ASSET MANAGEMENT CORPORATION OF NIGERIA (AMENDMENT) ACT, 2015
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ASSET MANAGEMENT CORPORATION OF NIGERIA (AMENDMENT) ACT, 2015
EXPLANATORY MEMORANDUM
This Act amends the Asset Management Corporation of Nigeria Act, No. 4, 2010.
[EDITOR’S NOTE: This Act along with the Asset Management Corporation of Nigeria (Amendment No. 2) Act, 2019 amends the Asset Management Corporation of Nigeria (Amendment) Act, 2010
ARRANGEMENT OF SECTIONS
1. Amendment of section 2.
2. Amendment of section 16
3. Amendment of section 22.
4. Amendment of section 34
5. Amendment of section 35.
6. Amendment of section 48.
7. Amendment of section 60
8. Insertion of Part IX
9. Amendment of section 61.
10. Citation.
ASSET MANAGEMENT CORPORATION OF NIGERIA (AMENDMENT) ACT, 2015
An Act to amend the Asset Management Corporation of Nigeria Act: and for related matters.
[Commencement 26/05/2015]
ENACTED by the National Assembly of the Federal Republic of Nigeria-
Amendment of section 2
1. Section 2 of the Principal Act is amended by deleting subsection (3).
Amendment of section 16
2. Section 16 of the Principal Act is amended by substituting for the existing subsection (5), anew subsection “(5)” –
“(5) A Member of the Board or any employee of the Corporation shall not either directly or indirectly be involved in the purchase of assets acquired by the Corporation as part of, or in pursuance of, the acquisition of an eligible bank asset or the enforcement or realization of any right relating to an eligible bank asset acquired by the Corporation.”
Amendment of Section 22
3. Section 22 (2) of the Principal Act is amended by substituting for the existing subsection (2)a new subsection “(2)” –
”(2) The Corporation shall submit within every financial year, a quarterly report of its operations including the Resolution Cost Fund, as at when due, to both Houses of the National Assembly through the relevant Standing Committees of the National Assembly”.
Amendment of Section 34
4. Section 34 of the Principal Act is amended –
(a) in subsection (1), by deleting, –
(i) after the word “powers” in line 4, the words “and subject to the provision of this Act, become subject to all of the obligations; and
(ii) after the word “rights”, the words “and Obligations”:
b) in subsection (2), by inserting a new paragraph “(c)” –
“(c) the pendency of an action before a court of law in respect of the eligible bank asset, except where there is in force and subsisting a valid order of court made after due notice to the eligible financial institution from which the eligible bank asset is to be acquired expressly restraining such acquisition”
Amendment of Section 35
5. Section 35 of the Principal Act is amended by inserting new subsections “(5) and (6) –
“(5) For the purpose of the provisions of the Limitation Law of a State or the Limitation Act of the Federal Capital Territory, with respect to any debt owed to the Corporation by reason of its acquisition of an eligible bank asset, time shall begin torun and the cause of action deemed to arise from the date of the purchase of the eligible bank asset”
“(6) Where action has already commenced by an eligible financial institution prior to acquisition of the eligible bank asset by the Corporation, the Corporation shall, at any time after the acquisition of the eligible bank asset be entitled to –
(a) continue with the action in its name or as a third party entitled to any judgment debt, and any liability in respect of the claim or any associated counterclaim or cross claim for which the assignor of the eligible bank asset shall be liable; or
(b) discontinue any such pending action relating to the eligible bank asset instituted by the eligible financial institution prior to such acquisition and such discontinuance by the Corporation shall be without prejudice to its right to commence or cause to be commenced a new action in respect of the same subject matter as that discontinued.
Amendment of Section 48
6. Section 48 of the Principal Act is amended by inserting new subsections “(3)” -“(9)” –
“(3) The powers of a receiver acting under the provisions of this section, shall be exercisable over all the assets and entire undertaking of the debtor company not withstanding that only a part of the assets of the debtor company was charged, mortgaged or pledged as security in relation to the eligible bank asset acquired by the Corporation:
Provided that such exercise of power shall be without prejudice to the existing rights of secured creditors or third parties in such assets.
