Interim order preventing sale of software firm Interblocks

Two co-founders of Interblocks Ltd., which specialises in software for banking industry, have obtained an ex-parte interim order from Colombo Commercial High Court against the planned sale of shares of the company allegedly at an undervalued price.

Having considered the petition, affidavit, documents and oral submissions of the learned counsel for the petitioners, Colombo High Court Judge Laffar Thahir granted three interim orders as prayed for and issued notice on respondents returnable on 4 May.

The petitioners in the case are Faiq Faaiz and Surendra Parthapa Dharmadasa Kohombange whilst the respondents are in numerical order Interblocks Ltd., Colombo 6., Paulovale International Ltd., British Virgin Islands, Peoples Venture Investment Company Ltd, Colombo 8, Nigel Patrick O’Shea, UK, Dinesh Lasantha Rodrigo, Pannipitiya, Oliver Lal Dharmapalam Mt. Lavinia, Nigel Patrick O’Shea, Trustee Interblocks Employee Share Ownership Trust, Colombo 6, Corporate Management Ltd, Colombo 4 and Loh Boon Fah, Singapore.

 The petitioners and the 2nd, 3rd, 5th, and 6th respondents along with few others were the founding shareholders of Interblocks in 2000.

Petitioners prayed for an interim order preventing respondents from acting in terms of provisions of the Company’s Articles of Association of the first respondent company and shareholders agreement and changing the status quo of the company’s shareholding, operations, intellectual property rights, assets belonging to the first respondent until the hearing and final determination of the application.

They also prayed for interim order preventing the 2nd and 9th respondents from directly or indirectly dealing with the petitioners shareholding in the first respondent company until the hearing and final determination of the application. Additionally they prayed for an interim order preventing the 1st to 9th respondents from transferring, selling, mortgaging, encumbering shares of the petitioners, assets and properties belonging to the first respondent or changing the status quo of the first respondent as at 8 April, 2011 until the hearing and final determination of the application.

The petitioners in their petition has alleged that at a highly low price the respondents 2nd to 7th had noticed the sale of entirety shares of the respondent company including petitioners to the 9th respondent (Singapore party) on all or no basis.

Petitioners alleged that no audited accounts have been prepared or circulated among shareholders for shareholders to identify and value the company shares and assets whilst no AGMs had been held either. Without having access to the audited accounts and details of the company’s operations both here in Sri Lanka and abroad, petitioners have maintained that it was impossible for them to blindly agree for the purported offer which is detrimental to their interest. The offer price indicated is Rs. 30 per share which petitioners challenge since in their estimation the price should be in the range of US$ 4 to 6 per share.

Interblocks designs and develop software products and provide engineering service for value added services to their customers or subscribers such as ATM switch (iSwitch), Internet payment Gateway (iPay), Card issuing and acquiring system (iCard), Internet banking solution (iBank) and iMobile.

M.U.M. Ali Sabri, Attorney at Law with K. Karunaratne, Attorney At Law and R. Dissanayake, Attorney-at-Law instructed by Paul Ratnayake Associates appeared for the petitioners.

The Daily FT in its Monday 25 April edition will publish a fuller version of this story.