VANCOUVER, BC--(Marketwired - June 02, 2015) - Urban Communications Inc. (TSX VENTURE: UBN) Vancouver-based Urban Communications Inc. ("Company"), one of the country's first telecommunications companies to deliver Gigabit Internet service to the home, announces that litigation has been commenced by a former director, officer and significant shareholder against the Company, three of its current directors and officers, one of its subsidiaries and the spouses of two of the current directors and officers.
The Company has not yet filed a defence in Court to the action, but the Company and its directors and officers completely and categorically deny all of the allegations, which are without merit, and have instructed legal counsel to vigorously defend the action.
The claims, none of which have been proven in Court, are based primarily on an allegation that the purchase of the subsidiary was fraudulent for the purposes of the current directors and officers taking over majority ownership of the Company, that the consideration paid was misrepresented and not properly disclosed under Canadian securities laws and regulations, and that the transaction was oppressive and a breach of fiduciary duty by two directors. Additional claims relate to private transactions between the claimant and some other directors.
The remedies sought by the claimant include an order to set aside the agreement for the purchase of the subsidiary and a return of funds, and for orders removing three directors and officers of the Company and appointing alternate directors, an injunction preventing the three directors from dealing with their shares, and special and punitive damages.
The claimant is a control person of the Company. The Company is pursuing a company controlled by the claimant for substantial indebtedness claimed by the Company. Concurrently with the Court action, the claimant has given notice to nominate an alternative slate of directors for election at the next Annual General Meeting scheduled for June 30, 2015.
The Company has instructed legal counsel to defend the action and to file a counterclaim that will allege certain breaches of fiduciary duty and breaches of confidence obligations by the claimant, and misrepresentations by the claimant that have caused the Company damages. It is the view of the Company that the action by the claimant is a subterfuge for his own attempt to take control of the Company without complying with the takeover provisions prescribed by securities laws and regulations by taking over the board of directors, and that it is an attempt to avoid the consequences of a Court action by the Company to recover the indebtedness claimed from his company.