The Federal High Court sitting in Abuja on Thursday reduced the share capital of the Women Development Micro-Finance Bank Limited from N200 million to N50 million based on its request.
The bank which listed the Corporate Affairs Commission (CAC) in its motion ex-parte marked FHC/ABJ/PET/5/2024, explained that the approval and confirmation of the reduction of shares by the applicant are required by law.
The request was in the bank’s motion, as seen by Nairametrics.
The applicant prayed for the following orders:
- “An order of this Honourable Court confirming that the petitioner’s Share Capital be reduced by the sum of N150,000,000 ( One Hundred and fifty million Naira Only) from N200,000,000( Two Hundred million naira only ) to N50,000,000 (Fifty Million Naira Only) in line with Special Resolution passed at the General Meeting of the applicant convened on the 14th day of February 2024.
- “An order that the proposed reduction of the Petitioner’s Share Capital approved by the Special Resolution dated 14th February 2024 is confirmed and approved by this Honourable Court.
What transpired in court
At the resumed sitting, the bank’s lawyer, Nurudeen Baba Bukar told Justice Binta Nyako that it was equitable and just to grant his application in line with the resolution of the bank.
He explained that the application is brought under Section 131 of the Companies and Allied Matters Act 2020 as well as the jurisdiction of the court.
- “Grant our petition as prayed,” Bukar said.
- “I grant your leave as prayed,” Justice Nyako replied, after going through the court records.
The Bank’s lawyer speaks
At the end of the proceedings, Bukar told Nairametrics exclusively that his client needed the confirmation of the Federal High Court because it has “creditors whose interests may be affected by such a reduction.”
The lawyer however submitted that the court was satisfied that the reduction would not affect the interest of creditors
- “If there is any need for their (creditors) grievances to be considered, the court will put a stop and call all the creditors of the company so that they are clear first before one reduces share capital,” Bukar added.
What you should know
- Share capital is basically what a company puts forward to do business.
- A company to reduce its share capital means the interest of its customers may be affected.
- The Companies and Allied Matters Act 2020 allows a company to hold a special resolution for the reduction of its share capital but such reduction is subject to the approval of the court.
- Section 131(1) of CAMA 2020, reads, “Subject to confirmation by the Court, a company having share capital may, if so authorised by its articles, by special resolution reduce its share capital in any way.”
- The CAC is one of the agencies that states the minimum paid-up capital for companies.