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TINE GOD NETWORKS PLC COMPLIANCE WITH FEDERAL GOVERNMENT REFORM POLICY ON CAPITALISATION.

Tine God Networks PLC is a company established with a vision that God’s time is the best. The company through its investment strategies has paid out millions of naira to investors around the world as returns on their investments. The monstrous intervention of the Nigerian Government through the Security and Exchange Commission (SEC) to enforce the Federal Government Reform Policy on the issue, capitalization and consolidation in the financial sector of the economy brought about delay in the smooth operation of the company. The bankers committee was equally addressed by the Central Bank Governor on the guideline incentives to facilitate restructuring and recapitalization of banks and other financial institution in the country. The guideline stated among other things but emphasis was on the Capital base, Reserves and Paid up capital of which no bank can operate in Nigeria with a minimums paid up Capital below 25 billion naira. The Federal Government bodies involved in monitoring and regulation of banks and other financial industries in Nigeria include SEC, C.A.C, C.B.N, NDIC, NIPC, e.t.c Tine God Networks PLC was not left. SEC as the champion of the regulation of all regulators was hell-bent to temporary sealed the offices of the company demanding the company to comply with all the regulatory conditions before the company could Operate under the collective investment Scheme of the Commission Act.

Tine God as champion also was able to face the challenges of recapitalization and restructuring of the company as set out by SEC,

These requirement include:

  1. To shore up the minimum share capital base of the company to 500m.
  2. To register all the existing securities of the company.
  3. To file five years financial statements stating profit and sources of income.
  4. Pro viding names of the investors and their shareholding structures.
  5. Providing insurance for at least 30% of paid up capital.
  6. To declare profit and pay dividends to shareholders.
  7. And register the company with the Commission as fund/portfolio manage under Collective Investment Scheme

In compliance to these laydown guidelines the company has successfully achieved

  1. Registered the company as Public Liability Company.
  2. Increased the share capital to 350 million.
  3. Provide 30% percent insurance cover for the paid up capital 0f 350 million
  4. Apply for listing in the Stock Exchange Market of NSE.
  5. Converted all the debt securities of the company into equity share and filed same with Corporate Affair Commission, Abuja.
  6. Open shareholders register at the company’s corporate headquarters.
  7. Stopped paying interest but pays dividends prior to the declaration of profit at the end of the year.
  8. Forward the list of all the investors to SEC after filing same with CAC.

 In the light of these development all the investors in the company are advised to open CSCS account for onward transfer and payment of dividends. Central Security Clearing system is a clearing house of NSE.

Following the approval by Corporate Affairs Commission Abuja of the conversion of dept. securities of Tine God Networks Plc in equity shares of the company, all the investors are hereby informed that the company should hence forth pay dividends in place of interest. The new units of shares allotted to each investor should be forwarded to them along with the statutory form of certificate of shares immediately. Please foreword your functional contact address to the secretary Tine God Networks Plc No 39, Osolo Way Ajao Estate Lagos. The shares holders register is now available for inspection at the company corporate headquarter Lagos.

 

Sign:

Management.

 

CORPORATE AFFAIRS COMMISSIONS STAND ON CONVERSION OF DEBT SECURITIES.

I have carefully considered the application of Tine God Networks PLC for conversion of debts securities to equity shares and have tried to distill two issues for determination. The issues are as follows:

  1. Whether a company is empowered under the Companies and Allied Act or under any other law to convert loan taken  by it to equities/shares in favor of the lender.
  2. Whether the shares of the company registered under CAMA can be in foreign currencies.

Issues 1

Essentially, this issue borders on Debt/Equity Swap. Although CAMA does not specifically make provision for Debt/Equity Swap, it is a common law position. What then is “Debt/Equity Swap”? a Debt/Equity Swap is a transaction in which the obligation Debts of a company or individual are exchanged for something of value, equity. in the case of a publicly traded company, generally entails and exchange of bonds for stocks. the value of the stocks and bonds being exchange is typically determine by the market at the time of the swap.

A Debt/Equity Swap is a refinancing deal in which a debt holder gets an equity position in exchange for cancellation of the Debt. The Swap is generally done to help a struggling company continue to operate. The logic behind this is an insolvent company cannot pay its debt or improve its equity standing .however, sometimes a company may simply wish to take advantage of favorable market conditions. Covenants in the bond indenture may prevent a Swap from happening without consent.

In some cases a business may offer its debtholders equity because the business does not want to or cannot pay the face value of the bond it has issued. To delay repayment it offers stock instead.

In other cases, businesses has to retain certain debts equity ratios and inviting debtors to swap their debts for equity in the company helps to adjust that balance. This debt equity ratio are often part of financing requirements imposed by lenders.in still other cases businesses use Debt/Equity Swap as part of their bankruptcy restructuring

Based on the above, it can conveniently be argued that Debt/Equity Swap is allowed in law.

 

TINE GOD NETWORKS PLC SHARE CERTIFICATE SAMPLE

Statutory form of Certificate of investment in share of Tine God Networks Plc

Name……………………………………………………………………………...

Address……………………………………………………………………………

Dear Sir/Madam

Following the conversion of debt securities of the company into equity shares as approved by Corporate Affairs Commission in recognition of your investment in the corporate bond of the company, you have been allotted with …………. Units of ordinary shares of the company at 1.00 each.  Subject to the regulation of the company. Your dividend warrant will be forwarded to you as soon as the company declares profit.

Given under the seal of the company.

 

Sign………………………………            Sign………………………………

          Secretary                                                      Director