...Cite inability of plaintiff to provide necessary documents to substantiate its shareholding
The Central Bank of Nigeria, CBN, and FBN Holdings Plc have asked a Federal High Court sitting in Lagos to dismiss a suit filed by an investment firm, Barbican Capital Ltd, over alleged alteration of its alleged 5,386,397,202 units of shares in the bank.
The Plaintiff (Barbican Capital Limited), an affiliate company of Honeywell Group Limited, in suit no. FHC/L/CS/ 1172/24, claimed that over the years and at different times, it cumulatively acquired about 5,386,397,202 shares, representing 15.1 per cent of FBNH overall share listed on the Nigerian Stock Exchange, NSE.
It stated that its shares purchases and dates of issue, were adequately captured by FBNH appointed Registrars, Meristem Registrar and Probate Service Ltd and further acknowledged in the Central Securities Clearing System, CSCS, which contained its value of shares with the bank.
However, FBN Holdings Plc in a written address filed in court in response to the Motion on Notice filed by its counsel, Babajide Koku, SAN, informed the court that the Plaintiff deliberately concealed the fact of an ongoing verification exercise by the Central Bank of Nigeria, CBN, of its alleged significant shareholdings.
The bank stated that the primary purpose of instituting the suit was to circumvent the verification exercise and the decision taken by the CBN against Barbican Capital Limited (Plaintiff).
It stated that on July 7, 2023, the Plaintiff in accordance with the regulatory laws and policies, notified the defendant (FBN Holdings Plc) that it had acquired units of shares and, therefore, held a shareholding amounting to about 4,770.269,843 units of shares. This shareholding was about 13.3 per cent of the Defendant's shareholding.
It stated that by the Central Bank of Nigeria, CBN, guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria (issued pursuant to the Central Bank Act of 2007 and Banking and Other Financial Institutions Act 2004), Financial Holding, Companies (including the Defendant) require prior approval to be sought from CBN before the purchase of a FHC's shareholding of 5 per cent and above. Or, in the event that the share units are purchased on the secondary market, to notify the CBN within 7 days from the date of the purchase to obtain a 'No Objection' or approval from the CBN.
It stated that pursuant to the CBN guidelines, the FBN Holdings Plc vide a letter dated July 10, 2023, notified the CBN of the purported new shareholding of the Plaintiff which exceeded the minimum threshold of 5 per cent shareholding and therein sought the CBN's approval.
The CBN responded to the defendant's letter and requested the plaintiff to produce documents for the verification process of the shareholding.
Sequel to the receipt of the CBN's letter, the defendant forwarded the same to Barbican Capital Ltd and recommended that the plaintiff (Barbican Capital Ltd) should provide the requested documents relevant to the verification process, but the plaintiff failed, refused and neglected to provide all the requested documents.
Consequently, the CBN vide a letter dated 29th of Jan 2024 informed the defendant that it was only able to verify only 3,110,400.619 units of shares out of the plaintiff's then 4,770,269,843 billion shareholding due to insufficient documents.
The defendant added that it communicated the verification status to the Barbican Capital Ltd., however the plaintiff failed, refused and or neglected to provide the relevant documents to the CBN till date.
Meanwhile, prior to the CBN letter of January 29, 2024, the defendant published its Unaudited Financial Statement for the year ended 2023 in December 2023.
Therein, it captured the plaintiff's shareholding to be 4,886,062,743 in accordance with data gathered from its members' register.
"Further to the verification by the CBN, (the defendant's Regulator), the defendant has published its Audited Financial Statements for the year end 2023 and its Unaudited Financial Statements for Q! 2024. As a regulated entity, the Defendant revised the stated Plaintiff's shareholding to be in accordance with the verified shareholding by CBN.
"Rather than regularise its status with the CBN by providing relevant documents to the CBN necessary for the verification of its unverified shareholding, the plaintiff has instituted this suit in a bid to activate machinery of justice to compel the defendant to defy its regulator, due process, regulatory laws and policies by mandating it to recognise all of the plaintiff's purported shareholding obtained without CBN's approval which as at the time of filing the suit stood to the tune of about 5,397,409,262 billion units," the defendant added.
Also, the CBN in a 60-paragraph deposed to by Orjiakor Nwabueze, a Deputy Director, Banking Supervision Department of Central Bank of Nigeria, stated that for the verification exercise, the Plaintiff, through its parent company, submitted claim of 5,450,999,924 shares of the Defendant's shares and wanted it's consent/approval for the shareholding.
He stated that CBN (3rd party) in exercise of its powers as regulatory and supervisory authority and before granting the consent/approval required and needed to satisfy itself that Plaintiff and the group are indeed owners of the shares put forward.
He added that the CBN demanded from the Plaintiff and its group evidence of purchase of shares being claimed by the Plaintiff with a view to verifying the shares and satisfying itself that the shares were actually purchased or that they belong to the Plaintiff and its Honeywell Group Ltd.
The verification exercise to be carried out by the CBN is to ensure compliance with the relevant statutory provisions on acquisition of shares and to ensure transparency.
He added: "In the course of the verification exercise, Plaintiff and its group could only provide evidence for purchase of 3,110,400,619 shares representing 8.67% of the shares of the Defendant and could not provide any evidence of purchase of the remaining 2,340,599,305 shares representing 6.52% of the shares of the Defendant being claimed by the Plaintiff and its group.
"Whilst the verification of shares was ongoing, the CBN having realized that necessary documents were not supplied or provided, wrote the letter of 5th January, 2024 to the Defendant notifying it of some documents/information not provided to aid the verification exercise.
"The 3rd party (CBN) instructed plaintiff and its group to provide materials/evidence to prove its purchase/ownership of the outstanding 2,340,599,305 shares to enable it verify their authenticity. The 3rd party is still expecting the Plaintiff and its group to come back with relevant materials to enable the 3rd party take a decision to grant consent/approval or not to the outstanding shares."
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In the meantime, 3rd party by its letter of January 29, 2024, communicated the Defendant about the outcome of the verification exercise conducted so far and specifically that only 3,110,400,619 shares (representing 8.67% of Defendant's total shares) of the total volume of shares being claimed by the Plaintiff and its group could be verified, while 2,340,599,305 shares (representing 6.52% shares of Defendant's total share capital) could not be verified.
"The 3rd party (CBN) being the regulatory and supervisory authority, its decision must be given effect to by the Defendant.
Meanwhile, counsel to FBN Holdings Plc, Babajide Koku, SAN, has urged the court to join Central Bank of Nigeria, CBN, as a third party to the suit by way of a Third Party Notice, which was granted by the court.
The crux of the Third party Notice is to bring the Central Bank of Nigeria (CBN) as a Party to the suit for the effective determination of questions and issues raised by the plaintiff.
However, the Plaintiff's motion for interim injunction and interlocutory injunction were not granted.
The presiding Judge, Justice Ayokunle Faji, granted the Third Party Notice, but did not grant the motion for interlocutory injunction.
The matter has been adjourned to October 2, 2024, for hearing of the substantive suit.
