African Alliance Insurance Plc has approached the Federal High Court in Lagos, seeking to annul the dissolution of its board by the National Insurance Commission (NAICOM).
In a suit numbered FHC/L/CS/2008/2024, the company is requesting a declaration that the dissolution of its board and the removal of its Chief Executive Officer and executive directors on October 29, 2024, is unlawful, null, and void.
The defendants, in this case, include the interim management board appointed by NAICOM, which consists of Dr. Haruna Mustafa, Jacob Erhabor, Wasiu Amao, Oremeyi Longe, Anthony Achebe, and Halimatu Khabee, as well as Dr. Talmiz Usman, NAICOM’s Director of Legal, Enforcement, and Market Development, and the Minister of Finance.
The plaintiff is asking the court to determine whether NAICOM acted in accordance with the provisions of the National Insurance Corporation Act, the Insurance Act, and the Prudential Guidelines for Insurers and Reinsurers in Nigeria (2015) during the board dissolution and the removal of African Alliance’s CEO and executive directors, as well as in appointing the interim management board.
Through its counsel, Tayo Oyetibo (SAN), the African Alliance also seeks a ruling on whether NAICOM acted in bad faith and unreasonably in exercising its powers under the law.
Furthermore, the plaintiff contends that NAICOM’s request for approval from the Minister of Finance to take over the management of African Alliance, while the company’s application to sell its assets in Pension Alliance Limited (PAL) was pending, was unreasonable, acted in bad faith, and was unlawful.
African Alliance is urging the court to declare the dissolution of its board and the appointment of the interim management board— as stated in NAICOM’s letter dated October 29, 2024, and signed by Talmiz Usman— as unlawful, null, and void.
The plaintiff has also requested an injunction to restrain the defendants, particularly the first to sixth defendants, from dealing with or selling/disposing of any assets belonging to African Alliance, whether by themselves, their representatives, privies, or agents.
In a supporting affidavit accompanying the originating summons, the African Alliance asserts that NAICOM has frustrated its efforts to raise funds and has acted in bad faith in dissolving its management and board.
The affidavit indicates that Pension Alliance Limited (PAL) is a company incorporated in 2005 with two shareholders: African Alliance (holding 49 per cent) and FSDH Holding (holding 51 per cent).
The plaintiff claims that, for reasons known to NAICOM, PAL failed to conduct its Annual General Meeting (AGM), which would have enabled it to consider and declare dividends to its shareholders. This would have provided operational funds for African Alliance, as the investment in PAL was made in the interest of the company and its shareholders.
African Alliance submitted a Business Turnaround Plan (BTP) to NAICOM, outlining its short-term, medium-term, and long-term strategies to address the issues raised by the Commission. A key component of the short-term plan was to secure bridge financing through the sale of its 49 per cent share in PAL. However, NAICOM directed the company to inject N6 billion into the African Alliance within 90 days from July 1, 2024.
According to the company, NAICOM subsequently published a notice claiming that it had placed the African Alliance under its Regulatory Order.
The company stated, “The Commission acted in bad faith to hinder the plaintiff’s efforts to raise bridge financing. This led to a run on the company, depleting its operational funds and making it impossible to attract investors. Consequently, the plaintiff was forced to sell its assets to secure the N6 billion needed for financing.
The Commission’s actions caused severe financial repercussions, including loss of customers and investors, plunging the plaintiff into a financial crisis. To raise the necessary funds, the plaintiff put its shares in PAL up for sale and received offers from Sea Global Energy Company Nigeria Limited and Ovie-B Investment Limited.
However, in a letter dated 22nd October 2024, the Commission denied consent for the sale, citing dissatisfaction with the prospective buyer’s information and imposing onerous conditions, including unnecessary approval from PENCOM.
After learning of Sea Global’s willingness to proceed with their N30 billion offer, the plaintiff informed the Commission on 30th October 2024. Shortly after, the Commission notified the plaintiff of its intention to dissolve its management and board under sections 41, 42, and 50 of the National Insurance Commission Act.
The plaintiff later discovered that while discussing the asset sale, the Commission sought approval from the Minister of Finance to take over the management, indicating a plan from the start to sell the company’s assets at a significant undervalue.
The Commission’s actions, seeking to take control while negotiating the asset sale, demonstrate unreasonableness and bad faith.”
No date has been set for the hearing.
