‘‘By section 22(2)(b) of the Company and Allied Matters Act (CAMA), no member of a private limited liability company may sell his shares to a non-member without first offering the shares to existing members. This is what is called right of pre-emption and it is statutory.’’
With the above citation from the body of law, an Act of Parliament, governing establishment and management of corporate businesses in Nigeria, Business lawyer Chuks Nwachukwu summed up what he said are clear reasons Access Bank’s bid to take controlling shares in First Guarantee Pensions Limited (FGPL) without the full consent of all the shareholders would fail.
Prime Business Africa had exclusively reported that the takeover bid by one of Nigeria’s Tier 1 banks is now causing ripples at FGPL, even as the company planned an Extraordinary General Meeting (EGM) for that purpose on Tuesday April 5, 2022.
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Nwachukwu, in an exchange with Prime Business Africa, said it would amount to breaking the law should the bank and FGPL follow the route it had cut for the takeover bid because a mandatory 21 days notice is required for an EGM, even as he argued that the the law cannot be suspended in that regard.
According to the lawyer, ‘‘waiving a similar provision in the articles does not and cannot remove the shareholders’ rights where the company in issue is a private limited liability company.’’
Also citing Rule 235(1)(a) of SEC Rules and Regulations and section 131(1) ISA, Nwachukwu noted that ‘‘Where the object of purchase of shares is to take over control of the company, a takeover bid must be made.
‘‘No takeover bid may be made with respect to the shares of a private company – Rule 235(3)(b) of SEC Rules and Regulations. Therefore, there cannot be a hostile takeover of a private company,” he stressed.
‘‘Note, these rules apply only to private companies. An attempt to apply them to the hostile takeover of defunct IMB was successfully resisted because it was a public limited liability company.’’
He noted that Notice for all types of meetings is 21 days, according to Section 241(1) of CAMA.
Nwachukwu, however, stressed that (notice) time may be abridged only in the case of an AGM where all members entitled to attend vote to agree, as well as in any other General Meeting where holders of 95% of nominal value of shares agree.
