A ruling by a federal high court in Lagos has raised fresh legal questions about governance and decision-making authority within Union Bank.
The court ordered the immediate reinstatement of the former board led by the chairman, Farouk Mohammed Gumel, alongside the bank’s previous management team.
Delivering the judgment, the judge, Chukwujekwu Aneke, held that the Central Bank of Nigeria acted beyond its powers when it dissolved the board and management in January 2024.
The ruling nullified all actions taken by the interim leadership installed by the regulator over the past two years.
It also directed that the former leadership structure be restored without delay.
The development has triggered concerns within the financial sector, particularly regarding the validity of decisions taken by the current board.
These concerns come at a time when banks are undergoing recapitalisation processes and regulatory stress assessments.
In January 2024, the Central Bank of Nigeria removed the existing leadership of Union Bank and appointed a new management team.
The regulator named Yetunde Oni as managing director and Mannir Ringim as executive director as part of the restructuring.
Following the decision, core shareholders including Titan Trust, Luxis International and Magna International approached the court.
They filed an application seeking judicial review of the regulator’s intervention in the bank’s governance.
The applicants argued that the removal of the board and proposed recapitalisation steps were carried out without following due process.
They also requested an order to stop further actions relating to the bank’s capital restructuring pending the outcome of the case.
In its judgment, the court agreed with the applicants and set aside the actions taken by the regulator and the interim board.
The ruling specifically invalidated approvals, directives and transactions linked to recapitalisation efforts initiated under the interim leadership.
It also covered engagements with financial advisers, auditors and other capital market operators connected to such processes.
Furthermore, the court restrained the regulator and its appointed representatives from exercising the powers of the legitimate board.
The judgment extended to activities such as restructuring share capital, altering ownership structure or undertaking transactions that could affect shareholders’ rights.
It also halted the continuation of any investor selection process linked to the recapitalisation plan.
This includes preliminary engagements such as requests for information and confidentiality agreements with potential investors.
The ruling has created uncertainty over whether the current board and management can continue to take administrative decisions.
Legal observers note that actions taken contrary to a subsisting court order may carry implications for validity and compliance.
The situation is particularly significant because bank boards play key roles in approving financial strategies and regulatory requirements.
These include decisions tied to capital adequacy, operational restructuring and compliance with supervisory directives.
The timing of the judgment coincides with broader regulatory efforts to strengthen the banking sector through recapitalisation.
As part of these efforts, institutions are expected to undergo assessments designed to evaluate financial resilience.
Boards are required to review outcomes of such assessments and determine appropriate responses.
With the court ruling in place, questions remain about which leadership structure is legally recognised to perform these functions.
The development has also drawn attention to the balance between regulatory authority and corporate governance within financial institutions.
While regulators are empowered to maintain stability in the banking system, such actions are expected to follow established legal procedures.
The case highlights the role of the judiciary in interpreting these powers and ensuring compliance with the law.
Despite the legal uncertainties, both the regulator and the bank have issued assurances regarding operational continuity.
They stated that customers’ deposits remain secure and that banking services will not be disrupted.
These assurances are aimed at maintaining public confidence in the institution and the wider financial system.
As developments unfold, attention remains on how the ruling will be implemented and its implications for future regulatory actions.
The outcome may also influence how similar disputes between regulators and financial institutions are handled.
For now, the central issue remains whether the current board retains the authority to make binding decisions under the prevailing legal conditions.
