Court orders Airtel to revert name to Econet

The Federal High Court of Nigeria has ordered Airtel Nigeria to revert to its former name, Econet Wireless Limited.

 

The court also ordered the Bharti Airtel to reinstate Econet Wireless’s five per cent shareholding in Airtel Nigeria.

 

Econet Wireless, an early investor in the company, is an international company domiciled in the United Kingdom.

 

The company had opposed Zain’s decision to sell the Nigerian business to Bharti Airtel, claiming its right of first refusal.

 

Zain, however, went ahead to sell its African mobile business including Nigeria to Bharti in 2010 for $10.7bn.

 

According to the summary of the judgement delivered by the Justice Shuaib, Econet is a shareholder of Bharti Airtel Nigeria Limited and holds five per cent of the issued shares of the company.

 

The Court, therefore, ordered that all actions, and resolutions taken by the company, since October 2003, at which Econet was entitled to be notified, and to participate in, as a shareholder, but was prohibited, were null and void.

 

This, according to the court, includes decisions to sell shares, issue shares, and transfer shares to third parties.

 

The court also orederd the Corporate Affairs Commission to cancel any certificate previously issued for the company’s change of the name of the company and restore its name to Econet Wireless Nigeria Limited.

 

A statement issued on behalf of Econet, stated that the firm through its lawyers has, as a result of the judgement, written to Bharti Airtel to immediately reissue its shares to Econet to reinstate its five per cent interest.

 

The statement said Econet had also 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.

 

“Econet Wireless intends to review the decisions taken by the board and other shareholders to ascertain which actions are in violation of the order of the High Court,” the statement said.

 

The Group Chairman, Econet Wireless, Mr. Strive Masiyiwa, who was quoted in the statement, said, “In October 2003, Econet Wireless received a letter from the chairman of the company, Mr Oba Otudeko, in which he advised that at a board meeting, 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.”

 

He said as a result of the actions, Econet Wireless was left with no option but to seek redress through the courts, adding that anapplication was filed in the Federal High Court in October 2003.

 

He said, “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.

 

“The substance of this ruling, which was known by Celtel and then Bharti, was a matter of record in the legal documents of the company. It is also common cause to even the casual reader that the order given has far-reaching consequences on the current ownership status of the company.”

 

Masiyiwa said that as a shareholder, Econet would like to ensure that all actions that must be taken to comply with the Court order were undertaken in such a way that there would be minimal disruption to the ongoing operations of the company.

 

He said, “The board of Econet Wireless and I remain willing to sit down with Bharti-Airtel, to review the best way forward for all parties. In the meantime, we have a fiduciary responsibility to take all of the necessary steps to vigorously protect the interests of our shareholders.”

 

In a statement signed by its management, Airtel Nigeria, said, “In the light of the judgment by the Federal High Court of Nigeria regarding Econet Wireless Limited’s claim to the ownership of five per cent equity in Airtel Networks Limited (Airtel Nigeria), an appeal against the said judgment has been filed by Airtel Nigeria.

 

“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. In addition, the judgment will have no impact on the equity holding of other shareholders in Airtel Nigeria.”