(4) Where a receiver under this section elects to manage the affairs of a debtor company or other debtor entity under section 48(2) (c), it shall give notice of its election by publication in at least two newspapers with nationwide circulation.
(5) A receiver under this section approved to manage the affairs of a debtor company or debtor entity, shall on the publication of the notice referred to in section 48(4)become entitled to take over the management of the affairs of the debtor company or debtor entity in the name and on behalf of the debtor company or debtor entity for the benefit of the debtor company or debtor entity and the general body of creditors of the debtor company or debtor entity for the period specified in the notice.
(6) A receiver managing the affairs of a debtor company or debtor entity under the provisions of this section shall be deemed to be a fiduciary of the debtor company or debtor entity and all its creditors: and shall in paying off any debts owed by the debtor company or debtor entity strictly adhere to debt priority ranking prescribed under section 494 of the Companies and Allied Matters Act.
(7) Subject to Section 48(9) of this Act and on the publication of the notice referred to in section 48(4) thereof all judgments, claims, debt enforcement procedures existing or being pursued before the publication of the notice shall stand automatically suspended and be unenforceable against the debtor company for the shorter of a period of 1 year from the date of the publication of the notice or the period that the receiver continues to manage the affairs of the debtor company:
Provided that claims relating to wages and other entitlements of existing staff of the debtor company or debtor entity and professional advisers shall not be so suspended.
(8) A receiver acting under section 48(2) (c) shall within 30 days of the publication of the notice referred to in section 48(4) cause to be prepared a detailed and comprehensive plan for the rehabilitation of the debtor-company or debtor entity.
(9) Where a receiver acting under section 48(2) (c) fails to comply with the provisions of section 48(8), the provisions of section 48 (7) shall cease to apply”.
Amendment of section 60.
7. Section 60 of the Principal Act is amended by –
(a) substituting for the marginal note, a “new marginal note” –
(i) “Exemptions granted to the Corporation”: and
(ii) inserting a new paragraph “(c)” –
“(c) Investments and Securities Act”,
Insertion of new Part IX
8. Insert after section 60 of the Principal Act a new “Part IX”
PART IX – BANKING SECTOR RESOLUTION COST FUND
Establishment of Banking Sector Resolution Cost Fund.
60A (1) Without prejudice to the provisions of section 19 of this Act, there is established, for the purposes specified in section 65 of this Act a fund to be known as the Banking Sector Resolution Cost Fund (in this Act referred to as the “Resolution Cost Fund”) which shall bedomiciled with the Central Bank of Nigeria, and into which shall be paid –
(a) all contributions and levies imposed under this Part: and
(b) the sums vested in the Resolution Cost Fund by section 64 of this Act.
(2) The Resolution Cost Fund shall be tax neutral and accordingly, all moneys accruing to, payments made from, and instruments and transactions relating to the Resolution Cost Fund shall be exempted from all forms of taxes, levies, duties, charges or imposition however described “
Contribution by the Central Bank of Nigeria
60B (1) On or before the first business day in each calendar year, starting from the 2011calendar year and up to the end of the tenor, the Central Bank of Nigeria shall pay into the Resolution Cost fund the sum of N50.000,0UO,OOO upon the approval of the National Assembly.
(2) For the purposes of making the payment required under subsection (1), the Central Bank of Nigeria shall appropriate the said sum of N50,000,000.000 (Fifty Billion Naira) or such higher sum determined by the relevant Committee of the National Assembly under subsection (1) of this section from the general reserves or other funds of the Central Bank of Nigeria and cause the sum so appropriated to be paid into the Resolution Cost Fund in immediately available funds.
Levy on eligible financial institutions.
