French giant loses battle for Portland Cement boardroom
Workers offload cement at EAPCC. Lafarge has lost a court battle to regain boardroom control in the cement maker. Photo/FILE
What you need to know:
High Court declines to overturn ruling made by the Capital Markets Authority (CMA).
Lafarge had petitioned the court to reverse a decision by CMA that effectively barred its nominee from taking a board position at Portland Cement.
The ruling is a huge loss for Lafarge which has been fighting to regain control of the cement firm’s board.
Giant French manufacturer Lafarge has lost a court battle to regain boardroom control at East African Portland Cement (EAPCC) after the High Court declined to overturn a ruling made by the capital markets regulator.
Lafarge had petitioned the court to reverse a decision by the Capital Markets Authority (CMA) that effectively barred its nominee from taking a board position at Kenya’s second-biggest cement producer after the regulator suspended controversial resolutions passed at EAPCC’s annual general meeting.
Justice Isaac Lenaola dismissed the suit, noting that CMA should be allowed to make its decision on the complaint.
“In the meantime, the petition stands dismissed and the petitioners are at liberty to apply once CMA investigations are concluded one way or another,” ruled Justice Lenaola.
The ruling is a huge loss for Lafarge which has been fighting to regain control of the cement firm’s board.
Boardroom power at EAPCC is currently tilted to the Treasury and the workers’ retirement fund NSSF, which are the two other significant shareholders of the cement maker.
Lafarge had challenged the suspension of EAPCC’s annual general meeting resolutions by the capital markets regulator through its subsidiary Cementia Holdings and its proposed appointee to the board Didier Tresarrieuis.
Lafarge has a 41.7 per cent interest in EAPCC and also owns 58.9 per cent of Bamburi Cement.
The Treasury holds 25.3 per cent stake in Portland while the National social Security Fund (NSSF) holds 27 per cent stake, effectively making the government the largest shareholder controlling a combined stake of 52.3 per cent.
Bamburi, a subsidiary of Lafarge, is Kenya’s largest cement maker with a total production capacity of 2.1 million tonnes a year and a market share of 39 per cent ahead of second-placed Portland, which controls 20 per cent of the market.
The judge agreed with EAPCC lawyer Kamau Karori who argued that determining the matters raised in the petition is like usurping the powers conferred on CMA and pre-empting the investigations.
The judge said CMA investigations need to be concluded expeditiously, noting that the matters affect shareholders of the firm.
“Having stated as above, this court is not ready to assume jurisdiction at this stage, and there is nothing to say on the substantive motion so as not to prejudice CMA’s investigations,” said the judge. The decision leaves an open room for further litigation since any of the aggrieved parties could return to court.
The simmering dispute between the government and Lafarge burst into the open last year when government representative stormed out of the meeting protesting the manner in which the annual general meeting was being conducted.
Industrialisation PS Dr Wilson Songa and NSSF executive Gideon Kyengo walked out of the shareholders’ meeting and immediately filed a complaint with the CMA.
The most contentious issue in the resolution was appointment of Mr Tresarrieu, a Lafarge nominee, who was said to have been nominated at the expense of a government proposed nominee Bill Lay.
CMA in December suspended AGM resolutions pending investigations. The resolutions were suspended after the government said its voting rights were ignored when former chairman Mark Ole Karbolo adopted show of hands as the election procedure.
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