NEM Insurance Plc, may have placed its capital raising exercise, on the front burner once again. The company today sent two notices to the Nigerian Stock Exchange (NSE) pertaining to its 48th and 49th Annual General Meetings (AGMs) respectively.
Under the Special Business Agenda for its 48 Annual General Meeting (AGM), the following item was included:
That on the recommendation of the directors, the shareholders authoriZe the directors to raise additional capital through the issuance of not more than 1,056,000,000 ordinary shares of 50 kobo each at N2.50 per share.
The need for capital: The company may have decided to table the motion once more in view of the recent increase in capital requirements by the National Insurance Commission (NAICOM).
Capital requirements for life insurance firms was increased from N2 billion to N8 billion. Insurance firms underwriting general business have been mandated to shore up their capital from N3 billion to N10 billion.
Composite insurance firms, that is, firms underwriting both life and general business will raise their capital from the current N5 billion level to N18 billion. Reinsurance firms will move up from the current minimum capital of N10 billion to N20 billion.
Under the special business agenda, the company also intends to make the following amendments to its article of association.
That the company may give notice of its Annual General Meeting and other STATUTORY notices, its balance sheet, (including every other document required by law to be annexed thereto to be considered at the company’s Annual General Meetings) in hard print or in electronic format to any person entitled to receive such notices, either by sending them to the person’s last known registered address, or by electronic mail to his/her last known email address.
The Accidental omission to give notice of a meeting or the non receipt of notice of a meeting by any person entitled to receive notice shall not invalidate the proceedings of the meeting.
Lessons learnt: The company may have decided to consider the above amendments following the declaration of its 48th Annual General Meeting (AGM) which held last year null and void.
The shareholders claimed that NEM Insurance had failed to notify them of the AGM in accordance with section 217 (1) of the Companies and Allied Matters Act (CAMA), SEC clause 24 and NSE rule 19.3, which prescribed at least 21 days notice to shareholders of an AGM to be held
They also asked the NSE to reverse a special resolution proposed and passed at the AGM to raise additional capital.
Consequences: The Nigerian Stock Exchange (NSE) investigated their claims and found them to be true. It imposed a fine of N575,505.00 on the firm, and it was also removed from the NSE corporate governance index.
NEM Insurance Plc closed at N2.36 in today’s trading session on the Nigerian Stock Exchange (NSE), unchanged from the prior day. Year to date, the stock is down 12.59%.