60C. (1) There is imposed on each eligible financial institution, an annual levy, in an amount equivalent to fifty (50) basis points (or such higher basis points as may from time to time be determined by the Central Bank of Nigeria) of its total assets as at the date of its audited financial statements for the immediately preceding financial year published under the Banks and other Financial Institutions Act, and which shall be payable on or before the 30th day of April in each calendar year commencing in the 2013 calendar year, and for every calendar year during the tenor.
(2) In relation to the 2014 calendar year, the reference to immediately preceding financial year in subsection (1) of this section shall be deemed to mean the end of the 2013 calendar year, and each eligible financial institution shall be liable to pay the annual levy imposed under subsection (1) of this section as it applies to its total assets as at the end of the 2013calendar year.
Provided that where an eligible financial institution has already made a contribution under the voluntary contractual arrangements referred to in section 64 of this Act on its total assets as at a date after 31st April 2013, then the levy imposed under subsection (1) of this section shall not apply as it relates to the total assets of such eligible financial institution as at the end of the 2013 calendar year.
(3) Each eligible financial institution shall not later than 10 business days from the 31st day of March of every calendar year during the period referred to in subsection (1) of this section–
(a) carry out a self-assessment of the amount it is liable to pay into the Resolution Cost Fund for the relevant calendar year in pursuance of the levy imposed under [subsection1] of this section using the assessment parameters specified in section 1(a) of this section and
(b) submit to the Board of Trustees its detailed computations of its self-assessment, together with any supporting documentation relating thereto.
(4) Where an eligible financial institution fails or otherwise neglects to comply with the requirement of subsection (3) of this section or where in the opinion of the Board of Trustees, the self-assessment submitted by an eligible financial institution under subsection (3) of this section is incorrect or otherwise understated, the Board of Trustees shall assess and determine the amount to which the concerned eligible financial institution is liable.
Provided that where a representative of an eligible financial institution whose liability is to be assessed and determined under this subsection is a member of the Board of Trustees, such representative shall not participate in or be otherwise involved in, any such assessment and determination by the Board of Trustees.
(5) An assessment and determination made by the Board of trustees under subsection (4) of this section shall, except for manifest error, be final and conclusive of the amount which the concerned eligible financial institution is liable to pay into the Resolution Cost Fund.
(6) The Central Bank of Nigeria shall be authorised to debit for the benefit of the Resolution Cost Fund the account of any eligible financial institution which fails to pay the levy imposed under this Act within the time limit specified in this Act to the tune of the amount so unpaid by the eligible financial institution, and to pay into the Resolution Cost Fund any moneys of the eligible financial institution in its custody or over which it has control, in satisfaction of the liability of the eligible financial institution under this Act.
Vesting of Certain Funds in the Resolution Cost Fund
60D. On the commencement of this Act, all funds standing to the credit of the account maintained with the Central Bank of Nigeria for the receipt of contributions made by eligible financial institutions and the Central Bank of Nigeria to meet banking sector resolution costs under a memorandum of understanding dated 14 January 2010 among the eligible financial institutions and the Central Bank of Nigeria shall be transferred to. and be vested in the Resolution Cost Fund; and the said memorandum of understanding shall, without any other assurance other than this provision, be deemed terminated.
Purpose of the Resolution Cost Fund
60E. (1) Subject to subsection (2) of this section, the Resolution Cost Fund shall be utilised exclusively for the following purposes:
(a) meeting the obligations of the Corporation arising from debt securities issued by the Corporation under this Act, if the Corporation is unable to meet its obligations as and when due from its resources including the proceeds of sale and management of eligible Bank Assets it acquires from eligible financial institution;
(b) meeting expenses specifically incurred in respect of or incidental to the purposes specified in paragraph (a) of this subsection, and
(c) meeting expenses and costs specifically and incurred for the administration and management of the Resolution Cost Fund up to an annual limit of an amount equivalent to 0.5 per cent of the total amount paid into the Resolution Cost Fund for the calendar year in which the expense or cost is incurred.
