Commercial High Court issues interim orders against unlawful transfer of majority shares of Ascot Le

On consideration of a Petition filed by Mohammed Firdouse Farook, the Commercial High Court by  an Order dated 25 January issued three Interim Orders against Ascot Holdings PLC, Ascot Leisure Ltd. and Fairway Holdings Ltd. from acting on an unlawful transfer of shares of  Ascot Leisure Ltd. from Ascot Holdings PLC to Fairway Holdings Ltd.

Ascot Holdings which is a publicly quoted holding company with shares in several wholly-owned subsidiaries including Ascot Leisure, recently saw a change in its Directorate following the acquisition of the majority shareholding in Ascot Holdings by several parties acting in concert.

The parties acting in concert upon obtaining a majority shareholding in Ascot Holdings moved to effect changes in the Board of Directors of Ascot Holdings.

Farook, a shareholder of Ascot Holdings, was as a result of the above recently appointed to the Board of Directors of Ascot Holdings. In his Petition Farook states that he upon his appointment to the Board of Directors came to discover that the previous Board of Directors of Ascot Holdings had prior to their removal/resignation unlawfully transferred 75% of the shareholding of Ascot Leisure to Fairway Holdings.

Thus, by his application Farook brought to the attention of Court that the purported transfer of shares had been affected by the previous Board of Directors to the benefit of Fairway Holdings in a manner contrary to the Article of Association of Ascot Holdings and in violation of the rules of the Colombo Stock Exchange (CSE) through representations made by the means of a false announcement dispatched to the CSE, making the purported transfer null and void in the first instance. Furthermore, Farook also called into question the bona fides of the entire transaction given that the value paid as consideration for the shares in question (a mere Rs. 20,000,000 along with a future capital infusion of Rs. 50,000,000 to be made into the company) was substantially lower than the asset value of Ascot Leisure (valued at Rs. 140,000,000), especially in the light  that several members of the previous Board of Directors of Ascot Holdings PLC i.e. – Rohan Abhaya Iriyagolle and Niroshan Dakshina Gunaratne had direct ties  to  Fairway Holdings Ltd.

On hearing the submissions made on behalf of the Petitioner, Commercial High Court Judge Hon. Ruwan Fernando in the first instance issued three Interim Orders against Ascot Leisure Ltd. from Ascot Holdings PLC to Fairway Holdings preventing the parties from taking any steps to give effect/act upon the unlawful transfer.

Thereafter, notice of the Interim Orders were served on the Respondents who appeared before Court on 26 February and moved to file their Objections to the Petitioner’s Application.

The Petitioner was represented in Court by Dr. Harsha Cabral, President’s Counsel, who appeared with counsels Nadun Wijayasriwardena and Yasith Hirimburegama  instructed by Julius and Creasy Attorneys-at-Law, Ascot Leisure and Ascot Holdings PLC were represented by M.U.M. Ali Sabry President’s Counsel, who appeared with counsel Migara Cabral on the instructions of Julian Francis Attorney-at-Law, Fairway Holdings was represented by Chandaka Jayasundera, President’s Counsel on the instructions of Upendra Gunasekara, Attorney at-Law.