Shareholders of Dalol Oil, one of the pioneers in local oil dealings, claim that a major share of the company was unlawfully taken by a foreign company. Shareholders argue that the incoming of the new company is suspicious and against Ethiopia’s business laws.
According to the claim that shareholders shared with Capital, the company called Gulf Prime Investment Plc has become the major shareholder without their knowledge.
The claim of the shareholders indicated that to elevate the financial constraints of the oil dealer, the board of directors of Dalol approved floating of un-sold shares to interested buyers.
Based on that, Gulf Prime, a company based in Dubai, UAE and oil and lubricant suppliers of Dalol have bought the said shares taking 22,348 shares worth 22.348 million birr.
As per the decision of the board, the company was invited to take the shares, at least in the settlement of two installments in a year’s time.
The board had also passed a decision that the payment should be conducted as per the country’s investment rules which means in foreign currency.
Besides that, the board directed Dalol’s CEO to handle the responsibility of verifying the required legal documents of the company and the process prior to the final endorsement of the general assembly.
However, shareholders expressed their concern that the company may not follow legal procedure to take the major share of the company as per the direction given by the former board. “I have a doubt that the company is registered as per the country’s trade laws,” one of the shareholders, who demands anonymity told Capital.
The board chaired by Tadesse Bekele, with the inclusion of a few members from the former board of directors was assigned in late 2021.
Shareholders argued that by now Gulf Prime should settle the total share amount, which is over 22 million birr, “but we have been informed by management of Dalol that the company so far settled nine million birr.”
They added that despite the share sales being supposed to be conducted in foreign currency, a confirmation on which currency was used was not cleared up.
They added that there is a conflict of interest between the local company and the new major shareholder; since Dalol is aligned with the new major shareholders who supply lubricants and oils, “we have also concerns regarding the supply, whether it is managed under competitive bidding manner or not,” shareholders described their confusion on the matter.
Sources said that if Gulf shall fully pay the whole amount of the shares offered, the company stands to take one-third of the stake at the company which makes it by default a quorum for the general assembly.
As per the information Capital obtained from the Ministry of Trade and Regional Integration, Gulf Prime Investment registered on August 24, 2020, at Kirkos Sub City with six million birr capital for engaging in the transport cargo trucks sector.
However, the company has also two licenses that were registered on the same date of February 21, 2020, but their status is canceled according to the data secured from the ministry’s ‘Business License Checker’ page.
The document indicated that one of the licenses registered involved the business of ‘import trade in petroleum and petroleum products and related products’ and the other license registration indicated the company’s involvement in Ethiopia is quoted as ‘wholesale trade in solid, liquid and gaseous fuels and related products’.
According to the country’s investment law a foreign company that would like to invest in Ethiopia should transfer at least USD 200,000 as initial investment capital.
“If a foreign company would like to invest jointly with local companies the initial amount that flows to the country shall be USD 150,000,” Daniel Getnet, legal advisor and foreign direct investment consultant said.
He told Capital that for the Gulf Prime case, the company should have at least channeled USD 500,000 to take a share worth over 22 million birr.
Experts said that the company’s license showed that the company’s capital was six million birr, which is about USD 117,000 at the current exchange rate which is far from the required initial investment amount for a joint venture or sole investment.
Biruk Girma, CEO of Dalol Oil, rejected Capital’s request for clarification, while he insisted that the board chair is the required body to answer the case. Capital’s effort to talk to the board chair was also unfruitful.
Getu Desta, who is stated as manager on the license of Gulf Prime, told Capital that Dalol is the right body to respond about the share ownership of Gulf.