The general assembly of Hidasie Telecom, a local telecom products and services distributor, was disrupted in a dispute following a demand by shareholders to remove the board of directors.
The company's sixth general assembly was called for last Sunday, December 23, 2018, to discuss three agenda: to hear last fiscal year's financial report, to consider raising the par value of shares and to decide the size of dividends.
However, the meeting was interrupted by calls demanding the removal of the 12-member board of directors chaired by Yhohannes Abebe over poor performance.
During the opening session of the meeting held at Global Hotel, on Sierra Leone Street, some shareholders called for the election of a new board of directors.
The Chairman, announced that the issue raised was not part of the agenda.
"But if you demand this, we can call for an extraordinary meeting," Yohannes informed the assembly.
He also asked that a vote be held to proceed with the meeting. His call was rejected as the gathering turned into a protest and the back-and-forth berating lasted almost two hours, at which point the board and the management of the company adjourned and postponed the assembly.
"Four months ago we filed a petition requesting the removal of the board of directors, though the meeting was not made part of the agenda," said one of the protesters who asked to remain anonymous.
"No petition was received by the board or the management," Yohannes told Fortune.
Established seven years ago, the company declared a net profit of 138.6 million Br last fiscal year, a 143pc increase from the previous year. Hidasie, founded by former employees of Ethio telecom laid off during a restructuring of the state telecom company, had an initial capitalization of 200,000 Br and 2,508 shareholders and currently employs 4,181 people in temporary and permanent positions. The company has issued one million shares total.
The company's business includes distribution of mobile prepaid cards, SIM cards, bill collection, vehicle maintenance and sales of mobile phones and parts. It operates from nearly 800 outlets and generated 1.29 billion Br in revenues last year, an 18.17pc rise from two years ago.
Gosaye Demissie, CEO of the company, rejects the call from some shareholders and points to the profitability of the company and the fact that the firm is constructing a 620 million Br headquarters in the Hayahulet area.
"Those who raise the call for the board removal are those who want a seat on the board," said Gosaye.
Ephram Birhanu, a trained lawyer and a lecturer at Addis Abeba University, argues that the shareholders' demand for the election of a board of directors is not legally acceptable.
Shareholders can only demand the election of the board of directors in a regular general assembly, if board members were found involved in corruption and other crimes, according to him.
"Even to carry out the demand, one-fourth of the shareholders should agree to call for an extraordinary meeting," Ephram said.
The protest action by some shareholders may have an effect on the company, according to him.
"To hold another meeting, the company will spend money to rent a hall and buy refreshments," he said. "The approval of the minutes of the general assembly will be delayed and dividends will not be paid to the shareholders on time."
The schedule of the next general assembly meeting has not been decided yet, according to Yohannes.
The next general assembly meeting is scheduled for January 7, 2019, according to an official at the Ministry of Trade & Industry.
"We mediated between the two parties, and they have agreed to hold the meeting on the new scheduled date," said this official.