The Investment and Securities Tribunal (IST) has ordered the Nigeria Deposit Insurance Corporation (NDIC) to refund to Winners Medical Diagnostic & Research Institute Ltd the sum of N5, 000, 000.00, it paid for the un-allotted shares of All States Trust Bank.
In addition, the deposit insurer is to pay a two per cent interest on the amount.
Also, the court awarded N500,000 in favour of Winners Medical Diagnostic & Research Institute Limited.
The Company had subscribed to 2, 500, 000 units of shares in the 2005 Initial Public Offer of the former All States Trust Bank Plc (now Ecobank Plc.), at N2.00 per shares of 50k each and paid N5, 000, 000. 00.
However, prior to the conclusion of the offer All States Trust Bank became distressed and its licence was revoked, with its assets and liabilities transferred to 1st Defendant Ecobank Nigeria Limited, including the Share / IPO Suspense Account No. 0170102746018, created to receive deposits for the sale of the share/IPO.
Accordingly the Tribunal, it was wrong for the NDIC, to classify or categorize the claim for return money for un-allotted shares regulated by ISA 1999 (repealed and re-enacted as ISA 2007) and SEC Rules and Regulations made pursuant thereto as general credits ranking subordinate to private deposits of the defunct All States Trust Bank, payable only after claims for depositors liabilities have been satisfied.
Reacting to the IST judgement, the Nigeria Deposit Insurance Corporation (NDIC) described the IST’s judgement as an error saying “it misconstrued and consequently misapplied the clear and express provisions of the relevant legislations governing bank liquidation in Nigeria.”
According to the deposit insurer, the tribunal did not take into consideration the role of the Corporation as the statutory liquidator of the Allstates Trust Bank would like to restate its position in the matter for record purposes.
The Corporation stated that in carrying out its functions as a liquidator, the NDIC complies with the applicable laws in the realization and distribution of the assets of defunct banks, inclusive of Allstates Trust Bank.
The above provision of BOFIA is very clear and unambiguous. Depositors of failed banks must as matter of law be settled first before any other claimants as depositors rank first in the order of priority of claim. In fact, sections 657 of CAMA and 55 of BOFIA jointly provide that claims in relation to the assets of a bank in liquidation would be applied in the following priority; Liquidation Expenses Depositors Claims Preferred Claims (as determined by CAMA) Equitable Charges.
NDIC noted that while it was contending the indebtedness of the defunct bank to the claimant, it was going to appeal the judgement at the Court of Appeal.