Procedures For Winding Up Cash S.O. Giwa Esq

It is not in doubt that banks be it Microfinance Banks or
conventional banks are incorporated limited liability companies
registered with Corporate Affairs Commission in full compliance
with the requirements of Companies and Allied Matters Act in
respect of their registration. For the reason of status of banks as
incorporated companies, many customers who are judgment creditors
by virtue of judgment of court used to resort to filing a petition
before the court through their lawyers pursuant to provisions of
sections on application for winding up of companies in the
Companies and Allied Matters Act to wind up banks as a means of
re-cooping their judgment sum from cash starved banks. Are the
provisions of sections on application for winding up of companies
in Companies and Allied Act applicable to banks in Nigeria? .

It is against this background that this piece is written with
utmost view to discussing the Act of National Assembly of the
Federal Republic of Nigeria applicable to banks vis-à-vis winding
up of banks with full recourse to the procedures involved and party
that has locus to wind up cash-starved banks.

Legal capacity in the legal parlance is a cognizable and
recognized right by law and which capable of being enforced in the
court of law. For any person to have been adjudged as a proper
person for performance of act, such person must have been conferred
with such right by law.

It is worth saying that though the provision of section 410 of
Companies and Allied Matters Act confers right to bring an
application for winding-up of a company on a Creditor, including a
contingent or prospective creditor of the company; this provision
is not applicable to bank for reason that only applicable Act with
respect to winding-up of a bank/Financial Institution is Banks and
other Financial Institutions Act which regulates banking and other
financial institutions and for matters connected therewith. This is
fortified by the provision of the introductory part of the Banks
and other Financial Institutions Act Laws of the Federation of
Nigeria Cap B3 2004 which provides thus:

‘An Act to regulate banking and other financial
institutions and for matters connected therewith’

Flowing from the above quoted provision is the deductible fact
that affairs of banks are regulated by Banks and other Financial
Institutions Act Laws of the Federation of Nigeria Cap B3 2004 to
the exclusion of Companies and Allied Matters Act. Hence, legal
maxim ‘Expressio unius est exclusio alterius’ meaning the
expression of one thing is exclusion of another applies. What then
are the procedures for winding-up of a bank provided for under
Banks and other Financial Institutions Act Laws of the Federation
of Nigeria Cap B3 2004?

PROCEDURES FOR WINDING-UP OF BANKS AND OTHER FINANCIAL
INSTITUTIONS 

Combing through the provisions of the sections of Banks and
other Financial Institutions Act Laws of the Federation of Nigeria
Cap B3 2004 with a view to finding out the laid down procedures of
Banks and other Financial Institutions in the Act evinced
provisions of sections 35, 36, 38, 39 and 40 discussed thereunder
as the relevant provisions on the procedures of winding-up of Banks
and other Financial Institutions and party who has right to apply
for winding up of Banks and other Financial Institutions in
Nigeria.

The procedures for winding-up of a bank and proper party who is
vested with power to apply for winding-up of Banks and other
Financial Institutions in Nigeria are succinctly provided under
sections 33, 35, 36, 38, 39 and 40 of the Banks and other Financial
Institutions Act Laws of the Federation of Nigeria Cap B3 2004.

The provision of section 33 of the Banks and other Financial
Institutions Act Laws of the Federation of Nigeria Cap B3 2004
confers power on the Governor of the Central Bank of Nigeria to
order a special examination or investigation of the books and
affairs of any bank. The provision of section 33 (1) of the Banks
and other Financial Institutions Act Laws of the Federation of
Nigeria Cap B3 2004 goes thus:

‘The Governor shall have power to order a special
examination or investigation or the books and affairs of a bank
where he is satisfied that –

• it is in the public interest so to do;
  or
• the bank has been carrying on its business in a
  manner detrimental to the interest of its depositors and creditors;
  or
• the bank has insufficient assets to cover its
  liabilities to the public; or
• the bank has been contravening the provisions of
  this Act; or
• an application is made therefor
  by-
• a director or shareholder of the bank;
  or
• a depositor or creditor of the
  bank:

    Provided that in the case of
paragraph (e) of this subsection, the Governor may not order a
special examination or investigation of the books and affairs of a
bank if he is satisfied that it is not necessary to do
so.’’

Flowing from the above quoted provision is deductible fact that
the first step of the procedure for winding-up of a bank is an
application to be made by a director or shareholder of the bank or
a depositor or creditor of the bank on the affairs of the bank to
the Governor of the Central Bank of Nigeria.

It is therefore safe to conclude that the first
step to take in winding-up of a failing bank is
lodging complaint on the affairs of a failing bank via an
application by a director or shareholder of the bank or a depositor
or creditor of the bank to the Governor of the Central Bank of
Nigeria.

Reading the provision of section 33(2) of the Banks and other
Financial Institutions Act Laws of the Federation of Nigeria Cap B3
2004 further evinced the second step which is to
be taken by the Governor of the Central Bank of Nigeria. The
provision of section 33(2) provides thus:

‘For the purpose of subsection (1) of this section,
the Governor shall have power to appoint one or more qualified
persons other than the officers of the Central Bank to conduct
special examination or investigation, under conditions of
confidentiality, of the books and affairs of the
bank.’ 

