Lawyers Seek Clarification on Sale, Transfer of Union Bank to Titan Trust, Threaten Legal Action

Wale Igbintade  

A group of lawyers have vowed to challenge the recent acquisition of 89.39 % stake in Union Bank Plc by Titan Trust Bank Limited, before a federal high court.

Union Bank Plc and Titan Trust Bank had on December 23, 2021, announced that Union Bank’s core investors, Union Global Partners Limited, Atlas Mara Limited, and other shareholders had reached an agreement with Titan Trust Bank to divest their shareholding in the country’s second oldest bank to Titan Trust.

But in separate letters written to the Governor of the Central Bank of Nigeria (CBN) and the Director-General, Securities and Exchange Commission (SEC), the lawyers alleged “a flagrant abuse of financial regulations, lacking in due process and illegal transfer of Union Bank of Nigeria Plc founded in 1917 to Titan Bank, which started operation on April 26, 2019.”

The lawyers were of the view that the sale and transfer of shares of the Union Bank to Titan Trust Bank was not in compliance with the Companies and Allied Matters Act 2020 and in violation of Section 342(2) of the Companies and Allied Matters Act 2020.

In the letter dated March 14, 2022, signed by Mr. Adedokun Makinde, on behalf of Dr. Charles Mekwunye,  and other minority shareholders of Union Bank and addressed to the CBN Governor, entitled, ‘Unlawful Sale and Transfer of the Majority Shares of Union Bank to Titan Bank Limited and Violation of the CBN Code of Corporate Governance for Banks and Discount Houses and Other statutory law,” he requested for the date the sale, and transfer of all the shares of Union (United) Global Partners Limited, and Atlas Mara Limited were consummated on the floor of the Nigerian Exchange Limited as required by Section 106 (4) of the Investment, and Securities Act, 2007.

 The letter also demanded details particulars/reports of the sale of the shares of Union (United) Global Partners Limited and Atlas Mara Limited in Union Bank of Nigeria to Titan Trust Bank limited in the record of the Apex Bank.

It warned that failure to provide the information requested within seven days, they would have no option but to seek further legal recourse to compel the apex court to provide the information.

However, the CBN in a letter signed by its Director/Secretary to the Board, Aminu Mohammed, acknowledged the letter, stating that ”the information being sought, where available, will be communicated to you in due course.”

A similar letter written to the Director-General, SEC, also alleged that the transaction was marred with unlawful abuse of the process of sale and transfer of shares in banks in Nigeria.

The letter read: “The report reaching our client also confirms that the transaction leading to the unlawful acquisition of Union Bank Plc by Titan Bank Limited failed to adhere to the provisions of the Central Bank of Nigeria Code of Corporate Governance for Banks and Discount Houses in Nigeria, the Companies and Allied Matters Act and other extant laws.

“That we take cognisance of the fact that the CBN approves financial transactions of all banks and approves all transfers of funds. Also based on our findings, we are very much aware that the CBN in respect to this sale and transfer of shares transaction of Union Bank Plc to Titan Bank Limited will have the records.

“The CBN must approve the transfer of funds used by Titan Bank Ltd to consummate this transaction.

“Further to these findings, we also discovered that Union Bank Plc has existed in Nigeria for about 100 years whereas Titan Trust Bank Limited was incorporated about two years and started banking about 18 months ago. Therefore, we know that Titan Trust Bank Limited has not made profits and has not broken even

“Therefore, the source of the finance of the said majority shares by Titan Trust Bank Limited cannot be from its profits of this source of finance and we demand strict disclosure as required by law.”

Responding to the letter, Union Bank through its lawyer, Mesuabari Mene-Josiah from the law firm of Udo Udoma and Bello-Osagie, stated that the transaction was privately negotiated sales of shares between the shareholders of the bank.

It stressed that Union Bank was not a party to the negotiations and/or the share sale and purchase agreement executed between the Selling Shareholders and TTB.

The letter dated March 15, reads: “The bank is a public limited liability company listed, and whose shares are freely tradable, on the floor of the Nigerian Exchange Limited as required under Nigerian law. As a result, shareholders of the bank have no obligation to notify the bank of any sale of their shares.”

The letter maintained that based on subsisting Nigerian law, the selling shareholders are validly entitled to divest their respective shareholding interests in the bank, and do not require any authorisation from the Board of directors of the bank or any shareholder(s) of the bank in this regard.

The letter explained that Section 139 of the Companies and Allied Matters Act 2020 provides that the shares of a member in a company are the personal property of such member.

“Once the bank was notified by the selling shareholders that they had entered into an agreement with TTB, our Client (Union Bank) duly complied with its specific regulatory obligation to notify the Nigerian Exchange of the transaction.

“It is pursuant to this notification that the bank made a public announcement of the transaction on 23rd December 2021,” the letter stated.