Alleged 5.4bn Shares: CBN, FBN Holdings Ask Court to Dismiss Barbican Capital‘s Suit

•On inability of plaintiff to provide necessary documents to lawfully substantiate its shareholding in FBN

Wale Igbintade

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 the 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, had claimed that over the years and at different times, it cumulatively acquired about 5,386,397,202 shares representing 15.1 percent 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 in response to the Motion on Notice filed by its counsel, Babajide Koku, a Senior Advocate of Nigeria (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, according to court records seen by THISDAY.

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 7th of July 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.

The shareholding was about 13.3 percent of the defendant’s shareholding.

It stated that by the Central Bank of Nigeria (CBN) guidelines for Licencing 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) required prior approval to be sought from CBN before the purchase of a FHC’s shareholding of 5 percent and above; or if the share units are purchased on the secondary market, to notify the CBN within seven 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 10th of July 2023 notified the CBN of the purported new shareholding of the plaintiff which exceeded the minimum threshold of five 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 in providing all the requested documents.

Consequently, the CBN vide a letter dated 29th of January 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 shareholdings 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 to date.

Meanwhile, before the CBN letter of 29th of January 2024, the defendant had 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 Q1 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 depose 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 a claim of 5,450,999,924 shares of the Defendant’s shares and wanted its consent/approval for the shareholding.

He stated that the CBN (3rd party) in the exercise of its powers as regulatory and supervisory authority and before granting the consent/approval required 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 the 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 the 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 the purchase of 3,110,400,619 shares representing 8.67 per cent of the shares of the Defendant and could not provide any evidence of the purchase of the remaining 2,340,599,305 shares representing 6.52 per cent of the shares of the Defendant being claimed by the plaintiff and its group.

“Whilst the verification of shares was ongoing, the CBN having realised 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 the plaintiff and its group to provide materials/evidence to prove its purchase/ownership of the outstanding 2,340,599,305 shares to enable it to 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.

In the meantime, the 3rd party by its letter of 29th January 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.

“Defendant by its letter of 28th May, 2024 communicated the plaintiff’s counsel to convey the position of the 3rd party on the verification exercise to the plaintiff.”

He stated that the plaintiff was not challenging the outcome of the verification exercise carried out by the CBN as the supervisory and regulatory body, contending that as far as the outstanding shares, being claimed by the plaintiff, to the tune of 2,340,599,305 shares (6.52%) remain unverified, Plaintiff cannot claim any right/benefit on those shares.

Meanwhile, counsel to FBN Holdings Plc, Babajide Koku, SAN, has urged the court to join apex bank 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 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.