Shareholders threaten to sue NAICOM over recapitalisation deadline
The Independent Shareholders Association of Nigeria has threatened to sue the National Insurance Commission if it insists on implementing its recapitalisation date for the insurance industry.
It stated this in a circular which was addressed to NAICOM and signed by its solicitor, Chuks Nwachku, on the “Tier-based minimum solvency capital policy for insurance companies in Nigeria; Pre-action notice.”
The circular stated that the hasty implementation of the policy did not give any reasonable room for adjustment or recapitalisation for insurance companies, which could make many of them to lose their business.
On the whole, it stated, the policy was targeted at pushing the majority of insurance companies out of business. It added that this could create undue advantage for a few, contrary to the letter and spirit of the Insurance Act.
It stated that the implementation of the policy would lead to unfair loss in the value of investment of shareholders in insurance companies, constituting a breach of their property rights under the constitution.
It also said that the policy was aimed at compelling many insurance companies and their shareholders to sell their interests to a few, contrary to Section 25 of the Nigerian Investment Promotion Act.
The circular read in part, “We therefore give notice that if the commission does not withdraw the offending circular within 30 days of this letter, we shall institute an action against the commission in accordance with the instruction of our client.”
The circular said the policy was calculated to bar insurance companies generally from doing business for which they were currently licensed by introduction of a requirement other than minimum paid up share capital contrary to the Insurance Act.
It stated, “The policy is designed to have disproportionate effect on the operators and skew the paying group in favour of the operators. “It is discriminatory and favours new entrants into the industry by giving them time and opportunity to raise capital while shutting the door against our clients as a result of the unreasonable two weeks given to our client to raise additional capital.”