A protracted battle of shareholders in a local energy firm may require the intervention from Rwanda’s executive as one of the warring parties doesn’t believe his interests are protected.
Shareholders in Omnicane, an Energy production company disagreed on how the company was renamed and how share capital was redistributed and this prompted them to go to court.
In March 2010, Dr. Jacques Ntogue flew into Rwanda and established REFAD Rwanda as majority share holder and Managing Director. His intentions were to invest in the lucrative energy production sector.
For three years, Dr. Ntogue made 60 trips in Rwanda and spent 668 days in the country as he worked tirelessly to implement his project.
He had to carry out; Feasibility Study, Environmental and Social Impact Study, Compensation of people along the road to the project site, and the PPA ( Power Purchase Agreement ) was signed with EWSA, the Utility name at that time.
Dr. Ntogue told Taarifa in an exclusive interview by email, “Omnicame came in October 2013 and wanted to get into the project.”
Interested in being part of this energy project, Omnicane appointed Stucky -a Swiss company to perform Due Diligence on REFAD GROUP and REFAD Rwanda and also check the project economics. Two months later, Stucky recommended the project and gave the Green light.
“It was agreed between REFAD GROUP AG and Omnicane that Omnicane gets 51% shares in the REFAD Rwanda company. Few months later Omninare acquired 51% share and REFAD GROUP AG 49%. REFAD Rwanda certificate of Incorporation was updated accordingly. A Shore holder agreement was signed,”remembers Dr. Ntogue.
With all the shareholding paperwork attained, Dr Ntogue says that Omnicane started ignoring the shareholder agreement.
“Omnicane signed a partnership with Mecamidi, a French EPC (Engineering and Procurement Construction ) company to develop power projects in Rwanda, ignoring agreement with REFAD GROUP AG (RGAG),” he said.
According to him, a year later that partnership failed. Omnicane signed a Construction contract with Fair Construction and also did not respect it. The court had to intervene.
“After 3 years and many efforts the Power plant was built and started producing electricity. REFAD Rwanda started generating revenues. But Omnicane kept refusing to apply basic Rwanda Corporate law, such as Shareholder meetings, involving a 49% shareholder in key decisions such as getting corporate loans, signing significant contracts.”
He further explains that REFAD GROUP AG complained about these practices and Omnicane was forced to disclose some information.
“This is how REFAD GROUP AG came to know that Omnicane had given a loan to REFAD Rwanda, but under which conditions, for what purpose, and For which duration,”Dr. Ntogue says, adding, there was “No Document was provided. No Evidence of loan.”
He noted that Ominicane recognised and wrote that Omnicane REFAD Rwanda Directors received Bonuses for running the company. In other words Omnicane which has 51% be given a loan to which the director took bonuses yet ignored REFAD Rwanda founders who still have 49% of REFAD Rwanda.
“That only happens in the Omnicane jungle. REFAD GROUP AG understood that Omincane practice had “Only one goal sucks money from REFAD Rwanda,” Dr. Ntogue says.
With such a situation, REFAD GROUP AG requested for an audit of the company and as required, the auditor would be chosen by the two parties.
However, “Omnicane refused and appointed its own auditor and dictated the auditor report. REFAD GROUP AG rejected this report,” Dr. Ntogue said.
Seemingly without any tangible consensus, in 2018, Omincane invited REFAD GROUP AG in a meeting in Frankfurt, Germany in order to resolve issues. “Omnicane offered to buy the 49% share of REFAD GROUP AG in REFAD Rwanda for U$600,000.”
However, “REFAD GROUP AG rejected the offer but instead also offered to buy 51% shares of of Omnicane in REFAD Rwanda for U$12,000,000 (almost the double of what Omnicane was offering), Omnicane refused,” Dr. Ntogue recounted to Taarifa business Desk.
In another twist of situation, early in 2019, REFAD GROUP AG ( RGAG) was informed that Omnicane has issued new shares in REFAD Rwanda, bringing RGAG from 49% to less than 2%.
“All this was conducted without holding a General Meeting, nor Shareholders’ meeting, no Report, no money transfer, NOTHING. How can this be possible???” Dr. Ntogue wondered.
Dr. Ntogue also finds it “really strange that RDB implemented this change without cross-checking. Omnicane went on and changed the company name from REFAD Rwanda Ltd to OMNYHYDRO which is in itself an act of theft.”
He notes that all these actions of capital restructuring and renaming the company happened when REFAD Rwanda was already in operation and generating revenues. “How can one explain the capital increase? Is there a new project? A new investment? No explanation.”
Under these circumstances, REDFAD GROUP AG appealed to RDB which acknowledged the problem and gave One month to Omnicane to revert back and restore the initial shares structure.
After a month, the RDB registrar requested a meeting and asked Omnicane to restore the capital structure. Omnicane agreed during the meeting but did nothing.
A second meeting a month later was requested by the Registrar. “The registrar clearly said that if Omnicane refuses again to implement the changes RDB will effect the change.”
However, during the second meeting, Dr.Ntogue questioned RDB why it could not reinstate the capital structure before all the parties, “RDB said can do it but this is not their preference,” he recounts.
RDB’s reluctance during the meeting duly condemned and stripped REDFAD GROUP AG of its shares.
“In other words one shareholder with 51% share of a company can rob the 49% shareholder? what about the The PPA ( Power Purchase Agreement ) signed with EWSA, the Utility name at that time,” he wondered.
REFAD GROUP AG, faced with this situation, filed a lawsuit. Then Mr. Kris Gahiga that received 5% shares of REFAD GROUP AG , from the chairman, complained to the court that REFAD GROUP AG founder and chairman with 70% shares has no right to sue Omnicane without a mandate from RGAG.
“REFAD GROUP AG provided board resolutions showing that the Chairman has all rights to represent the company. This first issue was solved,” he noted.
Dr. Ntogue questions the rationale of a shareholder with 51% issuing new shares without informing the other party with 49% share. “Can a shareholder ignore the RDB decision?“
“If this was the case how come RGAG asked to buy the 51% share of Omnicane? Even if RGAG has no money does that give Omnicane rights to bend the law ignoring Rwandan Corporate laws?,” Dr. Ntogue questions.
The storm prompted RGAG to appeal the court decision and said it expects the law will be respected to protect foreign investors in Rwanda.
Dr. Ntogue, however, told Taarifa, “Omnicane keeps saying they have friends everywhere in Rwanda and they will delay court decision until I give up.” It should be noted that Taarifa has looked at the court ruling on this matter (RCOM 01657/2023/TC & RCOM 00101/2023/TC)
Dr Ntogwe has to present his case at Commercial court and wait for its decision. It always happen when you partner with unhonwst business dealer. The only and best way u have to handle this situation is to go to commercial court. And it works.