Business - Business & Economy - News - November 21, 2021

Finally, PENCOM wades into FBN Holdings’ controlling shares controversy

Clarified that equity investments in FBN Holdings by Leadway Pensure Ltd on behalf of the pension funds under its management belong to the RSA holders and cannot be appropriated or classified as shareholdings of any related party to the PFA.

The National Pension Commission (PENCOM) on Friday waded in to the lingering controversy surrounding the ownership of the controlling shares in FBN Holdings.

FBN Holdings Plc, the parent entity to First Bank Nigeria Limited, named Tunde Hassan Odukale as the holder of the controlling shares of the bank.

In naming Odukale, FBN Holdings reversed its previous declaration on the matter in its correspondence to the Nigerian Exchange Group (NGX) proclaiming Nigerian businessman, Femi Otedola, as the holder of the controlling shares of the bank.

The bank said the decision to reverse itself on the issue was by virtue of the shareholders’ records at its disposal, which indicated that Odukale, who is its incumbent Chairman, owned about 5.36 percent of its equity against Otedola’s 5.07 percent.

Odukale

FBN Holdings said the structure of its shareholdings showed Odukale holds directly 4.16 percent of the bank’s equity and another 1.20 percent indirectly through parties related to him.

The related parties’ shareholdings, FBN Holdings said, included those held through Leadway Assurance Company Limited; ZPC/Leadway Assurance Prem & Inv Coll Acct; Haskal Holdings Limited; Leadway Capital & Trust Limited; LAC Investments Limited; Leadway Properties and Investments Limited; Leadway Holdings (HoldCo); OHO Investment, and Leadway Pensure PFA.                                                                                             

Following the controversy, the NGX sought FBN Holdings to provide and update on the current status of its shareholders’ information.

In its response, FBN Holdings claimed that apart from the 4.16 percent equity held by Odukale in his personal capacity, the 1.20 percent equity indirectly ascribed to him were held by parties relating to him, including his “cumulative equity stake” of 1.05 percent of Leadway Pensure PFA’s holdings.

FBN Holdings told the NGX that the inclusion of Odukale’s 1.05 percent equity holding in Leadway Pensure PFA as part of the 1.20 percent indirect stake in the bank was because of his indirect interest in Leadway Holdings Limited.

Besides the bank said Leadway Holding controlled 69 percent stake in Leadway Pensure PFA, with significant influence and control over Leadway Pensure.

Regardless, some investment analysts had faulted FBN Holdings for ascribing to Odukale part of the 1.20 percent indirect stake in Leadway Pensure Pension Fund Administrator (PFA), as investments by PFAs in companies quoted in the capital market are usually carried out on behalf of the Custodians and classified in the name of the Pension Fund Custodians and the PFA.

The analysts described as unusual for operators of the PFAs to also be directors of companies they have investment interest, or related parties have shares, to avoid conflict of interest.

They cited Section 6 6.1 iii of the Regulation on Investment of Pension Fund Asset of February 2019, which says: “The PFA or any of its agents are prohibited from investing Pension Fund Assets in the shares or any other securities, issued through public or private placement arrangements, by the following related party/person of any shareholder of the PFA.”

Also, Section 6.3 of the guideline also “prohibits PFAs from selling their assets to related party/person of any shareholder of the PFA.”

In its first official statement on the controversy since it broke in October, PENCOM countered FBN Holdings claims, saying there was no basis to ascribe the shares in Leadway Pensure PFA to Odukale, since the equity investments in the bank was made from a pool of contributors’ funds under management.

“The equity investments in FBN Holdings made by Leadway Pensure Ltd on behalf of the pension funds under its management are in the name of the pension fund and belong to the RSA holders,” PENCOM clarified.
“Therefore, the equity investments in FBN Holdings Plc as stated in (1) above, cannot be appropriated or classified as shareholdings of any related party to the PFA,” it added.

STATEMENT BY PENCOM
Below is the full statement by PENCOM titled: “CLARIFICATION ON ALLEGED BREACH OF THE REGULATIONS ON INVESTMENT OF PENSION FUND ASSETS IN THE EQUITIES OF FBN HOLDING PLC BY LEADWAY PENSURE LTD”

The Commission’s attention has been drawn to several publications in the media alleging breach of its Regulation on investment of pension fund assets by Leadway Pensure Ltd, a licensed Pension Fund Administrator (PFA), in the equities of FBN Holdings Plc.

The Commission categorically states that the allegations are NOT correct and must have been made based on the lack of understanding of the Investment Regulation issued by the Commission.

For the avoidance of doubt, the Commission wishes to clarify as follows:
1. The equity investments in FBN Holdings made by Leadway Pensure Ltd on behalf of the pension funds under its management are in the name of the pension fund and belong to the RSA holders.

2. Therefore, the equity investments in FBN Holdings Plc as stated in (1) above, cannot be appropriated or classified as shareholdings of any related party to the PFA.

3. Leadway Pensure Ltd is not in breach of the Investment Regulation by investing pension funds in the equities of FBN Holding Plc.

4. Records which can be confirmed from the Securities and Exchange Commission show that the equity investments in FBN Holdings Plc are in the name of the Pension Fund on behalf of the RSA holders.

5. For further clarification please note that: a. Pension fund assets are managed by licensed PFAs and held in custody by Pension Fund Custodians (PFCs) on behalf of Retirement Savings Account holders and other beneficiaries of the Contributory Pension scheme (CPS), in line with the provisions of the Pension Reform Act 2014 (PRA 2014).

b. Section 69 (b) of PRA 2014 stipulates that the PFA and PFC shall take reasonable care that the management or custody of the pension funds is carried out in the best interest of the retirement savings account holders.

Therefore, all investments made by licensed PFAs in eligible securities and corporate entities are “ring-fenced” and belong to the RSA holders and other pension beneficiaries. Accordingly, these pension assets cannot be appropriated directly or indirectly to any individual or related party of the PFA.

c. The provisions of Section 6.1(iii) of the Investment Regulation dealing with conflict of interest, stipulate that:
“The PFA or any of its agents are prohibited from investing Pension Fund Assets in the shares or any other securities, issued through public or private placement arrangements, by related party/person of any shareholder of the PFA”.

Related persons/party as defined in Section 1.10 of the Investment Regulation “includes natural persons related by blood, adoption or marriage; legal entities one of which has control or significant influence over the other, or both of which are controlled by some other person or entity; a corporate entity where any of the aforementioned holds 5% or more beneficial interest; and any other relationship that can be reasonably construed as related persons or parties”.

6. In view of the foregoing, the Commission reiterates that there was no breach of its Investment Regulation whatsoever and invites the general public to be guided accordingly.

7. The Commission restates its commitment to fulfilling its regulatory and supervisory functions as well as ensuring the safety of pension assets and the soundness of the Pension Industry.
SIGNED: MANAGEMENT

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also

Omicron variant: Nigeria to be added to UK travel red list from Monday

MEDIATRACNET  As part of temporary measures to prevent further spread into the UK of the d…