THE Central Bank of Nigeria (CBN) and the Asset Management Company of Nigeria (AMCON) have lost their bid to stop a suit filed by some shareholders of the defunct Bank PHB against the nationalisation of the bank and transfer of assets without compensation.
What the shareholders want
In the suit, which also had Keystone Bank Limited, the Attorney General of the Federation and the Nigeria Deposit Insurance Corporation (NDIC) as defendants, the shareholders are demanding N38.6 billion from the defendants being “fair compensation” to them for the value of their investment in the defunct Bank PHB Plc.
The shareholders in the suit marked FHC/L/CS/1273/11 are Benedicta Oyiana, Ifeyinwa Oyiana, Chioma Oyiana, Okoli Dumebi and Felix Oyiana, Pius Okonji, Okonji Obiageli, Ndiwa Uwaonye and Allwell Brown.
They are also praying the court to award N20 billion as damages against the defendants in their favour to cover for the loss of value on their investments in the defunct bank.
They further sought an order of the court setting aside what they described as “unlawful nationalisation, compulsory acquisition and expropriation of their investments in Bank PHB.”
In their papers filed before the court, they contested the validity of a letter dated August 5, 2011, written by the NDIC to the Managing Director of Bank PHB, informing him that the bank’s assets and liabilities had been transferred to Keystone Bank.
According to them, such a transfer amounted to an illegality when the NDIC did not make any arrangement for their compensation prior to the move.
But the defendants had through preliminary objections urged the court to strike out or dismiss the suit for lack of jurisdiction.
They also questioned the locus standi of the plaintiffs to institute the suit, which had a far reaching effect on the planned sale of Keystone Bank (Formerly Bank PHB) by AMCON in the second quarter of the year .
However, in a ruling delivered last week, copy of which was made available to The Guardian yesterday, Justice Mohammed Nasir Yunusa held that the holding of shares in a company gives shareholder a say in the company.
In addressing the issue as to whether shareholders have a right of access to the courts, the judge stated that a shareholder has such rights.
Citing the case of Tukur versus Government of Gongola State, the judge held that it is trite that no executive arm of government can take away a citizen’s right to acquire or hold property, thus there can be no compulsory acquisition.
According to the judge, the plaintiffs’ claim hinged on Section 44 of the constitution of the Federal Republic of Nigeria and the right to ownership of property.
The court stated that by virtue of section six of the constitution of the Federal Republic of Nigeria, an aggrieved person may apply to the High Court to enforce his rights, and the plaintiff has freely exercised this right.
Subsequently, Justice Yinusa held that the court had both party and subject-matter jurisdiction on the matter and adjourned hearing of the suit till March 31, 2015
Keystone Bank Sale
Though, the Judge did not declare any injunction against the sale of Keystone Bank by Amcon it is likely to affect the consummation of the deal as this court ruling has increased the legal risk associated with the deal. Amcon was hoping to conclude the sale of Keystone Bank after the election.