Articles of Association have changed tiwce in less than four months.
Habesha Cement declared October 2016 the month for trial production at the Fourth General Assembly on February 6, 2016. The meeting held at the plant's site, in the town of Holeta, 35Km west of Addis Abeba, also passed decisions changing provisions of its articles of association. Shareholders agreed to cancel the Minutes of its third Extraordinary Meeting, later revising the company's Articles of Association.
The Assembly decided how Board directors were to be elected and the number of shares one shareholder can buy.
Since 2013, Habesha had nine Board members: three seats for the foreign shareholding companies, two for South African Cement Company, Pretoria Portland Cement Company (PPC)and one for Industrial Development Corporation (IDC), South Africa's largest finance institution; one for the national shareholding company - United Bank, and four seats for individual national shareholders. The CEO is the default member of the Board.
The third extra-ordinary meeting on Novemeber 28,2015 set a rule that foreign shareholders determine their representation, as do the national shareholder. However, the new decision on February six 2016, reversing the decision of the third assembly, means that any group has a say in the election of any Board member nominated by any of the groups. That gives groups with majority shareholders, the power to determine who is going to be on the Board by the sheer number of votes they hold.
This change has been demanded by the foreign investors, who are from South Africa, in the company. It is not the first time the South Africans have made such demands.
In the 2013 General Assembly, the shareholders revised their Articles of Association, when the South African investors arrived. That included reducing the number of Board members from 12 to nine.
"We knew the restricted voting rights of shareholders would not pass any challenge by a shareholder," Mesfin Abadi, the founding CEO explained. "Now the foreign shareholders have challenged it - and the General Assembly had to revert to the mainstream legal framework."
"What Habesha had previously decided in its third extraordinary meeting was within the bounds of the law," argued Fikadu Petros, lecturer at Addis Abeba University's College of Law & Governance Studies.
Fikadu, author of Corporate Governance under Ethiopian Law, was of the view that "designating different classes of shareholders and assigning a quota representation on the Board of Directors is legally plausible as one way of protecting minority shareholders rights."
Protection of the rights of minority shareholders is done in different modalities.
The Commercial Code of Ethiopia puts such protection under the prerogative of shareholders and to be included in the Articles of Association.
Article 352 of the Commercial Code, titled Rights of Minorities, reads,"where there are several groups of shareholders with different legal status, the Articles of Association shall provide for each group to elect at least one representative on the Board of Directors.
The second extra ordinary decision has done away with the restriction to a maximum of 40pc shareholding by any one shareholder in the company. Now there is no limit restricting the ambitions of anyone.
"It was a high time for us to remove the seal," Mesfin said in justifying the move to do so. "Such restriction would not invite big potential shareholders and it is a diffident thinking."
As early as November 2014, there were media reports in which PPC is said to have declared ownership of a 51pc share in Habesha Cement. Global Cement had reported that PPC acquired IDC's share raising its share to a simple majority, noting that financial closure was scheduled for December the same year.
"That was not true," counters the CEO now. "Their standing, as the company's records show, stands at 31pc and 19 pc to PPC and IDC, respectively."
If PPC has issued such news, it was for the benefit of its other business interests in the stock market, Mesfin added.
Reports in January 2016 show that PPC's cement sales have fallen by three percent, while its international business recorded an eight per cent decline.
Habesha started on a high horse promising its shareholders dividend in less than three years, when it started selling shares eight years ago.
Credit to the promoter Eskinder Desta of Habesha Capital Services, a protégé of Ermias T. Amelga for the inital stage was superb. In many ways Eskinder emulated Ermias' business model of Access Capital Services, and close to 16,000 people bought 292,000 shares out of the total 600,000 raising 150 million Br when initial public offerings closed in 2010.
Shareholders, if not disengaged, are furious about the failed promise of payback in less than three years.
"I considered it a lost case way back and moved on," said a shareholder who had bought 15 shares and did not even attend the meeting on Saturday. "I knew about the meeting but did not even bother to go, I had other priorities."
Several other shareholder Fortune talked to, expressed discontent with the progress of the company.
Falling behind schedule is not unique to HCSC, but other cement producers, such as Derba and National materialized their goals after an average of two to three years delay; HCSC is late by six years.
"Finance was at the heart of the problem and the shareholders are to blame," said Mesfin Abadi, CEO of the company and an active player since inception. "Had the shareholders put up the amount of equity shares required to match the approved loan from the Development Bank of Ethiopia, this would not have happened."
The impressive performance of the company was immediately faced with a stumbling block. In 2011, the state-owned Development Bank of Ethiopia (DBE) backed out of its commitment to avail the 1.5 billion Br finance, that was conditional on the company's ability to raise the remaining 30pc equity share from outside.
That was the point where 'the valued shareholder", as Gizaw Teklemariam founding board member described them, appeared to rescue the share company that was on the cliff.
Additional loan agreements were signed in late November 2013 between Habesha, DBE and the Preferential Trade Area (PTA) Bank, the financial arm of the Common Market for Eastern & Southern Africa (COMESA). The PTA Bank is co-financing the Habesha project by lending 50 million dollars.
Things moved forward in the last two years and Habesha has once again promised its shareholders that it will start the trial production in one year, after reporting the developments to date.
The delay, however, came with its harsh consequences of investment capital soaring from the start up capital of 130.1 million dollars, to 154.5 million dollars in 2015.
To meet this, the Board has approved the sale of new shares to increase paid up capital by 46pc. This was announced on the sector's renowned website, globalcement.
Despite all the shortfalls and bumpy roads, Habesha in June 2015 commissioned WASS, an international consulting firm, identifying a potential for expansion.
"I see a big company taking a foothold in all this," a shareholder and expert in the sector said" but I also saw a race to have monopoly and domination by shareholders."
The new changes have facilitated the South African investors having majority share and control of the Board, he surmised.