Justice Akintayo Aluko of the Federal High Court, Lagos has ordered the board of IGI Insurance Plc to stop the sale of the company’s assets and also, convene an Annual General Meeting (AGM) of the company to allow all the shareholders to have insight into its current situation.
The order is in response to the prayers of some minority shareholders who have petitioned the court, accusing the board and the management of the underwriter of assets stripping, and also, complaining of being sidelined in the management of the ailing company which they said, has failed to render accounts to its over 10,000 shareholders in the last six years.
Section 237 (1) of the Companies and Allied Matters Act 2020 (CAMA) regulates the administration of a company and provides that, “Except in the case of a small company or any company having a single shareholder, every company shall in each year hold a general meeting as its annual general meeting in addition to any other meeting in that year, and specify the meeting as such in the notices calling it; and not more than 15 months shall elapse between the date of one annual general meeting of a company and the next
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IGI held the last AGM in 2016 and has not held another in the last six years, thereby contravening the provision of section 237 of CAMA 2020.
The shareholders comprising Signet Ring Reality and Investment Limited, Adeyinka Adedeji, Adefunke Adesola, Olayinka Olajuwon, Abiodun Akinjayeju, Olusegun Adekunle Wright, Igbekele Akinjayeju and Anthony Osaebrown in their November 28, 2021 petition to the court, accused the management and board of conducting the affairs of the company in a manner that is unfairly prejudicial and/or oppressive to their interests.
The respondents are IGI Insurance, the managing director Rachel Emenike, the chairman, Yayale Ahmed, Oladapo Afolabi, Augustine Olorunnisola, Kanayo Chuks Okorie, and Gafar Kayode Animasahun and Abiodun Ajifolawe.
The shareholders also accused the board and management of managing and controlling the company in manners contrary to the Companies and Allied Matters Act (CAMA) and also IGI Insurance’s memorandum and article of association.
Justice Aluko granting the fourth relief amongst others in the ruling delivered 8th June 2022 stated, “An order that the respondents shall forthwith cause to be convened, an Ammjual General Meeting of the first respondent for the purposes of the statutory business of the 1st respondent at annual general meetings in compliance with S.237 of CAMA, extant laws, and the 1st respondent’s Memorandum and Articles of Association is hereby granted”.
He further granted an order for the maintenance of status pending the determination of the petition or until further order shall be made by this honourable court.
Also, Justice Aluko granted “an order that parties shall refrain from any act or actions geared towards dissipating assets of the 1st respondent pending the determination of this petition or until a further order is made in this suit”.
The court action is the latest in the series of what the minority shareholders claimed as last-minute efforts to save the ailing company from going under. The shareholders had earlier approached two regulators, the National Insurance Commission (NAICOM) and the Securities and Exchange Commission (SEC), seeking their intervention in the crisis occasioned by liquidity problems and declining fortunes that have sent it crashing, leaving it to struggle for survival.
In an 18 October 2021 letter entitled, “Complaints Against Acts Of Prejudice By The Board of Directors of IGI”, and signed by Oluwatoyin Adekoya, the Managing Partner, S.O & C Legal, to the Director-General of SEC, the minority shareholders alleged arbitrary, wrongful, oppressive, and unlawful acts against the board and management of IGI.
In the letter that was also sent to the insurance regulator, the shareholders alleged that the IGI board in the past years has shown utter disregard for the provisions of various laws guiding public companies in the country.
Specifically, they accused the board of “Lack of transparency in the manner with which the company is being run, no accounts are rendered and all efforts to access the state of affairs of the company in the public domain have been futile”.
“It has been over four years since the company held an Annual General Meeting (AGM)” and the shareholders said non-convention of another contravened the provisions of the Companies and Allied Matters Act (CAMA).
They also accused the board of running the affairs of the company in secrecy from its investors, stating that this is against the “utmost good faith principle” on which an insurance business thrives.
The management was also accused of deviating from the core business of insurance, and now, into real estate, citing the sale of the real estate assets of the company including the 4.2 hectares of land (Leisure Land Theme Park) at Maiyegun Tourism Scheme, Lekki in Lagos.
The shareholders in the letter also accused the board of “Frivolous expenditure on unverifiable and bogus consultancy claims, and agency fees, particularly to Abdulkareem & Co and other firms to the detriment of the members of the company.
The managing Director, Rachel Emenike in a written response to the query from InsideBusinessNG then, waved off the assets stripping allegation but admitted that the company has not held an AGM since the last that was held in 2016.
She attributed the non-convention of AGM in the past years to inherent problems in the company including backlogs of annual audited financial statements that the management currently grapples with.
“There is nothing like assets striping. The Company has a lot of real estate assets but came somehow illiquid” Emenike said.
This development affected the solvency margin capital and created a problem in the company’s ability to do business, according to Emenike who informed that the sale of the company assets falls in line with the approval of the regulator who had earlier, agreed on the sale of some assets.
“The regulator, NAICOM around 2016 approved a restructuring of the assets of the company by way of sale of some of them to create more liquidity which in turn will guarantee the Company to continue to be a going concern”.
She stated that the assets were sold to offset some claims and address some “other teeming stakeholders and to also guarantee the company’s going concern status.
Although Emenike did not highlight the application of the proceeds of the assets’ sale, she, however, hinted that the Company is still under a regulatory order and so nothing can be sold without the approval of the regulator.
“The Management and the Board are only carrying on the instructions of the regulator to create liquidity for the Company”, she said. She admitted that IGI has not convened an AGM owing to some issues that were inherited by the current board but assured that, that will soon be sorted out.
IGI, until of late, is one of the flagships of the insurance industry and the first private insurer to hit a billion Naira premium income after the hitherto government-owned Nicon Insurance Corporation. Lately, however, its state is an eyesore in a sector with fragile public confidence.
IGI was incorporated as a private limited liability company on 31 October 1991 and later re-registered as a public limited liability company in 2007. It started operation in January 1992 as a composite insurer to transact the business of Life and General insurance, including Pensions and Special Risks.
IGI, a major provider of insurance and risk management services in West Africa has subsidiaries, in The Gambia, Uganda, Rwanda and representative offices in London and Washington, DC.
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