KARACHI: The Sindh High Court on Tuesday extended its earlier order to restrain the K-Electric from making any changes in its board of directors till the next hearing.
The Saudi Arabia-based Aljomaih Power Limited and Kuwait’s Denham Investment had last month filed a lawsuit in the SHC stating that they owned 46.2 per cent shares in the KES Power, which is holding 66.4pc shares in the KE.
The plaintiffs argued that any change in board and management of KE could not take place without the approval of 75pc of its stakeholders. On Oct 21, the SHC had restrained the power utility from making any changes in the board of directors till Nov 8.
When the suit came up for hearing before a single-judge bench headed by Justice Adnan Iqbal Chaudhry on Tuesday, lawyers for plaintiffs and KE requested time to file counter affidavit.
The bench adjourned the hearing for a date to be fixed after two weeks and said that it’s earlier restraining order to continue till the next hearing.
Citing the IGCF, Alvarez & Marsal, KES, KE, secretaries of the privatisation commission, power division and the National Electric Power Regulatory Authority as defendants, the plaintiffs stated that the KE was collectively owned and controlled by them and Infrastructure and Growth Capital Fund SPV21 Limited (IGCF).
They alleged that the IGCF in gross violation of the shareholders’ agreement 2008 was attempting to transfer the beneficial ownership effect or management control of the KE in connivance of the Alvarez and Marsal.
The lawyers for plaintiffs, Mehmood Mandviwalla and Hasan Mandviwalla, argued that the Abraaj group had established the IGCF as an acquisition vehicle to acquire the shares of KES and thereafter the plaintiffs, IGCF and KES, entered into a shareholders’ agreement in October 2008.
They maintained that as per the agreement, the board of directors of KE was comprised of five IGCF representatives, four representatives of the plaintiffs collectively, three members of the federal government, one independent director and the chief executive officer.
They further submitted that it was reported in a section of media that the transfer of management control of a large part of KES Power and KE was at advance stages for which a proposal had been filed and was awaiting approval by the grand court in Cayman Islands, a forum where the Abraaj group filed for voluntarily liquidation proceedings in terms of which Alvarez was appointed to take over the IGCF.
The counsel submitted that neither the plaintiffs nor the government were aware of any such transfer of beneficial ownership change in the board or management control of the power utility.
They argued that the plaintiffs were not part of any plan of the IGCF and Alvarez to change the board of directors of the KE, but the same was being discussed by the both defendants through proposals filed in Cayman Islands.
The lawyers contended that it had also come into plaintiffs’ knowledge that IGCF and Alvarez had sent board nominations to the KE on the basis of a transaction in order to hijack the power company bypassing the regulatory framework in Pakistan.
The submitted that the Shanghai Electric Corporation (SEC) continued to renew its mandatory tender offer every six months on the portal of the Pakistan Stock Exchange, which meant that previous transaction of the KE contracted in 2016 with SEC was still not withdrawn causing further concerns in respect of the attempts of IGCF and Alvarez to transfer beneficial ownership or change in the board of directors of KES and consequently the KE.
The lawyers contended that the defendants could not use the jurisdiction of Cayman Islands to unilaterally manipulate the transfer of beneficial ownership of the KE, which was not permissible without the approval of the plaintiffs or regulators in Pakistan.
They further argued that any change in the management control of power utility if approved by the grand court in Cayman Islands would have implications in Pakistan as the KE was regulated under the Pakistani laws.
The plaintiff pleaded to declare the acts of IGCF and Alvarez to transfer the beneficial ownership/change in board or management control of the KE as null and void.
Published in Dawn, November 10th, 2022