This answer is written by AI. The information provided in this response is intended for general informational purposes only and should not be considered as legal advice. Do not rely solely on the information provided in this response for any legal decisions. Consult with a qualified legal professional before making any decisions.

Can Oasis Argue EBITDA Target Met and Share Forfeiture Valid?

Question from sijan, Can Oasis Argue EBITDA Target Met and Share Forfeiture Valid?

Answer from AI:

Understanding EBITDA and Contractual Obligations

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company’s overall financial performance and is often used as an alternative to net income. In this case, the Shareholders’ Agreement (SHA) between Oasis and MLSP stipulated that MLSP would pay for the drawdown of shares only if the EBITDA target of 300 million was met within two years from November 18, 2019.

Arguments for EBITDA Target Being Met

Oasis can argue that the EBITDA target was substantially met based on the following points:

1. **Materiality and Substantial Performance**:
– The difference between 299.96 million and 300 million is minimal (0.04 million or 0.013% of the target). Courts often recognize the doctrine of substantial performance, which means that if a party has performed enough of the contract to fulfill its essential purpose, minor deviations may be overlooked.
– Oasis can argue that the 0.013% shortfall is immaterial and does not significantly affect the overall financial health or performance of the company.

2. **Force Majeure and Unforeseen Conditions**:
– The COVID-19 pandemic was an unforeseen event that significantly impacted global economies. Many contracts include a force majeure clause that excuses performance due to extraordinary events beyond the control of the parties.
– Oasis can argue that the pandemic qualifies as a force majeure event, and the slight shortfall in EBITDA should be excused due to these extraordinary circumstances.

3. **Intent and Purpose of the Agreement**:
– The primary intent of the EBITDA target was likely to ensure the company was financially stable and performing well. Oasis can argue that achieving 299.96 million in EBITDA demonstrates that the company is financially stable and that the target’s purpose has been fulfilled.

Validity of Share Forfeiture

Oasis can argue the validity of the share forfeiture based on the following points:

1. **Quorum and Conflict of Interest**:
– The SHA or the company’s bylaws likely outline the quorum requirements for board decisions. If the decision directly affects the interests of the two MLSP directors, they may have a conflict of interest.
– Oasis can argue that the decision to send the share forfeiture notice was made in good faith by the remaining director to avoid a conflict of interest, which is a common practice in corporate governance.

2. **Notice and Resolution**:
– The resolution to send the share forfeiture notice was passed by the Oasis director. If the company’s bylaws allow for decisions to be made by a single director in the absence of others due to conflict of interest, this action could be deemed valid.
– Oasis should ensure that all procedural requirements for sending the notice and passing the resolution were followed according to the company’s bylaws and the SHA.

Legal Precedents and Jurisdiction

In Nepal, the Companies Act, 2006, and relevant case law will govern the interpretation of these issues. Courts in Nepal may look at similar cases and principles of contract law, such as substantial performance and force majeure, to make a determination.

When to Seek Legal Advice

Given the complexity of this case and the potential for significant financial implications, it is crucial for both parties to seek legal advice. A legal professional can provide personalized guidance based on the specific terms of the SHA, the bylaws of the company, and relevant Nepalese law.

For more information on the Companies Act, 2006, you can refer to the [Nepal Law Commission’s website](http://www.lawcommission.gov.np/en/archives/category/documents/prevailing-law/statutes-acts/companies-act).

In conclusion, while Oasis has several arguments to support its position, the specific facts and legal context will ultimately determine the outcome. Consulting with a legal professional is essential to navigate these complex issues effectively.

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