Minority shareholders, have accused Aso Savings & Loans Plc of a considerable breach of corporate governance rules and asset stripping in the management of Union Homes Savings & Loans Plc, which it acquired in 2013.
The shareholders, under the auspices of the Independent Shareholders Association of Nigeria (ISAN) have consequently lodged a petition with the Securities & Exchange Commission (SEC), Financial Reporting Council of Nigeria (FRCN) and Corporate Affairs Commission (CAC) pleading for intervention to prevent the imminent loss of their investments.
The petition, signed by Chuks Nwachuku of Indemnity Partners, lawyers representing ISAN, noted that, Union Bank of Nigeria was compelled to divest from Union Homes Savings and Loan in line with the regulation of the scope of Banking Activities and Ancillary Matters issued on November 2010 by the Central Bank of Nigeria (CBN), which repealed the Universal Banking Guidelines and required banks to divest from their non-banking subsidiaries.
Entitled ‘Re: Disturbing Total Absence of Corporate Governance in Union Homes Savings & Loans Plc and Consequential Rape of the Company’, the petition explained that Aso Savings & Loans was selected as preferred bidder for the divestment and the parties entered into a Transaction Implementation Agreement together with Union Bank and UH Investment Nigeria Limited (UHNL), a special purpose vehicle set up by ASO to facilitate the transaction.
According to the petition, significant breaches of clauses in the Agreement were committed by Aso Savings. “Clause 5.1.3.5 which provides that, satisfactory evidence that Aso Saving has escrowed with a Nigeria Commercial Bank acceptable to Union Bank and CBN, the sum of N5 billion only being the fresh capital that is to be injected into Union Homes in consequence of the transaction outlined in the Agreement. However, the minority shareholders allege that Aso Saving never paid the investment amount and has failed to do so,”
ISAN asked Aso Saving to account for over N12 billion of recoveries made from customers of UHSL over the last 10 years which is more than sufficient to recapitalize the bank.
The minority shareholders also wanted ASO to account for the N1.6 billion recovered from Union Bank in September 2021 and recovered N2.5 billion from the Lagos State Government in two tranches of N1 billion in December 2022 and N1.5 billion in January 2023.
The petition alleged that Aso Savings failed to observe strict corporate governance rules and engaged in corporate abuse due to its failure to perform provisions of the ‘Agreement’.
ISAN believes that Aso Savings has breached corporate governance rules and has failed to act in the best interests of Union Homes and its shareholders, saying “as shareholders, we have a right to expect transparency, accountability and responsible management from the executive team and a properly constituted board of directors.”
The association also believes that corporate governance is essential to the success of any company, urging all companies to prioritize transparency, accountability, and responsible management in their operations.
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