Terms of Reference for Financial and Legal Advisory Services for the Qualified Re-organisation of Kasinthula Cane Growers from a Private Company and Trust to a Cooperative

Consultancies

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KASINTHULA CANE GROWERS LIMITED, KASINTHULA CANE GROWERS COOPERATIVE & SHIRE VALLEY CANE GROWERS TRUST

Terms of Reference for Financial and Legal Advisory Services for the Qualified Re-organisation of Kasinthula Cane Growers from a private Company and Trust to a Cooperative

1. Preamble

Kasinthula Cane Growers Limited (KCGL), Shire Valley Cane Growers Trust (SVCGT) and Kasinthula Cane Growers Cooperative (KCGC) are seeking proposals from suitably qualified and experienced Financial, Human Resource and Legal Advisory Firms for the provision of Technical Support in guiding the desired conversion from the present status of a Trust and a Private Limited Company to a fully functional Cooperative. The objective being to provide advisory services on the legal procedures and processes to be followed to achieve a successful transition.

2. Background

2.1 Shire Valley Cane Growers Trust (SVCGT)

Was formed by the Government in 1998 with the main objective of fostering the interests of the current and future smallholder sugar developments in the Lower Shire Valley as well as act as a vehicle through which funding and other support services could be rendered to smallholder sugarcane farming initiatives. The SVCGT is as such, the title holder of the land on which KCGL is currently cultivating its sugarcane and is also the main shareholder of KCGL – being the operating company.

2.2 Kasinthula Cane Growers Ltd (KCGL)

Due to the historical limitations around Cooperatives and Trusts in Malawi, once the Shire Valley Cane Growers Trust (SVCGT) was formed there was need to establish an operating company to ensure all operations around the Irrigation scheme were optimally run. The company was established in 1998 and has two shareholders: – SVCGT; which has 95% shareholding; – Illovo Sugar (Malawi) Plc, formerly known as SUCOMA; which has 5% stake in KCGL.

The Illovo shares were requested as a guarantee against the development loans it provided for Phase 1 and 2.

Phases 3 & 4 were developed later in 2012 and 2014 respectively with grant funding from the European Union (EU). The total area under irrigation sugarcane farming amounts to 1,435 hectares.

The company functions as the operator of the scheme and is responsible for procuring finance and inputs; operating the scheme; harvesting and hauling cane; receiving revenue from the cane delivered through a Cane Supply Agreement; reporting to, and, when it makes a profit, paying out dividend to its shareholders (the Trust and Illovo).

2.3 Kasinthula Cane Growers Cooperative (KCGC)

KCGC was registered in 2023 and, as the first step in the transition process, has replaced Kasinthula Cane Growers Association, (SVCGT’s beneficiaries’ representation structure), which was formed in 2010 with support from the EU funded Sugar Capacity Building Project (under one of numerous AMSP projects). KCGC has 762 members who form part of any one of the four Business Centres and has its institutional structure in place with elected leadership that are undergoing capacity building and training. KCGC will seek to establish the governance structure required to sustain the cooperative, its operations and provide the required governance and strategic support required by organisation of this nature

3. Scope of Work for Advisory Services

In order to implement the transition process in a legally compliant manner, the Trust seeks suitably qualified firms/individuals to complete the following Scope of Work: –

3.1 Legal Advisory Services

Review existing legal documents and agreements and provide advice on, but not limited to, the following: –

  1. Winding up the company in line with the provisions and regulations set in the Companies Act (2013)
  2. Guidelines on the legal transfer of shares in the company to the new Cooperative.
  3. Legal transfer of all assets owned by KCGL and SVCGT to KCGC and provide an estimate of the costs associated with such transfers.
  4. Transfer of all legal obligations and liabilities under KCGL and SVCGT to KCGC – e.g. Transfer of Loan agreements and associated securities and provide an estimate of the costs associated with such transfers.
  5. Review of all other agreements, (Shareholders’ agreement, Heads of agreement, Cane Supply Agreement (CSA), Management Agreements/ Supplier agreements) and the most efficient/ effective means to transfer these to KCGC and/or advise which ones are transferable or not.
  6. Review the current land title documentation held by SVCGT and advise on Transfer of title deed from SVCGT to KCGC and provide an estimate of the costs associated with such transfers.
  7. Review all relevant licences and permits in place and advise/recommend on transfer of these to KCGC (with associated costs).

3.2 Financial and Tax Advisory Services

Review existing structures and provide advice on, but not limited to, the following: –

  1. Review recent audited financial statements and assess KCGL’s total assets and liabilities.
  2. Review the most recent Tax Assessments and assess whether these accumulated gains/losses are transferable to the new Cooperative.
  3. Advise on registration of KCGC for different taxation requirements as per the Taxation Act (2014 and 2023 Amendment).
  4. Confirmation of and procedures required for the re-valuation and transfer of all KCGL and SVCGT assets to KCGC – and estimate the costs associated with the transfer.
  5. Confirmation of and procedures required for the re-valuation and transfer of all liabilities and obligations of KCGL and SVCGT to KCGC – and estimate the costs associated with the transfer
  6. Review the existing contractual obligations – loans; contracts; insurance and other and advise/liaise with the legal advisory services on the expected costs to transfer these from KCGL/SVCGT to KCGC
  7. Review and advise on the current share value of KCGL.

3.3 Human Resources Advisory Services

Review the existing employment records and contracts and provide advice on, but not limited to, the following:

  1. All Human Resource Employment Contracts and associated Conditions of Service and provide advice on the expected procedures to be followed for special approval to transfer contracts from KCGL/SVCGT to KCGC – in line with the regulations stipulated in the Labour Relations Act (1996); Employment Act (2000) and Workers Compensation Act (2000)
  2. Provide guidelines on contractual obligations and procedures to be followed for transfer of contracts and provide estimate of associated costs
  3. Review and provide guidelines on transfer of all pension contributions and obligations from KCGL/SVCGT to KCGC
  4. Review and provide guidelines on the transfer of all insurance policies related to staff and workers compensation from KCGL/SVCGT to KCGC.
  5. Provide advice on the optimal organizational structure for the KCGC.

4. Experience and Qualifications of interested firms/ individuals

Eligible firms/consortiums/individuals should be able to demonstrate their past or current experience in similar assignments – namely successful examples of qualified restructuring/mergers. This will be presented in the form of a marketing pack including the resumes of the core team members. The Team leader for the firm/consortium or individual Consultant must have a Minimum of Master’s Degree in the relevant field under submission and at least 10 years of experience.

This transaction is of high priority and the broader stakeholders include the effective 762 economic bona fide owners of KCGL-a listed Malawian company, the SVCGT, the Malawian government and foreign funders. All of which means it is imperative to ensure the transaction is concluded within the regulatory frameworks provided.

Time Frame
This assignment is a high priority and should start as soon as possible, and is expected to be completed within two months. Weekly progress updates will be required for delivery to the SVCGT Board and KCGC leadership.

Qualified firms/consortiums/individuals should send their proposals/marketing pack to the following address through email by Monday, 27th May, 2024:

The Trust Manager
Shire Valley Cane Growers Trust
P.O. Box 138
CHIKWAWA
Email: cchavi.svcgt@kasinthula.mw and/or chvchavi@yahoo.co.uk

For further enquiry, please contact staff on the following: +265 999 242 056/+265 888 329 108

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