SHC orders Unity Foods Board reconstitution

November 06, 2026 (MLN): The Sindh High Court (SHC) has directed Unity Foods Limited to fill vacant positions on its board of directors in a manner that gives Wilmar Pakistan Holdings Pte. Limited and/or its group a majority, bringing a potential resolution to the management deadlock at the listed food company.

The direction was issued through a consent order dated October 30, 2026, in four connected company petitions (JCM Nos. 13, 14, 46 and 57 of 2026).

The court directed that casual vacancies be filled in accordance with the Securities and Exchange Commission of Pakistan's (SECP) directions dated September 3, 2026, under the supervision of SECP counsel Mayhar Kazi.

Independent directors required under the law will remain outside the Wilmar majority arrangement. The court also recorded that Muhammad Farrukh, petitioner in JCM No. 13/2026, would exercise his voting rights to facilitate Wilmar's majority representation on the board.

However, the order does not resolve the separate applications seeking appointment of a provisional manager. These applications, filed by Wilmar and Dubai Islamic Bank (DIB), remain pending, with further arguments scheduled for November 18, 2026.

Board falls below statutory requirement

The proceedings followed an urgent application highlighting that Unity Foods, a public listed company, was operating with only two directors against the statutory minimum of seven under Section 154(1)(d) of the Companies Act, 2017.

According to the court order, several directors, including the chief executive, resigned between January and March 2026. The Chief Financial Officer and Company Secretary subsequently resigned in September.

In response to the board vacancies, the SECP issued a letter on September 3, 2026, under Section 474 of the Companies Act, directing the two remaining directors to fill the casual vacancies and subsequently appoint a chief executive under Section 187(1).

The directions had remained unimplemented, prompting the matter to be brought before the court.

Four petitions, competing interests

The connected proceedings involve competing claims by shareholders and a secured creditor over the management and future of Unity Foods and its subsidiary, Unity Wilmar Agro (Private) Limited.

In JCM No. 13/2026, Muhammad Farrukh, who holds 13.25% of Unity Foods, filed a petition under Section 286 of the Companies Act, 2017.

In JCM No. 46/2026, Unity Enterprises (Private) Limited and Farrukh approached the court in relation to Unity Wilmar Agro, in which the petitioner holds a 14% interest.

Wilmar Pakistan Holdings, which holds approximately 38% to 42% of Unity Foods' shareholding, filed JCM No. 14/2026 seeking winding up of the company under Section 301(g)(iv) of the Act, alongside the appointment of a provisional manager.

Meanwhile, Dubai Islamic Bank, a secured creditor with approximately Rs1.841 billion in outstanding principal financing, filed JCM No. 57/2026 under Section 286, seeking the appointment of a provisional manager. The bank's outstanding principal financing was stated to be equivalent to approximately 15.4% of Unity Foods' paid-up capital.

Wilmar raises Rs3bn receivables discrepancy

During the proceedings, Mansoor Ali Ghangro, counsel for Wilmar Pakistan Holdings, traced the dispute to February 12, 2026, when concerns emerged over Unity Foods' financial affairs and the CFO reportedly declined to sign the company's financial accounts.

He highlighted an unexplained discrepancy of approximately Rs3 billion in trade receivables and argued that the company's board had become dysfunctional.

Ghangro maintained that Wilmar had never exercised control over Unity Foods' management, despite its shareholding position. He also argued that fresh board elections would not adequately address the underlying governance issues.

Wilmar's counsel further maintained that the group could not consider any proposal to buy or sell shares without first conducting a forensic audit of the company's financial affairs.

Farrukh opposes winding up, cites management agreement

Arshad M. Tayebaly, counsel for Muhammad Farrukh, opposed both the winding-up petition and the appointment of a provisional manager.

He argued that transferring control of a large industrial enterprise operating multiple factories to an external manager without relevant industry expertise could adversely affect its business and operations.

Tayebaly told the court that his client remained willing either to purchase Wilmar's shareholding or sell his own stake. In the interim, he proposed filling the vacant board positions or holding fresh elections.

He also referred to a shareholders' agreement dated December 21, 2025, under which his client had undertaken to cooperate with Wilmar to enable the Singapore group to assume full management and control of Unity Foods.

The counsel further cited the company's March 5, 2026 disclosure to the Pakistan Stock Exchange, which stated that Wilmar Group had assumed management and control of the company.

He argued that the SECP's September 3 directions remained unimplemented due to Wilmar's default.

DIB seeks neutral manager amid financial concerns

Shahan Karimi, counsel for Dubai Islamic Bank, supported the appointment of a neutral provisional manager, citing the mass resignation of directors and an FIR alleging mismanagement and financial irregularities.

He argued that the continuing conflict between the major shareholder groups could prevent the board from functioning effectively, even if fresh elections were held.

The court questioned why the secured creditor opposed filling the vacant board positions if its primary concern was recovery of outstanding financing and it was not seeking the company's winding up.

SECP supports provisional management option

Representing the regulator, Mayhar Kazi informed the court that the SECP had submitted its paragraph-wise comments and that regulatory intervention was supported by existing legal provisions.

He submitted that an administrator or provisional manager could be appointed under Section 288 of the Companies Act, 2017.

Given the hostility between the major shareholder groups, the SECP considered such an arrangement a potentially appropriate interim remedy, as the existing conflict could lead to another board deadlock even after fresh elections.

Wilmar majority arrangement agreed

During the hearing, the court explored whether appointment of a provisional manager would be the most prudent interim arrangement.

Tayebaly informed the court that his client would have no objection to Wilmar securing a majority on the board and would exercise his voting rights to facilitate that outcome.

Ghangro subsequently agreed that the casual vacancies could be filled in accordance with the SECP's September 3 directions, subject to the assurance regarding Wilmar's majority representation.

The resulting consent order provides a route to restore the company's board composition without immediately handing over its management to a provisional manager.

Further hearing scheduled for November 18

The court has fixed November 18, 2026, for further arguments on the applications seeking appointment of a provisional manager, including CMA Nos. 144/2026 and 772/2026.

The parties will also assist the court on the question of maintainability of the company petitions filed by Muhammad Farrukh.

The order additionally addresses pending service of proceedings on several respondents.

Wilmar International Limited, Wilmar Trading Pte Limited, Kuok Khoon Hong, Lie Hong Hwa and Darwin Indigo, who have addresses in Singapore, are to be served under Order V, Rule 25 of the Code of Civil Procedure.

Dubai Islamic Bank was also directed to provide alternative addresses for former directors who have left Unity Foods.

Background: A widening governance and financial dispute

The dispute follows the December 21, 2025 shareholders' agreement under which Wilmar Group was to assume management control of Unity Foods. The company subsequently disclosed the arrangement to the Pakistan Stock Exchange. The SHC later directed the parties to pursue mediation in their dispute.

In August 2026, the FIA's Corporate Crime Circle Karachi registered an FIR following an SECP referral. The case involves allegations of a Rs44.7 billion discrepancy between Unity Foods' published financial accounts and its internal SAP records.

Unity Foods has maintained that the company itself is not named as an accused in the FIR and that the allegations concern individual conduct, remain unproven and are subject to due process.

In September, a court denied bail to four current and former company officials. Separately, the SECP has issued final notices in an investigation into alleged insider trading in Unity Foods shares.

The latest SHC order addresses the immediate board-composition crisis, but the underlying disputes over financial affairs, management control and the appointment of a provisional manager remain before the court.