Court to Monitor Quice Foods Merger After Reports of Shareholder Ownership Loss

A Karachi court has ordered judicial oversight of an upcoming Extraordinary General Meeting (EOGM) of Quice Food Industries Limited after minority shareholders challenged the company’s proposed merger with Indus Fruit Products Limited, alleging that the deal could unfairly dilute their ownership.

The order was issued by the South Civil Court on June 9 in response to a lawsuit filed by minority shareholders, including Muhammad Munir Ahmed and Khanani Securities Limited, who collectively hold a 20.04 percent stake in Quice Food. The shareholders are seeking to block the proposed merger, arguing that it undermines minority investor rights.

The dispute centers on Quice Food’s plan to absorb Indus Fruit Products, an unlisted company that was delisted from the stock exchange in 2012. While Quice Food is a profitable listed company, shareholders opposing the transaction argue that the proposed terms disproportionately favor the owners of Indus Fruit Products.

At the heart of the controversy is the proposed share swap ratio under which Quice Food would issue 13.66 shares for every one share of Indus Fruit Products. The plaintiffs described the valuation as excessively high and argued that the transaction could result in significant dilution of existing shareholders while reducing the influence of minority investors.

The shareholders also raised concerns about corporate governance and transparency, citing previous regulatory proceedings involving corporate bank accounts as part of their broader objections to the proposed merger.

After reviewing the case, the court ruled that the plaintiffs had established a prima facie case and that a major restructuring involving substantial equity dilution required enhanced safeguards to protect minority shareholder rights.

The court directed that the company’s EOGM, scheduled for June 23, must allow minority shareholders to fully participate, raise objections, and cast their votes without restriction. It also restrained the company’s directors and management from conducting the meeting in a manner that could impede shareholder participation.

To ensure transparency, the court appointed the Nazir to attend and supervise the meeting and submit an independent report on the proceedings. The court has also requested the Securities and Exchange Commission of Pakistan to nominate a compliance officer to observe the meeting alongside the court appointed official.

The defendants have been directed to submit their written responses and objections before the next hearing as the legal challenge to the proposed merger moves forward.