CEO secures acquisition of company in a shareholder dispute under section 286 of the Companies Act

In a landmark decision, the Lahore High Court’s Pindi bench has developed the doctrine of “ENE” (Early Neutral Evaluation) in a petition filed by ABS & Co that has resulted in the successful acquisition of the company and a resolution of shareholder disputes.

The petition was filed by Faisal Zafar, CEO and director of Genome Pharma, a pharmaceutical company, under section 286 of the Companies Act 2017 on the basis of oppressive management. The petitioner was represented by Ahmer Bilal Soofi from ABS & Co.

It was argued that the management had committed “certain illegalities” in running the company’s affairs, including non-payment of salary to its employees, non-payment of electricity bills, non-compliance with guidelines given by the Securities and Exchange Commission of Pakistan (SECP) etc.

The court concluded that the matter could be resolved through “early neutral evaluation” (ENE) — a form of alternative dispute resolution in which the two parties concerned invite a third one to give an opinion on the merits of their case. The judgment, authored by Justice Jawad Hassan, explained the methodology of settling commercial disputes through alternative dispute resolution (ADR). The court observed that the concept of corporate dispute resolution through mediation in commercial matters was not alien to the system and recommended the parties to attempt mediation under the court’s supervision.

Accordingly, a process of mediation was started. Ahmer Bilal Soofi and Usman Jillani from ABS & Co’s team in Islamabad represented the client during the negotiations securing important concessions that allowed the petitioner to acquire the company from the other shareholders. The agreement was submitted in court to bring it on record and ensure a beneficial outcome for the client.

Lawyers from our dispute resolution practice along with the corporate and commercial teams worked together to secure a positive result for the client. The team comprised of Ahmer Bilal Soofi, Usman Jillani, Fatima Midrar, Aiema Asrar and Samar Masood.

 

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