TROUBLED First National Building Society (FNBS) shareholders have lodged an appeal with the Ministry of Finance contesting the cancellation of the buildin
g society’s licence, which they say was improperly executed.
According to papers filed on Friday last week, the building society’s founding directors and major shareholders — Samson Ruturi and Nicholas Musona — who owned 89,74% between them, said the cancellation of the licence had procedural flaws and should be declared null and void.
The Registrar of Building Societies had not followed the mandatory provisions of Section 14 of the Building Societies Act Chapter 24:02 requiring 30 days notice to appellants before cancelling a building society’s licence.
The registrar cancelled FNBS’s operating licence on October 25, saying FNBS was not in a sound financial position and was also not in a position to meet new capital levels for building societies.
But FNBS’s key shareholders said the cancellation was “on the basis of incorrect information” provided by the former curator and provisional liquidator David Scott, who is alleged to have improperly disposed of the society’s assets during his period as curator.
Scott was recently replaced by Wesley Sibanda of AMG Global Chartered Accounts on November 13 as the building society’s final liquidator.
Sibanda has written to the central bank advising that FNBS could be resuscitated and that shareholders could raise enough funds to recapitalise the financial institution.
The shareholders allege that they received a notice of intention to cancel the society’s licence long after the 30-day notice period stipulated by law had expired.
The notice was given to Scott on August 24 but the shareholders received the notice on October 12, the same day they received a direct notice from the registrar advising them of the cancellation of the licence.
They are therefore seeking a waiver of the registrar’s decision whom they said ignored advice that withdrawing the licence without following the due process of law would create glaring legal and procedural shortcomings to the whole process.
The appeal, part of which was seen by businessdigest, noted that Scott had frustrated efforts to resuscitate FNBS and failed to produce proper accounting records on a monthly basis.
The shareholders claim that section 14 (1) of the Building Societies Act, upon which the decision to cancel the licence was based, did not apply to institutions placed under curatorship.
The building society also argued that FNBS had always been solvent as confirmed by several audits and a due diligence exercise that was conducted last year by external auditors.
The building society has been closed since February 7, 2003.