Oba Otudeko controlled Barbican Capital locks legal horns with First Bank over shareholding

• Federal High Court Lagos to address discripancies

Business a.m. Reporter

Barbacan Capital Limited, a firm controlled by Oba Otudeko, a former chairman of FBN Holdings which owns Nigeria’s oldest bank, First Bank, has taken the financial institution to court over what it says is a wrong classification of the amount of shares belonging to it in the holding company.

Barbican’s suit is seeking to protect its rights to the number of shares it has in FBN Holdings according to details of the legal action. Nigeria’s oldest bank has been mired in a number of legal actions in recent years and this would be the latest in this direction.

According to the details of the suit, Barbican Capital is seeking legal intervention following receipt of notification from FBN Holdings showing that what it believed to be the number of shares it has in the financial institution had been reduced.

Specifically, it claims that its shareholding in FBN Holdings had been reduced from five billion, three hundred and eighty-six million, three hundred and ninety-seven thousand, two hundred and two (5,386,397,202) by 40 percent.

Indeed, the financial institution raised suspicion when in May it released its December 2023 audited accounts and it showed that Barbican’s shareholding had been cut to 3.1 billion (3,110,400,619) or 8.67 percent of the HoldCo’s total shares from the figure of 4.8 billion (4,886,062,743) shares or 13.61 percent earlier reported in its December 2023 unaudited accounts released in February.

It had then attached a note to the audited accounts which stated that the 3.1 billion shares represent the total that had been “verified” by the Central Bank of Nigeria.

Papers filed in the lawsuit by Barbican Capital against FBN Holdings include a statement from the Central Securities Clearing System (CSCS) in support of its claims to the exact number of shares it has in the financial institution.

Operatives in the capital market say that CSCS, which is the central securities depository for the market, is the widely accepted source for confirming share ownership.

A CSCS statement of May 23, 2024 acknowledging Barbican’s shareholding showed the company owned 5,386,397, 202 shares (15.01 percent) while it held 4.8 billion (4,886,062,743) shares or 13.61 percent as at December 2023.

Barbican’s shareholding increased from 13.61 percent reported by FBN Holdings in its unaudited results to 15.01 percent after Honeywell recently consolidated 1.5 percent of its affiliated shares into Barbican, according to those familiar with the development.

According to court papers, FBN Holdings paid dividends to Barbican Capital for all of its 5,386,397,202 shares between November and December 2023 for the full year 2022, in what analysts see as a validation of Barbican’s ownership of the shares, which has further raised curiosity in the market concerning the bank’s actions.

It is also understood that FBN Holdings has written to its registrars, Meristem Registrars & Probate Services Limited responsible for paying dividends to shareholders, requesting that it freezes dividend payments to Barbican Capital on the shares in question,  which subsequently triggered the lawsuit by the Oba Otudeko controlled firm.

Court papers show that Barbican Capital is requesting the court to intervene and protect its rights given that the CSCS record assigns the 5,386,397,202 (15.01 percent) shares to its name and since “no entity or 3rd party is making an adverse claim to ownership of or contesting ownership” of shares claimed by it in FBN Holdings. It also avers that it had “also not given notice to the defendant [FBN Holdings Plc] of transmission of its shares to any 3rd party pursuant to any law or the articles of association of the defendant.”

Bode Olanipekun, a senior advocate of Nigeria (SAN) who filed the suit on behalf of Barbican stated in the originating summons at the Federal High Court in Lagos on July 3, 2024, that Barbican Capital is seeking several reliefs including “a declaration that the number of shares contained/entered in the defendants register of members/records of members relating to the plaintiff (Barbican), is representative of the number of shares held by the plaintiff in the defendant.

Also, Barbican wants the court to grant “a declaration that the plaintiff’s shareholding in the defendant stands at 5,386,397,202 (as of 1st July 2024) reflected in the dematerialised records of the Central Securities Clearing System Plc, (CSCS).”

Barbican also stated that it is “entitled to all the benefits of membership in respect of all shares recorded as owned by it in the defendant company reflected in the dematerialised records of the Central Securities Clearing System Plc (CSCS).”

It is also seeking “a declaration that all the shares held by the plaintiff in the defendant are the plaintiff’s personal property, with all rights and privileges pertaining thereto.”

Other reliefs sought by Barbican in the suit include:

• “a declaration that the plaintiff’s shareholding in the defendant cannot be altered, dissipated, reduced, diminished, or erroneously stated in a manner inconsistent with the plaintiff’s right to own property.

• “An order of perpetual injunction, restraining the defendant, whether by itself, its officers, agents, servants, assigns, privies or anyone acting on its behalf, from altering or continuing to alter, erroneously stating or continuing to erroneously state, dissipating or continuing to dissipate, reducing or continuing to reduce, diminish or continuing to diminish the plaintiff’s shareholding in the defendant.”

In an affidavit, Otu Hughes, chief investment officer of Barbican stated that “the plaintiff/applicant is a member of the defendant by virtue of 5,386,397,202 shares held in the defendant as of 1st July 2024.

“By its unaudited consolidated statement for the year ended December 31, 2023, the defendant acknowledged that as of December 31, 2023, the plaintiff owned a total of 4,886,062,743 of its shares and that this quantum represented 13.61 percent of defendant’s total shareholding.

“The defendant paid dividends to the applicant for all the shares (as above), between November and December 2023 for the full year 2022.

“Despite the fact that the applicant’s shares portfolio with the defendant had increased from the quantum it was when the defendant’s unaudited consolidated statement for the year ended December 31, 2023, was released, the defendant has repeatedly been representing that the applicant’s shareholding as of December 31, 2023, and March 2024 was/is 3,110,400,619 shares. Despite protests from the applicant, the defendant refused to retrace its steps.

“The applicant is apprehensive that if this Honourable Court does not restrain the applicant in the manner sought by the applicant, the rest of the suit might be damaged/destroyed.”

The filed court documents also stated, that “as of July 1, 2024, the plaintiff held and still holds a total of 5,386,397,202 fully paid and issued shares of the defendant.”

Barbican further stated in its filings at the Federal High Court that it “has shown very clearly the extent of its shareholding in the defendant. It has also shown the acts of the defendant which represent the same as depleted or reduced. By objective legal parameters, this amounts to an infraction or relevant laws, including the Constitution of the Federal Republic of Nigeria, 1999 (as amended) and CAMA. In the light of the facts contained in the affidavit in support of the originating summons and the arguments canvassed in this address, we respectfully urge this Honourable Court to grant the reliefs sought in the originating summons.”