According to a press release posted on the Econet Wireless website today, the Federal High Court of Nigeria handed down judgment in favour of Econet last week in the dispute between the company and Bharti Airtel Nigeria. The matter stems from shareholding disputes in 2003 and until now that Econet has been fighting, and until now the company had failed to get any favorable outcome from the courts.
In 2003 Econet attempted to resist a takeover bid by Vodacom of Econet Wireless Nigeria (EWN) in which it owned 5%. The sale to Vodacom however went through but Vodacom pulled out after citing irregularities in the takeover process. EWN was renamed V-Mobile and eventually a 65% stake sold to Celtel, a division of Zain in 2006. Econet disputed the sale arguing that its pre-emption rights had been breached. Econet pursued the matter in the Nigerian courts in a bid to overturn the sale. In 2010, Zain sold its African mobile operations including Nigeria to Bharti Airtel for $10.7 billion. Again, Econet sought to overturn this sale.
So far, it looks Econet has succeeded this time and the company wishes to rewind matters and right all the wrongs since the dispute started. At least that’s what the press release suggests.
Strive Masiyiwa, the Econet Wireless Group Chairman, is quoted in the release: “It is also common cause to even the casual reader that the order given has far-reaching consequences on the current ownership status of the company”
Bharti Airtel on the other hand has sought to reassure shareholders in a statement:
In light of the judgment by the Federal High Court of Nigeria regarding Econet Wireless Limited’s (EWL) claim to the ownership of 5% equity in Airtel Networks Limited (Airtel Nigeria), an appeal against the said judgment has been filed by Airtel Nigeria. The Company abides by and has full confidence in the law of the land, and believes the Appeal Court will determine the appeal on its merits.
Here’s is the full release by Econet Wireless:
On the 24th January 2012, in the Federal High Court of Nigeria, the Honorable Justice Shuaib, handed down judgment in the matter between Econet Wireless Ltd (‘EWL’) vs. Bharti Airtel Nigeria Limited, suit No FHC/KD/39/2008 (Formerly FHC/L/172/2004)
The summary of the judgment is as follows:
- Econet Wireless Ltd, an international company, domiciled in the United Kingdom, is a shareholder of Bharti Airtel Nigeria Limited and holds 5% of the issued shares of the company. The court ordered Airtel to reinstate the shareholding of EWL.
- The court ordered that all actions, and resolutions taken by the company, since October 2003, at which EWL was entitled to be notified, and to participate in, as a shareholder, but was prohibited, are null and void. This includes decisions to sell shares, issue shares, and also transfer shares to third parties.
- The court also ordered that the name change from Econet Wireless Nigeria Limited, effected in 2003, was irregular, and must be reversed forthwith.
- The Corporate Affairs Commission (CAC), has been ordered to cancel any certificate previously issued for the change of the name of the company and restore the name of the company to Econet Wireless Nigeria Limited.
As a result of the judgment by the Honorable Justice Shuaib, Econet Wireless Limited through its lawyers has now written to the company, with the following requests:
- Immediately reissue shares in the company to Econet to reinstate its 5% interest.
- Provide Econet full access to information relating particularly to board decisions and shareholder resolutions in accordance with the Companies Act, the shareholders agreement between the parties and in pursuance of the orders of the Federal High Court of Nigeria.
Econet Wireless intends to review the decisions taken by the board and other shareholders to ascertain which actions are in violation of the order of the High Court.
Commenting on the decision, Econet Wireless Group Chairman – Mr Strive Masiyiwa said:
“It is universally accepted throughout the world, that when shares in a company are allotted and share certificates issued, as confirmation of ownership, this is sacrosanct.
“In October 2003, Econet Wireless Ltd received a letter from the chairman of the company – Mr Oba Otudeko, in which he advised that at a board meeting directors had decided that Econet Wireless was no longer a shareholder, Econet’s share certificate had been cancelled, and Econet’s name removed from the shareholder register. The motive for this unprecedented action was the circumvention of Econet Wireless’ rights as a shareholder in order to facilitate the sale of shares, first to Celtel International, and later to Bharti Airtel.
“As a result of these actions, Econet Wireless was left with no option but to seek redress through the courts. An application was filed in the Nigerian Federal High Court in October 2003, more than eight years ago. Since then, every legal avenue to delay the process was pursued by the defendants through their lawyers, in order to frustrate Econet Wireless.
“I am very disappointed that whilst it was clear to Celtel, Zain and Bharti-Airtel that Econet Wireless was a shareholder, they still chose to pursue a path, in which the end justified the means. It is clear even to those with the most basic understanding of company law that the board of a company has no power in any jurisdiction to simply cancel the shares of a shareholder but their desire to own the company was so great that they were prepared to overlook the facts and ignore our rights
“The substance of this ruling, which was known by Celtel and then Bharti, was a matter of record in the legal documents of the company. It is also common cause to even the casual reader that the order given has far-reaching consequences on the current ownership status of the company.
We have made it clear to the company, that as a shareholder, we would like to ensure that all actions that must be taken to comply with the court order are undertaken in such a way that there is minimal disruption to the ongoing operations of the company.
“The board of Econet Wireless and I remain willing to sit down with Bharti-Airtel, to review the best way forward for all parties. In the meantime, we have a fiduciary responsibility to take all of the necessary steps to vigorously protect the interests of our shareholders.”