(2) where any sums standing to the credit of the Resolution Cost Funds are utilised to meet the purposes specified in subsection (1)(a) and (b) of this section, the Corporation shall refund any sums so utilised to the Resolution Cost Fund as soon as the Corporation becomes able to effect such refund out of its general revenue and assets.
Adjustments to Levy to meet Deficiency or Eliminate Excess.
60F. (1) On an annual basis during the tenor, the Board of Trustees in conjunction with the Central Bank of Nigeria and the Corporation shall determine whether the aggregate of the contribution of the Central Bank of Nigeria to the Resolution Cost Fund at the level prescribed in or under, subsection (1) of section 608 of this Act; and the proceeds of the annual levyimposed on eligible financial institutions at the level prescribed in or under subsection (1) of section 60C of this Act, over the course of the tenor, “Total Funding” will be sufficient to meet, over the course of the tenor, the obligations of the Corporation arising from debt securities issued by the Corporation under this Act, which the Corporation, based on its funding model, will be unable to meet or, whether the Total Funding will, over the course of the tenor, be in excess of the amount required to meet the said obligations of the Corporation.
(2) Where, under section 60F of this Act. a determination is made that the Total Funding will be insufficient: the Governor shall be mandatorily required to adjust upward the number of basis points prescribed in, or under subsection (1) of section 60C of this Act, to such level as is necessary to ensure that the Total Funding is sufficient, over the course of the tenor, to meet the obligations of the Corporation arising from debt securities issued by the Corporation in pursuance of this Act, which the Corporation will, based on its funding model, be unable to meet from its own resources.
(3) Where, under section 60F (1) of this section. a determination is made that the Total funding will be in excess of the amount required: the Governor shall be mandatorily required to adjust downward the number of basis points prescribed in, or under section 60E( 1) to such level as is necessary to eliminate the excess.
(4) An adjustment made by the Governor under section 60F(3) and (4) shall be published in the Gazette and shall come into effect at the beginning of the financial year immediately following the year in which a determination is made under section 60F(J).
Tax Deductibility of Annual Levy and Vested Contributions.
60G. Any annual levy paid by an eligible financial institution under this Act and all contributions made by an eligible financial institution referred to in section 60F of this Act shall be deductible for the purposes of the companies income tax of the paying eligible financial institution, under the Companies Income Tax Act.
Prohibition on payment of dividend and bonuses by defaulting eligible financial institution.
60H. An eligible financial institution that is in default of payment of the levy imposed under this Act or any part thereof is prohibited from paying dividends or other like distribution to its shareholders and from paying any bonuses however to its directors or employees, while such payment default continues.
Establishment and Composition of Board of Trustees
60I (1) There is established for the Resolution Cost Fund a Board of Trustees which shall consist of-
(a) 1 representatives of the Central Bank of Nigeria whom shall be appointee by the Central Bank of Nigeria from among its Deputy Governors other than the Deputy-Governor in charge of Financial System Stability, one of whom shall be appointed by the Governor as the Chairman;
(b) 4 representatives of eligible financial institutions to be appointed by the eligible financial institutions from among officers of four of the eligible financial institutions not below the level of a director on a 2 year rotational basis: and
(c) 3 ex-officio members, one each to be nominated by the Federal Ministry of Finance, Nigeria Deposit Insurance Corporation and the Asset Management Corporation of Nigeria, from among their respective officers not below the level of a director.
Duties of the Board of Trustees
60J. (1) The Board of Trustees shall have responsibility for the supervision, administration and management of the Resolution Cost Fund and shall in addition to such other duties specified in this Part IX of this Act have and discharge the following duties –
(a) collection of the contributions and levies levied under this Act and as and when due;
(b) disbursement of moneys standing to the credit of the Resolution Cost Fund to meet the obligations specified in section 60E of this Act:
(c) formulating investment policies for the Resolution Cost Fund and causing moneys standing to the credit of the Resolution Cost Fund to be invested in accordance with the provisions of this Act;
(d) formulating policies for running the Secretariat; and
(e) performing other functions that are consistent with the purpose of the Resolution Cost Fund as specified in section 60E of this Act.
