The management of Transnational Corporation of Nigeria has denied any wrong doing in the Initial Public offer of Transcorp Hotels saying that it breached no known regulation or law in the process. It said that the shareholders asking capital market regulators to void the initial public offer are ignorant of the provisions of the law stating that there is no basis or requirement for the shareholders of Transcorp to approve the above activities of TranscorpHotels.
Vanguard reported on Friday that some Transnational Corporation shareholders have urged the Nigerian capital market regulators to void the Initial Public Offering (IPO) of Transcorp Hotels.Plc. The shareholders under the aegis of the Independent Shareholders Association of Nigeria (ISAN) made the demand in separate letters to the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE).
ISAN said that their demand became imperative following serious breach of operating capital market laws by the regulators. ISAN, in letters signed by Sir Sunny Nwosu and Mr Adebayo Adeleke, National Coordinator and General Secretary respectively described the approval for the recently concluded offer of the shares of Trancorp Hotels as criminal and the height of regulatory impunity.
According to ISAN, the sale of Transcorp Hotel shares was an authorised bulkanisation of Transnational Corporation Plc. According to ISAN, we are not aware of any Annual General Meeting or Extra-Ordinary General Meeting as prescribed by Law, where a special resolution was proposed and passed by shareholders of Transnational
Reacting to the shareholders position Transcorp Management said “The issue is whether the shareholders of Transnational Corporation of Nigeria Plc (“Transcorp”) are entitled by law to approve the change of status of Transcorp Hotels Plc (“TranscorpHotels”) (formerly a private company) to a public company, its initial public offer (IPO) and subsequent listing by the Nigerian Stock Exchange.
“Legally and practically speaking, there is no basis or requirement for the shareholders of Transcorp to approve the above activities of TranscorpHotels. The latter is a company of full legal status with its own shareholders and Board that direct its affairs. Companies and Allied Matters Act (CAMA) (section 33(1) & section 50(1)-(7) provide that any company may, by special resolution (75% shareholders’ approval), change its name or convert from a private company to a public company or a public company into a private company, etc.
“For the purpose of the IPO and listing, the Investments and Securities Act and SEC Rules require the approval of the shareholders and Board of the issuer to offer shares to the public (not its parent or holding company’s shareholders). Whether or not TranscorpHotels is a wholly-owned subsidiary of Transcorp, the legal status does not change.
“TranscorpHotels is a separate legal personality and its shareholders and Board took their decisions to change the name, convert to public a company, do an IPO and list on the floor of the NSE. Transcorp Directors on TranscorpHotels’ Board are not supposed to fetter their discretion (section. 279 (6) CAMA) before taking a decision on the Board where they serve rather they exercise their business judgment in the interest of TranscorpHotels. It will also amount to conflict of interest if they were to do otherwise.
The regulators would not have approved the process if the consent/approval of the parent/holding company shareholders (Transcorp) were required by law and not obtained.
“The case would have been different if Transcorp was hiving off a business (which is not the situation here) – then SEC approval will be required based on existing SEC Rules. But here, TranscorpHotels is simply going public and asking for subscription of its share from the public.
Transcorp (and its shareholders) is not in any way negatively affected or prejudiced by this development. It continues to be the majority shareholder in TranscorpHotels, receiving its dividends and consolidating its Accounts as required by law.
As a mark of courtesy, good shareholder relationship and shareholders’ right to know, Transcorp is expected to formally inform its shareholders of the development in its subsidiary, TranscorpHotels, which is what Transcorp has done by publishing a “Letter to Shareholders” from the Chairman of Transcorp. We could not have informed shareholders at the last AGM because this development had not occurred then.
The shareholders had said “Spinning off and offering for sale shares of Transcorp Hotels is an unauthorized dismemberment of Transnational Corporation Plc,”.
The association said that they are constrained to draw the attention of SEC and NSE to the regulatory impunity because the IPO of 800 million ordinary shares of Transcorp Hotels negates the provisions of the Investment and Securities Act, rules and regulations of the commission and listing requirements’ of the echange. The shareholders said their quest for probity, accountability and due process, stemmed also from the issues raised by NOGA Hotels International (NHI) SA, a major investors in Transcorp Hotels.
ISAN also said that NHI had in a subtle caveat emptor advertorial published on October 16, 2014 in some dailies, described the IPO as contrived, following unresolved issues over ownership of Transcorp Hilton Hotels, Abuja.
