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PS. And the EY....they has resigned as the auditor as if nothing happened.....No problem, no questions asked. Oh yes, I forgot, they "do not take responsibility for the financial statements on which they form an opinion".....It would be nice if at least they took responsibility for their opinion based on which the investors form their opinions......
ELREY: well, I sympathise very strongly with you and with other investors who’ve lost money in this. It’s quite an unusual set of circumstances though. A largely overseas company headquartered in the UAE, majority-owned, even after listing in London, by individuals who are nationals of neither the UK nor the UAE. And with the means, if they should need it, to salt money away and to cover their tracks as they do it. It’s also wrong to place much confidence in the opinion of any professional experts, in any walk of life, whether auditors in an investment context, surveyors when buying a house or “competent persons” lending their reputations to a resource company’s prospects. There’s been a number of dodgy companies brought to the London market in the last twenty years or so which should never have been allowed. The investment banks introducing them have clearly had a far greater interest in the fees they’ve earned than in protecting the interest of investors or the reputation of London as a place where fair and honest dealing is the norm. And you’re right, the overseers in London are toothless, as a result of being either grossly underfunded or else wholly incompetent. Someone needs to be made an example of, to discourage the others.
As to the rights of shareholders - they own the business and hire the management. If the latter are so dishonest or incompetent as to drive it to bankruptcy, the shareholders are always the ones who carry the can. They can’t expect to benefit from the potential upside in their investment without accepting the risks. If they lose their investment following the creditors’ needing to safeguard their own interests by appointing a receiver, then they are de facto disenfranchised and lose control of the company, along with any financial interest if there are insufficient funds remaining to meet the claims of the creditors - and the claims of the accountants, lawyers etc. who swarm over companies in this situation.
I think the investment banks introducing such companies to the market should be required to examine their businesses and accounts in detail, and give an opinion on them, for failures in which they should be liable, at law and in a financial sense.
OofyProsser
"As to the rights of shareholders - they own the business and hire the management. If the latter are so dishonest or incompetent as to drive it to bankruptcy, the shareholders are always the ones who carry the can. They can’t expect to benefit from the potential upside in their investment without accepting the risks. If they lose their investment following the creditors’ needing to safeguard their own interests by appointing a receiver"
I get that but the process hasn't been followed. Finablr has never officially gone into administration. Yes, the fraud has been discovered, and yes, it was investigated. But no actual administration. At some point Prism Group just made the bid paying $1 and the deal was simply accepted by the Finablr board. How? This clearly isn't right, is it? There is a process to it and there is a process for creditors to follow too: pursue legal action, obtain judgement, force company into administration, enforcement, recover what's left, sue management and BOD individually (misappropriation / insider fraud). All bankrupt companies go through the process. I still can't see how it is possible (let alone legal) to proceed with sale for $1 without any shareholders vote while the company is still operating (clearly BOD was, if they approved the sale)?
Am I missing something?
Indomie
I agree. The scary thought is that it can really happen anywhere, anytime, and in any company. Literally anywhere. And nobody will even lift a finger to prevent / prosecute those responsible for that mess. It was well over $1billion for goodness sake, imagine what's going on behind the closed doors in all those listed companies with "trusted" BODs where people invest their hard earned...Terrifying.
Bunch of crooks all of them I have lost £2399 on this company
Hope our CEO can sleep at ni
ELREY: I think the Finablr situation has been complicated by the multiplicity of jurisdictions in which it operates and the inexperience in these matters of the UAE authorities. In addition, Finablr’s fx company in the UAE was the biggest remittance agent for money from workers in the UAE to the sub-Continent, and the UAE has been extremely keen to keep it operating. There are bank creditors in the UAE and in India - lots of them. The fact that it’s quoted in the UK is largely irrelevant to the UAE authorities, whose problems are more complicated than the interests of UK shareholders. The attachment below gives a sense of the issues:
https://www.tamimi.com › a-tale-of-...
A tale of corporate insolvency options for distressed debtors - Al Tamimi & Company
As a result of the internal investigations conducted at the parent entity level (Finablr), in early March 2020, the UAE Central Bank announced, ...
ELREY: I’m sure people on here will have seen this, but in case they haven’t, the Companies House pages for Finablr plc include a First Gazette Notice informing its readers that “unless cause is shown to the contrary, the company will be struck off the register and dissolved by the Registrar of Companies at the latest by 11 March 2022.
Yea I read that
Companies House just emailed me for Finablr name after I contacted them last week asking about progress on Fin
Bowlers12: the thing is, if Finablr plc is struck off and dissolved, the LSE denial of permission becomes academic, surely? I’m no lawyer but that would be my guess. I’m sure there are legal avenues by which a company dissolved in this way can claim back its assets (if any) from the Crown at a later stage but I imagine it is a rigmarole, time-consuming and expensive. And I don’t think Finablr has a company Secretary currently, does it? The reason for the move to strike it off seems to be Finablr’s failure to file its accounts. They don’t seem to be n a position to do this, and don’t seem to be in a hurry to satisfy Companies House.
