A group of shareholders of IPWA Plc has raised that poor corporate governance practices are negatively affecting the operations of the company.
The shareholders alleged that the board and management of the paint-manufacturing company were running the company like a private company without allowing inputs from other shareholders who could have provided additional insights.
They noted that the company has not held annual general meeting for several years while it has also been in default in terms of annual financial statement.
The management of the company however said while IPWA, like other paints and manufacturing companies, had suffered a setback in recent years, the company is on the rebound.
The management said it has always remained opened to shareholders’ suggestions and inputs, urging all shareholders to join hands with the board and management to sustain the current recovery of the company.
The management said the petition and the recent negative reports against the company were orchestrated by few shareholders who appeared to have ulterior motives than the general interest of shareholders of the company.
“The people who are complaining are known to us. But our surprise is that they have already petitioned the regulatory authority, the regulatory authority has written us, and we have given detailed explanations to the authority. But we are at a loss as to why this hurry on their part to go to the press. We would have thought the right thing to do is to wait for the outcome of their petition. We, as a company, are not interested in engaging in a media war with anyone. We would rather give respect to the authority who are looking into the matter,” the management stated in response to enquiry by The Nation.
A shareholder, Mr Biodun Oyapero, said investors in the company are bearing the brunt of the poor corporate governance, calling for regulatory intervention to protect shareholders’ interest.
“We invested in the company on the purview of regulatory assurance that our investment shall be protected. We do not know what is going on in IPWA. We went to them and advised that we can work together but they kept dribbling us. There has been no change in the board structure for a long time.
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“By not calling annual general meeting, they denied shareholders the opportunity of asking questions. The company’s problem is not beyond redemption. We expect the market regulators to intervene,” Oyapero said.
Another shareholders, Mr. Adeyinka Olumide-Fusika, said the issue at IPWA was a systemic failure, which requires systemic solution.
“The regulators are the ones that have the power to address the issues. They know the rule and they should apply it. This is not a situation that the market regulators – Securities and Exchange Commission (SEC) and Nigerian Exchange Limited (NGX) should allow to happen,” Olumide-Fusika stated.
IPWA was delisted in May 2016 by the NGX under regulatory delisting window of the Exchange. The NGX undertakes regulatory delisting mostly against companies that had consistently not been able to meet post-listing requirements, including submission of timely financial results. Most of the 124 companies that have been delisted from the NGX fall under regulatory delisting.
The management of IPWA stated that the directors of the company were not averse to new ideas and inputs from other well-meaning shareholders.
They said with the rebound in the operations of the company, the directors have set in motion process to hold annual general meeting.
“We are glad to say that while the company had been incurring some losses, but right now we are returning to profitability, production performance is on the uptick. We can’t be averse to fresh ideas or fresh blood, nobody is an island of knowledge,” the management stated.
The management said the company has also moved from a very poor funding situation to a better place, which is complementary to ongoing improvement in production, adding that the company will at the right time consider any need for additional capital injection.
They decried the arm-twisting tactic of the shareholders who petitioned the regulatory authority and while that process is ongoing, launched a campaign of negativity to portray the company in bad light.
“The management wants to know why they have been to several media houses. You can’t be a lawyer and a judge at the same time. You have to wait for the outcome, the regulatory authorities they petitioned must have something to say about their petition. Let’s wait for the outcome of the regulatory authorities’ inquiry,” IPWA stated.
Audited report and accounts of IPWA for the year ended December 31, 2021 showed that the company recorded a turnover of N323.31 million. Gross profit stood at N93.35 million while the company closed the year with a net loss of N29.70 million. Total assets and shareholders’ funds stood at N1.20 billion and N812.85 million respectively.
The chemical and paints sub-sector showed a mixed grill with some companies posting appreciable profitability while others have remained in losses. For instance, CAP Plc, the industry leader, recorded a net profit of N2.64 billion in third quarter 2024, as against N1.56 billion in third quarter 2023. Turnover had risen from N15.26 billion by September 2023 to N23.65 billion in third quarter 2024.
On the other hand, Premier Paints, which is still listed on the NGX, recorded a net loss of N20.63 million in 2021, with a turnover of N101.26 million.