Unhealthy legal fireworks swirl again between Oando and shareholders. CHRIS UGWU writes
Since attempts were made by some shareholders to disrupt Oando’s Annual General Meeting (AGM) held in Uyo, Akwa Ibom State in 2017, the company has been enmeshed in crisis. The AGM was reportedly disrupted for over 10 minutes as the protesters chanted songs seeking the resignation of the company’s Group Chief Executive, Wale Tinubu. The protesters, who stormed the venue under the aegis of “Oando Shareholders’ Solidarity Group,” said they were protesting in order to change the management of the company due to alleged gross mismanagement and abuse of corporate governance. They also called on the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE), to commence the immediate investigation of the company to determine the true state of the financial position and corporate practice. The action followed the majority shareholders in Ansbury Investment Inc, who had sent a petition to the Securities and Exchange Commission, seeking the postponement of the AGM. In the petition dated August 17, 2017, Ansbury urged SEC to postpone the AGM, pending the resolution of the shareholding matter earlier raised by it. Ansbury alleged that Oando was guilty of gross abuse of corporate governance and financial mismanagement. But, Oando’s Chief Compliance Officer & Company Secretary, Ayotola Jagun, said the petition filed in Ocean and Oil Development (OODP), which holds 99 per cent and 56 per cent equity stake in Oando Plc, lacked merit. He said the issues raised had received the approval of the board and shareholders, adding that other matters highlighted by the petitioners could have been directed to the company for necessary clarification. SEC had constituted a task force and started an investigation into the allegations against the oil firm. It was further leant that a task force was convened on August 30, 2017, mandating Ansbury to prepare a detailed written submission stating the grounds upon which SEC should postpone the AGM. In 2019, SEC concluded investigation of Oando and directed among others the resignation of the affected Board members, and also barred the Group Chief Executive Officer (GCEO) and the Deputy Group Chief Executive Officer (DGCEO) from being directors of public companies for a period of five (5) years. SEC also suspended the AGM of Oando indefinitely. AGM is an important platform for the protection of the shareholders of a company. It is a legal requirement for all publicly listed companies. By being listed on the Nigerian Stock Exchange (NSE), a company is by virtue owned by her shareholders, thus ultimate control and the destiny of a company should lie in the hands of said shareholders. Section 81 of the Companies & Allied Matters Act ascribes to every member of an incorporated company, who has fully paid for his or her shares, a right to attend all the shareholders’ meetings of such a company; and to speak and vote at such shareholders’ meetings. According to a press statement issued by Oando Plc dated July 20, 2020, the suspension of the AGM has also resulted in the inability of the company’s directors to lay before the shareholders for approval, the company’s 2018 Audited Financial Statements; inability to appoint auditors to hold office for the 2019 financial year; and the inability of the company to meet its FYE 2019 NSE Filing of Accounts obligation due date of March 31, 2020; amongst others.
It was reported recently that Patrick Ajudua, an Oando shareholder, took it upon himself to legally challenge SEC in a suit filed at the High Court of the FCT. The aggrieved shareholder filed that the directive of SEC suspending Oando’s annual general meeting was in breach of his right to freedom of association as guaranteed under Section 40 of the Nigerian Constitution and Articles 9, 10 & 11 of the African Charter on Human and Peoples Rights. According to the reports, Ajudua secured a win in court on Tuesday, February 23, 2021. In a hearing presided over by Justice O. A Musa, all cases filed were granted in his favour. Ajudua, who said he has painfully endured the infringement of his rights as a shareholder and an individual, for the past two years, was the much needed respite that the shareholders required, especially at a time when many are struggling for survival following the country’s second recession in three years. Presiding over the case, Justice O. A Musa, ordered that Ajudua as a member and shareholder of Oando had a right and freedom of association and assembly with other shareholders and right to receive information at the AGM. He declared among other things, the May 31, 2019 letter of SEC to Oando sanctioning its management, as unconstitutional, null and void and violation of Ajudua’s fundamental right to fair hearing and his human right to receive information on the affairs of Oando and his interest and shares in Oando; an order setting aside the directive of SEC suspending/ postponing indefinitely the AGM of Oando in violation, breach and contravention of Ajudua’s right and freedom of association and assembly with other shareholders and right to information from other shareholders and Oando Plc. Ajudua described his action as a win for him and all shareholders, noting that “the lingering delay in resolution of the conflict has brought untold hardship, financial difficulty and loss of capital appreciation on our investments. “Therefore, we receive this judgement with humility and the pray that with all hands on deck, we can move the company forward. “We plead with the regulators to give peace a chance and allow for a harmonious resolution of the conflict. “The shareholder community will continue to protect our investments by ensuring high compliance with the code of corporate governance and the integrity of the company’s operations in the capital market,” he added.
SEC refutes alleged court order
However, SEC has denied reports that a shareholder of Oando Plc purportedly obtained a judgment from the Federal Capital Territory High Court against the Commission. SEC, in a statement made available to New Telegraph, said: “The attention of the Securities and Exchange Commission has been drawn to several publications in the media, where it is reported that a shareholder of Oando Plc purportedly obtained a judgment from the Federal Capital Territory “The Commission wishes to inform the general public that it was never at any time served with court processes with respect to the purported matter at the FCT High court. The Commission will consequently take all necessary steps to verify and set aside the purported decision of the said court. Some publications in the media had, the previous day, reported that Ajudua took it upon himself to legally challenge the Securities and Exchange Commission (SEC), in a suit filed at the High Court of the FCT.
Court strikes out suit against SEC
The Federal High Court sitting in Abuja had struck out three cases filed by Oando Plc and some of its directors against the Securities and Exchange Commission for lack of jurisdiction in a judgement delivered by Justice F.O.G. Ogunbanjo. Oando Plc and three of its directors namely, Adewale Tinubu, Omamofe Boyo and Olufemi Adeyemo, had instituted these cases against SEC. The case was instituted against the Commission in view of the enforcement action taken against the company and the affected directors in its letter dated May 31, 2019. The affected directors, according to the SEC letter dated May 31,2019, had violated the Commission’s Code of Corporate Governance, the provisions of the Investments and Securities Act 2007 and the SEC Rules and Regulations. Oando Plc and the three directors had prayed the court to hold that their fundamental human rights were violated because, according to them, SEC did not give them fair hearing in investigating some petitions received by SEC in 2017 from some shareholders of Oando Plc. But the court, in delivering its judgement, struck out the three cases and ruled that the Federal High Court cannot assume jurisdiction to entertain a matter where the subject matter falls outside its jurisdiction under the guise of enforcing fundamental human rights. The court further held that the Federal High Court lacks jurisdiction to entertain matters arising from the Nigerian capital market.
Reacting to the development, National Coordinator, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said the decision would restore investors’ confidence in the capital market. “All bottlenecks must be blocked. Thorough investigation is necessary. All decision must be made public. Another shareholder, Chief Stephen Ozoloka, said the move by SEC had further given the needed impetus for the capital market to thrive based on its zero tolerance for infraction. He noted that the prompt decision of the Commission to put on hold the AGM would serve as a deterrent to other companies.
Reconciling with the aggrieved stakeholders is necessary to sustain the growth of the company.