Passport scheme fund halts Lombard Bank resolution allowing directors to issue new shares

The National Development and Social Fund (NDSF), the Government agency that manages and administers contributions made through Malta’s passport scheme, has voted against a resolution at a Lombard Bank Extraordinary General Meeting that would have given authority to the bank’s directors to issue new ordinary shares as they deem fit.

Increasing the bank’s shares would lead to an increase in its share capital.

The NDSF, which holds 49.01 per cent of the issues share capital at Lombard Bank, said in a statement to explain why it voted against the resolution that it believes in strengthening Lombard’s capital base, but took issue with the possibility that directors would be able to issue new shares without first consulting the bank’s shareholders.

“The NDSF believes that the bank’s board of directors should not have the authorisation to issue and allot shares in the bank up to the authorised share capital of the bank with such rights, restrictions and terms and conditions as the board of directors, in their absolute discretion, deem fit.

“Finally, the NDSF’s vote should be interpreted as a vote in the interest of all the bank’s shareholders and as a prudent measure taken to ensure that the correct level of transparency and shareholder participation is observed, and the rights of the bank’s shareholders maintained.

“The NDSF looks forward to participating in any future discussions with the bank, other shareholders and all concerned parties relating to measures that need be taken to strengthen the bank’s capital base,” the agency said in its statement following Lombard’s EGM.

Another three resolutions, however, were voted in favour by the NDSF. They include:

• Re-denomination of nominal value of share capital.
• Increase in authorised share capital;
• Amendments to the memorandum and articles of association;

The NDSF said it did not need to explain the reason for voting against the fourth resolution but did so for the sake of transparency and to explain its rationale.

It also said that it voted for the first two resolutions, which were put up for discussion “presumably…in anticipation of and to facilitate the eventual increase in its capital base.”

It said that in the case of allotting new shares, the NDSF believes they should be accompanied by:

“A presentation to the Bank’s shareholders, including the reasons for, and the terms and conditions of the issue and allotment; and, subsequently, the approval of the general meeting on the basis thereof.”