The case involving some Airtel Malawi plc shareholders, who dragged the company to court, has gone for mediation following an inter-partes hearing on Wednesday.
The shareholders lawyer Burton Mhango confirmed in an interview yesterday that the case is set for mediation after High Court Judge Jabbar Alide heard an application for security for costs by the company.
Two Airtel Malawi plc shareholders Frank Harawa and Chandrakant Makadia dragged the company to court in March this year for alleged breach of disclosure requirements in initial public offer (IPO) and want the mobile firm to be de-listed from the Malawi Stock Exchange (MSE). Airtel Malawi listed on MSE in February 2020.
In a Commercial Case Number 83 of 2021, the two, through their lawyer Mhango, believe the company and its directors breached statutory duty to disclose the pending litigation as prescribed by law.
He explained that the mediation was procedural in terms of the courts (High Court Civil Procedure Rules), which provide for mandatory mediation for all matters except a few matters that are exempted as per the rules.
“This case is not exempted from mediation and, therefore, it has been scheduled to go for mediation session, which will start on July 5 2021. The expectation of parties is that the matter could be resolved at mediation stage because there are a lot of benefits to that,” said Mhango.
Mediation is a form of alternative dispute resolution (ADR), a forum where parties to the case are given opportunity to resolve their dispute without necessarily having to go for trial.
“When a matter like this goes for trial it means that each party exposes itself to potential adverse ruling of court. Furthermore, full trial means parties have to incur huge costs of litigation and also get exposed to orders for party-and-party costs. Litigation can also take long time to conclude,” observed Mhango.
Airtel Malawi plc public relations manager Norah Chavula yesterday promised to revert when contacted, but she had not done so as we went to press.
It is expected that the aggrieved shareholders and all Airtel Malawi plc directors will be individually represented during the mediation session.
Harawa and Makadia accuse Airtel Malawi plc of concealing to prospective investors information about a K5.7 billion court case when it was being listed on the stock market in 2019.
They contend the concealment, including botched profit forecast, deprived them and other potential investors a fair and reasonable opportunity to assess the potential loss that the company could suffer and clear reflection of its liabilities if found liable in the said pending litigation.
The plaintiffs also say they proceeded to acquire shares and to make investments in the company and feel the directors breached their fiduciary duty to act reasonably in the circumstances and to disclose details of any pending litigation as required by law.
The case in question, currently in the Supreme Court of Appeal, relates to a K5.7 billion demand by the Malawi Revenue Authority (MRA) as non-resident tax, dating to 2012.
Besides, the claimants argue that a financial statement on December 20 2019 provided in the prospectus indicated a profit forecast of K18.088 billion for the year-ending December 2019, but by the 31st of that month, it showed a profit of K15.908 billion, which is 12.05 percent lower that the profit forecast.
Based on this, the claimants believe the directors fraudulently misrepresented the company’s financial status, involved and participated in unlawful and unfair trade practices, as well as deceived prospective investors.
Apart from Airtel Malawi plc, the other defendants in the case are Plastone Alex Chitsime, Charles Mustafa Kamoto, Alok Bafna, Ian Ferrao, Neelesh Pratap Singh and Kayisi M’bwana Sadala.