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Apr 4, 2005

Supreme Court ruling sought on removal of B.T.L. directors

After four hours of legal wrangling, the case of Government, joined by the Michael Ashcroft controlled E-COM Limited, versus Jeffrey Prosser?s Belize Telecom and I.C.C. over interpretation of the Articles of Association rested their submissions before Chief Justice Abdulai Conteh. In a strange pairing, Opposition Leader Dean Barrow representing E-Com and Solicitor General Elson Kaseke representing the Attorney General are on the same side, with Lionel Welch and B.Q. Pitts representing I.C.C./Belize Telecom. Barrow opened the presentations explaining that what is being sought is the court?s declaration on the removal of directors and the resulting relief that such a judgement would warrant. Barrow explained that it is his understanding that the articles are saying that the holder of the majority of C-shares, apart from the holder of the special share, may appoint directors, as long as it does not exceed half of the board, meaning they can appoint four of the board?s eight directors. The Articles of Association provides that B-shareholders get to appoint two directors, C-shareholders four directors, and the Government appoints two.

As it now stands, Jeffrey Prosser is in possession of the Special Share after the Musa administration vested him with authority as an agent. However, Solicitor General Kaseke told the Court that G.O.B. has asked Prosser to return the Special Share, but the American tycoon is refusing to do so. This, Kaseke says, is the point of all the contention because Prosser believes that because he is in control of the golden share, he can appoint directors. It is the first time that Government has given up control of the Special Share, which the Chief Justice chided the Solicitor General, is “to the detriment of the Articles.” Barrow further explained that under Article Eighty-eight of B.T.L.?s Articles of Association, the Government is entitled to appoint two directors no matter the circumstance. However, with the C-Directors it is different. Under section Ninety-D2 of the Articles, these directors, numbering two, are appointed only when a combination of circumstances occur. That is, the appointer must hold the Special Share together with holding thirty-seven point five percent of C-shares or more. It is a fluid situation, said Barrow. It would appear then, Barrow contended that G.O.B. can revoke the Special Share authority it gave to Prosser, dump his two appointed directors and get on with the business of running the company. Barrow also argued that since Prosser no longer holds thirty-seven point five percent of the ordinary C-Shares, he cannot maintain appointment of Ninety-D2 directors. The loss of this special status then reverts the company to the way it was before Prosser assumed the Special Share, meaning that the majority owner of the C-Shares can appoint all four directors.

In rising to make his presentation, the Solicitor General adapted Barrow?s submissions but emphasized that Prosser, by refusing to return the Special Share, is causing the problem. Kaseke says the trouble is that Prosser, because he is still physically in possession of the Special Share, erroneously believes that he can appoint directors. Kaseke said that when someone other than G.O.B. is holding the Special Share, appointment of directors is still at the will and consent of government as that person would only be acting as an agent of Belmopan.

When he rose to offer a response, attorney for I.C.C./Belize Telecom, Lionel Welch, argued that the declaration being sought in the Supreme Court is jumping the gun and that what ought to have been done was to exhaust the dispute settlement process internally before going before the C.J. Welch argued that Ninety-D2 appointed directors are immune from removal by majority of C-shareholders and that since the Articles are silent on removal of directors appointed by majority C-shareholders, the Board should have resorted to Chapter Thirteen of the Company?s Act for direction of how to remove directors when appointer loses thirty-seven point five percent of shareholdings. Essentially Welch contends that the issue ought to have been handled by the Board of Directors, and failing that, taken to the general membership for resolution. But that argument is fraught with pitfalls as the very directors who would have decided on the issue are themselves the subject of the dispute. As it now stands, Kaseke says even if they would agree to a board meeting, it would still be bogged down from the get go, as neither side wants to recognize a Chairman. Prosser believes he is in control of the board, but Kaseke says that is not the case. In return, Prosser absolutely rejects Dr. Carla Barnett, the government?s choice for Chairman of the Board.

The Chief Justice did not mince his words when he told the Solicitor General that the way government has handled the whole B.T.L. fiasco is confusing to the court and that the situation undermines employee morale and puts small shareholders at a clear disadvantage. The C.J. again chided the government for allowing sovereignty over the B.T.L. issue to be handled in a Miami Court. ?The proper thing to do when conflict arises in company law,? says the Chief Justice ?is to have the interpretation of the law given by a court in the country where the company is incorporated.? And while he will not make pronouncements on the Miami Court ruling, Conteh criticized parts of the judge?s ruling, at one point saying that courts should not disrespect each other or cast aspersions. “Some of what she [Justice Ursula Ungaro-Benages] said sail close to crossing the line,” said Conteh. The Chief Justice has reserved his judgement on the matter for nine-thirty on Tuesday morning.

Viewers please note: This Internet newscast is a verbatim transcript of our evening television newscast. Where speakers use Kriol, we attempt to faithfully reproduce the quotes using a standard spelling system.

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