Thursday, May 24, 2012 / BusinessDay
 

The Financial Reporting Council of Nigeria, the nation’s accounting and financial reporting standards custodian, yesterday took to task Forte Oil Plc for contravention(s) of corporate governance rules.
 

Jim Obazee, executive secretary of the FRC who spoke with a select group of journalists in Lagos said Forte Oil plc was also being indicted for allotting 102 million shares valued at N24.7 billion to certain shareholders during the company’s hybrid offer (public and rights issues) in 2008.
 

He explained that the share holders did not only refuse to pay for the shares but also received dividends to the tune of N259 million as shareholders on the shares, which they later dumped.
 

The FRC boss said, quoting from the 2010 annual report of the oil firm: “We draw attention to Note 9 to the consolidated financial statements on the hybrid offer (public offer and rights issue) in 2008 for which the majority of proceeds were received in 2009. The proceeds for 102 million ordinary shares allotted to certain shareholders of the group amounting to N24.7 billion have not been received by the company as at date of this report. Full provision for this amount has not been charged directly to shareholders’ funds in these consolidated financial statements.”
 

He also noted dividends amounting to N530 million were released for payment to the registrar in respect of the unpaid shares, as part of the dividends declared for the year ended 31 December 2008, and approved by the shareholders on 22 July 2009. Of this amount, only N271 million unpresented cheques have been recovered from this amount, he added.
 

Obazee said the FRC had requested Forte to provide it with all the details of the hybrid offer, including but not limited to circumstances under which the company allotted shares to group directors and shareholders without payment for the shares; the accounting policies the board approved to address such allotment of shares that were not cash-backed and ‘on dividends not recovered’.
 

Due to this development, the company’s issued share capital is less than 25 per cent of the authorised capital prescribed by section 99 of the Companies and Allied Matters Act, Cap C20 LFN 2004.
 

The FRC also want to know the circumstances in which share capital account was credited with un-received payment for the said allotted shares; the accounting policy the board adopted to address dividends paid on capital that was not raised; the reason the said ‘dividends not recovered ‘ was treated as memorandum as against contingency.
 

“Council also directed that as an interim measure, Forte Oil plc should write-off the yet to be recovered portion of the dividend paid on the said allotted shares, but furnish the FRC with the details of the beneficiaries of the dividends, and report the said beneficiaries to the Securities and Exchange Commission (SEC). A copy of the report should be forwarded to FRC”, he said.

 
http://www.proshareng.com/quote/AP