Owena Bank (Nigeria) Plc Vs Nigerian Stock Exchange Limited (1997)

LAWGLOBAL HUB Lead Judgment Report

MOHAMMED, JSC. 

On the 6th day of May, 1997 this appeal was argued before this court. After reading the respective briefs of counsel for the appellant and the respondent, and listening to the oral arguments in elaboration of points made in those briefs, I allowed this appeal, set aside all the orders made by the Court of Appeal and restored the orders made by the High Court. I indicated that I would give my reasons later. I now, do so.

In this appeal Owena Bank of (Nigeria) PLC submitted that the Court of Appeal, Lagos Division, was in error to grant leave to Securities and Exchange Commission to appeal, as an interested party against a ruling delivered by Audu Kafarati, J. of Federal High Court. Lagos.

The history behind this dispute started when one Mr. I.L. Okoh of the Securities and Exchange Commission wrote to the Managing Director of Owena Bank., the appellant in this appeal, disclosing to him the decision reached by the Administrative Hearing Committee established to investigate the complaint lodged by Dominion Trust Limited against Owena Bank (Nigeria) PLC. The complaint of Dominion Trust Limited was that the appellant had declined to consent and honour the transfer of 23.7 Million shares of the bank divested by National Provident Fund (NPF) through the Owena Bank, despite the fact that the deal in respect of the shares was duly transacted on the floors of the Nigerian Stock Exchange and approved by the Securities and Exchange Commission, vide its letter dated 20th January, 1994.

The Administrative Hearing Committee at its sitting on 8th December, 1994, after hearing the parties and considering the facts, evidence and submissions before it, arrived at the following decisions:

“1. That Owena Bank (Nigeria) Plc being a Public Limited Company and by virtue of the provisions of Section 151 and Table A Part 1 of schedule 1 of the Companies and Allied Matters Decree, 1990, its shares are freely transferable. Consequently, the Board of Directors acting for and on behalf of the company has no discretion to refuse, decline or restrict transfer of its fully paid up shares.

2. That the shares of Owena Bank (Nigeria) Plc are registered by the Commission and quoted on the Nigerian Stock Exchange and accordingly, the consent of the bank is not required before effecting any transfer in respect of its shares traded on the floors of the Stock Exchange.

3. That the transfer of 29,458,127 shares of NPF were properly made to the underlisted investors in the proportion shown against their names:-

1. Alaaye Investment Co. Ltd. – 23,700,000
2. Dayke Nigeria Limited – 5,088,127
3. Ahmed Azeezat Co. Ltd. – 670,000

It was therefore not correct to state that it was Alaaye Investment that purchased the total of 29,458,127 shares.

4. That the percentage of the shares currently held by Alaaye Investment is 30%. This percentage has not exceeded the limit of shareholding a corporate body is allowed to acquire in a bank under CBN regulations.

5.The failure of Owena Bank (Nigeria) Plc to sign, seal and deliver the share certificates and other instruments of transfer lodged with it by City Securities Limited for a period of over seven (7) months amounted to wilful violation of the SEC Decree and rules and regulations made thereunder.

6. The Registrar’s conduct in waiting for seven (7) months for the bank’s prior consent before effecting transfer of the said shares was not in consonance with the spirit of the law and the SEC rules and regulations.

In view of the above, the Administrative Hearing Committee, in pursuance of the powers conferred on the Securities and Exchange Commission by Sections 6(b), (c), (h) and (i); 15(1) and (2)(b) and 24 of the SEC Decree No. 29 of 1988 and in the interest of the investing public as well as for the maintenance of the public confidence in the Nigerian Capital Market, ORDERS and DIRECTS as follows;

1. That the registration of securities of Owena Bank (Nigeria) Plc by Securities and Exchange Commission be and is hereby suspended with effect from the date of this decision.

This suspension shall remain in force until the Bank signs, seals and delivers the certificates relating to the transfers of the 29,458.127 shares divested by NPF to the transferees namely;