By Dipo Olowookere
An Extra-Ordinary General Meeting (EGM) has been fixed for Tuesday, June 11, 2019 by Union Bank of Nigeria Plc, to seek approval of shareholders to restructure the company’s balance sheet.
At the meeting, the shareholders will vote to give the board of the lender the authority to write off the sum of N54.46 billion from legacy transactions.
A review of the financial position of Union Bank as at December 31, 2018 showed that there was a deficit of N54.458 billion as accumulated permanent losses from legacy transactions, in addition to the N247.868 billion approved by shareholders in 2017.
In order to reposition the financial institution for optimum performance, the board wants the shareholders, subject to the confirmation of the Federal High Court, to reduce the company’s issued share capital (including for this purpose its Share Premium Account), by N54.5 billion.
The bank, in a notice, explained that, “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 further assured shareholders that this move will “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.”
Union Bank further stated that, “In terms of mechanics and structure, the bank’s board of directors is proposing a reduction of N54.458 billion from the bank’s share premium account of N187.091 billion, 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.”
According to the bank, after the shareholders give their authorisation next Tuesday, it would file an application at the Federal High Court for an order sanctioning the Capital Reduction and Share Capital Reorganisation, subsequent to which the court order will be registered with the Corporate Affairs Commission (CAC) to become effective.
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