FHC Kano Rules for Oando Shareholders, Says SEC Overreached its Regulatory Powers

Thursday, March25, 2021 / 08:15 AM / by News / Header Image Credit: Lawcare Nigeria

Oandoshareholders 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 PacesettersShareholders 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 theruling dismissed the regulators preliminary objection and granted all thereliefs sought by the Oando Shareholders.

TheFHC Kano dismissed SEC's objection on the basis that the shareholders' claimsfall under their rights as shareholders according to the Companies and AlliedMatters Act (CAMA) and is therefore not a capital markets issue, hence it iscompletely under the jurisdiction of the FHC under Section 251 of theconstitution. The Court further held that SEC was wrong in assuming that theShareholders were challenging SEC's regulatory powers over Oando, whereas whatthe shareholders claimed is that SEC exceeded its regulatory powers therebymaking all their actions to date illegal and an infringement of theirrights.

TheCourt further granted all the prayers sought by the Oando shareholders,specifically that SEC intervening in Oando PLC's management without sharing theforensic audit report that led to the sanctions against the company andconcerned Directors was the regulator acting beyond the scope of its powers.Also, that SEC acted arbitrarily in suspending the management of Oando andtherefore declared the appointment of the interim management null and void; theCourt, therefore, awarded a N250,000 cost against SEC in favor of the Oandoshareholders.

Exactlya 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 hisrights as a shareholder. The court ruled in his favor ordering Oando to holdits Annual General Meeting (AGM) within 90 days of the ruling.

Theplethora of court cases against the SEC has been necessitated by thefrustrations of shareholders. Specifically, minority shareholders who have seen the regulatorat loggerheads with Oando for nearly 4 years. Their concern is that despite thewoes on them, the regulator continues in a battle that seems to have no end insight but is destroying value every day. Shareholders have over the last 4years, called for the SEC and Oando to reach an amicable agreement orresolution so the company's management can focus on running the business, butthese calls have fallen on deaf ears. By taking matters into their own handsthe shareholders have finally decided they will fight for their rights and eachwin is evidence that this is an action that should have taken years ago.

Atthe FHC in Kano the displeased shareholders called the ruling a big win. AlhajiTambari Kabiru, one of the applicants, an Oando shareholder since 1991explained why he decided to sue the apex regulator. He said "I wasnot happy with the current state of my investment, so I had to do somethingabout it. I invested my money heavily with the hopes of capital appreciationand this has not been the case. This SEC and Oando case is affecting thevaluation 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 SECand appealed a resolution, but they haven't listened to us, that's why we tookthe matter to court."

Speakingon the Court ruling, Alhaji Tambari said; "This is a great win for we theshareholders. We have endured too much pain these past four years. To worsenit, we had no oversight of what was going on in the company. We can't continuelike this, especially in these trying times when every penny counts. I thankthe Government for giving us confidence in the justice system. We, the commonman, have nowhere to go but the court, and they have ruled in our favor whichmeans no one can escape justice. I thank the management of Oando forpersevering this long and also the employees at Oando for standing by thecompany even in these trying times. I hope that this ruling SEC can allow us tohold our AGM and SEC will leave the company's management to run the business.'

Thesentiment of neglect by the SEC is the same across board as another applicantrepresenting Pacesetters shareholder association, Mr. Tunde Badmus explainedhis reason for suing the regulator. He said "The good of the company hasto be for the good of all stakeholders. We have absolute faith in Oando, itsBoard and management, hence our resolve to stand by the company. Asstakeholders, though minority shareholders, we still value our investment andthe path being taken by the company. We are confident that the board andmanagement will not launder or plunge the company into deliberate difficulty.When the regulators wanted to impose new management on the company, we frownedat it and thankfully that didn't happen. They should stick to their regulatoryrole and not try to become operators of the company by imposing management oftheir choice on us. We have reached out to the regulator both the old and newmanagement to no avail, hence we had to head for litigation."

TheSEC's non-responsive attitude towards the plight of shareholders of the companyhas been met with criticism. With the economic recession taking its toll onpeople, including shareholders and the investing community, there's a need forthe regulators to protect the capital market and its investors. As explained bythe shareholders, Nigeria needs foreign direct investments now more than ever;the investing community is watching and will be discouraged by regulatoryactions like these, making the operating environment appear hostile andunfavorable.