The Sindh High Court (SHC) barred the Securities and Exchange Commission of Pakistan (SECP) from according its approval to the decision of extraordinary general meeting of the Jahangir Siddiqui & Company Limited regarding issuance of right shares.
A single bench headed by Justice Amer Raza Naqvi gave the injunction on a lawsuit filed by 10 small shareholders who approached the court to seek recovery of Rs 424.94 million paid to the director of the JSCL as advisory fee.
The petitioner had claimed that the fee in question paid to Ali Jahagir Siddiqui constitutes about 300 per cent of the total expenses of the company. The court had earlier granted an interim stay in respect of such amount on April 9.
During pendency of hearing on the main lawsuit, the petitioner again moved the court to stop the JSCL from convening its EOGM, which was scheduled to be held on September 19, to put into effect any decision/approvals taken in the meeting.
According to the minority shareholders, an EOGM of JSCL was being convened on September 19 and it had been proposed to empower JSCL to raise its capital by Rs 1.144 billion by issuing class preference shares of Rs 10 each.
Moreover, the said notice is extremely cursory and vague in nature and it does not clearly state the benefits that will accrue to the company and also the way and manner in which the funds shall be used to the benefit of the company, they stated.
Furthermore, the said issuance shall also be detrimental to the interest of the minority shareholders but not limited to the petitioner since a 12 per cent per annum dividend on a cumulative basis shall be paid on the issued preference shared, they added.
The petitioner apprehended that if the proposed transaction was allowed, the existing majority shareholders or controllers of the company shall ensure that no money was received by the minority shareholders. Therefore, they pleaded to the court to grant a stay against calling of the EOGM as thousands of the minority shareholders would suffer irreparable loss and the wrongdoers would be allowed to commit another wrong to the company.
The court declared that the stay would remain in field till disposal of a lawsuit.
