Leadership (Abuja)
Aminu Imam
13 August 2008
For the first time in 40 years of Company Law Enactment in Nigeria (1968-2008), a Federal High Court, Lagos, has lifted the veil of incorporation of City Express Bank Plc and held the directors liable without limit for the debts and other liabilities of the bank, pursuant to Section 506 of Companies and Allied Matters Act, 1990 (CAMA).
Consequently, the four directors of the defunct bank, City Express Bank Plc, against whom the suit was originally initiated have been ordered to pay the sum of N44, 684,424.00 to the chief registrar of the court.
The order, according to the trial Justice Tijani Abubakar, must be complied with, within 21 days, which will elapse in a forthnight.
Abubakar also ordered that the money should not be dormant, and consequently, the custodian of the sum was directed to keep the money in an interest yielding account in a bank.
The order came in a suit initiated by the customers of the defunct bank, Branco Venture Nigeria Limited, and its Managing Director, Alhaji Saliu Iyiola, against some directors of the defunct bank, Dr. S. Adedoyin, Mrs. Sola Adeoti, Alhaji Gambo Magaji and Kayode Folorunsho.
City Express Bank had since been liquidated, following the bank's consolidation programme. Essentially, United Bank for Africa (UBA) had bought the bank over.
Following a failed business transaction between the customer and the liquidated bank, the former had gone to court, claiming the sum, while he also asked the court to hold the erstwhile directors liable in the botched deal.
In his considered decision, Justice Abubakar held the directors liable over the bank's indebtedness to the plaintiffs. That ruling, is however, being challenged by the petitioner, Nigeria Deposit Insurance Corporation (NDIC).
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