedly, was supposed to then sub-invest it into other companies, which would create an investment bank and would add on to the already existing pension money. The purpose of the fund was to channel these investments into various small and medium-sized Namibian businesses, with the NMCF receiving dividends and money in return on such investments.Myrtle Growth, appointed as fund manager for the trust, was in charge of overseeing investment activities alongside trustees. However, it had been deregistered as a fund manager by the Namibia Financial Institutions Supervisory Authority (Namfisa) due to non-compliance with financial laws and regulations. In addition to this, the NMCF was operating without trustees, rendering it an entity with no legal representatives.Allegations against Myrtle Growth CapitalMyrtle Growth stands accused of misappropriating the aforementioned funds from the GIPF and instituting illegal proceedings against the trust for monies allegedly owed by the trust to Myrtle Growth.According to the deed of the trust, Myrtle Growth was obligated to contribute 1% (N$4.3 million) as co-investment, of which the firm allegedly only contributed N$600 720.79.Furthermore, Myrtle Growth claimed that NMCF owed it outstanding management fees and, in the absence of a defence, secured a default judgment from the court.Default judgments occur when one party sues another, and the defendant fails to respond. Without opposition, the court grants an order in favour of the plaintiff. In this case, Myrtle Growth obtained a judgment of N$15 million against NMCF, despite the fund having no trustees to contest the claim.Typically, when a court grants a default judgment, the owed funds can legally be recovered through a process of the deputy sheriff seizing and selling the debtor’s property. However, Myrtle Growth allegedly bypassed this process by attempting to privately and unlawfully sell shares held by NMCF in various investment companies. These sales, valued between N$200 million and N$450 million, far exceed the original N$15 million judgment and cannot legally be sold for more than their judgment is worth.This action raised serious legal concerns, as the shares legally belong to NMCF. Myrtle Growth, not being the rightful owner, could not lawfully sell the shares without proper legal procedures.Urgent applicationNow that there are trustees in the trust, legal representatives of GIPF and NMCF, Deckenbrock Sauls & Co Law Chambers, filed two court applications in response to the unauthorised sale: a rescission application to overturn the default judgment and allow NMCF to dispute the claimed debt, followed by an urgent application to request the immediate halt of Myrtle Growth’s sale of the shares until the outcome of the rescission application has been heard.JudgmentThe parties appeared in the High Court yesterday for the ruling on the urgent application.Judge Nate Ndauendapo dismissed the urgent application, finding that the matter was not urgent enough to warrant immediate intervention.The rescission application is set to be heard later this month. If granted, it will allow NMCF to challenge Myrtle’s claims, potentially reversing the financial impact of the default judgment.

GIPF in fight over N$450m equity shares

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Namibian Sun 2025-02-26

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GIPF in fight over N$450m equity shares

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Namibian Sun 2025-02-26

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