Brazil judge invalidates decisions of Oi shareholders meeting

The acting judge of the 7th Business Court of Rio de Janeiro, Ricardo Lafayette, has ruled that the extraordinary general assembly held by the shareholders of operator Oi be invalidated, reports Correio Braziliense. The magistrate ordered that the Securities Commission (CVM) and the Commercial Registry of the State of Rio de Janeiro (Jucerja) refrain from filing the minutes of the meeting, or, if already done so, that they be suspended, until further judicial order. 

On 7 February, a group of 35 shareholders, with a 34 percent stake in Oi, held an assembly, in which they decided that Oi's CEO Eurico Teles should be removed from the board. The meeting was attended by Portuguese shareholders Pharol, Societe Mondiale and its backer businessman Nelson Tanure, a minority shareholders association and BNDESpar, the shareholder arm of the National Economic and Social Development Bank, which abstained from voting because it considered the meeting to be irregular.

Oi's legal department has taken against the shareholders, reports O Globo. The telecom operator is filing appeals with the Brazilian Securities and Exchange Commission (CVM) and the National Telecommunications Agency (Anatel) requesting the opening of administrative proceedings to shield the company's operations and ensure compliance with the judicial recovery plan approved by the creditors last December. 

"Processes are being opened in all spheres. The goal is to arm the company against shareholders. The company's interest needs to be preserved," one industry source said. According to a source familiar with the lawsuit, Oi has gathered documentation that indicates possible breaches of fiduciary duty, non-compliance with confidentiality obligations and market manipulation by shareholders. 

The Association of Minority Investors (Aidmin) has said it will take all necessary steps to safeguard the interests of minority shareholders in Oi, including seeking justice in the US, reports O Estado de Sao Paulo. The statement follows the injunction issued by the Rio court. Aidmin argues that the meeting deliberated only on measures to be taken to address the conduct classified as "illegal and fraudulent" attributed to the president of Oi, Eurico Teles, and the financial director, Carlos Brandao. The association alleges that Oi diverted cash for the payment of executive bonuses. The association also sent a request to the Public Ministry of Rio de Janeiro to investigate the situation.