The Central Bank of Nigeria (CBN), and First Bank of Nigeria (FBN) Holdings Plc have moved a Federal Court in Lagos seeking the dismissal of a suit filed by investment firm Barbican Capital Limited over the alleged falsification of 5,386,397,202 shares in the bank.
The plaintiff (Barbican Capital Limited), an affiliate of Honeywell Group Limited, in suit number FHC/L/CS/1172/24, alleged that it acquired a total of about 5,386,397,202 shares at various times over the years, representing 15.1% of the total shares of FBNH listed on the Nigerian Stock Exchange (NSE).
He explained that the purchase and issue date of his shares has been duly recorded by FBNH’s appointed registrar, Meristem Registrars, and Probate Services Limited, and confirmed in the Central Securities Clearing System, CSCS, which includes the value of his shares with the bank.
However, FBN Holdings Plc, in a written statement responding to an application for interim injunction filed by its counsel, Mr. Babajide Koku, SAN, told the court that the plaintiff was aware of the fact that the court was continually reviewing the company’s alleged large holdings, which the Central Bank of Nigeria (CBN) had deliberately concealed. The bank explained that its main objective in filing the suit was to avoid the CBN’s examination and decision against Barbican Capital Limited (the plaintiff).
The plaintiff stated that on July 7, 2023, in accordance with the provisions and guidelines of the Act, it notified the defendant (FBN Holdings Plc) that it had acquired share units and held approximately 4,770,269,843 shares. The shares represented approximately 13.3 percent of the defendant’s shareholding.
According to the Act, the Central Bank of Nigeria (CBN) guidelines on the licensing and regulation of financial holding companies in Nigeria (issued under the Central Bank Act, 2007 and the Banks and Other Financial Institutions Act, 2004) provide that a financial holding company (including a financial holding company) must obtain prior approval from the CBN before purchasing more than 5 percent of the FHC shares.
Alternatively, if the share units were purchased in the secondary market, it must notify the CBN within seven days from the date of purchase to obtain consent or approval from the CBN. Pursuant to the CBN guidelines, FBN Holdings notified the CBN of the Plaintiff’s alleged new shareholding in excess of the minimum value of 5% in a letter dated July 10, 2023, in which it stated it sought CBN approval.
In response to the Defendant’s letter, the CBN invited the Plaintiff to submit documents for the share ownership verification process.
Upon receiving the letter from the CBN, the Defendant forwarded it to Barbican Capital Ltd. and invited the Plaintiff (Barbican Capital Ltd.) to submit the documents required for the verification process, but the Plaintiff was unable to submit all the documents requested and refused to do so.
As a result, the CBN in a letter dated January 29, 2024, informed the Defendant that due to insufficient supporting documents, it could only verify 3,110,400.619 shares out of the 4,770,269,843 billion shares held by the Plaintiff at the time.
The Defendant added that it had given the verification status to Barbican Capital Ltd. but the plaintiffs have so far failed to submit, refused to submit, or ignored the relevant documents to the CBN. Meanwhile, prior to the CBN letter dated January 29, 2024, the defendant published its unaudited financial statements for the year ending 2023 in December 2024.
In it, the plaintiff’s shareholding was reported as 4,886,062,743 shares, according to data collected from the member 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 recognize 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.
The CBN further stated in a 60-paragraph statement filed by Mr Orjiakor Nwabueze, Deputy Director, Banking Supervision Department, Central Bank of Nigeria, that the plaintiffs had requested 5,450,999,924 shares of the defendants for verification through their parent company and consent/approval to the shareholding.
He explained that the CBN (third party) in its exercise of its powers as a regulatory and supervisory authority must be satisfied that the plaintiffs and group are the actual owners of the shares submitted before granting consent/approval.
He added that the CBN had requested proof of purchase of the shares claimed by the plaintiffs and their group in order to verify and be satisfied that the shares were indeed purchased or belong to the plaintiffs and their group.
The verification carried out by the CBN is aimed at ensuring compliance with the relevant legal provisions on the acquisition of shares and ensuring transparency.
He further added that “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 third party, by letter dated 29 January 2024, has notified the defendant of the results of the verification carried out so far, inter alia, that only 3,110,400,619 shares (representing 8.67% of the defendant’s total shares) of the total issue were not verified, while 2,340,599,305 shares (representing 6.52% of the defendant’s total shares) of the shares held by the plaintiff and its group 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 for FBN Holdings Plc, Mr. Babajide Koku (SAN), through a court-approved third-party notice, has requested the court to join the Central Bank of Nigeria (CBN) as a third party in the proceedings.
The essence of a third-party notice is to bring the Central Bank of Nigeria (CBN) as a party to the suit to effectively resolve the issues and problems raised by the plaintiff.
However, the plaintiff’s claim for provisional and interim injunctions was not granted. Presiding Justice Ayokunle Faji granted the third-party notice but did not grant the application for an interim injunction.
The case was adjourned until October 2, 2024, for hearing on the main claim.
