A Federal High Court in Lagos has been ordered to reject a lawsuit brought by Barbican Capital Ltd., an investment company, regarding the purported change of 5,386,397,202 units of the bank’s shares by the Central Bank of Nigeria, CBN, and FBN Holdings Plc.
In suit no. FHC/L/CS/ 1172/24, the plaintiff, Barbican Capital Limited, an affiliate of Honeywell Group Limited, asserted that it had cumulatively acquired approximately 5,386,397,202 shares over time, at various times, accounting for 15.1% of FBNH’s total shares listed on the Nigerian Stock Exchange, NSE.
It claimed that the dates and amounts of its share acquisitions had been accurately recorded by Probate Service Ltd., FBNH’s designated registrar, and Meristem Registrar.
It also claimed that the value of its shares with the bank had been duly acknowledged in the Central Securities Clearing System, (CSCS).
However, FBN Holdings Plc informed the court in a written address submitted in response to the Motion on Notice filed by its attorney, Babajide Koku, SAN, that the Plaintiff had purposefully concealed the existence of an ongoing Central Bank of Nigeria, verification exercise of its purportedly significant shareholdings.
The bank said that the main reason for filing the lawsuit was to get around the CBN’s ruling against Barbican Capital Limited (the plaintiff) and the verification process.
It said that on July 7, 2023, the Plaintiff notified the defendant (FBN Holdings Plc) that it had purchased units of shares and as a result possessed a shareholding amounting to approximately 4,770.269,843 units of shares in compliance with regulatory laws and rules.
This ownership accounted for approximately 13.3% of the Defendant’s total holdings.
According to guidelines for licensing and regulating financial holding companies in Nigeria issued by the Central Bank of Nigeria (CBN) in accordance with the Central Bank Act of 2007 and the Banking and Other Financial Institutions Act of 2004, financial holding companies, including the defendant, must obtain prior approval from CBN before purchasing a five percent or more stake in an FHC.
Alternatively, if the share units are bought on the secondary market, you must notify the CBN within seven days of the purchase date in order to get the CBN to approve or issue a “No Objection.”
It said that in accordance with CBN norms, FBN Holdings Plc notified the CBN in a letter dated July 10, 2023, of the Plaintiff’s alleged new shareholding, which surpassed the minimal threshold of 5% shareholding, and requested the CBN’s approval.
In response to the defendant’s letter, the CBN asked the plaintiff to submit supporting documentation so that the shareholding could be verified.
Following the defendant’s receipt of the CBN’s letter, Barbican Capital Ltd received a copy of it from the defendant. The defendant advised Barbican Capital Ltd to furnish the requested documents pertinent to the verification process; however, the plaintiff neglected, refused, or failed to provide all the requested documents.
As a result, in a letter dated January 29, 2024, the CBN notified the defendant that inadequate documentation prevented it from verifying more than 3,110,400.619 units of shares out of the plaintiff’s then-shareholding of 4,770,269,843 billion.
The defendant further stated that although it had informed Barbican Capital Ltd. of the verification status, the plaintiff has so far failed, refused, or forgotten to furnish the CBN with the necessary papers.
In the meantime, the defendant released its Unaudited Financial Statement for the year ended 2023 in December 2023, prior to the CBN letter of January 29, 2024.
The plaintiff’s shareholding was recorded there as 4,886,062,743, based on information obtained 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.
Additionally, the CBN stated in a 60-paragraph deposition given by Orjiakor Nwabueze, Deputy Director, Banking Supervision Department, Central Bank of Nigeria, that the Plaintiff had submitted a claim for 5,450,999,924 shares of the Defendant’s shares through its parent company and that it was seeking approval for the shareholding in order to complete the verification process.
He said that CBN (3rd party), in the exercise of its regulatory and supervisory jurisdiction, needs to confirm for itself that Plaintiff and the group are the true owners of the shares submitted before giving the necessary consent or approval.
In order to confirm that the shares were truly purchased and that they are the property of the Plaintiff and its Honeywell Group Ltd., he said, the CBN required documentation of the purchase of the shares from the Plaintiff and its group.
The CBN will conduct the verification process to guarantee transparency and compliance with the pertinent statutory provisions for the purchase of shares.
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.”
Meanwhile, the Defendant was notified by the Third Party in a letter dated January 29, 2024, of the results of the verification exercise that had been carried out thus far. Specifically, the letter stated that 2,340,599,305 shares, or 6.52% of the Defendant’s total share capital, could not be verified, while 3,110,400,619 shares, or 8.67% of the total volume of shares being claimed by the Plaintiff and its group, could be verified.
“The 3rd party (CBN) being the regulatory and supervisory authority, its decision must be given effect to by the Defendant.”
Through a Third Party Notice that the court approved, the attorney for FBN Holdings Plc, Babajide Koku, SAN, has sought the court to include the Central Bank of Nigeria, or CBN, as a third party in the lawsuit.
The primary purpose of the Third Party Notice is to include the Central Bank of Nigeria (CBN) as a party to the lawsuit so that the plaintiff’s questions and concerns can be effectively resolved.
Nevertheless, the plaintiff’s requests for an interlocutory and temporary injunction were turned down.
The Third Party Notice was approved by the presiding judge, Justice Ayokunle Faji, but the application for an interlocutory injunction was denied.
An adjournment has been placed on the subject for the substantive suit hearing on October 2, 2024.
