By Alex Enumah
The National Insurance Commission (NAICOM) on Thursday told a Federal High Court in Abuja that the suit seeking to stop the planned re-capitalisation of insurance companies in the country is incompetent and as such not within the jurisdiction of the court.
The Incorporated Trustees of Standard Shareholders Association of Nigeria and Mr Godwin Anono had dragged NAICOM to court over the commission’s proposed increase in the paid-up share capital of insurance and reinsurance firms operating in the country.
They had last week through an exparte application prayed the court to halt any further steps by the commission towards implementing the directive for the companies to recapitalize, pending the hearing and determination of the main suit.
However, Justice Mohammed ordered NAICOM to appear in court Thursday, August 20, to show cause why it should not be stopped.
When the matter was called, the plaintiffs’ lawyer, Mr Ayodele Akintunde (SAN), informed the court that its earlier order directing NAICOM to show cause why ex-parte order should not be granted have been served on the defendant.
He said the enroll order, hearing notice and other processes were served on the defendant on August 17 as directed by the court, adding that he was served with the defendant’s reply in court Thursday morning.
Responding, the counsel to NAICOM, Chukwuma-Machukwu Ume (SAN), informed the court that he had filed necessary processes including an objection to the suit, adding that he also received a reply from the plaintiffs Thursday morning.
He however told the court that the suit is incompetent and that alone robbed the court of its jurisdiction .
Besides, Ume urged the court to hold that the matter is not urgent for it to be heard during vacation.
The defendant’s lawyer, in addition, submitted that the plaintiffs lack the locus standi, that is the legal right, to sue NAICOM, describing them as “mere interlopers”.
He therefore prayed the court to either adjourn to hear the substantive matter or give his client more time to respond to the applicants’ processes.
Responding, Akintunde said though he had no objection to NAICOM’s plea asking the court to hear the substantive suit, he however expressed fear on the request for adjournment.
He told the court that after being served with the court order on August 17, NAICOM immediately issued a circular dated August 17, same date it was served, titled: “Re: Minimum Paid-Up Share Capital Policy for Insurance and Reinsurance Companies in Nigeria,” asking the companies to comply with its directive.
“In paragraph two of the circular, tagged as Exhibit GA6, it talked about the minimum paid-up share capital, the timeline, etc.
“And they list certain processes,” he said.
The lawyer argued that the issue was not about the deadline date for all insurance and reinsurance companies to meet the requirements set out by NAICOM but the fact that the recapitalisation plan, which he said is contrary with the provisions of the law, was a process.
He said the plan would have adverse effect on his clients, even at the time the world was battling with the COVID-19 pandemic and considering its economic impact.
Akintunde enjoined the court to stop the move and ordered that status quo be maintained.
But Ume refuted Akintunde’s claim that the circular was issued after NAICOM had been served with court processes.
He said the recapitalisation plan would only take effect in 2021.
After listening to the parties, Justice Mohammed adjourned the matter until August 26 to hear the defendant’s response.
“We have a matter here and we have not determined it.
“And if there is a concern, what do we do before the issue of jurisdiction is determined?” the judge said.
The plaintiffs in the suit marked FHC/ABJ/CS/ 835/2020, claimed that NAICOM had in a release last year fixed June 2020 as deadline for recapitalization of insurance companies in Nigeria, but pressures from the stakeholders made it to shift the deadline to December 2020.
In the planned recapitalization, NAICOM had raised the minimum paid-up share capital of a life insurance company from N2 billion to N8 billion; non-life insurance from N3 billion to N10 billion and composite insurance from N5 billion to N18 billion.
Re-insurance companies on the other hand were directed to raise their capital base from N10 billion to N20 billion.