(2) The Board of Trustees may delegate any part of its responsibilities under this Act as it may deem fit and may appoint independent service providers, professional advisers and consultants for the performance of any of its functions and for running the Secretariat.
(3) In the discharge of their responsibilities and duties. members of the Board of Trustees shall be deemed to stand in a fiduciary relationship with the Corporation and shall act with due care and skill, in utmost good faith and in the best interest of the Corporation.
Tenure, cessation of membership and casual vacancy.
60K. (1) Subject to subsection (2) of this section, members of the Board of Trustees, except the members nominated by eligible financial institutions who shall only hold office for a term of two years, shall hold office for as long as they continue to hold the office by virtue of which they were appointed to the Board of Trustees.
(2) A member of the Board of Trustees shall cease to hold office as a member if he ceases for any reason howsoever to hold the office by reason of which he holds membership of the Board of Trustees.
(3) Where a vacancy occurs as a result of the death, resignation. Retirement, disqualification or removal of a member of the Board of Trustees, the parastatal or eligible financial institution that the member represents on the Board of Trustees shall nominate another of its members to fill the vacancy so occasioned, for the remainder of the term of office of the member whose death, resignation, retirement disqualification or removal occasioned the vacancy.
Proceedings of the Board of Trustees.
60L. The Board of Trustees shall meet for the conduct of its business at the Secretariat or such other place at such times and on such days as the Chairman may decide; and the Board shall, subject to the provisions of this Act, have power to regulate its proceedings.
No Remuneration
60M. No remuneration shall be payable to members of the Board of Trustees, except the sitting allowances as the Governor may from time to time determine.
Provided that members of the Board of Trustees shall be entitled to be reimbursed in full for all reasonable expenses incurred in pursuit of the business of the Board of Trustees and in the discharge of their functions.
Secretariat of the Board of Trustees
60N. (1) There is hereby established for the Board of Trustees, a Secretariat which shall be situated at the head office of the Central Bank of Nigeria, or such other place as the Central Bank of Nigeria may determine and shall be staffed by such number of persons to be seconded from all or any of the Central Bank of Nigeria, the Federal Ministry of Finance, the Nigeria Deposit Insurance Corporation and an eligible financial institution as the Board of Trustees may from time to time determine, and Secretariat shall have such functions as are, from time to time, prescribed by the Board of Trustees.
(2) Persons seconded to the Secretariat shall during the period of the secondment remain employees of the seconding institution and the seconding institution shall continue to be responsible for the remuneration of such employee.
Custody of moneys and appointment of custodians
60O. (1) All moneys standing to the credit of, or other assets of the Resolution Cost Fund shall be held by the Central Bank of Nigeria or, at the instance of the Central Bank of Nigeria by custodians appointed by the Board of Trustees for that purpose in accordance with, written custodial services agreement entered into between the Resolution Cost Fund and the custodian in form and substance satisfactory to the Board of Trustees.
(2) A prospective custodian shall be engaged by the Board of Trustees through open and competitive selection procedures and to qualify for appointment, the prospective custodian shall-
(a) be a limited liability company duly incorporated in accordance with the laws of the Federal Republic of Nigeria;
(b) be a licensed financial institution or be wholly or jointly owned by a licensed financial institution with a combined minimum net worth of N25 billion unimpaired by losses;
(c) have, or its parent company or companies, have a combined total balance sheet of at least N125 billion;
(d) be a reputable custodian company with excellent track record;
(e) have the professional and technical capacity to provide custodial services as contemplated under this Act;
(f) have never been a custodian of any assets which was mismanaged or has been in distress due to any fault, either fully or partially by the custodian;
(g) have never been nor is a debtor of the Corporation or the obligor whether directly or indirectly or in relation to an eligible bank asset;
(h) possess appropriate information and communication technology that can adequately cater for on line real-time transactions and for keeping proper accounting records;
(i) have a system of internal controls which ensures that the assets under its custody are safeguarded and segregated and records adequately reflect the information they purport to present;
(j) be capable of providing a guarantee, either by itself or through its parent company or companies, to the full sum and value of assets held or to be held by it in bank deposits and other liquid assets;
(k) not be an entity or company in which any fund manager appointed by the Board of Trustees in relation to the Resolution Cost Fund, or any of the subsidiaries of such fund manager has an aggregate shareholding exceeding 5% of its issued and paid capital: and
(l) meet such other additional requirements or conditions as may be prescribed from time to time by the Board of Trustees.
