Lagos: The Federal High Court in Ikoyi is set to commence hearings in a case challenging the proposed sale of Lafarge Africa Plc to the Chinese company, Huaxin Cement Limited. This development represents a significant legal hurdle for Lafarge Africa and its parent company, Holcim Group, after the court recently dismissed a motion challenging its jurisdiction over the matter.
According to News Agency of Nigeria, the lawsuit was brought forth by Strategic Consultancy Limited, a Nigerian firm and shareholder of Lafarge Africa. The firm asserts that the divestment of Lafarge’s 83.81 percent majority shares held by Holcim Group, in favor of Huaxin Cement, was conducted in a ‘surreptitious’ manner. The pending sale has sparked controversy as it raises questions about its compliance with Nigerian laws, including the Companies and Allied Matters Act (CAMA) 2020, the Securities and Exchange Commission Act, and the Nigeria Investment Promotion Commission (NIPC) Act. These laws are especially pertinent concerning minority shareholder rights and transactions with foreign entities not registered in Nigeria.
Lafarge Africa, a publicly listed company on the Nigerian Exchange, gained prominence in the local cement market after acquiring significant stakes in three former government-owned cement firms during the privatization exercises of 2001 and 2002. Holcim Group, a Swiss-based multinational and majority shareholder of Lafarge Africa, had previously informed the Securities and Exchange Commission (SEC) of an ongoing internal restructuring. However, Strategic Consultancy Limited claims that the share divestment was executed without transparency and without offering local shareholders the right of first refusal.
The lawsuit, filed against Lafarge Africa, Holcim Group, the Nigerian Exchange Limited, and the Central Securities Clearing System, contends that the transaction undermines minority shareholder rights and involves unlawful dealings with unregistered foreign corporations. During a pre-trial session on May 15, presided over by Justice Lewis Allagoa, the court dismissed Lafarge’s preliminary objection contesting its jurisdiction. The objection was presented by Babatunde Fagbohunlu (SAN) for Lafarge and Uzoma Azikiwe (SAN) for Holcim Group, but was overturned following arguments by Dr. D.A. Awosika (SAN), counsel for Strategic Consultancy Limited.
In an unexpected development, the court ordered that Caricement BV (Netherlands) and Associated International Cements Ltd (England) be added as the fifth and sixth defendants, respectively. These entities were identified as beneficial owners of the shares in question. The court also granted permission to serve legal documents to these new parties outside of Nigeria. Justice Allagoa ruled, ‘The court also granted leave to serve the new parties with court documents outside Nigeria. It is hereby ordered that the persons sought to be joined herein and hereby joined as prayed, and leave to issue and serve the originating summons out of jurisdiction is hereby granted.’