The National Bank supervises the meeting after previously rejecting two boards.

After shareholders twice elected a new board of directors that was rejected by the National Bank of Ethiopia (NBE), members of the first board of directors of Lion International Bank, seen here at the first general assembly of shareholders on October 29, 2008, are to be replaced with members elected under the supervision of the NBE.

Lion International Bank (LIB), whose previously elected boards of directors were rejected by the National Bank of Ethiopia (NBE), nominated 14 people for its new board of directors, in a general assembly called and supervised by the central bank on Saturday, August 21, 2010.

The two boards of directors that had been elected at the bank's general assemblies before, one held at the Sheraton Addis and the other at Axum Hotel on May 30, 2010, were rejected by the NBE due to a breach of law.

Five laws in particular were breached during the second meeting, which infringed on the shareholders' rights, according to NBE.

The list of members LIB had sent for approval on Wednesday, July 21, 2010, was rejected by the NBE, who ordered the previous board of directors to resume work until a new board has been elected.

NBE called a general assembly of the shareholders on Saturday, August 21, which Teklewold Atenafu, governor of NBE, and Getahun Nana, vice governor of Financial Institution Supervision, supervised at the assembly hall inside the National Bank.

Starting in the morning, the atmosphere remained tense throughout the meeting. Before entering the building, shareholders had to pass heavy security in the form of guards that were assigned to the NBE about a year ago.

Teklewold opened the meeting by explaining the reasons why the central bank had to call and supervise the meeting, with Samora Yenus (Gen), the army's chief-of-staff, Sebehat Nega a veteran fighter for the Tigrian People's Liberation Front (TPLF), and Berhane Gebre Michael (MajGen) a.k.a. Wedi Medhin, sitting in the first row of the assembly in front of him.

NBE had to take over the election of the board of directors of the bank following the two elections the board had conducted itself which had been found unsatisfactory, according to the governor. It was also to protect the minority shareholders (who make up close to 80pc of the total shareholders) of LIB, in its capacity as a regulatory body of financial institutions.

After the governor, Samora took the floor to voice his disappointment in the tension that had been created among the shareholders. Many of the small shareholders are former army members who had invested in the bank to secure their retirements and he was there to protect their rights, according to Samora. The decision of NBE to reject the previous elected board of directors, he disagreed with.

"I respectfully request, as a citizen, for NBE to give me the report it used to make its decision to reject the last board of directors," he said.

Aside from the minutes of the general assembly that was held at Axum Hotel, taken during the election of the board of directors, NBE used no other report to decide that there had been gross breaches of law, the governor responded.

Shareholders nominated names for the board of directors, declared some unfit, and some even demanded that none of the previous board members be re-elected.

Despite objections to the fitness of people nominated for the board, their names cannot be taken off the list of nominees, unless the person who nominated them withdraws it after hearing the objection, Teklewold insisted, trying to bring the meeting to order. It is the law that at least three people from the previous board of directors must be elected to the new board, he said.

The meeting dragged on until late afternoon while shareholders, who were seemingly divided into two groups, tried to get the people of their choice elected to the board.

Ultimately, 14 people were elected: 11 will serve on the board and three are kept in reserve.

LIB, which has 6,392 shareholders with a paid-up capital of 200 million Br and a subscribed capital of 432 million Br, made a 50 million Br profit (unaudited) in the 2009/10 fiscal year. NBE is expected to approve the new board after conducting a background check.