It is deductible from the above quoted provision of section
33(2) of the Banks and other Financial Institutions Act Laws of the
Federation of Nigeria Cap B3 2004 that upon the receipt of the
letter of complaint via application on the affairs of the bank,
the Governor of the Central Bank of Nigeria is to appoint
one or more qualified persons who are not officers of the Central
Bank to conduct special examination or investigation of the books
and affairs of the bank complained of under conditions of
confidentiality.

It is worth saying that the failing bank on its own may
alternatively inform the Central Bank that it is likely to become
or unable to meet its obligation under the Act; or it is about to
suspend payment to any extent; or it is insolvent. If the bank on
its own does that, the Governor of Central Bank of Nigeria would
then appoint one or more qualified persons who are not officers of
the Central Bank to conduct special examination or investigation of
the books and affairs of the bank. Fortifying the above is the
provision of section 35(1) of the Banks and other Financial
Institutions Act Laws of the Federation of Nigeria Cap B3 2004
which provides thus:

‘Where a bank informs the Bank
that-

• it is likely to become or unable to meet its
  obligation under the Act; or
• it is about to suspend payment to any extent;
  or
• it is insolvent

the Governor by order in writing exercise any one or
more of the powers specified in subsection (2) of this
section.’

If the Governor of the Central Bank is satisfied that the bank
is in a grave situation provided for in section 33 of the Act
quoted above in this piece, the Governor may by order in writing
prohibit the bank from extending any further credit facility for
certain period; or require the bank to take any steps or any action
or to do or not to do any act or thing whatsoever, in relation to
the bank or its business or its directors or officers which the
Central Bank of Nigeria consider necessary; or remove
notwithstanding any limitations contained in the memorandum and
articles of association any manager or officer of the bank for
reasons to be recorded in writing with effect from such date set
out in the said order; or remove notwithstanding any limitations
contained in the memorandum and articles of association any
director of the bank; or appoint any person or persons as a
director of the bank with provision in the said order that the
person or persons appointed be paid remunerations stated in the
order by the bank or appoint any person to advise the bank in
relation to the proper conduct of its business, provide for the
person so appointed to be paid remuneration stated in the order by
the bank.

The above powers of the Governor of Central Bank of Nigeria
stated in the preceding paragraph are provided for in section
35(2)(a-e) of the Banks and other Financial Institutions Act Laws
of the Federation of Nigeria Cap B3 2004.

Flowing from the provision of section 36 of the Banks and other
Financial Institutions Act Laws of the Federation of Nigeria Cap B3
2004 is the turning over the control and management of the
failing bank by the Central Bank of Nigeria to the Nigerian Deposit
Insurance Corporation on terms and conditions as the third
step after taking above discussed steps in the preceding
paragraphs and the state of affairs of the bank concerned does not
improve.

It is important to be noted that the Nigerian Deposit Insurance
Corporation is empowered under section 38 of the Banks and other
Financial Institutions Act Laws of the Federation of Nigeria Cap B3
2004 to remain in control of and continue to carry on the business
of the bank in the name and on behalf of the bank until prescribed
time by the Central Bank of Nigeria.

It is pertinently important to note that where the Nigerian
Deposit Insurance Corporation has assumed control over the said
cash-starved bank as provided for in section 36 of the Banks and
other Financial Institutions Act Laws of the Federation of Nigeria
Cap B3 2004 and the bank is still insignificantly under-capitalized
to the extent that its risk weighted assets ratio is below five
percent but above two percent, the Nigerian Deposit Insurance
Corporation is statutorily empowered to take some measures provided
for under section 37 of the Banks and other Financial Institutions
Act Laws of the Federation of Nigeria Cap B3 2004.

These powers as provided for under section 37 of the Banks and
other Financial Institutions Act Laws of the Federation of Nigeria
Cap B3 2004 are:

i. requiring the bank to submit a recapitalization plan
acceptable to Nigerian Deposit Insurance Corporation;
ii. prohibiting the bank from extending any further credit and
incurring any additional capital expenditure without the approval
of Nigerian Deposit Insurance Corporation;
iii. requiring the bank to take such steps or to do or not to
do any act or thing whatsoever in relation to the business of the
bank or its directors or officers as may be considered necessary
within stipulated time by the Nigerian Deposit Insurance
Corporation notwithstanding the provisions of section 7 of the
Banks and other Financial Institutions Act Laws of the Federation
of Nigeria Cap B3 2004 on restructuring, re-organization, mergers
and disposal of bank;
iv. removing any director, manager, officer or employee of the
bank with the approval of the Central Bank of Nigeria; and
v. appointing with approval of Central Bank of Nigeria any
person or persons as a director or directors of the bank and cause
their remuneration to be provided by the bank

 In the event that the bank over which the
Nigerian Deposit Insurance Corporation has assumed control cannot
be rehabilitated, the next step provided for under section 39 of
Banks and other Financial Institutions Act Laws of the Federation
of Nigeria Cap B3 2004 is for Nigerian Deposit Insurance
Corporation to recommend other resolution measures to the Central
Bank of Nigeria which include revocation of the bank’s licence.

