Shareholders allege corporate governance lapses in management of Union

Minority shareholders have accused Aso Savings and Loans Plc of corporate governance breaches and assets stripping in the management of Union Homes Savings and Loans Plc, which it acquired 10 years ago.

The shareholders, under the Independent Shareholders Association of Nigeria (ISAN), have consequently lodged a petition with the Securities and Exchange Commission (SEC), Financial Reporting Council of Nigeria (FRCN) and the Corporate Affairs Commission (CAC) pleading for intervention to prevent loss of their investments.

The petition, signed by Chuks Nwachukwu of Indemnity Partners, the counsel to ISAN, said Union Bank of Nigeria Plc divested from Union Homes Savings and Loan to comply with the Regulation of the Scope of Banking Activities and Ancillary Matters, which repealed the universal banking guidelines and required banks to divest from their non-banking subsidiaries.

The petition titled, ‘Re: Disturbing Total Absence of Corporate Governance in Union Homes Savings and Loans Plc and Consequential Rape of the Company’ explained the investor was selected as the preferred bidder for the divestment and the parties entered into a transaction implementation agreement with Union Bank and UH Investment Nigeria Limited (UHNL), a special purpose vehicle set up by ASO to facilitate the transaction.

According to the petition by the shareholders, Aso Savings committed significant breaches in the agreement. For instance, Clause 5.1.3.5 provided satisfactory evidence that Aso Savings has escrowed with a commercial bank acceptable to Union Bank and CBN with the sum of N5 billion being the fresh capital that was to be injected into Union Homes in consequence of the transaction outlined in the Agreement. The shareholders alleged that Aso Savings had failed to pay the investment amount.

Also, ISAN asked Aso Savings to account for over N12 billion recoveries made from customers of UHSL over the last 10 years, which is sufficient to recapitalise the bank.

The shareholders also want Aso Savings to account for the N1.6 billion recovered from Union Bank in September 2021 and the recovered N2.5 billion from the Lagos State Government.

The petition alleged that Aso Savings failed to observe strict corporate governance rules while engaging in corporate abuse due to its failure to perform provisions of the ‘agreement’.

ISAN believed that Aso Savings has breached corporate governance rules and has failed to act in the best interests of Union Homes and its shareholders, saying “as shareholders, we have a right to expect transparency, accountability and responsible management from the executive team and a properly constituted board of directors.”