*Petition SEC, FRCN & CAC
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Minority shareholders in Union Homes Savings & Loans Plc, represented by the Independent Shareholders Association of Nigeria (ISAN), have accused Aso Savings & Loans Plc of a considerable breach of corporate governance rules and asset stripping in its management of the company which it acquired in 2013.
The shareholders have consequently lodged a petition with the Securities & Exchange Commission (SEC), Financial Reporting Council of Nigeria (FRCN) and Corporate Affairs Commission (CAC) pleading for intervention to prevent the imminent loss of their investments.
The petition, signed by Chuks Nwachuku of Indemnity Partners, lawyers representing ISAN, noted that Union Bank of Nigeria was compelled to divest from Union Homes Savings and Loan Plc in line with the Regulation of the scope of Banking Activities and Ancillary Matters No.3 issued on November 2010 by the Central Bank of Nigeria (CBN), which repealed the Universal Banking Guidelines and required banks to divest from their non-banking subsidiaries.
Entitled “Re: Disturbing Total Absence of Corporate Governance in Union Homes Savings & Loans Plc and Consequential Rape of the Company,” the petition explained that Aso Savings & Loans Plc (ASO) was selected as preferred bidder for the divestment and the parties entered into a “Transaction Implementation Agreement (the Agreement) together with Union Bank and UH Investment Nigeria Limited (UHNL), a special purpose vehicle set up by ASO to facilitate the transaction.”
According to the petition, significant breaches of clauses in the Agreement were committed by Aso Savings. It cited clause 5.1.3.5 which provides that, “Satisfactory evidence that ASO has escrowed with a Nigeria Commercial Bank acceptable to UBN and CBN, the sum of N5,000,000,000 (Five Billion Naira) only being the fresh capital that is to be injected into UHSL in consequence of the transaction outlined in the Agreement. However, the minority shareholders allege that “ASO never paid the investment amount and has failed to do so.”
The petition also alleged that Aso Savings committed fraud because, “Without acquiring the requisite Scheme Shares of UHSL, ASO and its managers have continued to control the company and strip it of its assets and income. In particular, (both of ASO) have to account for over N12,000,000,000 (Twelve Billion Naira) of recoveries made from customers of UHSL over the last 10 years which is more than sufficient to recapitalize the bank.”
The minority shareholders also want ASO to account for the N1,600,000,000 (One Billion Six Hundred Million Naira) recovered from UBN Plc in September 2021 and recovered N2,500,000,000 (Two Billion Five Hundred Million Naira) from the Lagos State Government in two tranches of one billion naira in December 2022 and N1.5 billion in January 2023.
The petition alleged that Aso Savings failed to observe strict corporate governance rules and engaged in corporate abuse due to its failure to perform provisions of the ‘Agreement’. It claimed that although ASO transferred some shares to UHNL to hold in trust, the transfer was illegal because ASO did not pay the consideration of N5 billion into an escrow account that would have ensured that Union Homes meets the minimum requirement for a National Mortgage Bank. It added that UHSL is, consequently, not on the CBN list of mortgage banks in Nigeria today.
It added that clause 4.2.5 which provides that, “The directors nominated by ASO will be appointed into the Board of Directors” was also breached. ASO nominated directors but most of them resigned and the bank is currently left with two directors who cannot form a quorum for a valid meeting. Consequently, there was no board meeting throughout 2022, the petition alleged.
The minority shareholders are asking for: “An investigation into the affairs of UHSL with a view to uncovering and arresting the looting of the business of the company by ASO, and in particular, by Mrs. Risikat Ahmed and Mr. Richard Femi Bello and recovering all the looted funds.”
They also want, “The prohibition of ASO from further intermediating in the affairs of UHSL,” and “A directive that the present managers of USHL report to the FRCN until a proper board is appointed for the company.”
Lastly, the petitioner wants, “An assistance to the present managers of the UHSL to call a meeting of existing shareholders of the company (of which UBN and ASO are no part) for the purpose of electing a board of directors for the company.”