It is after the recommendation by the Nigerian Deposit Insurance
Corporation that the Central Bank of Nigeria may then revoked the
bank’s licence pursuant to section 39 of the Banks and other
Financial Institutions Act Laws of the Federation of Nigeria Cap B3
2004.

The last step of its all for the winding up of banks is the
provision of section 40 of the Banks and other Financial
Institutions Act Laws of the Federation of Nigeria Cap B3 2004
which confers right on the Nigerian Deposit Insurance Corporation
to apply to the Federal High Court for a winding up order of the
affairs of the bank.

From the above highlighted procedures, it is crystal clear that
it is the Nigerian Deposit Insurance Corporation that has the legal
capacity to wind-up Banks and other Financial Institutions and not
a Creditor, including a contingent or prospective creditor of the
company, the officer receiver, a contributory, a trustee in
bankruptcy to, or a personal representative of a creditor or
contributory, the Corporate Affairs Commission, and a receiver
authorized by the instrument under which he was appointed provided
for under section 410 of Companies and Allied Matters Act.

On a final note, it is hereby advised and recommended that every
legal practitioner should always endeavour to find out applicable
law before taking any legal step in seeking justice in courts for
clients as doing that would enhance speedy determination of cases
in Nigerian Courts and reduce filing of preliminary objection to a
suit which some lawyers often derive joy in doing.

S.O. Giwa Esq. a.k.a pentalk (Ibadan based
Legal Practitioner) [email protected]^[1]
08035224192

FG assures 13% Revenue derivation to States

The Minister of State, Mines and Steel Development, Dr.
Uchechukwu Sampson Ogah has given assurance of Federal Government’s
commitment to pay the 13% mining revenue derivation to states,
noting that it would encourage them to curb leakages from illegal
mining, and generate more revenue for the country.

The Minister stated this during a courtesy visit to Plateau
State Governor, His Excellency, Hon. Simon Lalong, as part of his
working visit to the National Metallurgical Development Centre
(NMDC) and the Nigerian Institute of Mining and Geosciences (NIMG),
Jos, Plateau State on Thursday, November 14, 2019.

Dr. Ogah urged states to take advantage of the prompt payment of
the 13% revenue derivation by this administration, by coming up
with strategy towards organizing artisanal miners operating in the
respective states into cooperatives.

He added that the registration and formal organization of
artisanal mining activities would not only improve and grow them
but would also minimize the spate of foreigners taking precious
stones outside the country without going through proper government
procedures.

The Minister stated that to achieve the diversification effort
of President Muhammdu Buhari, the Ministry is working out
modalities that would boost a robust relationship between States
and Local Governments aimed at ensuring that due royalties are paid
to mining States.

The Plateau State Governor, Hon. Simon Lalong , who was
represented by the Deputy Governor, Prof. Sonni Tyoden, solicited
the Ministry’s assistance in getting the 13% derivation accruals to
the State, saying that despite the abundance of minerals
exploration that goes on in the state, Plateau State is yet to
benefit from the 13% derivation.

He assured the Hon Minister that the State Government would
coordinate and organize artisanal miners into Cooperatives for
increased mineral development and revenue generation.

In a related development, the Minister of State, Mines and Steel
Development, Dr. Uchechukwu Sampson Ogah has challenged the
management and staff of both National Metallurgical Development
Centre (NMDC) and Nigerian Institute of Mining and Geosciences
(NIMG) to use the institutes as key-driver for economic growth, job
creation and revenue generation.

The Minister gave the charge during a meeting with management
staff of National Metallurgical Development Centre (NMDC) and
Nigerian Institute of Mining and Geosciences (NIMG) respectively,
after his familiarization tour of facilities of the two
institutions.

He noted that the centres have the potentials and capacity to
drive revenue generation in the sector. He said entrepreneurs who
would create wealth for the country could be produced by the
institutes, urging management, staff and students not to lose hope
in Nigeria but join the current administration’s bid to take the
nation to the next level.

The Director General, National Metallurgical Development Centre,
Prof Linus Asuquo, said the institute is committed towards job
creation , poverty alleviation and contribution to GDP growth.

He expressed optimism that the completion of Ajaokuta Steel
Plant would greatly assist the institute to achieve its mandate,
disclosing that the United Nations (UN) has included the Centre in
its programme for 2019- 2022 for Nigeria.

Also in his remarks, the Director General, National Institute
for Mining and Geosciences, Prof. Hassan Bolaji, said the institute
aim to train and develop manpower in mineral research
development.

He revealed that it has sought partnership and collaboration for
revolutionized mining exploration with local and international
organizations.

Prof. Hassan disclosed that certificates obtained at the
institute are valid as the Bill establishing it, through the
support of the Ministry, was passed into law on 12th July 2018 and
gazetted in 2019.

Tine- Iulun, M. A

For: Director (Press)