Monday, July 23, 2018 04.32PM / By Ayodeji Ake of Thisday
The Federal High Court sitting in Lagos, presided over by Honourable Justice CMA Olatoregun on Monday the 7th of May, 2018 declared in its judgment, that the attempted takeover of Ekocorp Plc by Messrs Geoff Ohen. Ltd, through the alleged acquisition of more than 30% of the company without a formal takeover bid was unlawful and illegal.
Hon. Justice Olatoregun in her Judgement stated that the evidence before the court is in support of the fact that 1st Respondent, Geoff Ohen Ltd and 2nd Respondent, Dr Geoffrey Ohen having failed to comply with the provisions of section 134 (1) and (2) of the Investment and Securities Act (ISA) are liable to be punished as provided under Sections 137 of the Investment and Securities Act 2007.
In summary section 137 (1) of ISA, states that a corporation or an individual should not make a takeover bid except it has been approved by a board resolution and section 137 (2) indicates that noncompliance would amount to an offence with the offending parties liable to a a fine of N100, 000 or imprisonment or both and this was the position taken by the court in respect of the purported takeover by Geoff Ohen Ltd and Geoffrey Ohen.
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The court, on the question of whether Geof Ohen Ltd and Dr Geoffrey Ohen violated any law or regulation in acquiring the 110 million shares and the shares from GTB and Security Swap Ltd; declared that Geof Ohen Ltd and Dr Geoffrey Ohen failed and or refused to disclose their shareholding standing in Ekocorp when the issue of the private placement was discussed by the board and that they also failed to obtain shareholders’ approval at the Annual General Meeting before the SEC approval for the private placement was sought and obtained.
The Court therefore concluded that the SEC was misled by a false resolution in approving the scheme. It stated that there is no evidence that Regulations 89, 90(i), (ii) and (iv) of the Securities and Exchange Commission rules and Regulations were complied with as such “the basis upon which SEC granted its approval is non-existent. The approval must fail. Same is set aside “
The court asserted that Geoff Ohen Ltd and Dr Geoffrey Ohen the first and second Respondents deliberately refused to make a takeover bid in contravention of the provisions of the Investment and Securities Act, and the absence of any evidence of a takeover bid by the 1st and 2nd Respondent in line with section 131 of ISA, the acquisition is declared illegal ab initio.
On the conversion of debt owed by Ekocorps to the Founding Directors namely, Dr Alexander Eneli, Dr Sunday Kuku, and Late Dr Augustine Obiora to equity, the court stated that from the evidence it is clear that EKOCORP was indebted to them and that Dr. Geofferey Ohen did not protest at the Board meeting where it was agreed that 75% of the debt be converted to equity while 25% of the debt be paid to them in cash as seen from the adopted minutes of meeting.
The Court in approving the prayer of the Founding Directors (Petitioners) and in a bid to regularize the operations of EKOCORP PLC ordered that an Annual General Meeting be held within 60 days from the date of judgment for the approval of (I) the Debt Equity Swap; and (II) the Special Private Placement. As it conclusively held that “I am satisfied that the equitable way to go is for parties to go back to an Annual General Meeting and seek approval for the special placement as well as the debt equity swap”.
The judgement of the High court has once again shown the resolve of the judiciary to secure entrepreneural efforts of hard working citizens of the country and to discourage hostile takeovers outside due process.
The Court Judgment
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