Court Orders CAC to Probe Company Amid Shareholders Dispute
The Federal High Court in Abuja has ordered the Corporate Affairs Commission (CAC) to launch a comprehensive investigation into Sochem Construction Chemicals and Industries Nigeria Limited. The decision, delivered by Justice J. O. Abdulmalik, directs the CAC to scrutinize the company’s administrative affairs, financial transactions, and overall business practices.
The court has also mandated that the company pay 35% of its earnings from incorporation to the judgment date to three minority shareholders: Mr. Ramjee Yogasundaram, Mr. Ramjee Damodaran, and Mr. Ramjee Mohankumar. Additionally, the company’s directors, Mr. Arunachalam Venkateswaran and Venkateswaran Malathy, have been ordered to jointly pay N300 million in damages for negligence and breach of duty.
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Background:
In a petition filed in 2022 by the three petitioners against Sochem Construction Chemicals and Industries Nigeria Limited, a company in which the petitioners – Mr. Ramjee Yogasundaram, Mr. Ramjee Damodaran, and Mr. Ramjee Mohankumar made investments. Court evidence revealed that the petitioners collectively invested US $174,825.00 into the company, demonstrating their substantial financial commitment to the venture.
However, as the company grew, the minority shareholders became increasingly marginalized. They alleged that the company’s directors, Mr. Arunachalam Venkateswaran and Venkateswaran Malathy, systematically excluded them from financial decisions and denied them access to crucial information about the company’s performance and profits.
Attempts to resolve the dispute failed, leading the minority shareholders to seek legal recourse. In 2022, they filed a petition (Number FHC/ABJ/PET/35/2022) with the Federal High Court in Abuja through their lawyer, Ikechukwu Ikogwe Esq. The petition accused the company’s management of oppressive and unfairly prejudicial conduct, citing violations of the Companies and Allied Matters Act, 2020.
The case brought to light a series of allegations, including financial mismanagement, lack of transparency, and breach of fiduciary duty. Despite their significant initial investment, the petitioners argued that they had been unfairly treated and denied their rightful participation in the company’s affairs and profits.
The respondents claimed they had injected an additional US $24,950.00 into the company to keep it afloat. However, they failed to provide concrete evidence to support this assertion, which ultimately weakened their position in court.
Court`s Decision:
The court issued an order compelling the Corporate Affairs Commission to conduct a comprehensive investigation into Sochem Construction Chemicals and Industries Nigeria Limited’s affairs, including its administrative practices, business transactions, earnings, and financial records.
The petitioners were granted a 35% share of the company’s earnings from its incorporation date until the judgment date.
The company and its directors were ordered to provide accurate accounts of all earnings and calculate the petitioners’ 35% share.
The court ordered Mr. Arunachalam Venkateswaran and Venkateswaran Malathy to jointly pay N300,000,000.00 (Three Hundred Million Naira) as general damages for negligence and breach of duty.
The CAC was directed to initiate proceedings against the company, with 35% of the proceeds from asset sales to be remitted to the petitioners.
A 10% yearly interest was awarded on the total judgment sum until full payment.
Claims against the 4th and 5th Respondents were dismissed due to insufficient evidence.
