Bank owners agree on a 75 per cent majority vote

The majority of shares at the National Commercial Bank (NCB) have been sold, but an agreement reached between the Government and the new owners, East Caribbean Financial Holding Company Ltd (ECFH), requires a 75 per cent vote by the directors in order to make certain major decisions.{{more}}

This was disclosed by Prime Minister Dr. Ralph Gonsalves on Friday, November 19, as he gave an update on the closure of the agreement that saw the sale of 51 per cent of the shares of the NCB.

Gonsalves said: “We have sold the majority shares, but there are certain things which are to be done, the majority cannot do them by themselves. They will require seventy-five per cent of the directors.”

Four of these directors were appointed by the new owners, while three were appointed by the Government of St.Vincent and the Grenadines.

Gonsalves described the directors representing St.Vincent and the Grenadines as three strong personalities who were chosen by Cabinet. They are Evelyn Jackson, a former Account General of St.Vincent and the Grenadines; Judy Veira, an actuary and consultant on matters relating to insurance and financial issues; and Godwin Daniel, a graduate in the field of Agriculture, a farmer and businessman.

The four directors who will represent ECFH are two St. Lucians and two Vincentians respectively, Robert Norstrom and Victor Eudoxie; and Errol Allen, the outgoing Chairman who has been appointed the new Chairman and Andre Iton, the former Chief Executive Officer, who will retain the post of CEO and director.

The five Vincentians that make up the new board were also part of the former NCB’s Board of Directors.

“I think that’s an important point about the governance of this bank people should watch,” said Gonsalves.

Gonsalves said there are thirteen issues which will require a 75 per cent to make changes.

These include: the entering into any new undertaking by NCB or any material alteration or change in the operations of the business of NCB; the issue or allotment of shares or other voting securities in NCB and without limiting the foregoing, allotment of shares to a third party other than those pursuant to Clause 2.E. above (this dealt with the question of the Government of SVG selling five per cent of its shares to National Insurance Services (NIS), 20 per cent to Vincentians and four per cent to the staff); any increase or reduction in the capital of NCB or any agreement for the sale, purchase or transfer of the unissued shares of NCB; and the lending of any monies to, the granting of guarantees or suffering the indebtedness of any company, firm, or persons otherwise than in the ordinary course of business of NCB.

Without a 75 per cent vote, the new bank will not be able to engage in the delegation, to any person or persons, any of the powers of the directors; the sale, transfer, conveyance, charging, mortgaging, encumbering, issuing licenses, exchanging, alienating or other disposition of any immovable property of NCB in excess of 20 per cent of the aggregate book value of its assets; the acquisition by purchase lease, license, or otherwise, any immoveable property in excess of 10 per cent of the aggregate book value of the assets; and the entering into any transaction of a major financial character, and for the purposes of this paragraph, any transaction or series of related transactions other than trading contractions, which involve expenditure, the incurring of liability in excess of 20 per cent of the aggregate book value of its assets shall be deemed to be a transaction of a major financial character.

He added that without a 75 per cent vote, the new owners will not be able to increase or reduce the number of directors and the determination of fees; NCB ceasing to carry on its business or substantial part thereof; and the approval of the annual budget and operating plan, adopting or modification of financing or accounting policies or practices, approval of annual financial statements and determination of allocation of net profits.

Gonsalves further stated that without a 75 per cent vote, the new owners will not be able to raise any additional capital and any capital expenditure in excess of 10 per cent of the issued share capital; make any change in the articles or bylaws of the NCB; and pass any petition or resolution to wind up the NCB.

“So you notice the large number of things they cannot do unless they have a 75 per cent vote and how they going and get that?” asked Gonsalves.(HN)