Apr 09, 2009 News
Chief Justice, Ian Chang, granted an interim injunction restraining Guyana Stockfeeds Incorporated from further paying out the sum of $48M, or any sum, as dividends to its shareholders.
The order is as a result of a court action filed by Executive Director of National Industrial and Commercial Investments Limited, Winston Brassington, the plaintiff company in this case.
The judge also granted an order restraining Guyana Stockfeeds Incorporated from further acquisitions and investments between the company and its subsidiaries.
The matter has been adjourned for April 16.
The affidavit in support states that the proceedings as it relates to this case were initially filed in January 2002. On September 29, 2008, Justice Jainarayan Singh gave judgement ruling that the defendant’s issues of four to one shares and 24:1 bonus shares were illegal, contrary to the articles of the Association and void.
It added that the said judge’s direction for correction of the defendant’s register and other consequential directions touching the above ruling have not been put into operation as the defendant secured an interim stay of the said orders pending appeal to the Full Court.
According to the affidavit, the defendant, among other things, has alleged that in the absence of a stay, bankruptcy will set in, loss of confidence in the business and other harm will ensue.
“The plaintiff denies the foregoing. While the stay exists the defendant has proceeded to issue dividends in the form of shares. Managing Director Mr. Badal is stripping the company of its cash balances and making large payouts to related third parties.”
The document also states that the accounts for 2007 recently showed large cash payments to other companies associated with Mr. Robert Badal and there is also the accounts indication that the defendant has purchased the “Popeye’s franchise” from a company that is owned by Mr. Badal which is outside the scope of the business of the defendant.
“More importantly, the recently released accounts (2008) reveal that the “Popeye” franchise was purchased by the defendant for $123M. The defendant, any time now, will pay out approximately $48M to shareholders for dividend based on the 2007 report of which Mr. Badal’s will be based (80% +) on shares allotted before Justice Singh’s decision.”
Further, the affidavit adds, he has relatively recently set up in Trinidad a company similar to the defendant, namely Guyana Stockfeed Limited, and the accounts of the defendant recently received show that $1.3B was transferred from the defendant there allegedly to help the defendant.
“NEOFI (National Edible Oil & Fats Inc) with a building at Farm East Bank, Demerara was acquired at a cost of $100m of the defendant’s resources. This later company was almost wholly owned by Mr. Badal. And there are other similar matters which are being investigated.”
According to the affidavit, time is of the essence in this matter especially in respect of the above mentioned dividend which may be disbursed imminently. The Trust Company is under instructions to pay $48M in bonus to shareholders, it states.
“Consequent on the above illegal or invalid issues, the Plaintiff showed before Justice Singh and maintains that its share in the Defendant Company was reduced from 38 per cent to seven per cent while Mr. Badal’s shareholding therein increased from 50.03 per cent to 88 per cent.
“The defendants are concerned that in the absence of an immediate check on the foregoing and other extravagance, the financial standing of the Company will be deliberately adversely affected.”
The affidavit says that the plaintiff company will be gravely damaged if the defendant is permitted to continue on its present course of dispersing the funds of the defendant.
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