1 February 2013

Nigeria: Newswatch - Ibrahim's Bid to Stop Shareholders' Suit Fails

Chairman of Global Fleet Group, Mr. Jimoh Ibrahim, Thursday lost in his quest to have a suit instituted against him and others by some aggrieved shareholders of Newswatch Communications Limited dismissed.

Justice Ibrahim Buba of the Federal High Court in Lagos held in a ruling that the preliminary objection filed by Ibrahim and others to challenge the suit, was not only misconceived, but also lacked merit.

The minority shareholders, Nuhu Wada Aruda and Professor Jibril Aminu, had filed the suit to challenge the method through which Ibrahim acquired the purported majority shares of Newswatch, and his style of leading the company so far.

The shareholders had urged the court to set aside the contract through which Ibrahim purportedly assumed majority shareholding in the company.

They had stressed that Ibrahim fraudulently acquired the majority shares of the company and has been running the affairs of Newswatch in a manner detrimental to the interest of other shareholders.

In his ruling yesterday, Justice Buba dismissed the objection filed by Ibrahim and others, and subsequently fixed today for ruling on a motion for interlocutory injunction seeking to stop further publication of Newswatch Daily pending the determination of the suit.

The defendants had argued in their objection that the court lacked jurisdiction to entertain the suit because there was a clause in the agreement between parties that any dispute on Newswatch should be handled by the Lagos High Court.

On that point, Justice Buba held that the provisions in the agreement between parties could not override the Constitutional provision which empowers the Federal High Court to adjudicate on disputes emanating from the provisions of the Companies and Allied Matters Act (CAMA) as in the instant case.

Also, the court rejected an argument canvassed by the defendants that the plaintiffs lacked the mandate to sue being minority shareholders and that it was only the directors that can sue on behalf of the company.

In response to that argument, the plaintiffs had cited Section 381 of CAMA, and queried who would sue in the event that directors work against the interest of the company.

Justice Buba agreed with the plaintiffs' argument, and held that the court has jurisdiction to look into the matter.

Besides, the judge also faulted an argument canvassed by the defendants in the objection that the suit was similar to another one filed by Ibrahim against Mr. Ray Ekpu, and others, and so it amounted to an abuse of court process.

Justice Buba ruled that the parties in the instant suit were different from the other one.

According to the main suit, Aruda and Aminu, who are claiming to be minority shareholders and former directors of Newswatch, accused the new management under Ibrahim of systematically working to kill the company's main product, Newswatch weekly magazine and replacing same with daily newspapers, to be published by a newly incorporated company-Newswatch Newspapers Limited-an organisation in which Ibrahim's company, Global Media Mirror Limited, owns a majority shareholding.

Aruda and Aminu averred that Ibrahim, the new Chairman of Newswatch Communications Limited and the company "have not called a general meeting since the said new illegal take-over of the company."

They argued that although Ibrahim and his company, Global Media failed to comply with the conditions contained in the contract-a Share Purchase Agreement - of May 2011 between Newswatch and Global Media, Ibrahim and his company "wrongly assumed" the management and control of the company and shut down its operations to the utter detriment and loss of the petitioners.

Aruda and Aminu noted that by Clause 3.0 the 2011 agreement, Ibrahim and Global Mirror was to acquire 51 per cent stake in Newswatch Communications on the condition that they pay N510million as purchase price; by Clause 4.0 the money was to be paid on or before May 5, 2011, and by Clause 13.0 Global Media was required to pay additional N500 million within 90 days of its takeover of the company.

"Without complying at all with any of the aforementioned conditions of the agreement, the second respondent (Global Media), through the instrumentality of the third respondent (Ibrahim), went ahead and took over full control and management of the first respondent (Newswatch Communications)."

They argued that since the company was shut in August last year, it has lost about N15.780 million in revenue and profit, part of which ought to accrue to its shareholders, including the petitioners.

The petitioners are praying the court to among others, nullify the May 2011 agreement; an order directing Ibrahim and Global Media to pay the N15.780 million lost suffered by the company so far and 21 per cent interest on the judgment sum before judgment and 10 per cent after judgment is given and until it is paid.

They are also praying for an order directing that any verified money by Ibrahim and Global Media in Newswatch Communications be refunded to them by the receiver/manager from the funds realized from the operations of the company.

The petitioners equally want the court to grant a perpetual injunction, restraining Ibrahim, Global Media and their agents from proceeding with the publication of the planned daily papers; and order of perpetual injunction restraining them from further interfering in the management and control of Newswatch Communications.

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