(3) In addition to meeting the criteria stipulated in section (2) of this section, an applicant shall only be appointed as a fund manager if it procures, to the reasonable satisfaction of the Board of Trustees, loss insurance cover and fidelity bond in such amount as the Board of Trustees may stipulate from time to time.
Investment of Resolution Cost Fund.
60P. (1) All moneys standing to the credit of the Resolution Cost Fund which are not immediately required to be utilized shall be invested in any of the following-
(a) debt securities issued, or which are guaranteed by the Federal Government of Nigeria or the Central Bank of Nigeria;
(b) with the prior written consent of Central Bank of Nigeria, debt securities, issued, or which are guaranteed by the central government of a sovereign country;
(c) with the prior written consent of Central Bank of Nigeria, debt securities issued, or which are guaranteed by an international financial institution of which Nigeria is a member;
(d) debt securities issued by the Corporation;
(e) repurchase agreements fully collaterised by debt securities of the governments and institutions mentioned in section 76(1) (a)-(c), worth a maximum maturity of 30 days; and
(f) such other debt securities or instruments that the Board of Trustees may with the approval of the Central Bank of Nigeria, from time to time. designate:
Provided always that in the case of paragraphs (b), (c), and (e) above, such debt securities or instruments shall be freely tradable securities.
(2) All bonuses, profits and other returns which accrue on investments made under subsection(1) of this section shall form part of the Resolution Cost Fund and may be re-invested in accordance with subsection (1) of this section.
Appointment of fund managers.
60Q. (1) For the purposes of managing and investing moneys standing to the credit of the Resolution Cost Fund as required under subsection (1) of section 76, the Board of Trustees shall appoint independent third party professional fund managers who shall act on behalf of the Board of Trustees to administer and manage the Resolution Cost Fund and invest or re-invest moneys standing to the credit of the Resolution Cost Fund and accretions thereto in accordance with the provisions of this Act and fund management guidelines to be issued from time to time by the Board of Trustees.
(2) A prospective fund manager shall be appointed by the Board of Trustees through open and competitive selection procedures, and to qualify for appointment, the prospective fund manager shall –
(a) be a limited liability company duly incorporated in accordance with the laws of Federal Republic of Nigeria;
(b) have a minimum paid up share capital of N150,000,000 or such higher sum as may be prescribed, from time to time, by the Board of Trustees;
(c) be duly registered with the Securities and Exchange Commission as a portfolio/fund manager and be in good standing with the Securities and Exchange Commission;
(d) possess a proven track record of managing funds amounting to N10,000,000,000 or more(or such other amount as may from time to time be prescribed by the Board of Trustees),in Nigeria;
(e) not be engaged in any business other than the management of funds and assets;
(f) not have compounded its debt or failed to honour its lawful obligations;
(g) have never been a manager or administrator of any funds or assets which were mismanaged or has been in distress due to any fault either fully or partially, of the prospective fund manager or any of its subscribers, directors or officers;
(h) have never been nor is a debtor of the Corporation or the obligor whether directly or indirectly in relation to an eligible Bank Asset;
(i) have a management team comprising at least two sponsored individuals duly registered with the Securities and Exchange Commission;
(j) possess appropriate information and communication technology lo adequately cater for online real-time transactions and for keeping proper accounting records: and
(k) meet such other additional requirements or conditions as may be prescribed from time to time by the Board of Trustees.
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