Cornerstone Insurance Plc said its board of directors has reached a decision concerning a proposed issuance of bonus shares to its shareholders. This is part of the insurer’s plans to meet its recapitalisation mandate.
In a notice that was sent to the Nigerian Stock Exchange, yesterday, Cornerstone Insurance said the resolution on bonus shares is one of many other resolutions that were reached when its board of directors met on July 22nd.
Details of the planned bonus shares issuance
The bonus shares will be issued in the proportion of seven new shares for every thirty shares of fifty kobo each, already held by shareholders. Part of the statement by the company said:
“In line with Rule 19.2 (a) of the Issuers Rules Relating to Board Meetings and General Meetings of Issuers, Cornerstone Insurance PLC (“The Company”) wishes to inform its esteemed Shareholders, Stakeholders, The Nigerian Stock Exchange (“The Exchange”) and the general public that at the Board Meeting of the Company held on July 22, 2020, the following resolutions were duly considered and approved…
“The transfer of One Billion, Seven Hundred and Eighteen Million (₦1,718,000,000) from the Company’s share premium account to the share capital account by issuing bonus shares in the proportion of seven (7) new shares of fifty Kobo each for every thirty (30) existing shares of fifty kobo each, to achieve the Company’s recapitalization plan.”
Note that planned bonus share issuance is subject to shareholders’ approval during the company’s next Annual General Meeting.
What this means
Much like all the other insurance companies in Nigeria, Cornerstone Insurance Plc has had to grapple with the challenges of meeting the recapitalisation mandate set by NAICOM. As Nairametrics reported, the company prospected several options to this end, including a deliberated a merger and the eventual decision to sell some of their landed properties.
With this bonus share issuance, Cornerstone Insurance Plc will finally be able to meet the required share capital, even as the shareholders get to own additional shares in the company without incurring additional costs.
Recall that it was back in May 2019 when NAICOM mandated all insurance companies in Nigeria to recapitalise. Since then, the deadline for compliance has been extended more than twice. The latest extension to the compliance deadline was given last month by NAICOM. In view of this, the insurance firms were given an additional year to recapitalise, with the final deadline being September 2021.
The recapitalisation programme is requiring life insurance firms to meet a minimum paid-up capital of N8.0 billion, up from N2.0 billion previously. In the same vein, general insurance companies are required to raise their minimum paid-up capital to N10.0 billion from N3.0 billion previously.
Also, the regulatory capital for composite insurance was raised to N18.0 billion from N5.0 billion previously while reinsurance businesses are now required to have a minimum capital of N20.0 billion from a previous N10.0 billion.