Thursday, June 6, 2019 04:12PM / NSE
A review of the Bank’s financial position as at 31st December 2018 (“2018 FYE”), established a deficit of N54.458billion as accumulated permanent losses from legacy transactions, in addition to the N247.868billion approved by shareholders, in 2017.
The balance sheet restructuring proposed will not affect the Bank’s authorised or issued share capital or regulatory capital but should result in a reduction of the credit balance in the Bank’s Share Premium Account, while leaving the aggregate shareholders’ funds unchanged. It would have no impact on the Bank’s creditors but rather, pave the way for the Bank’s investors to receive dividends out of the Bank’s future profits.
In terms of mechanics and structure, the Bank’s Board of Directors (‘the Board’) is proposing a reduction of N54.458billion from the Bank’s Share Premium Account of N187.091billion, pursuant to sections 106 and 107 of Companies and Allied Matters Act (‘CAMA’). The reserve arising from the reduction of capital would be used to eliminate the negative retained earnings as at 2018 FYE.
4. Process and Timeline
At the Extra-Ordinary General Meeting (“EGM”) scheduled for 11th of June 2019, the shareholders of the Bank will consider and, if thought fit, approve the Capital Reduction and Share Capital Reorganization.
Thereafter, an application will be made to the Federal High Court for an order sanctioning the Capital Reduction and Share Capital Reorganization, subsequent to which the court order will be registered with the Corporate Affairs Commission (CAC) to become effective.
Somuyiwa Adedeji Sonubi
Union Bank of Nigeria Plc
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Table: Unaudited Q1 2019 Results