Setraco Shareholders at War

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All is not well at Setraco Nigeria Limited as its shareholders are currently entangled in a battle over the management of the company.

Already, a Federal High Court in Abuja has asked members of minority shareholders, Inu Umoru and Son Nigeria Limited, Abu Inu Umoru, Ignatius Aigbokhade and five others, to show cause why an order of interim injunction should not be granted against them for continuously accessing and drawing on overdraft facilities from Zenith Bank Plc and Diamond Band Plc despite the suit filed against them by Setraco International Holding and five others.

In the suit filed by the majority shareholders, Setraco International Holding, Said Khalaf, Tania Khalaf Raja Touma and Chabel Abdallah, sued the minority shareholders: Inu Umoru and Son Nigeria Limited, Abu Inu Umoru, Ignatius Aigbokhade Aladasanmi Adekunle, Afizu Inu Umoru, Sifawu Inu Umoru Momoh, Setraco Nigeria Limited, Lee Obomegie and Ray Chaudhuri, over the shareholding structure of the company.

 

The majority shareholders served a special notice indicating their intention to remove the directors nominated by Inu Umoru and Sons Limited for the way they have wrongly managed the affairs of the company.
They rushed to court. But the court ordered the parties to maintain status quo.
Subsequently, the Setraco International led by Khalaf and three other directors who were excluded brought an action seeking for a number of injunctive remedies.

The presiding judge, Justice B.O. Quadri, also ordered the respondents to show cause why the injunctive relief sought in respective of the overdraft facilities should not be made against them.

The judge made the order after listening to Ogunmuyiwa Balogun.
The case resumes on Thursday, August 16.
Setraco Nigeria Limited, one of the few successful construction company in Nigeria with substantial indigenous participation is embroiled in an intractable shareholders and directors dispute over the control of the management of the affairs of the company resulting to the suit.

There have been multiple suits and counter suits in court involving not just the shareholders and directors, but the Corporate Affairs Commission (CAC) has now been dragged into the disputes by the minority shareholders in the company and a group of directors nominated by the minority shareholders (the minority directors).

From available court processes, it is alleged that the minority directors repeatedly acted without concurrence of the full board, and executed far-reaching decisions to the detriment of the company, in a manner capable of causing financial loss to the company and its members.

It was alleged that the minority directors have also excluded other members of the Board of Directors of the company (the majority directors) from participating and voting at the company’s meetings.

The majority directors initiated a process to pass special resolutions to remove the minority directors; however, the minority directors proceeded to court to forestall their removal.
The minority directors also filed a petition alleging that the affairs of the company are being run in a manner prejudicial to their interest.

Not to be outdone, the majority directors brought their own suit challenging the actions taken by the minority directors without due approval by the Board of Directors of the company. These actions include approving financial statements and paying dividends in contravention of the provisions of the Companies and Allied Matters Act, obtaining loans from banks without due approval by the board of directors of the company, engaging in activities outside the objects of the company, and disposal of assets of the company without due approval by the Board of Directors of the company.

From all indications, the tussle for control between the warring factions of the shareholders and members of the Board of Directors could affect the fortune of the company and the company’s ability to execute existing contracts and win new mandates.

From available documents filed in court, it is understood that accounts of the company outside Nigeria through which critical equipment and payment of salaries of expatriate employees are paid have been blocked.

It is doubtful how long the company will be able to carry on without the critical input of the foreign shareholders and directors; and access to funds from the accounts outside Nigeria. One thing is certain; if these disputes are not resolved quickly it will affect the ability of the company to continue to flourish, and may bring about the unfortunate demise of the one of the few construction company in Nigeria with visible indigenous participation.

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