The matter however stems from a shareholder dispute in nine years ago. In 2003 Econet Wireless Limited, attempted to resist a takeover bid by Vodacom, of Econet Wireless Nigeria (EWN) in which it owned a 5 percent stake.
The sale to Vodacom however went through, but Vodacom pulled out, citing irregularities in the takeover process.
EWN was renamed V-Mobile and eventually a 65 percent stake was sold to Celtel, a division of Zain in 2006. EWL disputed the sale, arguing that its pre-emption rights had been breached. Econet pursued the matter in Nigerian courts, in a bid to overturn the sale. In 2010, Zain sold its mobile operations in Africa, including Nigeria, to Bharti Airtel for $10.7 billion. Again, EWL sought to overturn this sale.
The court has ruled that all actions and resolutions taken by the firm 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.
The Federal High Court also ordered the name change from Econet Wireless Nigeria Limited, effected in 2003, was irregular, and must be reversed forthwith. It added that 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 of Justice Shuaib, Econet Wireless Limited, through its lawyers, has now written to Airtel to provide it 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.
“In October 2003, EWL received a letter from the chairman of the firm – Oba Otudeko, in which he advised that a board meeting of 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”, said Econet Wireless Group Chairman, Strive Masiyiwa.
According to him, “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.”
Masiyiwa is still committed to striking a deal with Bharti, which will be beneficial to all the parties involved. A statement issued by the management of Airtel, yesterday revealed that an appeal against the said judgment has been filed. The statement said: “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. “The judgment will have no impact on the equity holding of other shareholders in Airtel Nigeria. We wish to assure our customers, employees and business partners that the ruling will in no way affect operations or the company’s ability to fulfill obligation to its stakeholders”. Analyst told business Day yesterday that Econet may have succeeded this time, and that the firm wishes to rewind matters and right all the wrongs since the dispute started. “The board of EWL and I remain willing to sit down with Airtel, to review the best way forward for all parties. In the mean time, we have a judiciary responsibility to take all of the necessary steps to vigorously protect the interests of our shareholders”.