MCB gains full control over Adamjee Insurance

After three years of legal wrangling, the MCB group easily romped through the election of six of their nominees to the Board of Adamjee Insurance Company Limited, reducing the founder family to two seats. The present Chief Executive Muhammad Chaudhry completes the board, as the ninth director.
Hanif Adamjee, while conducting a marathon general meeting on Saturday with dignity and in smooth manner covering three years' account approvals, withdrew his nomination for directorship leaving others to contest.
Two scions of the Adamjee family, Hameed and Razzak, led the vote tally, but with nearly 40 percent of equity and support of other public shareholders, the MCB group in a planned manner managed to bag six seats and also reportedly backed the re-election of Managing Director Muhammad Chaudhry.
It may be recalled that both MCB and Adamjee Insurance were launched and managed by the Adamjee family in the early years of Pakistan. The Adamjee family lost control of the bank upon nationalisation in January 1974. Subsequently the children of three brothers Wahid, Zakaria and Gul Muhammad Adamjee inherited the shares of the Insurance Company.
Later, the fragmented shareholding of the company was sold in public and at present the family has around 17 percent equity of which the major chunk is held by the Adamjee Foundation.
MCB landed with 25 percent shares upon default by a major broker client of Lahore. In a falling market, the bank raised its equity to 29.5 percent, while the MCB Employees Foundation and the Staff Benevolent Fund acquired another 10 percent shares.
The new elected board comprising Hameed Adamjee; Razzak Adamjee; Ibrahim Shamsi; Shahzad Saleem; Syed Jawad Gilani; Saqib Ellahi; Naim Mukhtar; Burhan Muhammad Khan and Muhammad Chaudhry as per law have to meet within the next 14 days to elect a chairman and appoint a chief executive for a three years term.
According to informed sources Muhammad Chaudhry, besides remaining director for the next three years, may become the Advisor and Syed Jawad Gilani Chief of Security General Insurance, the only other insurance man on the board, could become the new Managing Director.
The atmosphere at the AGM was, however, a little tense. A former director of Adamjee Insurance Company, Iqbal Adamjee, had approached the Sindh High Court to stop the election on the grounds that only fit and proper persons should be allowed to come on the Board of the company.
The court while admitting the case did not agree to stop the election. However, it directed the SECP to look into the matter.
Since all the directors elected on Saturday have a track record of operating their businesses, knowledgeable sources feel that SECP is likely to clear them.
The MCB control over Pakistan's largest insurance company is being described as an institutional acquisition. According to stockbrokers, the average price paid by MCB is around Rs 50 per share. If one is to add the 45 percent bonus shares received by the bank then the capital gain to MCB is estimated to be over Rs 1.5 billion at present trading price.