The Federal Government has directed all insurance and reinsurance companies in the country to submit their recapitalization plan to the National Insurance Corporation (NAICOM) on or before August 20, 2019.
The plan, it said, should include, among others, the capital status of each company based on earlier circular on minimum paid up share capital policy for insurance and reinsurance companies in Nigeria dated May 20, 2019, as at the last audited financial statements.
Also, the recapitalisation plan should include the insurance and reinsurance companies’ board resolution on how to comply with the directives.
This is contained in a circular issued by the National Insurance Commission (NAICOM) with number: NAICOM/DPR/CIR/25 – 02/2019, dated July 23, 2019.
The circular signed by the Director, Policy & Regulation Directorate of National Insurance Commission, Mr. Pius Agboola, also states that detailed action plan on how the funds for the recapitalisation are to be sourced with timelines and deliverables should be submitted.
It directed companies intending to seek funds from the capital markets to submit their plan of action on a file-and-use basis.
In the same vein, the circular urged companies that either intend to merge or acquire another to submit their proposal after which they must comply with Sections 30 and 31 of the Insurance Act 2003.
It reads in part: “Insurers and Reinsurers shall submit their recapitalization plan to the Commission on or before August 20, 2019. The plan should include, among others: capital status of the company based on the above referenced circular as at the last audited financial statements.”
The document, the circular said, should include “Board Resolution on how to comply with the directives. Detailed Action Plan on how the funds for the recapitalisation are to be sourced with timelines and deliverables.
It added that “Companies intending to seek funds from the capital markets are required to submit their plan of action on a file-and-use basis.
“Companies that intend to merge or acquire another should submit their proposal after which they should comply with Sections 30 and 31 of the Insurance Act 2003”.
In another circular number: NAICOM/DPR/CIR/25 – 01/2019 dated July 23, 2019 and also signed by Agboola in furtherance of the recapitalisation policy, stated that the following shall apply with respect to existing companies.
On share capital, it said: “The minimum paid up share capital shall be through any or a combination of the following: existing paid up share capital; cash payment for new shares Issued; retained earnings – capitalization of undistributed profits; Payment in kind (other than by way of cash) for new shares issued such as properties, treasury bills, shares, bonds which must be converted to cash not later than three months to the deadline for recapitalisation; and share premium”.
It advised that the recapitalization exercise could be achieved through merger and acquisition.