Section 11 of Banks and Other Financial Institutions Act and Its Implications for Investments in Nigerian Banks

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ABSTRACT

Section 11 of Banks and Other Financial Institutions Act and Its Implications for Investments in Nigerian Banks

Stephen Chima Arubike*

The article reviews section 11 of Banks and Other Financial Institutions Act focusing on its constitutionality, its consistency with the company law and other legal rules as well as its effect on the flow of investments to the banking sector. The Section seeks to oust the jurisdiction of the court from entertaining any suit challenging the ownership of a registered holder of bank shares. The Section violates several provisions of the Constitution and departs from otherwise rational principles and rules of company law. The paper concludes that the effect of the Section on transactions relating to bank shares is adverse as it could quickly turn to an instrument of fraud for transactions relating to bank shares. Attempts to avert the adverse consequences of the Section will also increase the costs of such transactions. The article recommends that the Section be amended either by the lawmakers in the exercise of their legislative powers or by the President further to its power to align an existing law with the Constitution. Alternatively, when the opportunity presents itself, the Court further to its inherent powers should strike down the Section for violating the Constitution.

Keywords: Constitution, Company Law, Banking, Bank Shares.

* Senior Associate at G Elias & Co. I thank Prof Gbolahan Elias (SAN) and Marian Nicholas both of G Elias & Co. for their insightful comments on the drafts of this article. I accept responsibility for all errors in the article.

THE GRAVITAS REVIEW OF BUSINESS & PROPERTY LAW VOL.10 NO.2