Oando shareholders in the persons of Alhaji Yakubu Gumel; Alhaji Kabiru Tambari, suing for himself and on behalf of the Sokoto Zone Shareholders Association; Tunde Badmus, suing for himself and for the benefits of Pacesetters Shareholders Association, bagged yet another win at the Federal High Court (FHC) Kano, in a suit filed against the Securities and Exchange Commission (SEC) for overreaching its powers. Justice A. Lewis Allagoa presiding over the ruling dismissed the regulators preliminary objection and granted all the reliefs sought by the Oando Shareholders.
The FHC Kano dismissed SEC’s objection on the basis that the shareholders’ claims fall under their rights as shareholders according to the Companies and Allied Matters Act (CAMA) and is therefore not a capital markets issue, hence it is completely under the jurisdiction of the FHC under Section 251 of the constitution. The Court further held that SEC was wrong in assuming that the Shareholders were challenging SEC’s regulatory powers over Oando, whereas what the shareholders claimed is that SEC exceeded its regulatory powers thereby making all their actions to date illegal and an infringement of their rights.
The Court further granted all the prayers sought by the Oando shareholders, specifically that SEC intervening in Oando PLC’s management without sharing the forensic audit report that led to the sanctions against the company and concerned Directors was the regulator acting beyond the scope of its powers. Also, that SEC acted arbitrarily in suspending the management of Oando and therefore declared the appointment of the interim management null and void; the Court, therefore, awarded a N250,000 cost against SEC in favor of the Oando shareholders.
Exactly a month ago, the High Court Abuja, ruled in favor of another Oando shareholder, Patrick Ajudua, who filed a suit against the commission for breach of his rights as a shareholder. The court ruled in his favor ordering Oando to hold its Annual General Meeting (AGM) within 90 days of the ruling.
The plethora of court cases against the SEC has been necessitated by the frustrations of shareholders. Specifically minority shareholders who have seen the regulator at loggerheads with Oando for nearly 4 years. Their concern is that despite the woes on them, the regulator continues in a battle that seems to have no end in sight but is destroying value every day. Shareholders have over the last 4 years, called for the SEC and Oando to reach an amicable agreement or resolution so the company’s management can focus on running the business, but these calls have fallen on deaf ears. By taking matters into their own hands the shareholders have finally decided they will fight for their rights and each win is evidence that this is an action that should have taken years ago.
At the FHC in Kano the displeased shareholders called the ruling a big win. Alhaji Tambari Kabiru, one of the applicants, an Oando shareholder since 1991 explained why he decided to sue the apex regulator. He said “I was not happy with the current state of my investment, so I had to do something about it. I invested my money heavily with the hopes of capital appreciation and this has not been the case. This SEC and Oando case is affecting the valuation of our investment; it gets worse each year. For over two years now, we have been totally in the dark about our investment in Oando. Year on year, our investment has depreciated. We are tired! We have reached out to the SEC and appealed a resolution, but they haven’t listened to us, that’s why we took the matter to court.”
Speaking on the Court ruling, Alhaji Tambari said; “This is a great win for we the shareholders. We have endured too much pain these past four years. To worsen it, we had no oversight of what was going on in the company. We can’t continue like this, especially in these trying times when every penny counts. I thank the Government for giving us confidence in the justice system. We, the common man, have nowhere to go but the court, and they have ruled in our favor which means no one can escape justice. I thank the management of Oando for persevering this long and also the employees at Oando for standing by the company even in these trying times. I hope that this ruling SEC can allow us to hold our AGM and SEC will leave the company’s management to run the business.’
The sentiment of neglect by the SEC is the same across board as another applicant representing Pacesetters shareholder association, Mr. Tunde Badmus explained his reason for suing the regulator. He said “The good of the company has to be for the good of all stakeholders. We have absolute faith in Oando, its Board and management, hence our resolve to stand by the company. As stakeholders, though minority shareholders, we still value our investment and the path being taken by the company. We are confident that the board and management will not launder or plunge the company into deliberate difficulty. When the regulators wanted to impose new management on the company, we frowned at it and thankfully that didn’t happen. They should stick to their regulatory role and not try to become operators of the company by imposing management of their choice on us. We have reached out to the regulator both the old and new management to no avail, hence we had to head for litigation.”
The SEC’s non-responsive attitude towards the plight of shareholders of the company has been met with criticism. With the economic recession taking its toll on people, including shareholders and the investing community, there’s a need for the regulators to protect the capital market and its investors. As explained by the shareholders, Nigeria needs foreign direct investments now more than ever; the investing community is watching and will be discouraged by regulatory actions like these, making the operating environment appear hostile and unfavorable.
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