AC Network Holding Ltd & Ors v Polymath Ekar SPV1 & Ors [2022] ADGMCFI 0009 (15 November 2022)

AC Network Holding Ltd & Ors v Polymath Ekar SPV1 & Ors [2022] ADGMCFI 0009 (15 November 2022)

The Drag Notice was invalid because the sale was not to a bona fide purchaser on arm's length terms as required by the Shareholders' Agreement. Lux, the purchaser, was controlled by the same party orchestrating the Drag Notice, and the process was self-serving, lacking good faith and transparency. Other procedural objections (pre-emption, 75% approval, founder's shares) were rejected, but the core requirement of bona fide, arm's length sale was not met.

Citation
[2022] ADGMCFI 0009
Parties
First Claimant: AC Network Holding Limited; Second Claimant: AC Pool Holding Limited; Third Claimant: Khalil Mohamed Binladin; Fourth Claimant: Dalia Khalil Binladin; Fifth Claimant: Horizon Light Investments LLC; First Defendant: Polymath EKAR SPV1; Second Defendant: Polymath EKAR SPV2; Third Defendant: Vilhelm Nikolai Paus Hedberg; Fourth Defendant: Ravi Nagesh Bhusari; Fifth Defendant: Ali Hashemi; Sixth Defendant: LUX 2 INVCO; Seventh Defendant: Clara Formations Limited; Eighth Defendant: Ekar Holding Limited
Jurisdiction
United Arab Emirates
Judgment Date
15 November 2022
Procedural Posture
Shareholder Dispute / Commercial / Judgment After Trial
Outcome
Drag Notice declared invalid; further directions for valuation and expert report ordered.
Legal Topics
Shareholders' Rights, Drag Along Provisions, Share Transfer, Bona Fide Purchaser, Arm's Length Transaction, Remedies for Breach of Contract, Company Valuation
Commercial Law Company Law Shareholders' Rights Drag Along Provisions Share Transfer Bona Fide Purchaser Arm's Length Transaction Remedies for Breach of Contract +1 more

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Parties

AC Network Holding Limited

First Claimant

AC Pool Holding Limited

Second Claimant

Khalil Mohamed Binladin

Third Claimant

Dalia Khalil Binladin

Fourth Claimant

Horizon Light Investments LLC

Fifth Claimant

Polymath EKAR SPV1

First Defendant

Polymath EKAR SPV2

Second Defendant

Vilhelm Nikolai Paus Hedberg

Third Defendant

Ravi Nagesh Bhusari

Fourth Defendant

Ali Hashemi

Fifth Defendant

LUX 2 INVCO

Sixth Defendant

Clara Formations Limited

Seventh Defendant

Ekar Holding Limited

Eighth Defendant

Procedural Posture

Shareholder Dispute / Commercial / Judgment After Trial

Legal Issues

  1. 1 Whether the Drag Notice issued on 27 April 2020 was valid under the Shareholders' Agreement
  2. 2 Whether the sale was to a bona fide purchaser on arm's length terms
  3. 3 Whether pre-emption rights were required before Drag Notice

Ratio Decidendi

The Drag Notice was invalid because the sale was not to a bona fide purchaser on arm's length terms as required by the Shareholders' Agreement. Lux, the purchaser, was controlled by the same party orchestrating the Drag Notice, and the process was self-serving, lacking good faith and transparency. Other procedural objections (pre-emption, 75% approval, founder's shares) were rejected, but the core requirement of bona fide, arm's length sale was not met.

Court Disposition

Drag Notice declared invalid; further directions for valuation and expert report ordered.

Orders

  • The Drag Notice issued on 27 April 2020 is declared invalid.
  • The share capital of Ekar Holding Limited as at 27 April 2022 is assessed at US$3 million.