Uganda National Insurance Corporation (NIC) management put up a spirited fight reassuring shareholders about the state of the firm in a stormy annual general meeting (AGM) on Wednesday.
In one of the most heated AGMs in Uganda, shareholders ultimately voted for NIC to undertake a rights issue to raise sh7b to fulfill the new statutory requirements by the industry regulator that operators shore up their capital. A rights issue is an issue of additional shares to existing shareholders by a company to raise capital.
The Uganda Insurance Commission, the industry regulator, is proposing that paid up capital be raised from sh1b to sh5b for life and sh10b from sh5b for life and non-life firms. The rights issue will fund the recapitalisation.
During the four-hour meeting, there were moments of altercations between NIC chairman Remi Oluwude, whose Nigerian-based Industrial and General Insurance holds a major stake and Sudhir Rupareila, who controls a 20% stake in NIC, on how the voting should proceed.
Shareholders were given three options; the company to do a rights issue immediately or a rights issue and a public offer together, and a rights issue then after a public offer, if the rights are not completely taken up.
The majority shareholders voted for a rights issue and an option of a public offer that will provide shareholders another chance to take up shares.
NIC has suffered a battered image arising from its conflicts with Makerere University over the pensions funds claims. Oluwude admitted that the institution was undergoing "trying times."
"We are trying to reposition the company for future growth but NIC has the capacity to pay what is legally acceptable," said Oluwude.
Board member Dr Martin Aliker said the Makerere issue had caused a lot of damage to NIC.
"It is a good thing that it has now gone to court. If the court says we pay, we will," said Aliker.
Olowude assured shareholders of no selfish interests, saying he was not interested in more than 60% stake that his firm holds in NIC.
"It is better to give ordinary Ugandans more chances to buy shares. If people don?t take up their rights, then we do a public issue later," said Oluwude.