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CaseLaw

Owena Bank V. NSE (1997) CLR 7(a) (SC)

Judgement delivered on July 4th 1997

Brief

  • Power of Exchange to suspend trading in any security
  • SEC and its disciplinary powers
  • Appeal as an interested party

Facts

On the 6th day of May, 1997 this appeal was argued before this court. After reading the respective briefs of counsel for the appellant and the respondent, and listening to the oral arguments in elaboration of points made in those briefs, I allowed this appeal, set aside all the orders made by the Court of Appeal and restored the orders made by the High Court. I indicated that I would give my reasons later. I now do so.

In this appeal Owena Bank (Nigeria) PLC submitted that the Court of Appeal, Lagos Division, was in error to grant leave to Securities and Exchange Commission to appeal, as an interested party, against a ruling delivered by Audu Kafarati J. of Federal High Court, Lagos. The history behind this dispute started when one Mr. I. I. Akoh of the Securities and Exchange Commission wrote to the Managing Director of Owena Bank, the appellant in this appeal, disclosing to him the decision reached by the Administrative Hearing Committee established to investigate the complaint lodged by Dominion Trust Limited against Owena Bank (Nigeria) PLC. The complaint of Dominion Trust Limited was that the appellant had declined to consent and honour the transfer of 23.7 Million shares of the bank divested by National Provident Fund (NPF) through the Owena Bank, despite the fact that the deal in respect of the shares was duly transacted on the floors of the Nigerian Stock exchange and approved by the Securities and Exchange Commission, vide its letter dated 20 January, 1994.

The Administrative Hearing Committee at its sitting on 8th December, 1994, after hearing the parties and considering the facts, evidence and submissions before it, arrived at the following decisions:

  • 1
    That Owena Bank (Nigeria) Plc being a public limited Company and by virtue of the provisions of S. 151 and Table A part 1 of schedule 1 of the Companies and Allied Matters Decree 1990, its shares are freely transferable. Consequently, the Board of Directors acting for and on behalf of the company has no discretion to refuse, decline or restrict transfer of its fully paid up shares.
  • 2
    That the transfers of 29, 458, 127 shares of NPF were properly made to the underlisted investors in the proportion shown against their names:
  • 3
    That the transfers of 29, 458, 127 shares of NPF were properly made to the underlisted investors in the proportion shown against their names:
  • 1
    Alaaye Investment Co. Ltd. – 23,700,000
  • 2
    Dayke Nigeria Limited - 5,088,127
  • 3
    Ahmed Azeezat Co. Ltd. - 670,000

    • It was therefore not correct to state that it was Alaaye Investment that purchased the total of 29,458,127 shares.

  • 4
    TThat the percentage of the shares currently held by Alaaye Investment is 30%. This percentage has not exceeded the limit of shareholding a corporate body is allowed to acquire in a bank under CBN regulations..
  • 5
    The failure of Owena Bank (Nigeria) Plc to sign, seal and deliver the share certificates and other instruments of transfer lodged with it by City Securities Limited for a period of over seven (7) months amounted to willful violation of the SEC Decree and rules and regulations made thereunder.
  • 6
    The Registrar's conduct in waiting for seven (7) months for the bank's prior consent before effecting transfer of the said shares was not in consonance with the spirit of the law and the SEC rules and regulations.

    • In view of the above, the Administrative Hearing Committee, in pursuance of the powers conferred on the Securities and Exchange Commission by sections 6 (b), (c), (h) and (i); 15(1) and (2) (b) and 24 of the SEC Decree No. 29 of 1988 and in the interest of the investing public as well as for the maintenance of the public confidence in the Nigerian Capital Market ORDERS and DIRECTS as follows:

  • 1
    That the registration of securities of Owena Bank (Nigeria) Plc by Securities and Exchange Commission be and is hereby suspended with effect from the date of this decision.
  • 2
    This suspension shall remain in force until the bank signs seals and delivers the certificates relating to the transfers of the 29,458,127 shares divested by NPF to the transferees namely:
  • a
    Alaaye Investment Nig. Ltd. - 23,700,000
  • b
    Dayke Nig. Ltd. - 5,088,127
  • c
    Ahmed Azeezat Co. Ltd. - 670,000
  • 3
    It is further ordered that trading in Owena Bank (Nig.) Plc securities on the floors of the Nigerian Stock Exchange and its branches be and is hereby suspended forthwith until the Bank complies with the order herein made.
  • 4
    The bank is hereby warned to desist from such further conducts that will frustrate the laws and operations of the Capital Market and undermine public and investors' confidence in securities transaction in the market:"

After reading the above letter the appellant filed an application for an order of certiorari to quash the decision of Securities and Exchange Commission suspending the appellant from both having its securities registered and its stocks traded on the floors of the Nigerian Stock Exchange. The grounds upon which the reliefs were sought are that the proceedings before the Administrative Hearing Committee violated the principles of natural justice and mandatory provision for a fair hearing as enshrined in section 33 of the Constitution of the Federal Republic of Nigeria, 1979. The panel was in breach of the Rules of Natural Justice and the proceedings violated the intendment of section 24 of the Securities and Exchange Control Act., Cap 406, Law of the Federal Republic of Nigeria, 1990.

The learned Chief Judge of the Federal High Court, after hearing both parties, and in a well-considered judgment, found that the proceedings and conviction based on it before the Administrative Hearing Committee was against natural justice. The learned Chief Judge concluded that the applicant (appellant in this appeal) was not given an opportunity to defend itself in the substantial parts of the complaint and held that the decision was void ab initio. Consequently the court quashed the said proceedings. An appeal has been lodged to the Court of Appeal against that judgment.

The appellant simultaneously filed a motion ex-parte for an interim injunction to restrain the respondent from preventing the trading in the appellant's securities on the floor of the Stock Exchange or its branches. This application was granted on 23rd February, 1996. Thereafter, the respondent herein, the Securities and Exchange Commission, applied to the Court of Appeal for leave to appeal as an interested party against the ex-parte order of injunction made. In the said application which was filed after the time limited to appeal, the respondent did not include a prayer for extension of time to appeal. However, in granting the application, the Court of Appeal made an order granting the respondent extension of time to appeal.

The appellant was aggrieved and it appealed to the Supreme Court.

Issues

Whether or not the Securities and Exchange Commission can exercise power to...

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