OofyProsser
Thanks, Yeah I've seen that. It's just a register, it means nothing. When I was chasing debtors we were told that this is a standard procedure by Companies House when the company fails to submit the required documents. We were also told that HMRC and/or creditors can apply at anytime to reinstate the company to the Companies House Register if it has already been struck off. They can then force it into compulsory liquidation in an attempt to reclaim the money they are owed. Apparently that's the way it works: creditors have to first force the company into compulsory liquidation if they want to reclaim the money they are owed. Normally if the company is still trading and there are still assets left, obtaining a favourable judgement and appointing High Court enforcement officer is enough to seize goods or repossessing property. Obviously here it's not that simple because there there are no assets left. Therefore our best bet would be to force the company into compulsory liquidation first and then go after the individuals who perpetrated the fraud. That's the theory. In practice, go and try finding some Indian / Arab executives who just stole a billion dollars in the middle east and conduct a successful investigation / prosecution ;) Trust me, with that kind of money a new identity is not an issue in some parts of the world.
That is fine Indomie but I don't think this helps us please tell me if I am wrong
ELREY: yes, you’re right, there’s virtually zero chance of shareholders rescuing anything from this disaster. Shareholders have been extremely unlucky, the management has been either wholly incompetent or corrupt and the system is not designed to offer them any protection or compensation.
AIM seems to me to be worse. The market there is virtually unregulated, shocking really (though you’d also have lost all your investment in NMC, Finablr’s FTSE100 sister company). I think the only reasonably safe investments are among FTSE100/250 companies with a UK domicile and UK management. There’s no worthwhile due diligence performed on any of these overseas-domiciled companies which get a quote in London. The investment banks introducing them couldn’t care less about investors and nor could the regulators.
OofyProsser
Thanks, question: do you generally have any knowledge about the rules governing the sale of a listed company (or its subsidiary) lets say in a normal civilised environment (not in the middle east)? It needs to be approved by shareholders right? Is it 50% plus one or other majority that is required? I was just thinking, Shetty owns 64% or so shares in Finablr, if he simply agreed to it the deal could go through. Or, if he's under investigation and huge irregularities (fraud) are being discovered etc. maybe there are some rules allowing BOD to take over the control of the entity and simply sell company without his consent providing it is in the "best interest of the company" in the circumstances? Could this be that simple?
ELREY: Shetty’s assets in the UAE and the UK are frozen, I think. I don’t think he’d be allowed a voice in what’s happening to Finablr. In the UK, where a company is insolvent, you’d normally see an Administrator or Receiver appointed and he’d get on with working out whether it could be rescued and if not, what its assets were worth and how they should be shared out. There’s a set schedule for this, orders of priority, starting with HMRC (I think) and the lawyers/accountants handling the dissolving of the company, then secured lenders and then unsecured lenders/trade creditors/employees etc. If there’s insufficient assets to meet every one of these creditors, the equity owners (shareholders) get nothing. If there’s a surplus, it’s shared between the shareholders pro-rata. In Finablr's case, the chances of any surplus are infinitesimal. In the UAE, I’m not sure what the process is. It ought to be very similar but I don’t recall an Administrator being appointed, just a couple of investigation firms appointed to inquire into what had gone on and a creditors’ committee set up. So precisely how they got from being declared insolvent to being bid for at £1 by Prism, and that bid accepted, is a mystery to me. The important thing, however, is that it was insolvent (very) and there doesn’t seem to me to be any way, in any jurisdiction, in which the shareholders would be involved in any vote to decide its fate, or receive any financial payout.
OofyProsser:
"So precisely how they got from being declared insolvent to being bid for at £1 by Prism, and that bid accepted, is a mystery to me"
Correct. They haven't gone go into administration, have not appointed any insolvency practitioner or administrative receiver either. I just did some reading on "insolvency" that could be a key to the mysterious sale. The interesting part was that "The principal focus of modern insolvency legislation and business debt restructuring practices no longer rests on the liquidation and elimination of insolvent entities but on the remodeling of the financial and organizational structure of debtors experiencing financial distress so as to permit the rehabilitation and continuation of their business" and then "Implementing a business turnaround may take many forms, including sale as a going concern.....". The question that remains is: how? How come BOD just agreed a sale for $1 without shareholder vote?
PS. Even in my bravest dreams I don't expect to receive any financial payout, just want to understand the process. Wonder who could shed any light on that sale process? Any idea where to go with it? Clearly it cannot be a complete mystery, it must have been done based on something and there must be people who at least understand the logic behind the process.
Another intriguing part of the from 17 December 2020 is:
" Further to its announcement on 6 October 2020, the Company today announces that it has entered into a definitive agreement with Global Fintech Investments Holding AG ("GFIH"), an affiliate of Prism Group AG ("Prism") to sell to GFIH the entire issued share capital of Finablr Limited" and then "The completion of the Transaction is subject to customary conditions, including the receipt of certain regulatory approvals".
Do you think that "shareholder approval" could in fact be included in the "customary conditions" term mentioned in RNS? That would basically mean that BOD "has entered into a definitive agreement to sell" with Prism on behalf of Finablr and that is now subject to customary conditions (read: shareholder approval) and certain regulatory approvals. Or am i just making this up?
In the first RNS mentioning the sale dated 06 October 2020 they DID say that "After due consideration the Board has approved the offer and the Company will proceed to negotiate a share purchase agreement with Prism documenting the terms of the transaction and seek shareholder and regulatory approval".
ELREY: no, sadly I can’t shed any light on this. I’ve concentrated on the bottom line, which is that I can’t see any chance at all of the old Finablr’s shareholders getting anything out of it. Perhaps UAE law is different or perhaps they’re making it up as they go along. Or maybe some step was taken in the process that we haven’t heard about. I’ve no idea. It’s new to me, that a company is sold without apparently being put through a process of administration. I do feel great sympathy for the shareholders, who’ve been robbed in record time, with no recourse.
OofyProsser
No problem, thanks for responding.