Appeal Court grants interim order on On’ally Holdings shareholder dispute

• By Lakmal Sooriyagoda 

The Court of Appeal has issued an interim order suspending a previous ruling by the Commercial High Court of Colombo. 

This ruling, dated February 15, 2024, restrained the Urban Development Authority (UDA) and On’ally Holdings PLC from interfering with the voting and other shareholder rights of Lanka Reality Investment PLC, the majority shareholder in On’ally Holdings PLC.

The petitioner, Lanka Reality Investment PLC, submitted to the Court of Appeal that 50.8 percent of the ordinary shares of On’ally Holdings PLC, which primarily owns the Unity Plaza building, was purchased through the Colombo Stock Exchange (CSE). It was the position of the petitioner that the Commercial High Court of Colombo, by way of the order dated February 15, 2024, had granted reliefs in favour of the UDA, which in turn affected the 50.8 percent of the shareholding of the petitioner. 

The petitioner further submitted to the Court of Appeal that the Securities and Exchange Commission (SEC) of Sri Lanka, which has been named as a respondent in the Commercial High Court case, has in fact objected to the UDA’s application on the alleged violation of the SEC and CSE rules and regulations. 

Additionally, it was submitted to the court that the SEC has in fact, sought for a dismissal of the UDA’s application in the Commercial High Court. It was the position of the petitioner to the Court of Appeal that the impugned order is misconceived, thus should be reviewed and subsequently overturned. 
Justice D.N. Samarakoon of the Court of Appeal, being satisfied with the documents and submissions made before the court, proceeded to issue notice to parties, including the UDA, Renuka Capital PLC and the SEC, which were respondents in the initial Commercial High Court matter. 

In addition, the Court of Appeal issued an interim order suspending the order given by the Commercial High Court of Colombo, dated February 15, 2024 and further made order restraining the UDA and On’ally Holdings PLC from interfering with the 50.8 percent of shareholder rights of Lanka Reality, the petitioner, in the On’ally Holdings PLC, directly or indirectly, in any manner whatsoever. The notices were issued to be returnable on March 28, 2024 and until such time, the interim order is in operation. 
Counsel Nishan Sydney Premathiratne, with Vikum Jayasinghe and Nimashi Fernando, instructed by Francis Julian, appeared for the petitioner.