GoldQuest-affiliate’s takeover of Ferntea illegal - Ferntea AGM postponed in dispute over Suntex stake

By Duruthu Edirimuni

Suntext Holdings Ltd, a company connected to GoldQuest, the controversial network marketing company that’s making waves in the stockmarket, was last week accused of an illegal takeover of a Sri Lankan company

In what could become a landmark court case, the District Court of Colombo issued a restraining order on Suntex Holdings Ltd, the major shareholder, saying it had violated exchange control regulations where a foreign entity is barred from buying shares in a retail trading company, which has a capital less than US$ 1million. Suntex is closely linked to GoldQuest.Suntex has a 55 percent majority stake in Ferntea Ltd, scene of a major takeover some months back. The court order which also restrained Suntex from using its 55 percent stake in voting at Ferntea’s AGM scheduled for Friday, November 11, came after a Ferntea shareholder filed a petition objecting to the Suntex stake on the grounds of exchange control violations.

Ferntea has a share capital of Rs 60 million, short of the Rs 100 million or US$1 million required for any foreign investment to come in. The aggrieved shareholder said Suntex’s share purchase cannot be used for voting rights at Friday’s AGM. The petition also said voting rights with regard to the said shares cannot be used and added Suntex Holdings is backed by a pyramid scheme which the Central Bank has advised against, and as such, the manner in which Suntex Holding Ltd is using its controlling interest is detrimental to Ferntea’s interests. The AGM was however not held on Friday after Ferntea chairman Anura Fernando filed action in the same court seeking an order to put off the AGM since Suntex’s voting rights have been blocked by court. Goldquest, which the Central Bank declared was running a pyramid scheme and warned the public against any involvement has been heavily involved in the stockmarket. Last week it purchased a large stock of John Keells Holdings shares to add to its stake in the Colombo bourse. However its efforts to break into National Development Board were blocked after some share transactions were not recorded.