A Federal
High Court sitting in Lagos has struck out a case filed by Oando PLC against
the Securities and Exchange Commission (SEC) seeking to stop SEC from
conducting a forensic audit on the company and also lift a technical suspension
placed on its shares.
The presiding
judge, Mohammed Aikawa, on Thursday struck out the case on the grounds that the
court lacked jurisdiction over the matter. He advised Oando to take its case to
the Investment and Securities Tribunal (IST).
The ruling
was consequent to a preliminary objection filed by counsel to SEC, George
Uwechue, SAN.
In his
ruling, the judge said, “I hold that the subject matter of this issue falls
within the exclusive jurisdiction of the Investment and Securities Tribunal
(IST) and not this court.”
“In
addressing this issue, I find the provisions of the Investment and Securities
Act 2007 quite instructive.
Section 284
of the ISA (2007) says the Tribunal shall, to the exclusion of any other court
of law or body in Nigeria, exercise jurisdiction to hear and determine any
question of law or dispute involving- (a) a decision or determination of the
Commission in the operation and application of this Act, and in particular,
relating to any dispute- (i) between capital market operators; (ii) between
capital market operators and their clients; (iii) between an investor and a
securities exchange or capital trade point or clearing and settlement agency;
(iv) between capital market operators and self regulatory organisation; (b) the
Commission and self regulatory organisation; (c) a capital market operator and
the Commission; (d) an investor and the Commission; (e) an issuer of securities
and the Commission; and Jurisdiction of the Tribunal, etc. 132 (f) disputes
arising from the administration, management and operation of collective
investment schemes.
“It is not
in dispute that the matter before me is a dispute between capital market
operators.”
According to
the judge, “the duty of the court is to apply the law”.
“On this
premise, I have no option than to uphold the preliminary objection. I also in
the same vein uphold the preliminary objection of the 2nd defendant (Nigerian
Stock Exchange). This court lacks the jurisdiction to adjudicate the dispute
between both parties.
“The proper
place for this matter to go is IST. I therefore strike out this matter,” the
judge ruled.
Reacting to
the ruling, the counsel to SEC, George Uwechue, said, “We brought a notice of
preliminary objection stating that this court has no jurisdiction to hear
capital market matters because there is a special tribunal set up for it. And
the court agreed with us. So the court upheld our preliminary objection and
therefore struck out the application.”
Oando
approached the Federal High Court to obtain an order to stop the suspension of
its shares and an impending forensic audit after SEC, on October 18, directed
the Nigerian Stock Exchange (NSE) to place the shares of Oando Plc on full
suspension for 48 hours and on technical suspension from October 20.
The
suspension, according to SEC, was to enable it conduct a forensic audit into
the affairs of Oando Plc following petitions and protests by some aggrieved
shareholders leading to a directive by the House of Representatives Committee
on Capital Market to issue a directive to the regulator to investigate the
grievances.
SEC
explained in a statement in October that it carried out a comprehensive review
of the petitions and found a breach of the provisions of the Investments &
Securities Act 2007; breach of the SEC Code of Corporate Governance for Public
Companies; suspected insider dealing; suspected related party transactions not
conducted at arm’s length and discrepancies in the shareholding structure of
Oando Plc, among others.
SEC, in the
memo said these findings were weighty and therefore needed to be further
investigated.
“The
commission’s primary role as apex regulator of the Nigerian capital market is
to regulate the market and protect the investing public. The commission notes
that the above findings are weighty and therefore needs to be further
investigated. After due consideration, the commission believes that it is
necessary to conduct a forensic audit into the affairs of Oando Plc. This is
pursuant to the statutory duties of the Commission as provided in section
13(k), (n), (r) and (aa) of the ISA 2017.
“To ensure
the independence and transparency of the exercise, the forensic audit shall be
conducted by a consortium of experts made up of auditors, lawyers, stockbrokers
and registrars,” the regulator had stated.
Oando’s
shares were also suspended by the Johannesburg Stock Exchange (JSE) in October.
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