Mohammed Shosanya
African Alliance Insurance Plc has prayed a Lagos the Federal High Court, to nullify the dissolution of its Board by the National Insurance Commission (NAICOM).
The insurance firm is praying for a declaration that the purported board dissolution and removal of its Chief Executive Officer and executive directors on October 29, 2024 is unlawful,null and void.
The court has not fixed date for hearing of the suit marked, FHC/L/CS/2008/2024
Defendants in the suit are the interim management board appointed by NAICOM, namely; Dr. Haruna Mustafa, Jacob Erhabor, Wasiu Amao, Oremeyi Longe, Anthony Achebe and Halimatu Khabee, as well as NAICOM Director of Legal, Enforcement & Market Development, Dr. Talmiz Usman and Minister of Finance.
The plaintiff is praying the court to determine whether NAICOM complied with the provisions of the National Insurance Corporation Act, the Insurance Act and the Prudential Guidelines for Insurers and Reinsurers in Nigeria 2015 in the purported board dissolution and removal of African Alliance CEO and executive directors and the appointment of the interim management board.
Through its counsel,Tayo Oyetibo (SAN),the plaintiff also asked the court to determine whether NAICOM acted in bad faith and unreasonably in exercising its powers under the laws.
Besides,the plaintiff is praying the court to hold that the act of NAICOM in seeking the approval of the Minister of Finance to take over the management of African Alliance while its application for consent to sell its assets in Pension Alliance Limited (PAL) was pending with the commission is unreasonable, in bad faith and unlawful.
The insurance firm prayed the court to nullify the dissolution of its board and the appointment of an interim management board as contained in NAICOM’s letter dated October 29 2024 and signed by Talmiz Usman for being unlawful, null and void.
It also prayed for an injunction restraining the defendants, especially the first to sixth defendants, whether by themselves, their representatives, privies or agents from dealing with or selling/disposing of any assets of African Alliance.
In its supporting affidavit to the originating summons,the insurance firm stated that NAICOM frustrated its efforts to raise funds and acted in bad faith in the dissolution of its management and board.
African Alliance stated that Pensions Alliance Limited (PAL) is a company that was incorporated in 2005 with two shareholders -African Alliance (49 percent shareholding) and FSDH Holding (51 per cent).
It said for reasons well known to NAICOM, PAL failed to hold its Annual General Meeting (AGM) that would have allowed it to consider and declare dividends to the shareholders, which would have formed part of the operational funds of African Alliance as the investment in PAL was made in the interest of the company and its shareholders.
African Alliance stated that it submitted a Business Turnaround Plan (BTP) to NAICOM outlining its short-term, medium-term, and long-term plan to address the issues raised by the Commission.
The key component of the short-term plan was to secure bridge financing through the sale of the plaintiff’s 49 percent asset in PAL, following which NAICOM directed it to inject N6 billion into the company within 90 days from July 1, 2024.
According to the firm,NAICOM still went behind to publish a notice that it had put Africa Alliance under its Regulatory Order.
The insurance firm added: “The action of the Commission was done in bad faith to frustrate the plaintiff’s efforts in raising funds for the bridge financing.
“As a result, there was a run on the company which greatly depleted the plaintiff’s operational funds and also rendered all the plaintiff’s efforts at getting investors futile, leaving the plaintiff with the only option of the sale of its assets to raise the N6 billion bridge financing.
“This action of the Commission had serious ripple effects on the finance of the plaintiff, resulting in loss of customers and investors, serious financial loss and plunging the plaintiff into serious financial and investment crisis.
“In a bid to raise the N6 billion bridge financing, the plaintiff had to put up its shares in PAL for sale and got offers from two companies: Sea Global Energy Company Nigeria Limited and Ovie-B Investment Limited.
“By a letter dated October 22, 2024, the Commission refused its consent to the sale of the assets to the prospective investor not because the timeline it gave the plaintiff had expired but on the grounds that it was not satisfied with the information about the prospective purchaser and further asked for onerous conditions which include but not limited to getting consent from PENCOM when the applicable Guidelines did not provide for PENCOM’s approval as a condition precedent to the grant of the Commission’s consent.
“Upon receipt of the Commission’s letter, the plaintiff contacted Sea Global Energy Company Nigeria Limited to see if they are willing, able, and ready to fulfil their offer of N30 billion for the assets and N5.85 billion to buy out the majority shareholders of the plaintiff, and they confirmed their readiness to fulfil their offer.
“By a letter dated 30 October 2024, the plaintiff wrote to the Commission to inform her of the offer from Sea Global Energy Company Nigeria Limited and their readiness to purchase the assets.
“Surprisingly, shortly after the delivery of the plaintiff’s letter to the Commission, the plaintiff received a letter from the Commission notifying it of the exercise of the powers under sections 41, 42, and 50 of the National Insurance Commission Act on the same 30th October 2024 to: dissolve the management and Board of the Plaintiff and remove all members of the Board, including the Chief Executive Officer and Executive Directors; appoint an interim Management/Board to steer the affairs of the company.
“After the receipt of the letter of the Commission, the plaintiff discovered that while the Commission was engaging with the plaintiff on the sale of the company’s assets, the Commission was, at the same time, seeking the approval of the Minister of Finance to take over the management of the plaintiff.
“The plaintiff also discovered that the plan of the Commission and its officers from the outset was to take over the management of the plaintiff through an interim management board and sell the assets of the company to their nominees at gross undervalue.
“The act of the Commission in seeking the approval of the Minister of Finance to take over the management of the plaintiff while still engaging the company on the sale of its assets to raise funds to meet its obligation is unreasonable and in bad faith.”
